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Item 9A. Controls and Procedures

2024-03-29 compared with 2023-03-31 · 1030 added, 819 removed, 86 unchanged (96% of the section changed)

Controls and Procedures.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms.

Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our principal executive officer and principal financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2022, pursuant to Rule 13a-15(b) under the Exchange Act.

Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2022, our disclosure controls and procedures were effective.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud.

Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs.

Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any.

The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management’s Report on Internal Controls Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Management conducted, under the supervision of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the “COSO” criteria.

Based on the assessment performed, management concluded that our internal control over financial reporting was effective as of December 31, 2022.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level due to the existence of the material weaknesses described below.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of the audited consolidated financial statements for the years ended December 31, 2023 and 2022, we identified material weaknesses in our internal controls over financial reporting.

Specifically, these weaknesses related to having an insufficient number of personnel with an appropriate degree of accounting and internal controls knowledge, experience, and training to appropriately analyze, record and disclose accounting matters commensurate with its accounting and reporting requirements, which resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives.

Management’s Plan to Remediate the Material Weaknesses

With the oversight of our senior management and audit committee, we will continue hiring additional accounting personnel with accounting and internal controls knowledge, experience and training and have implemented improved process level and management review controls with respect to the completeness, accuracy, and validity of complex accounting measurements on a timely basis.

We also have supplemented internal accounting resources with external advisors to assist with performing technical

accounting activities.

Furthermore, we are implementing a process of formalizing procedures to ensure appropriate internal communications between the accounting department and other operating departments necessary to support the internal controls.

The remediation measures are ongoing and are expected to result in future costs for the Company.

While we are implementing a plan to remediate these material weaknesses, we cannot predict the success of such plan or the outcome of our assessment of these plans at this time.

These improvements to our internal control infrastructure are ongoing, including during the preparation of our financial statements as of the end of the period covered by this report.

As such, management has concluded that the remediation initiatives outlined above are not sufficient to fully remediate the material weaknesses in internal control over financial reporting, and will remain insufficient until the applicable controls have operated for an adequate period of time, and further, that through testing, management can conclude that the controls are designed and operating effectively.

We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures.

Management’s Annual Report on Internal Control Over Financial Reporting

As discussed elsewhere in this Annual Report on Form 10-K, we completed the Business Combination on December 19, 2023.

Prior to the Business Combination, Legacy SMAP was a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses.

As a result, Legacy SMAP’s previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date as Legacy SMAP’s liabilities and operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination.

The design of our internal control over financial reporting post-Business Combination has required and will continue to require significant time and resources from management and other personnel.

As a result, management was unable, without incurring unreasonable effort or expense, to conduct an assessment of our internal control over financial reporting as of December 31, 2023.

Accordingly, we are excluding management’s report on internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) pursuant to Section 215.02 of the SEC Division of Corporation Finance’s Regulation S-K Compliance & Disclosure Interpretations.

Additionally, our independent registered accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act or even after we no longer qualify as an “emerging growth company,” if we remain a “low-revenue smaller reporting company” that meets the revenue limits under the definition of a smaller reporting company in Rule 12b-2 of the Exchange Act, until we are no longer a low-revenue smaller reporting company.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than the remediation efforts described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.

(b) Insider Trading Arrangements and Policies.

During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “ Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

Our directors and officers are as follows:

Chief Executive Officer and Director

Executive Officers and Directors

The following table provides information regarding our executive officers and members of our board of directors (ages as of the date of this Annual Report on Form 10-K):

Director and Chief Executive Officer

Director and President

Chief Financial Officer

Chief Strategy Officer

Steve Webster

David Gow has served as our CEO and Director since inception.

General Counsel

Stuart V Flavin III

Petros Kitsos

Gary Strahan .

Since the Closing, Gary Strahan has served as a director and the Chief Executive Officer of MSAI.

Strahan served as Legacy ICI’s Chief Executive Officer since its founding in 1995, using his experience in the infrared technology space and non-destructive testing (“NDT”) and other technologies to grow our business into the provider of high-resolution thermal sensing solutions it is today.

Prior to starting Legacy ICI, Mr.

Strahan worked at Mobil Oil from 1989 to 1994 as an Inspection Engineer, Inspection Manager and, eventually, Senior NDT Level III, during which time he established Mobil Oil’s NDT procedures.

From 1994 to 1995, Mr.

Strahan was a Mechanical Integrity Manager at Ameripol Synpol Corporation.

Strahan was a Manufacturer’s Representative for Agema from 1995 to 1998.

He was also a District Manager at FLIR Systems through its merger (now a subsidiary of Teledyne Technologies) in 1998 before leaving FLIR Systems Inc.

in 2000 to work as a Manufacturer’s Representative of Mikron Infrared, Inc.

until Mikron was purchased by LumaSense Technologies, Inc.

Strahan is a veteran of the U.S.

Navy, where he was a Hull Technician and Diver.

He is a Level III Certified Thermographer and attended Lamar University prior to joining the U.S.

He attended UCSD after USN service.

Strahan received certification as a mixed gas saturation diver from the College of Oceaneering and attended Don Boscoe Technical Institute where he was certified in multiple NDT methods including radiography, ultrasonics, magnetic particle, and liquid penetrant inspection.

Strahan is an Authorized Inspector for the NBBI and has had API and AWS certifications.

He currently serves on the ASTM E-20 Committee and SPIE Thermosense Committee.

Strahan is well qualified to serve on the MSAI Board due to having over 30 years of experience with infrared technology and NDT methods, including in his capacity as Legacy ICI’s Chief Executive Officer.

Steven Winch .

Since the Closing, Steven Winch has served as a director and the President of MSAI.

Winch served as Legacy ICI’s President since May 2020.

Since 2014, he has also been the Managing Partner of Villard Capital, LLC, a private equity firm focused on investments in technology and industrial sectors.

Previously, Mr.

Winch was a Managing Director at The Blackstone Group focused on private equity and special situations investing.

At Blackstone, Mr.

Winch sourced, evaluated, and executed direct investment opportunities in both private and public markets.

Before Blackstone, Mr.

Winch was a senior advisor to Cornwall Capital Management LP.

Prior to that, Mr.

Winch worked at Ripplewood Holdings LLC where he sourced, analyzed, and executed direct private equity investments in technology and industrial sectors.

Previously, Mr.

Winch was an Engagement Manager at McKinsey & Company working across a range of industries in the U.S., Europe, Asia, South America, and Australia.

He began his career in the Mergers & Acquisitions group of Salomon Brothers Inc.

He previously served on the board of directors of Keweenaw Land Association, Ltd.

from April 2018 to December 2021.

Winch received an A.B.

from Duke University, where he graduated magna cum laude and was elected Phi Beta Kappa, as well as an M.B.A.

with Distinction from Harvard Business School.

He is a member of the Council on Foreign Relations.

Winch is well qualified to serve on the MSAI’s Board due to his familiarity with our business and his extensive management experience.

Peter Baird .

Since the Closing, Peter Baird has served as Chief Financial Officer of MSAI.

Since August 2020, Mr.

Baird served as Legacy ICI’s Chief Financial Officer, where he has established and managed a range of corporate functions from accounting, treasury and finance, among others.

Prior to joining Legacy ICI, Mr.

Baird worked at 91 Asset Management (formerly Investec Asset Management) as Head of African Private Equity from January 2017 to March 2020, and at Standard Chartered Bank as

a Senior Managing Director and Head of African Private Equity from September 2011 to December 2016.

In both of these roles he managed a team of professionals investing in and managing growth companies.

Prior to this, Mr.

Baird was a Principal at McKinsey & Company, where he worked from September 1995 to June 2006.

During his investing career he has served on and/or chaired more than 25 corporate boards.

He received a Bachelor of Arts degree cum laude with Honors in Economics and Political Science from Bates College, a Master of Arts degree in Quantitative Economics from the University of Cape Town, and a Master of Business Administration degree from the Stanford Graduate School of Business.

At Stanford he was an Arjay Miller Scholar (top 10% of the class) and was also awarded certificates in Public Management and Global Management.

Baird is also a Charted Financial Analyst and is a member of the Council on Foreign Relations.

Steve Guidry .

Since the Closing, Steve Guidry has served as General Counsel of MSAI.

Guidry served as Legacy ICI’s General Counsel since April 2020.

Previously, Mr.

Guidry was a solo practitioner at his own law firm from October 2013 to April 2020 and, prior to that, he was a partner at the law firm of Germer Gertz, LLP from April 2001 to October 2012.

Guidry received an Associate of Applied Science and a Bachelor of Science in Industrial Engineering and Industrial Technology from Lamar University and a Juris Doctor degree from the University of Texas at Austin.

Since the Closing, David Gow has served as a director of MSAI.

Gow previously served as the Chief Executive Officer and a director of SportsMap since its inception until the Business Combination.

In August 2007, Mr.

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We believe Mr.

Gow is qualified to serve on our board of directors due to his extensive experience in the sports industry, as well as his corporate finance and public company experience.

Jacob Swain serves as our CFO.

Swain is the CEO of Incrementum, LLC, a company he founded in 2019 specializing in financial and information systems consulting.

Before founding Incrementum, Mr.

Swain served as the CEO of BBB Tank Services from 2016 through 2019 and the CFO from 2009 through 2016.

BBB Tank Services provides construction and repair services for the aboveground storage tank industry.

Swain served as the CTO and CFO of Bellatorum Resources, a company specializing in mineral rights investments, from March through November of 2019.

Swain earned a BA from the University of Hawaii, a MS from the University of Houston, and an MBA from Rice University.

Swain served in the United States Air Force from 2000 through 2004 with duty assignments in Texas, Germany, Qatar, and Hawaii.

Lawson Gow serves as our Chief Strategy Officer.

He is the son of David Gow, who serves as our CEO.

Lawson Gow is the Founder & President of The Cannon, an organization that provides startup businesses, investment groups, governments, corporations, and other strategic organizations with a variety of innovation solutions and incubator workspace, which he launched in 2017.

Prior to The Cannon, Mr.

Gow worked as an investment analyst for the global corporate venture capital firm, KPMG Capital, where he led the investment decisions of the $100M fund into technology startups, a role he held from 2013 to 2017.

Gow is a board member of Central Houston Organization, an entity responsible for managing much of the funding and strategy associated with the growth and development of Downtown Houston, and a member of the Houston 2026 World Cup Bid Committee, an entity formed to develop a formal bid to the FIFA World Cup international site selection team on behalf of The City of Houston.

Gow received the Houston Business Journal’s 40 Under 40 Award in 2019.

Gow earned a B.A.

from Rice University.

Reid Ryan has been a Director since October 18, 2021.

Gow is qualified to serve on the MSAI’s Board due to his corporate finance, general management and public company experience.

Since the Closing, Reid Ryan has served as a director of MSAI.

Ryan previously served as a director of SportsMap since October 18, 2021 until the Business Combination.

Ryan became the Founder & CEO of Ryan-Sanders Baseball, Inc., an entity that owns the Round Rock Express, the Triple-A affiliate of the Texas Rangers of Major League Baseball.

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Ryan left Ryan-Sanders to become the president of the Houston Astros and served in this position from 2013 to 2019, which included two trips to the World Series and a World Championship in 2017, and thereafter became Executive Advisor of Business Relations in 2020.

Currently, he is the executive producer for a feature length “30-for-30 style” documentary on Nolan Ryan which will debut in 2022.

He was the executive producer for a feature length “30-for-30 style” documentary on Nolan Ryan which debuted in 2022.

Ryan also runs a family office that invests in sports tech properties and other sports-related companies.

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We believe Mr.

Ryan is qualified to serve on our board of directors due to his knowledge and experience in the sports industry.

David Graff has been a Director since October 18, 2021.

Graff is the CEO of Hudl, a large sports technology company headquartered in Lincoln, Nebraska, that he co-founded in 2006.

Hudl is a software platform that helps coaches and athletes prepare for and stay ahead of the competition with video.

Hudl offers a suite of products that over 180,000 global sports teams use at every level—from youth to professional organizations—to combine video and data to improve performance and showcase talent.

Graff also serves on the board of directors for Nelnet (NYSE:

NNI) and Assurity, both headquartered in Lincoln, Neb., and is a trustee for the University of Nebraska Foundation and an advisory board member for the Raikes School.

Graff was named on Forbes’ 30 Under 30 list.

Graff received a undergraduate degree in accounting and an MBA from the University of Nebraska-Lincoln in the Jeffrey S.

Raikes School in Computer Science and Management.

We believe Mr.

Graff is qualified to serve on our board of directors due to his executive leadership expertise in the sports technology area, as well as his corporate governance experience.

Oliver Luck has been a Director since October 18, 2021.

From June 2018 to April 2020, Mr.

Luck served as the CEO and Commissioner of the XFL until it suspended operations due to the COVID-19 pandemic.

From June 2010 through 2017, Mr.

Luck served as the Athletic Director at West Virginia University, his alma mater.

In October 2013, Mr.

Luck was one of 13 members unanimously chosen by the College Football Playoff Management Committee to select the four teams to compete in the first College Football Playoff which was to be held in 2015.

In December 2014, Mr.

Luck became the EVP for Regulatory Affairs for the NCAA.

From 2005 to 2010, Mr.

Luck was the first president and general manager of the Houston Dynamo of Major League Soccer.

From 2001 to 2005, he was the CEO of the Houston Sports Authority, the governmental entity created in 1997 to provide the financing, construction, and management oversight of the three large sports and entertainment venues in Houston– Minute Maid Park (home of the Houston Astros), NRG Stadium, (home of the Houston Texans), and the Toyota Center (home of the Houston Rockets).

Prior to joining the Sports Authority, Mr.

Luck was a top-ranking executive with the National Football League for more than ten years, where he served as Vice President of Business Development and President and CEO of NFL Europe.

Luck spent five seasons in the National Football League as a quarterback for the Houston Oilers (1982–1986).

After retiring from pro football, Mr.

Luck earned a J.D.

from the University of Texas School of Law.

We believe Mr.

Luck is qualified to serve on our board of directors due to his executive leadership experience at all levels of the sports industry.

Steve Webster has been a Director since October 18, 2021.

Webster co-founded Avista Capital Partners, a large private equity firm, where he continues to serve as a Managing Director.

Webster co-founded Avista Energy Capital, a private equity firm making direct equity investments in energy companies.

During his career, Mr.

Webster has served on numerous public boards, including currently on Callon Petroleum (NYSE) since 2020, Oceaneering International (NYSE) since 2015 and Camden Property Trust (NYSE) since 1993.

He is also active on numerous boards of private companies in which he holds investments.

Webster is Managing Partner of AEC Partners (investing in energy) which he co-founded as well as Kestrel Capital, a family-owned partnership which has invested in a variety of businesses, including Gow Media.

Since 2010, Mr.

Webster has been an active investor in multi-family housing, land and other real estate with several different partners.

Webster earned a BS and honorary doctorate from

Purdue University and a MBA from Harvard Business School, where he was named a Baker Scholar.

We believe Mr.

Webster is qualified to serve on our board of directors due to his private equity expertise, as well as his corporate finance experience.

Number of Officers and Directors

We have seven directors.

In accordance with NASDAQ corporate governance requirements, we are not required to hold an annual meeting until one full year after our first fiscal year end following our listing on NASDAQ.

We may not hold an annual meeting of stockholders until after we consummate our initial business combination.

Our officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office.

Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate.

Director Independence

The Nasdaq listing standards require that a majority of our board of directors be independent.

An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

Our board of directors has determined that each of Reid Ryan, David Graff, Oliver Luck, and Steve Webster are “independent directors” as defined in NASDAQ listing standards and applicable SEC rules.

Our independent directors have regularly scheduled meetings at which only independent directors are present.

Committees of the Board of Directors

Our board of directors has three standing committees:

an audit committee, a compensation committee and a nominating and corporate governance committee.

Each committee operates under a charter that has been approved by our board and has the composition and responsibilities described below.

Our audit committee, compensation committee and nominating and corporate governance committee is composed solely of independent directors.

Audit Committee

Graf, Ryan and Webster serve as members of our audit committee.

