Item 9A. Controls and Procedures
Item 9A. 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
Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2024 (“Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective as of December 31, 2024.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect all misstatements. Effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, management has conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013) and SEC guidance on conducting such assessments. Based on evaluation under these criteria, management determined that the Company’s internal control over financial reporting was effective as of December 31, 2024.
Remediation of Prior Material Weakness 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.
As previously disclosed in Part II, Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, management determined that the Company’s internal control over financial reporting was not effective as of December 31, 2023 due to the existence of the material weakness in internal control over financial reporting 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 our accounting and reporting requirements, which resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives.
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During 2024, management conducted a remediation plan to address the material weakness described above. The Company hired additional personnel with the requisite expertise in accounting and internal controls, including individuals with significant experience in financial reporting and compliance. Additionally, these personnel hired have conducted training for our existing accounting and finance staff to enhance their knowledge and skills in accounting principles, internal controls, and financial reporting. The Company also developed and implemented new internal control procedures and enhanced existing controls. During the quarter ended December 31, 2024, our management completed testing of the remediation activities and concluded that the previously identified material weakness was remediated as of December 31, 2024.
Changes in Internal Control Over Financial Reporting
Management, together with our CEO and CFO, evaluated the changes in our internal control over financial reporting during the quarter ended December 31, 2024. We implemented a new general ledger accounting and enterprise resource planning system in October 2024. With the implementation, we have realized certain process efficiencies, and we expect this new system to enhance our financial reporting and analysis capabilities in the future. The change in our general ledger and enterprise resource planning system was subject to testing and review both before and after the implementation. Besides the system implementation discussed, we determined that there were no other changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
Amended and Restated Bylaw s. On March 25, 2025, the Company’s Board of Directors approved the Company’s Second Amended and Restated Bylaws to clarify, among other things, (i) the procedure for the right of shareholders to bring business before a shareholder meeting, (ii) information to be provided by shareholders who submit proposals at the Company’s annual or special meetings, (iii) requirements for notices of shareholder meetings and (iv) the conduct of business at a shareholder meeting. The above description of the changes to the Company’s Second Amended and Restated Bylaws is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to such bylaws filed herewith as an exhibit to this annual report.
(b) Insider Trading Arrangements and Policies .
During the quarter ended December 31, 2024, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange Act) 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.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Executive Officers and Directors
The following table provides information regarding our executive officers and members of our board of directors as of the date of this Annual Report on Form 10-K:
Name
Position(s) at the Company
Principal Employment
Stuart Flavin