Graff chairs the audit committee.

Under the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee all of whom must be independent.

Graf, Ryan and Webster are independent.

Each member of the audit committee is financially literate and our board of directors has determined that Mr.

Graff qualifies as an “audit committee financial expert” as defined in applicable SEC rules.

Responsibilities of the audit committee include:

● the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent registered public accounting firm engaged by us;

● pre-approving all audit and non-audit services to be provided by the independent registered public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;

● reviewing and discussing with the independent registered public accounting firm all relationships the auditors have with us in order to evaluate their continued independence;

● setting clear hiring policies for employees or former employees of the independent registered public accounting firm;

● setting clear policies for audit partner rotation in compliance with applicable laws and regulations;

● obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control

review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;

● reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction;

● reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

Compensation Committee

The members of our Compensation Committee are Messrs.

Luck, Ryan and Webster.

Luck chairs the compensation committee.

We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:

● reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation in executive session at which the Chief Executive Officer is not present;

● reviewing and approving the compensation of all of our other officers;

● reviewing our executive compensation policies and plans;

● implementing and administering our incentive compensation equity-based remuneration plans;

● assisting management in complying with our proxy statement and annual report disclosure requirements;

● approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;

● producing a report on executive compensation to be included in our annual proxy statement;

● reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser.

However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.

Nominating Committee

Our nominating committee consists of Messrs.

Ryan, Luck and Graff, each of whom is an independent director under Nasdaq’s listing standards.

Ryan chairs the nominating committee.

The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors.

The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others.

Guidelines for Selecting Director Nominees

The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that persons to be nominated:

● should have demonstrated notable or significant achievements in business, education or public service;

● should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations;

● should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders.

The Nominating Committee will consider a number of qualifications relating to management and leadership experience, background, integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors.

The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members.

The nominating committee does not distinguish among nominees recommended by stockholders and other persons.

Code of Ethics

We have adopted a Code of Ethics applicable to our directors, officers and employees.

We have filed a copy of our form of Code of Ethics and our committee charters as exhibits to the registration statement we filed for our initial public offering.

Our stockholders are able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov .

In addition, a copy of the Code of Ethics will be provided without charge upon request from us.

We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.

Conflicts of Interest

Our stockholders should also be aware of the following other potential conflicts of interest:

● None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.

● In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated.

Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

● Our initial stockholders purchased founder shares prior to our initial public offering and our sponsor purchased the private units at such time.

Our initial stockholders have agreed to waive their right to liquidating distributions with respect to their founder shares and private shares if we fail to consummate our initial business combination within the required time period.

However, if our initial stockholders acquire public shares, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business combination within the required time period.

If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private units will be used to fund the redemption of our public shares, and the private units will expire worthless.

● Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.

In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:

● the corporation could financially undertake the opportunity;

● the opportunity is within the corporation’s line of business;

● it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.

In relation to the foregoing, our amended and restated certificate of incorporation provides that:

● we renounce any interest or expectancy in, or being offered an opportunity to participate in, any business opportunities that are presented to us or our officers or directors or stockholders or affiliates thereof, including but not limited to, our initial stockholders and its affiliates, except as may be prescribed by any written agreement with us;

● our officers and directors will not be liable to our company or our stockholders for monetary damages for breach of any fiduciary duty by reason of any of our activities or any of our initial stockholders or its affiliates to the fullest extent permitted by Delaware law.

As a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities to multiple entities.

In addition, conflicts of interest may arise when our board evaluates a particular business opportunity.

We cannot assure our stockholders that any of the above mentioned conflicts will be resolved in our favor.

Furthermore, each of our officers and directors currently has and may in the future have fiduciary obligations to other businesses, including other blank check companies similar to our company, of which they are now or may in the future be officers or directors.

To the extent they identify business opportunities which may be suitable for the entities to which they owe fiduciary obligations, our officers and directors will honor those fiduciary obligations.

Accordingly, it is possible they may not present opportunities to us that otherwise may be attractive to us unless the entities to which they owe fiduciary obligations and any successors to such entities have declined to accept such opportunities.

In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors has contractually agreed, pursuant to a written agreement with us, until the earliest of a business combination, our liquidation or such time as he ceases to be an officer or director, to present to our company for our consideration, prior to presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to us, subject to any fiduciary or contractual obligations he might have.

Below is a table summarizing the entities to which our officers and directors currently have fiduciary duties or contractual obligations which will take priority over our officers and directors.

Chairman & CEO

Chief Technology Officer

Incrementum, LLC

Chief Executive Officer

The Cannon Houston

Founder, President

Round Rock Express

Documentary film on Nolan Ryan

Executive Producer

Family office

American Campus Communities

Altius Sports Partners, LLC

Steve Webster

Avista Capital

Managing Director

Callon Petroleum

Oceaneering International

Camden Property Trust

To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our initial stockholders, officers or directors unless we have obtained an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions, and the approval of a majority of our disinterested independent directors that the business combination is fair to our company (or stockholders) from a financial point of view.

Notwithstanding the foregoing, our amended and restated certificate of incorporation provides that, subject to fiduciary duties under Delaware law, we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.

Our officers and directors, as well as our initial stockholders, have agreed (i) to vote any shares owned by them in favor of any proposed business combination and (ii) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination or any amendment to our charter documents prior to the consummation of our initial business combination or sell any shares to us in a tender offer in connection with a proposed initial business combination.

Limitation on Liability and Indemnification of Officers and Directors

Our amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended.

In addition, our amended and restated certificate of incorporation provides that our directors will not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, except to the extent such exemption from liability or limitation thereof is not permitted by the DGCL.

We entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation.

Our bylaws also permit us to maintain insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification.

We have obtained a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.

These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty.

These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.

Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.

We believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.

EXECUTIVE COMPENSATION

Executive Officer and Director Compensation

None of our executive officers or directors have received any cash compensation for services rendered to us.

Until the earlier of consummation of our initial business combination and our liquidation, beginning on the closing date of our initial public offering, we have agreed to pay Gow Media, LLC, an affiliate of one of our officers, an Administrative Service Fee of $10,000 per month for office space, utilities, secretarial support and other administrative and consulting services.

Included in the Administrative Service Agreement to Gow Media, LLC, Gow Media, LLC has paid Lawson Gow, who serves as our Chief Strategy Officer, approximately $100,000 per year in connection with services related to identifying and consummating the initial business combination.

Our executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.

Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or their affiliates.

After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees from the combined company.

All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination.

It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive officer and director compensation.

Any compensation to be paid to our executive officers will be determined by a compensation committee constituted solely by independent directors.

We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination.

The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination.

We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding the beneficial ownership of our common stock as of February 14, 2023 based on information obtained from the persons named below, with respect to the beneficial ownership of our shares of common stock, by:

● each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

● each of our executive officers and directors;

● all our executive officers and directors as a group.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this Report.

Percentage of

Shares Beneficially

Name and Address of Beneficial Owner (1)

Common Stock (3)

SportsMap, LLC

David Gow (4)

Jacob Swain (5)

Lawson Gow (5)

David Graff (5)

Oliver Luck (5)

Reid Ryan (5)

Steve Webster (5)

All directors and officers (7 individuals) as a group

Periscope Capital Inc.

Barclays PLC (7)

* Less than 1%.

(1) Unless otherwise noted, the business address of each of the following entities or individuals is 5353 West Alabama, Suite 415 Houston, Texas 77056.

(2) Interests shown consist solely of founder shares.

(3) Based on 15,050,000 shares of common stock outstanding.

(4) Represents shares held by our sponsor.

David Gow has voting and dispositive power over the shares held of record by our sponsor.

David Gow disclaims any beneficial ownership of the shares held by our sponsor, except to the extent of his pecuniary interest therein.

(5) Does not include any securities held by our sponsor, of which each person is a direct or indirect equity owner.

Each such person disclaims beneficial ownership of the reported securities, except to the extent of his pecuniary interest therein.

(6) Based solely on a Schedule 13G filed with the SEC on February 14, 2023 on behalf of Periscope Capital Inc.

(“Periscope”), which is the beneficial owner of 791,819 shares of common stock, and acts as investment manager of, and exercises investment discretion with respect to, certain private investment funds (each, a “Periscope Fund”) that collectively directly own 139,800 shares of common stock.

The filing of this statement should not be construed as an admission that Periscope is, for the purpose of Section 13 of the Act, the beneficial owner of the common stock owned by the Periscope Funds.

The address of the principal business office of Periscope is 333 Bay Street, Suite 1240, Toronto, Ontario, Canada M5H 2R2.

(7) Based solely on a Schedule 13G filed with the SEC on February 11, 2022 on behalf of Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc.

The securities being reported on by Barclays PLC, as a parent holding company, are owned, or may be deemed to be beneficially owned, by Barclays Bank PLC, a non-US banking institution registered with the Financial Conduct Authority authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom.

Barclays Bank PLC, is a wholly-owned subsidiary of Barclays PLC.

The address of the principal business office of Barclays PLC and Barclays Bank PLC is 1 Churchill Place, London, E14 5HP, England.

The address of the principal business office of Barclays Capital Inc.

is 745 Seventh Ave, New York, NY 10019.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Prior to our initial public offering, we issued an aggregate of 2,875,000 founder shares to our initial stockholders for an aggregate purchase price of $25,000, or approximately $0.009 per share.

Subject to certain limited exceptions, our initial stockholders have agreed not to transfer, assign or sell their founder shares until six months after the date of the consummation of our initial business combination or earlier if, subsequent to our initial business combination, we consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their common stock for cash, securities or other property.

Our initial stockholders purchased an aggregate of 675,000 private units at a price of $10.00 per unit in a private placement that occurred simultaneously with the closing of our initial public offering.

Our initial stockholders agreed not to transfer, assign or sell any of the private units and underlying common stock until 30 days after the completion of our initial business combination.

We have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation.

We are party to an Administrative Services Agreement pursuant to which we pay Gow Media, LLC a total of $10,000 per month for office space, utilities, secretarial support and other administrative and consulting services.

Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.

Accordingly, in the event the consummation of our initial business combination takes the maximum 18 months, we will pay a total of $180,000 ($10,000 per month) for office space, utilities, secretarial support and other administrative and consulting services.

Included in the Administrative Service Agreement paid to Gow Media, LLC, Gow Media, LLC pays Lawson Gow, who serves as our Chief Strategy Officer, approximately $100,000 per year in connection with services related to identifying and consummating the initial business combination.

Other than reimbursement of any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, no compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, has been or will be paid to our sponsor, officers or directors, or to any of their respective affiliates, prior to or with respect to our initial business combination (regardless of the type of transaction that it is).

Our audit committee reviews on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and is responsible for reviewing and approving all related party transactions as defined under Item 404 of Regulation S-K, after reviewing each such transaction for potential conflicts of interests and other improprieties.

As of June 23, 2021, our sponsor advanced us, pursuant to a promissory note, a total of $50,025 used for a portion of the expenses of our initial public offering.

The loan was, at the discretion of the sponsor, due on the earlier of February 28, 2022, the consummation of our initial public offering or the abandonment of our initial public offering.

The promissory note was payable without interest.

The promissory note was repaid out of the proceeds of our initial public offering available to us for payment of offering expenses.

In addition, in order to finance transaction costs in connection with an intended initial business combination, our initial stockholders, officers and directors and their affiliates may, but are not obligated to, loan us funds as may be required.

Such loans would be evidenced by promissory notes.

In the event that we are unable to consummate an initial business combination, we may use a portion of the offering proceeds held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment.

If we consummate an initial business combination, the notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $1,000,000 of the notes may be converted upon consummation of our business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued 100,000 units if the full amount of notes are issued and converted).

After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders.

It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a meeting of stockholders held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.

All ongoing and future transactions between us and any member of our management team or his or her respective affiliates will be on terms believed by us at that time, based upon other similar arrangements known to us, to be no less favorable to us than are available from unaffiliated third parties.

It is our intention to obtain estimates from unaffiliated third parties for similar goods or services to ascertain whether such transactions with affiliates are on terms that are no less favorable to us than are otherwise available from such unaffiliated third parties.

If a transaction with an affiliated third party were found to be on terms less favorable to us than with an unaffiliated third party, we would not engage in such transaction.

We are not prohibited from pursuing an initial business combination with a company that is affiliated with our initial stockholders, officers or directors.

In the event we seek to complete our initial business combination with a target that is affiliated with our initial stockholders, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company (or stockholders) from a financial point of view.

We have entered into a registration rights agreement with respect to the founder shares and private units, among other securities.

Policy for Approval of Related Party Transactions

The audit committee of our board of directors has adopted a policy setting forth the policies and procedures for its review and approval or ratification of “related party transactions.” Pursuant to the policy, the audit committee will consider (i) the relevant facts and circumstances of each related party transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party, (ii) the extent of the related party’s interest in the transaction, (iii) whether the transaction contravenes our code of ethics or other policies, (iv) whether the audit committee believes the relationship underlying the transaction to be in the best interests of the company and its stockholders and (v) the effect that the transaction may have on a director’s status as an independent member of the board and on his or her eligibility to serve on the board’s committees.

Management will present to the audit committee each proposed related party transaction, including all relevant facts and circumstances relating thereto.

Under the policy, we may consummate related party transactions only if our audit committee approves or ratifies the transaction in accordance with the guidelines set forth in the policy.

The policy will not permit any director or executive officer to participate in the discussion of, or decision concerning, a related person transaction in which he or she is the related party.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of fees paid or to be paid to Marcum LLP, or Marcum, for services rendered.

Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings.

The aggregate fees billed by Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the year ended December 31, 2022 and 2021 totaled $106,585 and $87,550, respectively.

The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.

Audit-Related Fees.

Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

We did not pay Marcum for consultations concerning financial accounting and reporting standards for the year ended December 31, 2022 and 2021.

We paid Marcum $8,755 and $8,755, respectively, for tax planning and tax advice for the year ended December 31, 2022 and 2021.

All Other Fees.

We did not pay Marcum for other services for the year ended December 31, 2022 or 2021.

Pre-Approval Policy

Our audit committee was formed upon the consummation of our initial public offering.

As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors.

Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

EXHIBITS AND FINANCIAL STATEMENTS

Documents filed as part of this Report

Financial Statements

The financial statements and notes thereto which are attached hereto have been included by reference into Item 8 of this part of the annual report on Form 10-K.

See the Index to Financial Statements.

Financial Statement Schedules

All schedules are omitted because they are inapplicable or not required or the required information is shown in the financial statements or notes thereto.

Business Combination, dated as of December 5, 2022, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc.

(incorporated by reference to exhibit 2.1 of the Current Report on Form 8-K, filed with the SEC on December 6, 2022)

Amended and Restated Certificate of Incorporation (incorporated by reference to exhibit 3.1 of the Current Report on Form 8-K filed October 21, 2021)

Bylaws (incorporated by reference to exhibit 3.3 of the Form S-1 file no 333-259912)

Warrant Agreement, dated October 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to exhibit 4.1 of the Current Report on Form 8-K, filed with the SEC on October 21, 2021)

Description of Registrant’s Securities (incorporated by reference to exhibit 4.2 of the Annual Report on Form 10-K, filed with the SEC on June 21, 2022)

Letter Agreement, dated October 18, 2021, by and among the Company and each of the officers, directors and initial shareholders of the Company (incorporated by reference to exhibit 10.1 of the Current Report on Form 8-K, filed with the SEC on October 21, 2021)

Investment Management Trust Agreement, dated October 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as trustee (incorporated by reference to exhibit 10.2 of the Current Report on Form 8-K, filed with the SEC on October 21, 2021)

Form of Registration Rights Agreement, dated October 18, 2021, among the Registrant and certain security holders (incorporated by reference to exhibit 10.3 of the Current Report on Form 8-K, filed with the SEC on October 21, 2021)

Form of Indemnity Agreement (incorporated by reference to exhibit 10.4 of the Form S-1 file no.

Administrative Services Agreement, dated October 18, 2021, by and between the Company and Gow Media, LLC (incorporated by reference to exhibit 10.4 of the Current Report on Form 8-K, filed with the SEC on October 21, 2021)

Business Combination Marketing Agreement dated October 18, 2021 between the Company and Roth Capital Partners, LLC (incorporated by reference to exhibit 1.2 of the Current Report on Form 8-K, filed with the SEC on October 21, 2021)

Sponsor Letter Agreement, dated as of December 5, 2022, among SportsMap Tech Acquisition Corp.

and the Insiders party thereto (incorporated by reference to exhibit 10.1 of the Current Report on Form 8-K, filed with the SEC on December 6, 2022)

Transaction Support Agreement, dated as of December 5, 2022, among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc.

and the Holders party thereto (incorporated by reference to exhibit 10.2 of the Current Report on Form 8-K, filed with the SEC on December 6, 2022)

Code of Ethics (incorporated by reference to exhibit 14 of the Form S-1 file no.

Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes- Oxley Act of 2002

Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

Certification of Principal Executive Officer Pursuant to Section 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Principal Financial Officer Pursuant to Section 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Ryan is qualified to serve on the MSAI’s Board due to his general management and sales and marketing experience.

Stuart V Flavin III .

Since the Closing, Stuart V Flavin III has served as a director of MSAI.

Flavin served as the Chief Operating Officer of Healthier Cleaning Innovations from March 2016 to July 2022.

Additionally, Mr.

Flavin served as the Chief Executive Officer from April 2018 to August 2019 and served as the Chief Operating Officer from January 2015 to March 2018 of N12 Technologies, Inc.

Previously, Mr.

Flavin served as the VP of Innovation for P&G’s Global Shave Care business from July 2009 to October 2012, where he focused on innovation strategy, product/technical roadmap planning, and program execution.

Previously, Mr.

Flavin was the VP of Global Operations for the Blades and Razors Business from January 2006 to June 2009.

Prior to this, Mr.

Flavin was a Partner at Mckinsey & Company where he focused on operational excellence across many industrial companies and co-led the Operations Practice.

Flavin served as a director of Healthier Cleaning Innovations from June 2014 to June 2015 and N12 Technologies, Inc.

from October 2012 to August 2019.

Flavin received a B.S.

in Chemical Engineering from the University of Rochester, where he graduated magna cum laude, as well as an M.B.A from Harvard Business School.

Flavin is well qualified to serve on the MSAI’s Board due to his experience in innovation, program management, scaling businesses, and managing global operations.

Petros Kitsos .

Since the Closing, Petros Kitsos has served as a director of MSAI.

Kitsos currently serves as the Managing Principal of TBL Companies, LLC, a strategic services firm, since September 2006, and Co-Founder and Trustee of the KT Family Trust, a private investment trust, since July 2004.

Prior to TBL Companies, LLC, Mr.

Kitsos enjoyed a distinguished 16-year career in investment banking with Citigroup, Salomon Smith Barney, and Salomon Brothers where, among other responsibilities, he served as Head of the Global Defense & Aerospace Group, Head of Western Region Mergers & Acquisitions, and Co-Head of the Los Angeles office.

Kitsos currently serves as a director of Sonnedix Power Holdings Ltd., elected in December 2014, Northrop Grumman Federal Credit Union, elected in November 2018, Maritime Tactical Systems, Inc., elected in September 2021, and St.

Stefanos Greek Orthodox Community, Inc., elected in January 2023.

Previously, Mr.

Kitsos served as a director of PrecisionHawk, Inc.

from September 2016 to April 2018, and Aries I Acquisition Corp.

from February 2021 to July 2021.

As Director of Aries I Acquisition Corp., a publicly traded “SPAC,” he participated in the company’s IPO, and then, participated in the diligence and review of over thirty merger targets.

Kitsos received an A.B.

from Hamilton College, where he was elected Phi Beta Kappa, as well as an M.B.A.

with honors from Harvard Business School.

He also attended St.

Antony’s College, Oxford.

Kitsos is well qualified to serve on the MSAI’s Board due to his extensive strategy and advisory experience in the aerospace, defense, and electronics sectors in the last thirty years.

Margaret Chu .

Since the Closing, Margaret Chu has served as a director of MSAI.

Chu currently serves as the Chief Financial Officer of PaeDae Inc., an advanced media-buying technology platform, since September 2022.

Prior to PaeDae Inc., Ms.

Chu served as the Chief Financial Officer of Vox Media, Inc.

from March 2020 to March 2022.

Prior to that, Ms.

Chu served as an Executive Vice President at Green Pen, LLC from November 2018 to February 2022.

Chu served as a director of Momo Holdings, LLC from December 2016 to October 2018, and FQS Holdings, LLC from January 2017 to October 2018.

Additionally, Ms.

Chu has held non-Director Board Observer positions for Momomilk, LLC, Legendary Pictures, Inc., Dayton Superior Corporation and TransDigm Group.

Chu received a B.A.

from Dartmouth College, where she was awarded the Milton Sims Kramer award, as well as an M.B.A.

from Harvard Business School.

Chu is well qualified to serve on the MSAI’s Board due to her extensive experience overseeing corporate finance, accounting, development and legal departments.

Code of Business Conduct and Ethics

We have a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

A copy of the code is posted on our website at https://investors.multisensorai.com/ .

In addition, we intend to post on our website all disclosures that are required by law or the Exchange rules concerning any amendments to, or waivers from, any provision of the code.

The remaining information required by this Item will be included in our definitive proxy statement for our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”), expected to be filed with the SEC no later than 120 days after December 31, 2023, and is incorporated herein by reference.

Item 11.Executive Compensation.

The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference.

Item 13.Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference.

Item 14.Principal Accountant Fees and Services.

The information required by this Item will be included in the 2024 Proxy Statement and is incorporated herein by reference.

Item 15.Exhibits and Financial Statement Schedules

(a)(1) Financial Statements.

The following documents are included on pages F-1 through F-30 attached hereto and are filed as part of this Annual Report on Form 10-K.

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.34)

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

Notes to the Consolidated Financial Statements

(a)(2) Financial Statement Schedules.

All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the financial statements or the notes thereto.

(a)(3) Exhibits.

The following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Incorporated by Reference

Business Combination Agreement, dated as of December 5.

2022, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc.

Amendment No.

1 to Business Combination Agreement, dated as of June 27, 2023, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc.

Amendment No.

2 to Business Combination Agreement, dated September 17, 2023, by and among SportsMap Tech Acquisition Corp., Infrared Cameras Holdings, Inc., and ICH Merger Sub Inc.

Second Amended and Restated Certificate of Incorporation of Infrared Cameras Holdings, Inc.

(n/k/a Multi Sensor AI Holdings, Inc.)

Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Infrared Cameras Holdings, Inc.

(n/k/a Multi Sensor AI Holdings, Inc.).

Amended and Restated Bylaws of Infrared Cameras Holdings, Inc.

(n/k/a Multi Sensor AI Holdings, Inc.)

Amendment to the Amended and Restated Bylaws of Multi Sensor AI Holdings, Inc.

Warrant Agreement, dated as of October 18, 2021, by and between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent.

Description of Registrant’s Securities

Subscription Agreement, dated December 1, 2023, by and between the Registrant and the parties thereto.

Form of Financing Note

Form of Financing Warrant

Form of Loan Agreement.

Share Transfer Agreement.

Amended and Restated Registration Rights Agreement, dated as of December 19, 2023, by and among Infrared Cameras Holdings, Inc.

and the holders party thereto.

Form of Lock-Up Agreement.

Amended and Restated Employment Agreement among Infrared Cameras Holdings, Inc., Infrared Cameras, Inc., and Gary Strahan.

Amended and Restated Employment Agreement among Infrared Cameras Holdings, Inc., Infrared Cameras, Inc., and Steven Winch.

Amended and Restated Employment Agreement among Infrared Cameras Holdings, Inc., Infrared Cameras, Inc., and Peter Baird.

Form of Restricted Stock Unit Grant Notice and Award Agreement (Deferred RSUs Non-Plan Award).

Amended and Restated 2020 Equity Incentive Plan of Infrared Cameras Holdings, Inc.

Form of Stock Option Agreement (2020 Equity Incentive Plan).

Infrared Cameras Holdings, Inc.

2023 Incentive Award Plan.

Form of Restricted Stock Unit Grant Notice and Award Agreement (Deferred RSUs 2023 Incentive Award Plan).

Form of Stock Option Grant Notice and Agreement (2023 Incentive Award Plan).

Form of Restricted Stock Unit Grant Notice and Agreement (2023 Incentive Award Plan).

Form of Indemnification and Advancement Agreement between Infrared Cameras Holdings, Inc.

and its directors and officers

Earnout Waiver Agreement dated March 7, 2024

Lock-Up Waiver Agreement dated March 7, 2024

List of subsidiaries

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

Section 1350 Certification of Chief Executive Officer

Section 1350 Certification of Chief Financial Officer

Policy for Recovery of Erroneously Awarded Compensation

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Filed herewith

† Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2).

The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.

FORM 10-K SUMMARY

Furnished herewith

Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

Indicates a management contract of compensatory plan.

Item 16.Form 10-K Summary.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SPORTSMAP TECH ACQUISITION CORP.

/s/ David Gow

Chief Executive Officer

MultiSensor AI Holdings, Inc.

March 29, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

/s/ David Gow

/s/ Gary Strahan

Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Gary Strahan

Chief Executive Officer and Director

March 29, 2024

(Principal Executive Officer)

/s/ Jacob Swain

/s/ Peter Baird

Chief Financial Officer

March 29, 2024

(Principal Financial and Accounting Officer)

/s/ David Graff

(Principal Financial Officer and Principal Accounting Officer)

/s/ Steven Winch

President and Director

March 29, 2024

/s/ Oliver Luck

/s/ David Gow

March 29, 2024

1 unchanged sentence

March 29, 2024

/s/ Steve Webster

/s/ Stuart V Flavin III

March 29, 2024

Steve Webster

SPORTSMAP TECH ACQUISITION CORP.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688 )

Financial Statements:

Balance Sheets

Statements of Operations

Statements of Changes in Stockholders’ Equity

Statements of Cash Flows

Notes to Financial Statements

Stuart V Flavin III

/s/ Petros Kitsos

March 29, 2024

Petros Kitsos

/s/ Margaret Chu

March 29, 2024

MultiSensor AI Holdings, Inc.

Index to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Sportsmap Tech Acquisition Corp.

To the shareholders and the Board of Directors of MultiSensor AI Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Sportsmap Tech Acquisition Corp.

(the “Company”) as of December 31, 2022 and 2021, the related statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2022 and for the period from May 14, 2021 (inception) through December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the year ended December 31, 2022 and for the period from May 14, 2021 (inception) through December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

We have audited the accompanying consolidated balance sheets of MultiSensor AI Holdings, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, statements of changes in shareholders’ equity, and statements of cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination by April 20, 2023.

If a Business Combination is not consummated by the required date, there will be a mandatory liquidation and subsequent dissolution.

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

Management’s plans in regard to these matters are also described in Note 1 to the financial statements.

As discussed in Note 2 to the financial statements, the Company is 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;

which raises substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

5 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

We have served as the Company’s auditor since 2021.

/s/ Deloitte & Touche LLP

March 29, 2024

SPORTSMAP TECH ACQUISITION CORP.

BALANCE SHEETS

Prepaid expenses - current

We have served as the Company’s auditor since 2021.

MultiSensor AI Holdings, Inc.

Consolidated Balance Sheets

( Amounts in thousands of U.S.

dollars, except share and per share data )

As of December 31,

Current assets

Cash and cash equivalents

Trade accounts receivable, net of allowances of $ 180 and $ 290 , respectively

Inventories, current

Income taxes receivable

Other current assets

Total current assets

Prepaid expenses - non-current

Cash and securities held in Trust Account

Liabilities, Redeemable Common Stock and Stockholders’ Equity

Accrued offering costs and expenses

Franchise taxes payable

Income tax payable

Deferred tax liability

Due to related party

Property, plant and equipment, net

Right-of-use assets, net

Other noncurrent assets

Liabilities and shareholders’ deficit

Current liabilities

Trade accounts payable

Income taxes payable

Accrued expense

Contract liabilities

Line of credit

Convertible notes, current

Related party promissory note

Legacy SMAP promissory note

Right-of-use liabilities, current

Other current liabilities

Total current liabilities

Shareholder promissory note

Contract liabilities, noncurrent

Convertible notes, noncurrent

Deferred tax liabilities, net

Total liabilities

Commitments and contingencies (Note 15)

Common stock subject to possible redemption, 11,500,000 shares at redemption value of $ 10.30

Stockholders’ Equity:

Preferred stock, $ 0.0001 par value;

1,000,000 shares authorized;

none issued and outstanding

Shareholders’ equity (deficit)

Common stock, $ 0.0001 par value;

100,000,000 shares authorized;

3,550,000 shares issued and outstanding (excluding 11,500,000 shares subject to possible redemption) as of December 31, 2022 and 2021

300,000,000 and 7,708,163 shares authorized as of December 31, 2023 and 2022, respectively, and 11,956,823 and 5,292,384 shares issued and outstanding as of December 31, 2023 and 2022, respectively

Additional paid-in capital

Accumulated earnings

Total Stockholders’ Equity

Total Liabilities, Redeemable Common Stock and Stockholders’ Equity

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

SPORTSMAP TECH ACQUISITION CORP.

STATEMENTS OF OPERATIONS

For the Period from

For the Year Ended

(Inception) to

Formation and operating cost

Loss from operations

( 1,385,573 )

Other income:

Interest earned on cash and securities held in Trust Account

Total other income

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

Basic and diluted weighted average shares outstanding, redeemable shares

Basic and diluted income (loss) per common stock, redeemable shares

Basic and diluted weighted average shares outstanding, non-redeemable shares

Basic and diluted income (loss) per common stock, non-redeemable shares

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

SPORTSMAP TECH ACQUISITION CORP.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2022 AND FOR THE PERIOD FROM MAY 14, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021

Stockholders’

Balance as of May 14, 2021 (inception)

Common stock issued to Sponsors

Sale of 675,000 private placement units, net of offering costs

Allocated proceeds to public warrants, net of offering costs

Re-measurement of common shares subject to possible redemption

( 10,504,527 )

Balance as of December 31, 2021

Remeasurement of carrying value to redemption value of shares subject to possible redemption

( 1,154,587 )

Balance as of December 31, 2022

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

SPORTSMAP TECH ACQUISITION CORP.

STATEMENTS OF CASH FLOWS

For the Period

(inception) through

Cash Flows from Operating Activities:

Net income (loss)

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

Interest earned on cash and securities held in Trust Account

( 1,739,145 )

Changes in operating assets and liabilities:

Prepaid expenses

Accrued offering costs and expenses

Income tax payable

Deferred tax liability

Franchise taxes payable

Due to related party

Accumulated deficit

Total shareholders’ deficit

Total liabilities and shareholders’ deficit

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

MultiSensor AI Holdings, Inc.

Consolidated Statements of Operations

( Amounts in thousands of U.S.

dollars, except share and per share data )

Year Ended December 31,

Cost of goods sold (exclusive of depreciation)

Operating expenses:

Selling, general and administrative

Casualty losses, net of recoveries

Total operating expenses

Operating loss

Interest expense

Interest expense, related parties

Change in fair value of convertible notes

Tariff refund

Change in fair value of warrants liabilities

Loss on financing transaction

Other (income) expenses, net

Loss before income taxes

Income tax expense

Weighted-average shares outstanding, basic and diluted

Net loss per share, basic and diluted

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

MultiSensor AI Holdings, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

( Amounts in thousands of U.S.

dollars, except share data )

Shareholders’

Class A Common Stock

January 1, 2022, as previously reported

Elimination of historical equity

Retroactive application of recapitalization

Adjusted Balance at January 1, 2022

Share-based compensation

Balance at December 31, 2022

Conversion of shareholder promissory note

Conversion of convertible notes

Financing transaction shares

Issuance of common stock

Merger recapitalization (Note 3)

Deferred transaction costs

Share-based compensation

Balance at December 31, 2023

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

MultiSensor AI Holdings, Inc.

Consolidated Statements of Cash Flows

( Amounts in thousands of U.S.

Year Ended December 31,

Operating Activities

Adjustments to reconcile net loss to net cash:

(used in) provided by operating activities

Allowance for doubtful accounts

Inventories impairment

Non-cash lease expense

Inventory casualty losses

Deferred income tax expense

Share-based compensation

Non-cash PIK interest

(Gain) on sale of equipment

Loss on financing transaction

Change in fair value of warrants liabilities

Change in fair value of convertible notes

Increase (decrease) in cash resulting from changes in:

Trade accounts receivable

Deferred transaction costs

Other current assets

Other noncurrent assets

Trade accounts payable

Income taxes payable

Income taxes receivable

Contract liability

Other current liabilities

Right of use liabilities

Accrued expenses

Other liabilities

Net cash used in operating activities

( 1,016,150 )

Cash Flows from Investing Activities:

Principal deposited in Trust Account

( 117,300,000 )

Cash withdrawn from Trust Account to pay taxes

Net cash provided by (used in) investing activities

( 117,300,000 )

Cash Flows from Financing Activities:

Proceeds from initial public offering, net of costs

Proceeds from sale of founder shares

Proceeds from private placement units

Payment of promissory note – related party

Payment of deferred offering costs

Investing Activities

Capital expenditures

Proceeds from sale of equipment

Net cash used in investing activities

Financing Activities

Proceeds of First Insurance Funding line of credit

Repayments of First Insurance Funding line of credit

Proceeds of Wells Fargo line of credit

Repayments of Wells Fargo line of credit

Proceeds of B1 Bank line of credit

Repayments of B1 Bank line of credit

Proceeds from SMAP related party promissory note

Proceeds from related party promissory notes

Proceeds from shareholder promissory notes

Repayments on shareholder promissory notes

Proceeds from convertible notes

Proceeds from financing transaction

Merger recapitalization

Net cash provided by financing activities

Net Change in Cash

Cash - Beginning of period

Cash - End of period

Supplemental disclosure of non-cash financing activities:

Deferred offering costs paid by related party

Remeasurement of common stock subject to possible redemption

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

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of the year

Supplemental cash flow information

Interest paid

Income taxes paid

Non-cash investing and financing transactions

Conversion of shareholder promissory note and accrued interests into common stock

Conversion of convertible notes and accrued interest into common stock

Conversion of related party promissory note into convertible note

Conversion of Legacy SMAP related party promissory notes into convertible notes

Transfer of inducement shares in financing transaction

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

MultiSensor AI Holdings, Inc.

Notes to Consolidated Financial Statements

( Dollars in thousands )

Note 1 — Organization and Business Operations

SportsMap Tech Acquisition Corp.

(the “Company”) is a newly organized, blank check company incorporated as a Delaware corporation on May 14, 2021.

The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (the “Business Combination”).

As of December 31, 2022, the Company had not commenced any operations.

All activity for the period from May 14, 2021 (inception) through December 31, 2022 relates to the Company’s formation and the initial public offering described below and, subsequent to the initial public offering, identifying a target company for a Business Combination.

The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.

The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering (the “IPO”).

The Company has selected December 31 as its fiscal year end.

The Company’s sponsor is SportsMap, LLC, a limited liability company (the “Sponsor”).

The registration statement for the Company’s IPO was declared effective on October 18, 2021 (the “Effective Date”).

On October 21, 2021, the Company consummated the IPO of 11,500,000 units (the “Units” and, with respect to the Common stock included in the Units being offered, the “public shares”) at $ 10.00 per Unit, including the full exercise of the underwriters’ over-allotment of 1,500,000 units, generating gross proceeds to the Company of $ 115,000,000 , which is discussed in Note 3.

Simultaneously with the consummation of the IPO, the Company consummated the private placement of 675,000 units (the “Private Placement Units”) at a price of $ 10.00 per Private Placement Unit t o the Sponsor and the representative of the underwriters and/or certain of their designees or affiliates, generating gross proceeds to the Company of $ 6,750,000 , which is described in Note 4.

Transaction costs amounted to $ 2,822,937 consisting of $ 2,300,000 of underwriting commissions and $ 522,937 of other offering costs.

$ 2,686,076 was all charged to temporary equity and $ 136,861 was charged to additional paid-in capital.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80 % of the net balance in the Trust Account (as defined below) (less any taxes payable on interest earned) at the time of the signing a definitive agreement in connection with the initial Business Combination.

However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

There is no assurance that the Company will be able to successfully effect a Business Combination.

Following the closing of the IPO on October 21, 2021, $ 117,300,000 ($ 10.20 per Unit) from the net proceeds of the sale of Units in the IPO and a portion of the proceeds of the sale of the Private Placement Units was deposited into a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S.

government treasury bills, notes or bonds with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act and which invest solely in U.S.

Except as set forth below, the proceeds held in the Trust Account will not be released until the earlier of:

(1) the completion of the initial Business Combination within the required time period;

(2) the Company’s redemption of 100 % of the outstanding public shares if the Company has not completed an initial Business Combination in the required time period;

and (3) the redemption of any public shares properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption of public shares as described in the IPO or redeem 100 % of the public shares if the Company does not complete the initial Business Combination within the required time period or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity.

In connection with any proposed initial Business Combination, the Company will either (1) seek stockholder approval of such initial Business Combination at a meeting of stockholders called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed Business Combination or do not vote at all, for their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), or (2) provide the Company’s stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject to the limitations described herein.

The decision as to whether the Company will seek stockholder approval of a proposed Business Combination or will allow stockholders to sell their shares to the Company in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval.

The Company will have only 18 months from the closing of the IPO (the “Combination Period”) to complete the initial Business Combination.

If the Company is unable to complete the initial Business Combination within such 18 -month period, the Company will:

(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100 % of the outstanding public shares which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of common stock and the board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject (in the case of (ii) and (iii) above) to the Company’s obligations to provide for claims of creditors and the requirements of applicable law.

The initial stockholders have agreed to (i) waive their redemption rights with respect to their private shares in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their private shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100 % of the public shares if the Company does not complete the initial Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to their private shares if the company fail to complete the initial Business Combination within the Combination Period.

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $ 10.20 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act.

In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.

The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company.

The Company has not asked the Sponsor to reserve for such obligations and therefore believes the Sponsor will be unlikely to satisfy its indemnification obligations if it is required to do so.

However, the Company believes the likelihood of the Sponsor having to indemnify the Trust Account is limited because the Company will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

For the year ended December 31, 2022, the Company withdrew $ 307,146 from the Trust Account to pay taxes.

No amounts were withdrawn in the period ended 2021.

Business Combination Agreement

On December 5, 2022, SportsMap Tech Acquisition Corp., a Delaware corporation (“ SportsMap ”), entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “ Business Combination Agreement ”), by and among SportsMap, Infrared Cameras Holdings, Inc., a Delaware corporation (“ ICI ”), and ICH Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of SportsMap (“ Merger Sub ”).

The Business Combination

The Business Combination Agreement provides that, on the terms and subject to the conditions of the Business Combination Agreement, Merger Sub will merge with and into ICI (the “ Merger ”) with ICI surviving the Merger as a wholly-owned subsidiary of SportsMap (the “ Surviving Company ”).

The Business Combination is expected to close in the third quarter of 2023, following the receipt of the required approval of SportsMap’s stockholders and the fulfillment or waiver (if permitted by applicable law) of other customary closing conditions.

The closing of the Business Combination is referred to herein as the “ Closing ”.

Business Combination Consideration

At the effective time of the Merger (the “ Effective Time ”), in accordance with the terms and subject to the conditions of the Business Combination Agreement:

● each share of ICI common stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares (as defined in the Business Combination Agreement) and shares held immediately prior to the Effective Time by ICI as treasury stock) will be converted into the right to receive such number of shares of SportsMap common stock equal to the Exchange Ratio (as defined below),

● each option (a “Company Option”) to purchase shares of ICI Class B Common Stock that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, other than any Out-of-the-Money Option (as defined in the Business Combination Agreement) (the “Participating Company Options”), will be converted into an option to purchase a number of shares of SportsMap common stock upon substantially the same terms and conditions (but taking into account any accelerated vesting provided for in ICI’s equity plan or any award agreement by reason of the Business Combination Agreement or the transactions contemplated by the Business Combination Agreement) as are in effect with respect to such Company Option prior to the Effective Time, except that such option shall represent the right to receive a number of shares of SportsMap common stock equal to the number of shares of Company Class B Common Stock subject to such Company Option prior to the Effective Time multiplied by the Exchange Ratio, and the exercise price per share shall be equal to the exercise price per share of such Company Option prior to the Effective Time multiplied by the Exchange Ratio;

and each Out-of-the-Money Option will be cancelled and terminated for no consideration;

● each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into one share of common stock of the Surviving Company;

● each share of ICI common stock held immediately prior to the Effective Time by ICI as treasury stock will be cancelled and extinguished for no consideration;

● each Dissenting Share of ICI will not convert in the Merger and will be entitled to rely on such rights as are granted pursuant to Delaware law, subject to certain conditions set forth in the Business Combination Agreement and in accordance with applicable law.

The “ Exchange Ratio ” will be determined by (i) dividing the Adjusted Equity Value by $ 10 , which is the value of one share of Sports Map common stock, and (ii) further dividing the quotient of the calculation in clause (i) by the aggregate number of shares of ICI Common Stock issued and outstanding immediately prior to the Effective Time (other than shares held immediately prior to the Effective Time by ICI as treasury stock) on a fully-diluted basis assuming the exercise of all Participating Company Options, excluding any such shares issuable upon exercise of Out-of-the-Money Options, which will be cancelled at the Effective Time.

The “ Adjusted Equity Value ” will be equal to (a) $ 100,000,000 , less (b) the aggregate amount of ICI’s outstanding indebtedness at the Effective Time, plus (b) the aggregate exercise price that would be paid in respect of Participating Company Options if all Participating Company Options were exercised in full immediately prior to the Effective Time, plus (c) all cash and cash equivalents of ICI as of immediately prior to the Effective Time, plus (d) the aggregate principal amount of any convertible promissory notes entered into by ICI on or after the date of the Business Combination Agreement but prior to the Closing in each case on terms and subject to conditions set forth in the Business Combination Agreement.

Pursuant to the Business Combination Agreement, SportsMap will reserve for issuance 2,400,000 shares of SportsMap common stock (the “ Earnout Shares ”).

The Earnout Shares will be issued pro rata to the holders of ICI common stock if either (a) during the period beginning six months after the closing of the Business Combination and ending on December 31, 2024, the common stock of the post-closing public company (“ PubCo ”) achieves a market price of $ 12.50 per share for a specified number of days, or the combined company consummates a transaction in which its stockholders have the right to receive consideration implying a value of at least $ 12.50 per share, or (b) PubCo achieves revenue of $ 68.5 million during the fiscal year ending December 31, 2024, subject to certain limitations set forth in the Business Combination Agreement.

In addition, the Business Combination Agreement provides that, if ICI raises additional capital by the issuance of convertible promissory notes on or after the date of the Business Combination Agreement but prior to the Closing, such convertible notes will convert into ICI Class A Common Stock (as defined in the Business Combination Agreement) immediately prior to the Effective Time and will convert in the Merger in the same manner as ICI Common Stock.

The Business Combination Agreement may be terminated under certain customary and limited circumstances prior to the closing of the Business Combination, including, but not limited to, (i) by either SportsMap or ICI if the Business Combination is not consummated by June 30, 2023, provided that such date may be extended by ICI by an additional 60 days under certain circumstances set forth in the Business Combination Agreement, (ii) by SportsMap if there is a material breach of the representations, warranties or covenants of ICI, subject to a thirty (30)-day cure period following notice of such breach, and (iii) by ICI upon a material breach of the representations, warranties or covenants of SportsMap, subject to a thirty (30)-day cure period following notice of such breach.

If the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement will have any liability or any further obligation under the Business Combination Agreement, other than customary confidentiality obligations, except in the case of willful breach or fraud.

Contingent Business Combination Fees

As discussed in Note 6, the Company has engaged various parties to assist in the selection and consummation of a Business Combination.

These fees are not due or payable until the consummation of a Business Combination.

At December 31, 2022, none of these amounts are reported in the Company’s financial statements.

Liquidity and Capital Resources

As of December 31, 2022, the Company had $ 222,266 in its operating bank account and working capital of $ 124,865 , excluding taxes.

The Company’s liquidity needs through December 31, 2022 were satisfied through a payment from the Sponsor of $ 25,000 (see Note 5) for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of up to $ 400,000 .

The outstanding balance under the promissory note of $ 323,190 was paid in full and the unsecured promissory note is no longer available to the Company.

As of December 31, 2022, no amounts were outstanding under the unsecured promissory note.

After consummation of the IPO on October 21, 2021, the Company had $ 24,991 in its operating bank account, and working capital of $ 1,463,454 , which included $ 2,150,000 of private placement proceeds receivable from the Sponsor which was received into the Company’s operating bank account on October 22, 2021.

In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 5).

As of December 31, 2022, there were no amounts outstanding under any Working Capital Loans.

MultiSensor AI Holdings, Inc.

(“MSAI”, “the Company”, “we” or “our”) and its wholly owned subsidiaries manufacture and distribute multi-sensor systems (hardware and software) for thermographic and other use in a variety of industrial applications.

The Company also provides on-prem and cloud-based software and services, including training, calibration, and repairs for its customers.

The Company’s customers operate in the distribution and logistics, manufacturing, utility and oil and gas sectors.

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

Business Prior to the Business Combination

Prior to the Business Combination, the Company as a corporate entity was SportsMap Tech Acquisition Corp.

(“Legacy SMAP”), and the Company’s sponsor was SportsMap, LLC (the “Sponsor”).

The registration statement for Legacy SMAP’s initial public offering (“IPO”) was declared effective on October 18, 2021 (the “Effective Date”).

On October 21, 2021, Legacy SMP consummated the IPO of 11,500,000 units (the “Units” and, with respect to the Common stock included in the Units being offered, the “public shares”) at $ 10.00 per Unit, including the full exercise of the underwriters’ over-allotment of 1,500,000 units, generating gross proceeds to Legacy SMAP of $ 115,000 .

Simultaneously with the consummation of the IPO, Legacy SMAP consummated the private placement of 675,000 Units at a price of $ 10.00 per Unit to the Sponsor and the representative of the underwriters and/or certain of their designees or affiliates, generating gross proceeds to Legacy SMAP of $ 6,750 .

Transaction costs for Legacy SMAP’s IPO amounted to $ 2,823 , consisting of $ 2,300 of underwriting commissions and $ 523 of other offering costs.

Of these transaction costs, $ 2,687 was charged to temporary equity and $ 137 was charged to additional paid-in capital.

All activity for the period from October 21, 2021 (inception) through December 18, 2023 related to the Company’s formation and IPO, subsequent to closing of the IPO, and identifying a target company for an initial business combination, and consummating the Business Combination (described below).

Legacy SMAP generated non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.

Business Combination Agreement and Related Financing

On December 19, 2023, Legacy SMAP, through its subsidiary ICH Merger Sub Inc.

(“Merger Sub”), and Infrared Cameras Holdings Inc (“Legacy ICI”), all of them Delaware corporations, consummated the closing of the transactions contemplated by the Business Combination Agreement, initially entered on December 5, 2022, by and among Legacy SMAP, Legacy ICI, and Merger Sub (the “Business Combination”).

Pursuant to the terms of the Business Combination Agreement, a merger of Legacy SMAP and Legacy ICI was effected by the merger of Merger Sub with and into Legacy ICI, with Legacy ICI surviving the Merger as a wholly-owned subsidiary of Legacy SMAP.

As a result of the consummation of the Business Combination, Legacy SMAP changed its name from “SportsMap Tech Acquisition Corp.” to “Infrared Cameras Holdings, Inc.” (“ICI”).

In February 2024, ICI changed its name to MultiSensor AI Holdings, Inc.”

Pursuant to the Business Combination Agreement, at the effective time of the Business Combination, (i) each outstanding share of Legacy ICI common stock was converted into the right to receive a number of shares of Company common stock equal to the Exchange Ratio (as defined below), and (ii) each Legacy ICI option, restricted stock unit, restricted stock award that was outstanding immediately prior to the closing of the Business Combination (and by its terms did not terminate upon the closing of the Business Combination) remained outstanding and (x) in the case of options, represented the right to purchase a number of shares of Company common stock equal to the number of shares of Legacy ICI’s common stock subject to such option multiplied by the Exchange Ratio used for Legacy ICI common stock (rounded down to the nearest whole share) at an exercise price per share equal to the exercise price per share for such option divided by the Exchange Ratio (rounded up to the nearest whole cent) and (y) in the case of restricted stock units and restricted stock awards, represented a number of shares of Company common stock equal to the number of shares of Legacy

ICI’s common stock subject to such restricted stock unit or restricted stock award multiplied by the Exchange Ratio (rounded down to the nearest whole share).

The Exchange Ratio was 10.2776 of a share of Company common stock per fully diluted share of Legacy ICI common stock.

On December 19, 2023, the Company received $ 2,137 held in Legacy SMAP’s trust account net of redemptions.

Transaction costs related to the issuance of the trust shares were $ 3,910 .

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany transactions and balances have been eliminated upon consolidation.

The Merger was accounted for as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805, Business Combination.

As a result of Legacy ICI being the accounting acquirer in the Merger, the financial reports filed with the SEC by the Company subsequent to the Merger are prepared as if ICI is the accounting predecessor of the Company.

The historical operations of Legacy ICI are deemed to be those of the Company.

Thus, the financial statements included reflect (i) the historical operating results of Legacy ICI prior to the Merger;

(ii) the consolidated results of the Company, following the Merger on December 19, 2023;

(iii) the assets and liabilities of Legacy ICI at their historical cost;

and (iv) the Company’s equity structure for all periods presented.

The recapitalization of the number of shares of common stock is reflected retroactively to the earliest period presented and will be utilized for calculating loss per share in all prior periods presented.

Going Concern

The Company anticipates that the $ 222,266 held outside the Trust Account as of December 31, 2022 may not be sufficient to allow the Company to operate for at least 12 months from the issuance of the financial statements, assuming that a business combination is not consummated during that time.

Until consummation of its business combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from the initial shareholders, certain of the Company’s officers and directors (see Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

The Company can raise additional capital through Working Capital Loans from the initial shareholders, certain of the Company’s officers, and directors (see Note 5), or through loans from third parties.

None of the sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company.

If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses.

The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of these financial statements.

The Company has until April 20, 2023 to consummate a Business Combination.

It is uncertain that the Company will be able to consummate a Business Combination by that date, which is less than 12 months from the issuance of these financial statements.

If a Business Combination is not consummated by the required date, there will be a mandatory liquidation and subsequent dissolution.

In connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” management has determined that mandatory liquidation, and subsequent dissolution, should the Company be unable to complete a business combination, raises substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of these financial statements.

No adjustments have been made to the carrying amounts of assets and liabilities should the Company be required to liquidate after April 20, 2023.

Risks and Uncertainties

Management is currently evaluating the impact of the COVID-19 pandemic and Russia-Ukraine war and has concluded that while it is reasonably possible that the virus and war could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law.

The IR Act provides for, among other things, a new U.S.

federal 1% excise tax on certain repurchases of stock by publicly traded U.S.

domestic corporations and certain U.S.

domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023.

The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase.

However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax.

Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.

In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined.

The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

Note 2 — Significant Accounting Policies

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and approval of any golden parachute payments not previously approved.

Further, Section102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

These 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 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 it may 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 plans to obtain additional liquidity including raising additional funds from investors (in the form of debt, equity or equity-like instruments) and continuing to reduce operating expenses.

However, these plans are subject to market conditions, and are not within the Company’s control, and therefore, cannot be deemed 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 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

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Making estimates requires management to exercise significant judgement.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company did no t have any cash equivalents as of December 31, 2022 and 2021 other than those in the Trust Account.

Cash and Securities Held in Trust Account

As of December 31, 2022 and 2021, the company had $ 118,742,928 and $ 117,310,928 , respectively, in cash and securities held in the trust account which were invested in US Treasury bills.

Net proceeds of the sale of the Units in the Public Offering and the sale of the Private Placement Units were placed in the Trust Account which will only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.

government treasury obligations.

All of the Company’s investments held in the trust account are classified as held-to-maturity securities.

Held-to-maturity securities are presented on the balance sheet at amortizable cost at inception and at the end of each subsequent reporting period.

Interest earned on the investments during each reporting period is recorded at the end of each reporting period and is reported as interest income in the accompanying statements of operations.

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make certain estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates are adjusted to reflect actual experience when necessary.

Significant estimates reflected in these consolidated financial statements include, but are not limited to revenue recognition, useful life of fixed assets, allowance for doubtful accounts receivable, capitalization of internal-use software, share-based compensation, estimation of contingencies and estimation of income taxes.

The Company assesses estimates on an ongoing basis;

however, actual results could materially differ from those estimates.

The Company has 9,131,250 warrants outstanding as of December 31, 2023, that were assumed from SMAP (comprised of 8,625,000 warrants issued in SMAP’s initial public offering and 506,250 warrants issued in a private placement to SMAP’s sponsor concurrently with SMAP’s initial public offering), and 340,250 warrants were issued in connection with the financing transaction consummated concurrently with the Business Combination.

The warrants are accounted in accordance with the guidance contained in ASC 815-40-15-7D.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

The 9,131,250 warrants outstanding as of December 31, 2023, that were assumed from SMAP, are classified as equity-classified instruments, and the 340,250 warrants that were issued in connection with the financing transaction consummated concurrently with the Business Combination are classified as liability-classified instruments.

Segments and geographical information

Segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) to allocate resources and assess performance.

The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance.

Accordingly, the Company operates and manages its business as one operating segment.

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

United States

International

Total revenue, net

The Company holds 100 % of its assets within the United States.

Revenue Recognition

Revenue is accounted for under ASC 606, Revenue from Contracts with Customers through the following steps:

● Identify the contract with a customer;

● Identify the performance obligations in the contract;

● Determine the transaction price;

● Allocate the transaction price to performance obligations in the contract;

● Recognize revenue when or as the Company satisfies a performance obligation.

Revenue is recognized net of allowances for returns and any sales taxes collected from customers.

Revenue Sources

The Company’s revenues are derived from multiple sources.

The following are descriptions of principal revenue generating activities.

— Product Sales

The Company recognizes revenue from product sales at point of time, at the amount to which it expects to be entitled when control of the products is transferred to its customers.

Control is transferred at Free On Board (“FOB”) Destination.

Payment for products is collected within 30 – 90 days following transfer of control.

Product sales are considered one performance obligation.

— Software as a Service (“SaaS”) and Related Services

The Company sells SaaS subscriptions that comprise access to the cloud platform and technical support and upgrades of the software.

The software subscription is accounted for as service obligation.

The access to the cloud platform has stand-alone functionality and represents one performance obligation, and the technical support and upgrades of the software are considered distinct from another, are not considered critical for the functionality of the software, and are considered a separate stand ready performance obligation.

The Company’s SaaS subscription services are generally contracted for a period of 12 – 36 months.

Annual subscription payments are made in advance, are initially recognized as customer prepayments and revenue is recognized ratably over the subscription period.

— Ancillary Services

Ancillary services derived from on-site inspections, the calibration of infrared cameras, maintenance and training are recognized at point of time when service is provided to the customer.

Shipping and Handling

Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in cost of goods sold as incurred.

Transaction Price Allocated to Performance Obligations

The Company allocates the transaction price to each performance obligation identified in the contract on a relative stand-alone selling price (SSP) basis.

Contract Liabilities

Contract liabilities include billed and unbilled amounts resulting from in-transit shipments, as we have an unconditional right to payment upon the completion of all performance obligations.

Contract liabilities also include customer prepayments consisting of advances from customers related to products and SaaS subscriptions, as well as repair and service agreements, for which the Company has not yet recognized revenue.

Product Warranties

The Company provides a warranty for the repair or replacement of any defective products within one year of purchase.

Estimated future warranty costs are accrued and charged to cost of goods sold in the period that the related revenue is recognized.

These estimates are derived from historical data and trends of product reliability and costs of repairing and replacing defective products.

Accounts Receivable

Accounts receivables are stated at net realizable value.

The allowance for doubtful accounts is determined through an evaluation of the aging of the Company’s accounts receivable balances, and considers such factors as the customer’s creditworthiness, the customer’s payment history and current economic conditions.

A provision is recognized to bad debt expense and the allowance for doubtful accounts for accounts determined to be uncollectible.

Bad debt written-off and any recovery of bad debt write-off is applied to the allowance for doubtful accounts.

Customer Concentration

For the year ended December 31, 2023, one customer accounted for 82 % or $ 2,011 of accounts receivables and one customer accounted for 44 % or $ 2,374 of revenue.

For the year ended December 31, 2022, two customers accounted for 21 % or $ 317 and 10 % or $ 151 , respectively of accounts receivables and two customers accounted for 11 % or $ 799 and 6 %or $ 436 , respectively of revenue.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

The carrying values of cash and cash equivalents approximate their fair values due to the short-term nature of these instruments.

Cash in the Company’s bank accounts may exceed federally insured limits.

Restricted cash, if any, represents amounts that the Company is unable to access for operational purposes.

As of December 31, 2023, and 2022, the Company had no restricted cash.

Offering Costs

7 unchanged sentences

$ 2,686 was all charged to temporary equity and $ 137 was charged to additional paid-in capital.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets, primarily due to its short-term nature.

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and measured at fair value.

Conditionally redeemable common stock (including shares of common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity.

At all other times, common stock is classified as stockholders’ equity.

The Company’s Common stock will feature certain redemption rights that are considered to be outside of the Company’s control and will be subject to the occurrence of uncertain future events.

Accordingly, common stock subject to possible redemption will be presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”.

Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

Derivative assets and liabilities are classified in the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

The Company accounts for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”).

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and 2021.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company has identified the United States as its only “major” tax jurisdiction.

The Company is subject to income tax examinations by major taxing authorities since inception.

These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws.

The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

This assessment, which requires the use of professional judgment, is conducted at the time warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all of the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

The Company accounts for its outstanding warrants as equity-classified instruments.

Net Income (Loss) Per Common Stock

The Company complies with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

At December 31, 2022 and 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

As a result, diluted income (loss) per common stock is the same as basic income (loss) per common stock for the period presented.

The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each component of common stock for the year ended December 31, 2022 and for the period from May 14, 2021 (inception) through December 31, 2021:

For the period from May 14, 2021

For the Year Ended

(inception) through December 31,

December 31, 2022

Basic and diluted net income (loss) per common stock:

Allocation of net income (loss)

Basic and diluted weighted-average shares outstanding

Basic and diluted net income (loss) per share

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the federal depository insurance coverage of $250,000.

At December 31, 2022 and 2021, the Company had not experienced losses on this account.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments.

The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments.

ASU 2020-06 allows for a modified or full retrospective method of transition.

For smaller reporting companies, this update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted.

We are currently evaluating the impact this change will have on our financial statements.

Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

Note 3 — Initial Public Offering

On October 21, 2021, the Company sold 11,500,000 Units, including the full exercise of the underwriters’ over-allotment option to purchase 1,500,000 units, at a purchase price of $ 10.00 per Unit.

Each unit consists of one share of common stock, an aggregate of 11,500,000 shares, and three-quarters of one warrant (“public warrants”), an aggregate of 8,625,000 public warrants.

Each whole public warrant entitles the holder to purchase one share of common stock at an exercise price of $ 11.50 per whole share, subject to adjustment (see Note 7).

All of the 11,500,000 common stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s certificate of incorporation.

In accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” and with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity.

The common stock is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99.

If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period.

The Company recognizes changes in redemption value immediately as they occur.

Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount value.

The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital and accumulated deficit.

As of December 31, 2022 and 2021, the common stock reflected on the balance sheets are reconciled in the following table:

Gross proceeds

Proceeds allocated to Public Warrants

( 5,518,451 )

Redeemable common stock issuance costs

For the year ended December 31, 2023, the Company incurred transaction costs related to the Business Combination of approximately $ 7,595 which are included as a reduction in APIC on the consolidated statements of changes in shareholders’ equity.

The Company paid $ 3,910 in transaction costs related to legal, banking, and accounting advisory fees at the closing of the Business Combination.

Inventories are carried at the lower of cost or net realizable value and primarily consist of infrared cameras and various other components and parts.

The Company accounts for inventory using the weighted average cost method.

Inventory is evaluated and adjusted for excess or obsolete quantities when conditions exist to indicate that inventories are likely to be in excess of anticipated demand or are obsolete based upon the Company’s assumptions about future demand for its products.

At the end of each quarter and at year-end the Company evaluates its inventory based on i) its current operating plan to estimate the demand of inventories based on market environment, current portfolio of customers and upcoming purchase orders from customers, ii) full count of inventory at year end and 80 % coverage count on a quarterly basis to identify if there are any inventories that are not sold

in the operating business cycle, have slow movement and/or are obsolete, iii) assessing whether the costs of individual line items in inventory are greater than net realizable value and should be impaired.

Inventory is evaluated and adjusted for excess or obsolete quantities when conditions exist to indicate that inventories are likely to be more than anticipated demand or are obsolete based upon the Company’s assumptions about future demand for its products.

On October 8, 2022, the Company incurred a casualty loss.

The Company performed a physical inventory count of all inventories on January 19, 2023, accounting for a casualty loss of $ 1,376 related to a flood in the Beaumont warehouse.

The Company did not identify material count discrepancies between its inventory count and its corresponding inventory/financial accounting records and did not identify any material weakness in controls for inventories as of December 31, 2022.

This amount is offset by insurance recoveries of $ 1,221 , resulting in a net $ 155 of casualty losses, net of recoveries presented on the consolidated statement of operations.

Of the $ 1,221 in insurance recoveries, $ 225 was received in cash in December 2022 and the remaining $ 996 was received in cash in January 2023.At the end of each quarter, the Company reviews short-term and long-term classification of inventories related to infrared cameras, as well as to replacement, maintenance and spare parts.

Using similar analyses and sources of information as for the inventory write down to net realizable value assessment, the Company makes the following determinations:

● The Company classifies as short-term inventories that are expected to be sold in the subsequent twelve months.

● The Company recognizes an inventory write down for inventories that cannot be sold in the market and net realizable value is below cost.

● The Company classifies as long-term inventories the inventories that are not expected to be sold in the following twelve months but for which ones there is an active market, and the Company has not identified any indicator of impairment.

For the year ended December 31, 2023, the Company updated its operating plan and recorded an inventory write down of $ 1,689 , which were charged to costs of goods sold in the Consolidated Statements of Operations, primarily related to products that are not expected to be sold, based on customer demand and current market conditions.

No inventory write down was recognized for the year ended December 31, 2022.

Property, Plant and Equipment

Property, plant, and equipment is recorded at cost and is depreciated on the straight-line basis over its estimated useful life.

Upon retirement or sale, the cost of assets disposed, and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operating income (loss).

Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred.

All property, plant, and equipment is depreciated (to the extent of estimated salvage values) on the straight-line method based on estimated useful lives of the assets as follows:

Estimated Useful Life

25 - 39 years

Computer equipment

Furniture and fixtures

Machinery and equipment

Capitalized Software

The Company capitalizes certain internal and external costs incurred to acquire or create internal use software in the development stage.

Internal costs capitalized are directly attributable to the development of the software.

Capitalized software is included in property, plant and equipment and is amortized over 5 years on the straight-line method once development is complete.

The Company expenses advertising costs as incurred.

Advertising costs were $ 345 and $ 609 for the years ended December 31, 2023, and 2022, respectively.

Long-Lived Assets

The Company reviews the carrying value of property, plant and equipment and other long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable.

If a long-lived asset is tested for recoverability and the undiscounted estimate future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value.

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

No impairment was recognized for the years ended December 31, 2023, and 2022.

Leases are accounted under ASC 842, Leases.

The Company’s lease portfolio consists of real estate leases.

Some leases have the option to extend or terminate the lease and the Company recognizes these terms when it is reasonably certain that the option will be exercised.

As a lessee, the Company determines if an arrangement is a lease at commencement.

The Right-of-Use (ROU) lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments related to the lease.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

We use incremental borrowing rates based on information available at the commencement date to determine the present value of our lease payments.

The Company leases relate to its corporate office and production facilities.

As of December 31, 2023, and 2022, all leases are classified as operating leases.

The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes .

The income tax accounting guidance results in two components of income tax expense:

current and deferred.

Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues.

The Company recognizes a net deferred tax asset or liability based on the tax effects of the differences between the book and tax basis of assets and liabilities.

Enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from the change in the net deferred tax asset or liability between periods.

The deferred tax asset is reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained.

Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.

The Company does not have any uncertain tax positions that require recognition or measurement in the Company’s consolidated financial statements.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations.

Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.

ASC 740, “Income Taxes,” requires the Company to reduce its deferred tax assets by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of appropriate character during the periods in which those temporary differences become deductible.

Management considers the weight of available evidence, both positive and negative, including the scheduled reversal of deferred tax assets and liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment.

To the extent the Company believes that it does not meet the test that recovery is more likely than not, it establishes a valuation allowance.

To the extent that the Company establishes a valuation allowance or changes this allowance in a period, it adjusts the tax provision or tax benefit in the consolidated statement of operations.

Management uses its best judgment in determining provisions or benefits for income taxes, and any valuation allowance recorded against previously established deferred tax assets.

The Company has measured the value of deferred tax assets for the year ended December 31, 2023, based on the cumulative weight of

positive and negative evidence that exists as of the date of the financial statements.

Should the cumulative weight of all available positive and negative evidence change in the forecast period, the expectation of realization of deferred tax assets existing as of December 31, 2023, prospectively may change.

As a result, the Company established a valuation allowance based on the weight of available evidence, both positive and negative, including results of recent and current operations and our estimates of future taxable income or loss.

In order to determine the amount of deferred tax assets or liabilities, as well as the valuation allowances, the Company used estimates and assumptions regarding future taxable income and other business considerations.

Changes in these estimates and assumptions, including changes in tax laws and other changes impacting the ability to recognize the underlying deferred tax assets, could require adjustments to the valuation allowances.

Shared-Based Compensation

The Company issues share-based awards to certain employees and non-employees in the form of stock options, which are measured at fair value at the date of grant.

The fair value determined at the grant date and is expensed on a straight-line basis over the vesting period.

The share-based awards are classified as equity.

Share-based compensation expense is included within selling and general administrative expense in the consolidated statements of operations.

The Company estimates grant date fair value using the Black-Scholes-Merton option-pricing model.

The use of a valuation model requires management to make certain assumptions with respect to selected model inputs.

The Company grants stock options at exercise prices determined equal to the fair value of common stock on the date of the grant.

The fair value of the Company’s common stock is based on the Company’s historical financial performance and observable arms-length sales of the Company’s capital stock.

The expected term represents the period that the share-based awards are expected to be outstanding.

The stock option grants are “plain vanilla” and the Company determines the expected term using the simplified method as provided by the Securities and Exchange Commission.

The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.

The risk-free rate for the expected term of the options is based on the U.S.

Treasury yield curve at the date of the grant.

Forfeitures are recognized as they occur (Note 10).

Contingencies

The Company accrues costs relating to litigation claims and other contingent matters when such liabilities become probable and reasonably estimable.

Such estimates may be based on advice from third parties or on management’s judgment, as appropriate.

Revisions to contingent liabilities are reflected in the consolidated statements of operations in the period in which different facts or information become known or circumstances change that affect the Company’s previous judgments with respect to the likelihood or amount of loss.

Amounts paid upon the ultimate resolution of contingent liabilities may be materially different from previous estimates and could require adjustments to the estimated reserves to be recognized in the period such new information becomes known.

In circumstances where the most likely outcome of a contingency can be reasonably estimated, the Company accrues a liability for that amount.

Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than others, the low end of the range is accrued.

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.

Deferred transaction costs

Deferred transaction costs represent amounts paid for legal, consulting, and other offering expenses in conjunction with the future raising of additional capital to be performed within one year.

These costs are netted against additional paid-in capital after the Merger was complete.

Tariff refund

Tariff refund includes refunds from the U.S.

Customs and Border Protection (“CBP”) resulting from overpayment of customs duties, taxes, and fees.

New Accounting Pronouncements

Recently Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which amends the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

As the Company is a smaller reporting company, ASU 2016-13 is effective for the Company’s annual reporting periods, and interim periods within those years, beginning after December 15, 2022, and requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements Financial Instruments-Credit Losses (Topic 326).

ASU 2019-04 provides narrow-scope amendments to help apply ASU 2016-13 and is effective with the adoption of ASU 2016-13.

The Company adopted ASU 2016-13 and ASU 2019-04 on January 1, 2023, and it did not have a material impact on its financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the FASB issued Accounting Standards Update No.

2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures.

The amendments require disclosure of incremental segment information on an annual and interim basis.

The amendments also require companies with a single reportable segment to provide all disclosures required by this amendment and all existing segment disclosures in Accounting Standards Codification 280, Segment Reporting.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

The Company does not expect the adoption of the amendments to have a material impact on its financial statements.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, Income Taxes - Improvements to Income Tax Disclosures.

The amendments require (i) enhanced disclosures in connection with an entity’s effective tax rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction.

The amendments are effective for annual periods beginning after December 15, 2024.

The Company does not expect the adoption of the amendments to have a material impact on its financial statements.

Note 3 — Reverse Recapitalization

On December 19, 2023, the Merger was accounted for as a reverse recapitalization under U.S.

Legacy ICI was the accounting acquirer and Legacy SMAP was the accounting acquiree for financial reporting purposes.

Accordingly, for accounting purposes, the financial statements of the Company represent a continuation of the financial statements of Legacy ICI with the Merger being treated as the equivalent of ICI issuing stock for the net assets of Legacy SMAP, accompanied by a recapitalization.

The net assets of Legacy SMAP are stated at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Merger are presented as those of Legacy ICI.

The following table reconciles the elements of the Merger to the consolidated statement of cash flows for the year ended December 31, 2023:

Recapitalization and associated transactions

fees to underwriters and advisors

Net cash due to Merger recapitalization

Issuance of Financing notes

Net cash received from Financing transaction and Merger recapitalization

The number of outstanding shares of common stock of the Company as of December 31, 2023, is summarized as follows:

Shares by Type

Number of shares

ICI Class A Common Stock outstanding previous to the Merger

Number of Shares issued at the date of the business combination (Recapitalization)

SMAP Class A Common Stock outstanding previous to the Merger

Redemption of SMAP Class A previous to the Merger

( 1,493,265 )

Remeasurement of carrying value to redemption value

Common stock of shares subject to possible redemption at December 31, 2021

Remeasurement of carrying value to redemption value

Common stock of shares subject to possible redemption at December 31, 2022

Note 4 — Private Placement

Simultaneously with the closing of the IPO, the Company’s Sponsor, and the representative of the underwriters and/or certain of their designees or affiliates (collectively, the “initial stockholders”) purchased an aggregate of 675,000 Private Placement Units at a price of $ 10.00 per unit in a private placement, for an aggregate purchase price of $ 6,750,000 , in a private placement.

Each unit consists of one share of common stock, an aggregate of 675,000 shares, and three-quarters of one warrant (“private warrants”), an aggregate of 506,250 private warrants.

Private Placement Units are identical to the units sold in the IPO, except that the Private Placement Units (including the private warrants or private shares issuable upon exercise of such warrants) will not be transferable, assignable or saleable until 30 days after the Business Combination.

The initial stockholders have agreed not to transfer, assign or sell any of the Private Placement Units and underlying common stock until after the completion of the initial Business Combination.

Additionally, the initial stockholders have agreed to (i) waive their redemption rights with respect to their private shares in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their private shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100 % of the public shares if the Company does not complete the initial Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to their private shares if the company fail to complete the initial Business Combination within the Combination Period.

Total Class A Shares issued to former SMAP shareholders

Number of Basic Share issued at the Merger and Total Common Stock as of December 31, 2023

Pursuant to the terms of the Business Combination Agreement, each Transaction RSU Award immediately prior to the closing of the Business Combination, and which based on their terms did not terminate upon the closing of the Business Combination, remained outstanding.

In the case each Transaction RSU Award, they were converted based on the number of shares of Company common stock equal to the number of shares of Legacy ICI common stock subject to that award, multiplied by the Exchange Ratio.

Class A Common Stock

Pursuant to the Business Combination Agreement, at the effective time of the Merger each outstanding share of Legacy ICI common stock ( 804,194 shares) were converted into common stock of the Company based on the Exchange Ratio described in Note 1.

Under the Business Combination Agreement, the surviving company would have been obligated under certain circumstances to issue 2.4 million shares of common stock following the Business Combination (the “Earnout Shares”).

The Earnout Shares would be issued pro rata to the holders of Legacy ICI common stock prior to the Business Combination, under certain qualifying conditions, if either (a) during the period beginning six months after the closing of the Business Combination and ending on December 31, 2024, the common stock of the Company achieved a market price of $ 12.50 per share for a specified number of days, or the Company consummated a transaction in which its stockholders have the right to receive consideration implying a value of at least $ 12.50 per share, or (b) the Company achieved revenue of $ 68.5 million during the fiscal year ending December 31, 2024.

The earnout provision under the Business Combination Agreement was subsequently cancelled on March 7, 2024.

Financing Transaction

In connection with the Business Combination, a number of purchasers (each, a “Financing Investor”) purchased from the Company an aggregate of $ 6.8 million in convertible promissory notes in connection with the closing of the Business Combination (the “Financing Notes”).

Of the $ 6.8 million in Financing Notes, $ 1.3 million were issued in exchange for cancellation of an equal amount of existing promissory notes of Legacy SMAP (rather than having such notes repaid at the closing of the Business Combination), $ 1.0 million were rolled over from an existing related party promissory note of Legacy ICI (rather than having such note repaid at closing of the Business Combination), and $ 4.5 million were cash proceeds to the combined company.

Each Financing Note will mature on the third anniversary of the closing of the Business Combination (the “Maturity Date”) and is convertible at any time at the Financing Investors’ option at a conversion price of $ 10.00 per share, subject to certain customary adjustments (such shares issuable upon conversion of Financing Notes, the “Conversion Shares”).

Except with the consent of the

holder of the applicable Financing Note (the “Holder”), we may not repay any principal amount of any Financing Note prior to the Maturity Date.

We will pay interest on the aggregate unconverted and then outstanding principal amount of such notes at the rate of 9 % per annum, payable (i) quarterly on January 1, April 1, July 1 and October 1, beginning April 1, 2024, (ii) on each date on which a Holder elects to convert any amount of Financing Notes and (iii) on the Maturity Date (each such date, an “Interest Payment Date”), in cash or, if the Holder elects to receive interest on the Financing Note in the form of shares of our common stock.

If the Holder elects to receive interest in shares of our common stock, such interest shall be payable at a rate of 11 % per annum in duly authorized, validly issued, fully paid and non-assessable shares of our common stock at a volume-weighted average price for the 30 consecutive trading days ending on the trading day immediately prior to the applicable Interest Payment Date (which shall not be less than $ 1.00 ) (such shares payable in lieu of cash interest, the “Interest Shares”).

Failure to pay interest is deemed an event of default and the interest rate shall increase automatically to 15 % per annum until repaid.

As part of the financing transaction, we also issued warrants (the “Financing Warrants”) to the Financing Investors to purchase an aggregate of 340,250 shares of our common stock (such shares issuable upon exercise of the Financing Warrants, the “Financing Warrant Shares”), at an exercise price of $ 11.50 per Financing Warrant Share.

The Financing Warrants were allocated ratably among the Financing Investors in accordance with their respective investment amounts.

The Financing Warrants are exercisable at any time before the fifth anniversary of the closing of the Business Combination.

The Financing Warrants are not subject to any redemption provision, and can be exercised for cash or on a cashless basis at the discretion of the holder.

In addition, in order to induce the Financing Investors’ investments, certain holders of SMAP’s founder shares and stockholders of Legacy ICI transferred, and Legacy ICI issued prior to the closing of the Business Combination for exchange at the Exchange Ratio at Closing, an aggregate of 680,500 shares of our common stock to the Financing Investors at the closing.

Note 4 — Revenue

The following table summarizes the Company’s revenue disaggregated by type of product and service:

Product sales

Software as a service and related services

Ancillary services

Total revenue

In 2023 and 2022, $ 4,646 and $ 6,920 of the Company’s revenues were recognized as point in time and $ 784 and $ 348 revenues were recognized over time, respectively.

Contract Liabilities

Contract liabilities consist of sales of SaaS subscriptions and related services, as well as repair and service agreements, where in most cases, the Company receives prepayments and recognizes revenue over the support term of 12 - 36 months.

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

The following table summarizes the change in contract liabilities:

Contract liabilities

Balance at January 1, 2022

Revenue recognition

Balance at December 31, 2022

Revenue recognition

Balance at December 31, 2023

Contract liabilities, noncurrent

Remaining performance obligations

As of December 31, 2023, the Company had $ 2,065 in remaining performance obligations, of which $ 1,944 will be completed by the year ended December 31, 2024 , and $ 121 will be completed by the year ended January 31, 2028 .

Accounts Receivables Allowance

The following table summarizes the change in the accounts receivables allowance:

Beginning balance

Reversal of account receivables allowance

Bad debt expense

Ending balance

Note 5 — Property, Plant and Equipment

The following table summarizes our property, plant and equipment:

Computer equipment

Furniture and fixtures

Machinery and equipment

Internal-use software

Property, plant and equipment, gross

accumulated depreciation

Property, plant and equipment, net

Depreciation expenses were $ 872 and $ 561 for the years ended December 31, 2023, and 2022, respectively.

Note 6 — Other Current Assets

The following table summarizes our other current assets:

Prepaid expenses

Other receivables

Total other current assets

As of December 31, 2022, other receivables reflect the amount recoverable by the insurance, related to the damage of inventories in the production facility in Beaumont, Texas as noted in Note 2.

Note 7 — Inventories

The following table summarizes inventories:

Infrared cameras

Replacement, maintenance, and spare parts

Inventories, current

Infrared cameras

Replacement, maintenance, and spare parts

Inventories, noncurrent

Total inventories

For the year ended December 31, 2023, the Company recorded an inventory write down of $ 1,689 , which were charged to costs of goods sold in the Consolidated Statements of Operations, related to products that are not expected to be sold in one year based on customer demand and current market conditions.

No inventory write down was recognized for the year ended December 31, 2022.

The following table summarizes the amount of inventory write-downs to net realizable value recorded for each period (in thousands):

Amount of inventory write-down to net realizable value

Note 8 — Accrued Expense

The following table summarizes accrued expenses:

Professional fees

Salaries and wages

Interest payable

Taxes payable

Total accrued expense

Note 9 — Debt

Wells Fargo Line of Credit

On April 2, 2021, the Company entered into an asset based revolving credit agreement with Wells Fargo Bank, National Association, as amended on June 18, 2021 (the “Credit Agreement”).

The Credit Agreement provided an aggregate revolving credit commitment of $ 15,000 subject to a borrowing base consisting of eligible accounts receivable and inventory.

The Credit Agreement included borrowing capacity available for letters of credit and revolving loans available for working capital and other general corporate purposes.

This Credit Agreement had a maturity date of April 3, 2023.

The interest rate applicable to the Credit Agreement was either (i) the Base Rate, which is the higher of the Prime Rate, the Federal Funds Rate plus 0.5 % and the Daily Floating LIBOR Rate plus 1.0 %, or (ii) LIBOR plus a margin of 2.0 % .

The Company was subjected to a non-use fee of 0.375 % on the daily average unused portion of the commitment under the Credit Agreement.

Obligations under the Credit Agreement were secured (with certain exceptions) by first priority security interests on all of the Company’s assets.

The Credit Agreement permitted voluntary prepayments (without reducing availability for future revolving borrowings) and voluntary commitment reductions at any time, in each case without premium or penalty.

In March and May 2022, the Company borrowed $ 400 and $ 1,000 , respectively and in June 2022, the Company repaid the entire $ 1,400 borrowing.

On July 12, 2022, the Company voluntarily reduced the revolving credit commitment to zero ($ 0 ) and terminated the Credit Agreement.

At the time of the termination, the interest expense was $ 10 and termination fees were $ 51 , which were charged to selling, general and administrative expenses in the Consolidated Statements of Operations.

B1 Bank Line of Credit

On January 22, 2023, the Company entered into an asset-based revolving credit agreement with B1 Bank (the “Line of Credit”).

The Line of Credit provided an aggregate revolving credit commitment of $ 3,000 , subject to a borrowing base consisting of eligible accounts receivable and inventory.

The Line of Credit included borrowing capacity available for letters of credit and revolving loans available for working capital and other general corporate purposes.

The maturity date is January 22, 2024.

The interest rate applicable to the Credit Agreement is 8.5 % and is secured by inventories and cash flows.

In March and June 2023, the Company borrowed $ 300 and $ 600 , respectively.

In December 2023, the Company repaid the entire $ 900 borrowing.

Throughout 2023, the Company paid $ 52 in interest.

Shareholder Promissory Note

On July 14, 2020, the Company issued a promissory note to its majority shareholder in an amount of $ 29,718 (the “Shareholder Promissory Note”).

The Shareholder Promissory Note bore interest at the rate of 0.45 % per annum, with all principal and accrued interest due and payable in full on July 14, 2025.

The Shareholder Promissory Note was unsecured.

Principal and interest payments were made by the Company in cash or in kind prior to maturity.

During the years ended December 31, 2023, and 2022 the Company made principal cash payments of $ 100 and $ 100 , respectively.

The Company received additional proceeds in the amount of $ 200 in 2022.

On December 31, 2022, the principal outstanding balance was $ 18,347 and accrued unpaid interest was $ 224 .

Interest expenses for the years ended December 31, 2023, and 2022 were $ 30 and $ 83 , respectively.

Interest expense is paid-in-kind.

On May 31, 2023, the Company completed the conversion of the outstanding principal and accrued and unpaid interests of the Shareholder Promissory Note into shares of Class A Common Stock.

At the time of conversion, the total face value of the Shareholder Promissory Note was $ 18,501 , comprising $ 18,247 in principal and $ 254 in accrued interest.

In exchange for the contribution of the Shareholder Promissory Note, the Company issued 142,028 shares of its Class A Common Stock to the creditor, in accordance with ASC 405-20-40, “Liabilities - Extinguishments of Liabilities - Derecognition”.

No cash was exchanged as part of this transaction.

Related Party Promissory Notes

On August 9, 2022, the Company borrowed $ 1,000 under an unsecured non-interest-bearing promissory note with a related party to fund short-term working capital needs.

The promissory note shall be payable in full on any future date on which the lender demands repayment On December 19, 2023, in connection with the Business Combination, the promissory note was exchanged for an equal amount of Financing Notes which resulted in loss on the extinguishment of debt of $ 594 recorded under loss on financing transaction within the Consolidated Statements of Operations.

In June 2023, the Company borrowed $ 375 under an unsecured non-interest-bearing promissory note with a related party to fund short-term working capital needs.

The Related Party Promissory Note shall be payable in full on any future date on which the lender

demands repayment.

The Notes have a maturity date of 12 months from the effective date and beared an interest rate of 12 %.

Accrued unpaid interest was $ 25 on December 31, 2023.

On December 8, 2023, the Company borrowed $ 200 under an unsecured non-interest-bearing promissory note with a related party to fund short-term working capital needs.

The Related Party Promissory Note shall be payable in full on any future date on which the lender demands repayment.

Legacy SMAP Related Party Promissory Notes

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 has elected to extend repayment of the promissory notes beyond the closing.

The principal balance may be prepaid at any time.

On December 19, 2023, in connection with the Business Combination, $ 1,324 of the promissory notes was exchanged for an equal amount of financing notes which resulted in loss on the extinguishment of debt of $ 787 recorded under loss on financing transaction within the Consolidated Statements of Operations.

Convertible Notes

In September 2023, August 2023, July 2023, June 2023, May 2023, January 2023 and December 2022, Legacy ICI issued unsecured convertible notes with several accredited private investors in an aggregate principal amount of $ 100 , $ 500 , $ 400 , $ 350 , $ 100 , $ 150 and $ 950 , respectively.

The notes had a maturity date of 6 months from the effective date and beared a paid-in-kind interest rate of 10 % per annum which was increased to 12 % effective on February 15, 2023.

In the event of and prior to the consummation of an initial public offering (“IPO”) or de-SPAC transaction, the unpaid principal balance and accrued interest were to be automatically converted into ICI Class A Common Stock at the imputed price per share of common stock of the IPO, discounted at 50 %.

On December 19, 2023, in connection with the Business Combination, Legacy ICI completed the conversion of the outstanding principal and accrued and unpaid interests of the convertible notes into shares of Class A Common Stock.

At the time of conversion, the total face value of the convertible notes was $ 2,754 , comprising $ 2,550 in principal and $ 204 in accrued interest.

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 described above.

Each Financing Note will mature on the third anniversary of the closing of the Business Combination (the “Maturity Date”) and is convertible at any time at the holder’s option at a conversion price of $ 10.00 per share, subject to certain customary adjustments (such shares issuable upon conversion of Financing Notes, the “Conversion Shares”).

Except with the consent of the holder of the applicable Financing Note, the Company may not repay any principal amount of any Financing Note prior to the Maturity Date.

The Company will pay interest on the aggregate unconverted and then outstanding principal amount of such notes at the rate of 9 % per annum, payable (i) quarterly on January 1, April 1, July 1 and October 1, beginning April 1, 2024, (ii) on each date on which a holder elects to convert any amount of Financing Notes and (iii) on the Maturity Date (each such date, an “Interest Payment Date”), in cash or, if the holder elects to receive interest on the Financing Note in the form of shares of the Company’s common stock.

If the Holder elects to receive interest in shares of the Company’s common stock, such interest shall be payable at a rate of 11 % per annum in duly authorized, validly issued, fully paid and non-assessable shares of the Company’s common stock at a volume-weighted average price for the 30 consecutive trading days ending on the trading day immediately prior to the applicable Interest Payment Date (which shall not be less than $ 1.00 ) (such shares payable in lieu of cash interest, the “Interest Shares”).

Failure to pay interest is deemed an event of default and the interest rate shall increase automatically to 15 % per annum until repaid.

Debt Obligations and Schedule Maturities

As of December 31, 2023, aggregate principal repayments of total debt for the next five years were as follows:

Note 10 — Share-Based Compensation

Stock Options

On October 9, 2020, the Company implemented the 2020 Equity Incentive Plan, (the “Plan”) pursuant to which the Company’s Board of Directors may grant stock options to employees and non-employees.

The Plan initially authorized grants to purchase up to 26,500 shares of authorized but unissued Class B non- voting Common Stock of Legacy ICI.

In December 2020, May 2021 and December 2021, the Plan was amended to increase the number of stock options granted for issuance under the Plan by an additional 43,257 , 40,000 and 40,000 shares, respectively.

As of December 31, 2022, the amount of stock options granted was 149,757 shares.

Stock options could be granted under the Plan with an exercise price equal to the share’s fair value at the grant date.

The options vest and become fully exercisable over service periods ranging from two to four years from the date of grant.

The options expire ten years after issuance.

On December 19, 2023, in connection with the Business Combination, which triggered accelerated vesting of all outstanding stock options, resulted in an additional $ 845 share-based compensation expense.

The grant date fair value of each option award is estimated on the date of grant using the Black-Scholes- Merton option-pricing model based on the following weighted average assumptions:

Valuation assumptions:

Exercise price per share

Expected term (in years)

Expected share volatility

Expected dividend yield

Risk free rate

The following table summarizes the Company’s stock option activity during the year ended December 31, 2023 and 2022:

exercise price

remaining term

Balance at January 1, 2022

Balance at December 31, 2022

Exercisable at December 31, 2022

exercise price

remaining term

Balance at January 1, 2023

Balance at December 31, 2023

Exercisable at December 31, 2023

The weighted average grant-date fair value of options granted during the years 2023 and 2022 was $ 33.50 and $ 30.91 , respectively.

110,916 and zero shares were exercised during the years ended December 31, 2023, and 2022, respectively.

Total share-based compensation expense related to stock options recognized in selling, general and administrative expenses in 2023 and 2022 was $ 1,197 and $ 644 , respectively.

At December 31, 2023 and 2022, there was no ne and $ 1,129 , respectively, of total unrecognized compensation cost related to unvested stock options granted under the Plan.

The total fair value of shares vested during the years ended December 31, 2023, and 2022 was $ 1,197 and $ 841 , respectively.

Restricted Stock Units

Prior to the effective time of the Business Combination, the Company granted 1,886,166 Transaction RSU Awards to certain employees.

Each Transaction RSU Award vests on January 1, 2024.

In addition, each Transaction RSU Award is expected to be settled in twelve substantially equal monthly installments starting on the date following the first anniversary of the closing of the Business Combination.

An additional award of restricted stock units is expected to be granted by the Company to certain employees upon the effectiveness of the Form S-8 that will register common stock issuable under the Company’s 2023 incentive award plan, which is expected to occur in 2024.

Presented below is a summary of the status of outstanding RSUs, including showing the vesting status based on the service and criteria.

Average Grant

Date Fair Value

Non-vested at January 1, 2023

Nonvested at December 31, 2023

As of December 31, 2023, there are 1,886,166 RSUs outstanding, all with only service conditions.

None have vested as of December 31, 2023.

All RSUs were assigned a fair value of $ 6.82 , which is based on the fair value of the Company’s common stock on the date of the grant.

Stock compensation expense for Transaction RSU Awards have only service vesting conditions.

Expense will be recognized on a straight-line basis for all RSU awards with only service conditions.

In the event that a RSU grant holder is terminated before the award is fully vested for RSUs granted under the 2023 incentive award plan, the full amount of the unvested portion of the award will be recognized as a forfeiture in the period of termination.

We recognized a total shared based compensation expense related to RSUs of $ 12,864 during the year ended December 31, 2023.

Note 11 — Shareholders Equity

Total authorized capital stock of the Company as of December 31, 2023 is 300,000,000 shares of common stock and 10,000,000 shares of preferred stock.

As of December 31, 2023, there were 11,956,823 shares of common stock issued and outstanding and no shares of preferred stock outstanding.

As of December 31, 2022, there were 5,292,384 shares of Legacy ICI Class A common stock issued and outstanding .

Note 12 — Earnings (loss) per Share

Basic earnings (loss) per share is computed in accordance with ASC 260, Earnings Per Share, by dividing the net loss attributable to holders of common stock by the weighted average shares of common stock outstanding during the period.

Diluted earnings (loss) per share is computed by dividing net income by the weighted average shares of common stock outstanding, including the dilutive effects of stock options.

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

Since the Company was in a net loss position for the years ended 2023 and 2022, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive.

Basic and Diluted Net loss attributable to common stockholders

Weighted average number of shares:

Basic - Common Stock

Dilutive effects, as shown separately below

Unvested Stock Options

Diluted - Common Stock

Basic Net loss per share attributable to common stockholders

Diluted Net loss per share attributable to common stockholders

The diluted earnings (loss) per share is the same as the basic earnings (loss) share for years ended December 31, 2023 and 2022 as all potential common shares including stock options are anti-dilutive and are therefore excluded from the computation of diluted net profit per share.

The table above does not include (i) up to 680,500 shares of new Common Stock that will be issuable upon conversion of $ 6,805 in Financing Notes at a conversion rate of $ 10.00 per share, (ii) up to 2,245,650 shares of new Common stock that may be issuable as interest payments on the Financing Notes, (iii) up to 8,625,000 shares of new 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, (iv) up to 2,400,000 Earnout Shares that will be issuable if certain conditions are met (v) up to 506,250 shares of new Common Stock that will be issuable upon exercise of the Company’s outstanding private warrants at an exercise price of $ 11.50 per share, (vi) up to 340,250 shares of new Common Stock that will be issuable upon exercise of the Financing Warrants at an exercise price of $ 11.50 per share for cash, (vii) shares of new Common Stock that will be issuable upon the exercise of Company’s Options, (viii) shares of new Common Stock underlying the Company’s RSU Awards or (ix) shares of new Common Stock that will be available for issuance under the 2023 Incentive Award Plan, which will initially be equal to 12 % of the fully-diluted shares as of the Business Combination (excluding the Earnout Shares and shares payable as interest on the Financing Notes).

Note 13 — Related Party Transactions

Founder Shares

In June 2021, the initial stockholders paid $ 25,000 in exchange for 2,875,000 shares of common stock (the “Founder Shares”).

The number of Founder Shares outstanding was determined based on the expectation that the total size of the IPO would be a maximum of 11,500,000 Units if the underwriter’s over-allotment option is exercised in full, and therefore that such Founder Shares would represent 20 % of the outstanding shares after the IPO.

As of December 31, 2022 and 2021, of the 2,875,000 shares outstanding, none of which were subject to forfeiture due to the full exercise of the over-allotment option by the underwriters upon the consummation of the IPO.

The initial stockholders have agreed not to transfer, assign or sell (i) any of the Founder Shares until nine months after the date of the consummation of the initial Business Combination or earlier if, subsequent to the initial Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their common stock for cash, securities or other property or (ii) any of the Private Placement Units until the completion of the initial Business Combination.

The representative’s Private Placement Units are identical to the Units sold in the IPO except that they may not (including the common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until after the completion of the initial Business Combination.

Additionally, for so long as the warrants underlying the Private Placement Units are held by the representative and its designees, they will not be exercisable more than five years from the commencement date of sales in the IPO in accordance with FINRA Rule 5110(g)(8)(A).

Promissory Note — Related Party

The Sponsor agreed to loan the Company up to $ 400,000 to be used for a portion of the expenses of the IPO.

These loans were non-interest bearing, unsecured and due at the earlier of February 28, 2022 or the closing of the IPO.

At December 31, 2021, the outstanding balance under the promissory note of $ 323,190 had been paid in full and the unsecured promissory note is no longer available to the Company.

As of December 31, 2022 and 2021, no amounts were outstanding under the unsecured promissory note.

Working Capital Loans

In order to finance transaction costs in connection with an intended initial Business Combination, the initial stockholders, officers and directors and their affiliates may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”).

The Working Capital Loans would be evidenced by promissory notes.

In the event that the Company is unable to consummate an initial Business Combination, the Company may use a portion of the offering proceeds held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment.

If the Company consummates an initial Business

Combination, the notes would either be paid upon consummation of the initial Business Combination, without interest, or, at the lender’s discretion, up to $ 1,000,000 of the notes may be converted upon consummation of the Business Combination into additional Private Placement Units at a price of $ 10.00 per unit (which, for example, would result in the holders being issued 100,000 units if the full amount of notes are issued and converted).

At December 31, 2022 and 2021, no such Working Capital Loans were outstanding.

Administrative Service Fee

The Company entered into an administrative services agreement on October 18, 2021, pursuant to which the Company will pay the Sponsor a total of $ 10,000 per month for office space, utilities, secretarial support and other administrative and consulting services.

Upon completion of the Company’s initial Business Combination or its liquidation, the Company will cease paying these monthly fees.

At December 31, 2022 and 2021, the Company had accrued $ 21,356 and $ 24,516 , respectively, of administrative service fees.

For the year ended December 31, 2022, the Company incurred $ 120,000 of administrative service fees expense.

For the period from May 14, 2021 (inception) through December 31, 2021, the Company incurred $ 24,516 of administrative service fees expense.

Included in the Administrative Service Fee paid to the Sponsor is $ 100,000 the Sponsor pays to Lawson Gow, the Company’s Chief Strategy Officer, in connection with services related to identifying and consummating the initial Business Combination.

Related Party Investments

In December 2022, the Chief Executive Officer of the Company, and a director of the Company, loaned a total of $ 600,000 to Infrared Cameras Holdings, Inc.

(“the Borrower”) bearing interest at 10 % per annum increasing to 12 % per annum on February 15, 2023 .

Interest is due upon the Maturity Date, which is six months from the effective dates of the notes.

The unpaid principal balance of these notes and accrued and unpaid interest shall be converted into shares of common stock, par value $ 0.01 per share, of Borrower at the Automatic Conversion Price (“Automatic Conversion”), described below.

The automatic conversion date is immediately before the Borrower consummates an initial public offering or consummates a business combination resulting in the Borrower’s shares of common stock being publicly traded.

The Automatic Conversion Price is approximately 50% less than the publicly traded price if the Borrower consummates an initial public offering, or 50% less than the assigned value per share if the Borrow consummates a business combination resulting in the Borrower’s shares of common stock being publicly traded.

Shareholder and Related Party Promissory Notes

The Company leases its corporate office and one production facility from its majority shareholder under three operating lease agreements.

The Company paid the majority shareholder total lease payments $ 163 , for the years ended December 31, 2023, and 2022, under these lease agreements.

Note 14 — Leases

Operating leases

The Company leases consist of operating leases related to corporate offices and production facilities.

Supplemental Consolidated Balance Sheet information for operating leases on December 31, 2023, and 2022, is as follows:

Right-of-use assets, net

Right-of-use liabilities, current

Components of operating lease cost for the twelve months ending December 31, 2023, and 2022:

Components operating lease cost

Operating lease cost

Short-term leases

For the years ended December 31, 2023, and 2022, the Company incurred operating lease expense totaling $ 174 and $ 225 , respectively, and operating lease expense was recognized on a straight-line basis over the term of the lease.

Remaining operating lease term and discounted rates as of December 31, 2023, and 2022, are as follows:

Weighted-average remaining lease term (years)

Weighted-average discount rate

Supplemental cash flow information related to leases for the twelve months ending December 31, 2023, and 2022, is as follows:

Right of use assets obtained in exchange for lease liabilities

Cash paid for amounts included in the measurement of lease liabilities

Cash paid for short term operating leases

Operating lease payments

Maturities of operating lease liabilities for continuing operations under the new lease standard as of December 31, 2023, are as follows:

For the twelve months ending December 31,

Total operating lease payments

imputed interest

Present value of operating lease liabilities

Note 15 — Commitments and Contingencies

Registration Rights

The initial stockholders and their permitted transferees can demand that the Company registers the founder shares, the Private Placement Units and the underlying private shares and private warrants, and the units issuable upon conversion of Working Capital Loans and the underlying common stock and warrants, pursuant to an agreement to be signed prior to or on the date of the IPO.

The holders of such securities are entitled to demand that the Company registers these securities at any time after the Company consummates an initial Business Combination.

Notwithstanding anything to the contrary, any holder that is affiliated with an underwriter participating in the IPO may only make a demand on one occasion and only during the five-year period beginning on the commencement date of sales in the IPO.

In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination;

provided that any holder that is affiliated with an underwriter participating in the IPO may participate in a “piggy-back” registration only during the seven-year period beginning on the commencement date of sales in the IPO.

Underwriting Agreement

Upon closing the IPO on October 21, 2021, the Company paid a cash underwriting discount of 2.0 % per Unit, or $ 2,300,000 .

Business Combination Marketing Agreement

On October 18, 2021, the Company has engaged Roth Capital Partners, LLC, the representative, as an advisor in connection with the Business Combination to assist it in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing its securities in connection with the

initial Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination.

The Company will pay the representative a cash fee for such services upon the consummation of the initial Business Combination in an amount equal to 3.5 % of the gross proceeds of the IPO, or $ 4,025,000 (exclusive of any applicable finders’ fees which might become payable).

Additionally, the Company engaged Craig-Hallum Capital Group LLC (“Craig-Hallum”) in February 2022 to act as its placement agent and its merger and acquisition advisor in connection with any offering in respect to a Business Combination with a Target.

Craig-Hallum will assist with identifying selecting a potential target company, assisting with the formation of a letter of intent (“LOI”), evaluating proposals for potential business combination, assisting in structuring the formation of a potential business combination, identifying and selecting investors and other activities related to a potential business combination.

In the event an offering of securities in connection with a Business Combination with a Target or any other evidence of commitment with a Business Combination with a Target, the Company will pay Craig-Hallum a cash fee of 6.0 % of the gross proceeds raised and only if Craig-Hallum is the source of introduction to the specific transaction.

Additionally, if the Company completes a Business Combination with a target during the term of the contract with Craig Hallum, Craig-Hallum will be owed an M&A Advisory Fee in stock equal to the greater of (i) 2.0 % of the aggregate transaction value of the target;

and (ii) 250,000 shares of newley issued common stock registered within 90 days of closing of the Business Combination.

Roth Capital will be due 30 % of the M&A Advisory Fee in stock.

In October 2022 the Company has engaged ArentFox Schiff LLP (“AFS”) to assist with various routine and business combination related matters.

AFS has agreed to perform the foregoing services at a discounted rate, and, subject to final consummation of the Business Combination, the Company will pay an additional amount to AFS equal to the cumulative amount earned by AFS up until the date of the consummation of the Business Combination.

To the extent the Business Combination is not completed, the Company will not be required to pay AFS any additional amounts in excess of the discounted rate.

For the year ended December 31, 2022 and 2021 the Company has incurred $ 297,453 and $ 3,500 , respectively, in legal fees.

At December 31, 2022 and 2021, $ 223,748 and $ 3,500 was unpaid.

Earnout Shares

Pursuant to the Business Combination Agreement, SportsMap will reserve for issuance 2,400,000 shares of SportsMap common stock (the “Earnout Shares”).

The Earnout Shares will be issued pro rata to the holders of ICI common stock if either (a) during the period beginning six months after the closing of the Business Combination and ending on December 31, 2024, the common stock of the post-closing public company (“PubCo”) achieves a market price of $ 12.50 per share for a specified number of days, or the combined company consummates a transaction in which its stockholders have the right to receive consideration implying a value of at least $ 12.50 per share, or (b) PubCo achieves revenue of $ 68.5 million during the fiscal year ending December 31, 2024, subject to certain limitations set forth in the Business Combination Agreement.

Note 7 — Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share.

At December 31, 2022 and 2021, there were no shares of preferred stock issued or outstanding .

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $ 0.0001 per share.

Holders of the common stock are entitled to one vote for each common stock.

At December 31, 2022 and 2021, there were 3,550,000 shares of common stock issued and outstanding, none of which were subject to forfeiture due to the full exercise of the over-allotment option by the underwriters upon the consummation of the IPO.

As of December 31, 2022 and 2021, there were no warrants outstanding.

Upon closing of the IPO on October 21, 2021, there were 8,625,000 public warrants and 506,250 private warrants outstanding.

Each whole warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share, subject to adjustment as described herein.

if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $ 9.20 per share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Company’s initial stockholders or their affiliates, without taking into account any founders’ shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $ 9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, and the $ 18.00 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal to 180 % of the higher of the Market Value and the Newly Issued Price.

Each whole warrant entitles the registered holder to purchase one share of the common stock at any time commencing 30 days after the completion of the initial Business Combination and will expire five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.

No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the issuance of the common stock issuable upon exercise of the warrants and a current prospectus relating to such common stock.

Notwithstanding the foregoing, if a registration statement covering the issuance of the common stock issuable upon exercise of the warrants is not effective within 60 days following the consummation of the initial Business Combination, warrant holders may, until such time as there is such an effective registration statement and during any period when the Company shall have failed to maintain such an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act.

If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis.

Except as described above, no warrants will be exercisable and the Company will not be obligated to issue common stock unless at the time a holder seeks to exercise such warrant, a prospectus relating to the shares of common stock issuable upon exercise of the warrants is current and the shares of common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants.

Under the terms of the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants.

However, the Company cannot assure you that the Company will be able to do so and, if the Company does not maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise.

If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and the warrants may expire worthless.

Redemption of warrants

Once the warrants become exercisable, the Company may redeem the outstanding warrants, in whole and not in part, at a price of $ 0.01 per warrant:

● at any time while the warrants are exercisable,

● upon a minimum of 30 days ’ prior written notice of redemption,

● if, and only if, the last sales price of the common stock equals or exceeds $ 18.00 (as adjusted for share sub-divisions, share dividends, reorganizations and recapitalizations) for any 20 trading days within a 30 trading-day period commencing after the warrants become exercisable and ending three trading days before the Company sends the notice of redemption, and

● if, and only if, there is a current registration statement in effect with respect to the issuance of the common stock underlying such warrants at the time of redemption and for the entire 30 -day trading period referred to above and continuing each day thereafter until the date of redemption.

If the Company calls the warrants for redemption as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants in exchange for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the surrendered warrants, multiplied by the difference between the exercise price of the surrendered warrants and the fair market value by (y) the fair market value.

The “fair market value” for this purpose shall mean the average reported last sale price of the common stock for the 10 trading days ending on the trading day prior to the date of exercise.

For example, if a holder held 150 warrants and the fair market value on the trading date prior to exercise was $ 15.00 , that holder would receive 35 shares without the payment of any additional cash consideration.

If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis.

Note 8 — Income Tax

The Company’s net deferred tax assets (liability) at December 31, 2022 and 2021 are as follows:

Deferred tax liability

Federal net operating loss

Contingencies

Liabilities for loss contingencies arising from claims, earn-outs, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

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

As of December 31, 2023, and 2022, the Company was 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 consolidated financial position, results of operations, or liquidity.

Note 16 — Income taxes

The components of the provision for income taxes for the years ended December 31, 2023, and 2022 were as follows:

Total current

Total deferred

Total income tax provision

Deferred Tax Assets:

Interest carryforward

Net operating losses

Financial instruments

Start-up costs

Unrealized gains on investments in trust account

Total deferred tax asset

Valuation allowance

Deferred tax liability, net of allowance

The income tax provision for the year ended December 31, 2022 and for the period from May 14, 2021 (inception) through December 31, 2021 consists of the following:

State and Local

Valuation allowance

Income tax provision

As of December 31, 2022 and 2021, the Company had $ 0 and $ 91,556 , respectively, of U.S.

federal net operating loss carryovers available to offset future taxable income.

The federal net operating loss can be carried forward indefinitely.

As of December 31, 2022 and 2021 the Company had did no t have any of state net operating loss carryovers available to offset future taxable income.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

For the year ended December 31, 2022, the change in the valuation allowance was $ 232,428 .

For the period from May 14, 2021 (inception) through December 31, 2021, the change in the valuation allowance was $ 86,930 .

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2022 and 2021 is as follows:

Statutory federal income tax rate

Unrealized gains on investments in Trust Account

Total deferred tax assets

Deferred Tax Liabilities :

Prepaid Expense

Total deferred tax liabilities

Deferred tax (liabilities) assets, net

The total provision for income taxes for the years ended December 31, 2023, and 2022 varies from the federal statutory rate as a result of the following:

Loss before income tax expense

Statutory tax rate

Income tax (benefit) expense at federal statutory rate

Increase (decrease) resulting from:

Permanent differences

State income tax, net of federal benefit

Valuation allowance

Income tax provision

The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to permanent book to tax differenced related to change in fair value of warrants and full valuation allowances on deferred tax assets.

The Company files income tax returns in the U.S.

federal jurisdiction and is subject to examination by the various taxing authorities.

The Company’s tax returns for the year ended December 31, 2022 and 2021 remain open and subject to examination.

The Company currently owes $ 83,543 in federal income taxes and 137,115 in Delaware franchise taxes.

Note 9 — Held-to-Maturity Investments

A reconciliation from amortized cost basis to net carrying amount and fair value is provided below for the Company’s held-to-maturity investments:

Held-to-maturity investments, amortized cost basis

Interest earned on investments

Held-to-maturity investments, net carrying amount

Unrealized gain on investments

Held-to-maturity investments, fair value

There are no indicators of impairment, including other-than-temporary impairments, with respect to the held-to-maturity investments as of December 31, 2022 and 2021.

All investments mature within one year of the date of these financial statements;

however, they are classified as non-current assets due to contractual restrictions that limit access to the cash and securities held in the Trust Account until the consummation of the Company’s initial Business Combination.

Income tax expense

Current income tax expense

Deferred income tax (benefit)

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes.

As a result of the Company’s evaluation of both the positive and negative evidence, the Company determined it does not believe it is more likely than not that its deferred tax assets will be utilized in

the foreseeable future and has recorded a valuation allowance.

For the year ended December 31, 2023, the Company recognized income tax expense because of a true-up on the federal tax payable and interest on late payment of the federal tax payable.

For the year ended December 31, 2022, the Company recognized income tax expense because of a change in valuation allowance.

Changes in the valuation allowance are as follows:

Balance, beginning of the year

Additions to valuation allowance

Balance, end of the year

The Company intends to continue maintaining a valuation allowance on its deferred tax assets until there is sufficient evidence to support reversal of all or some portion of these allowances.

The Company reported U.S.

net operating loss carryforwards of $ 16,771 and state net operating loss carryforward of $ 22,416 .

For state income tax purposes, the Company has $ 20,218 of net operating losses which are subject to expiration.

The carryforward life for the net operating losses is dependent on the rules for each jurisdiction and therefore the losses are subject to expiration with the earliest year being 2033 and the latest year being 2044.

net operating loss carryforwards of $ 16,771 of federal and $ 2,198 of state NOLs will not expire.

In addition, the Company also had U.S.

interest limitation carryforwards of $ 133 with an indefinite expiration date.

A reconciliation of unrecognized tax benefits is as follows:

Balance, beginning of the year

Balance, end of the year

The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statement of operation and as of December 31, 2023, and 2022, the Company did not accrue interest and penalties.

The Company does not expect its unrecognized tax benefits to change significantly in the next twelve months.

We file income tax returns in the U.S.

as well as in various states and the Company notes that the earliest year open to examination is 2020.

The Company is not currently under examination by any major tax jurisdiction.

Note 17 — Fair Value Measurements

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

The common stock granted as part of the Plan were recorded in equity and classified as Level 3 within the fair value hierarchy.

On December 19, 2023, prior to the closing of the Business Combination, the Board of Directors of Legacy ICI authorized that the shares of common stock which were subject to the Transaction RSU Awards would be delivered in accordance with the terms of the Restricted Stock Unit Agreement.

All Transaction RSU Awards issued were valued using a fair value of $ 6.82 , which was the closing share price of our common stock on that date.

The common stock granted as part of the Plan were recorded in equity and classified as Level 1 within the fair value hierarchy.

The convertible note was valued using a probability-weighted expected return method (“PWERM”) based on the probabilities of different potential outcomes for the note.

The fair value of the convertible note was determined using the following significant unobservable inputs.

Fair Value Assumption – Financing Note

December 31, 2023

Discount rate

Maturity date

The fair value of the Financing Notes as of December 31, 2023 is $ 5,695 and is classified as Level 3 within the fair value hierarchy.

The fair value of the Company’s outstanding warrants as of December 31, 2023 and is classified as Level 1 within the fair value hierarchy.

Fair Value Assumption – Warrants

December 31, 2023

Exercise Price

Maturity date

Note 18 — Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

For the consolidated financial statements as of December 31, 2023, the Company has evaluated subsequent events through March 29, 2024, the date the financial statements were available to be issued.

In March 2024, the Company entered into an earnout waiver agreement whereby the Company and other parties thereto agreed to cancel the earnout provision in the Business Combination Agreement referenced in Note 1.

In March 2024, the Company entered into an agreement to waive the lock-up restrictions with respect to 2,146,067 shares of the Company’s common stock which are currently subject to lock-up pursuant to that certain Lock-Up Agreement, dated December 19, 2023, between the Company, SportsMap, LLC, and certain other holders of the Company’s common stock.

The 2,146,067 shares being released from lock-up restrictions are held by certain holders who are not affiliates of the Company.

Without such waiver, these shares would have been subject to lock-up restrictions until June 19, 2024.

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-K

Item 9A. Controls and Procedures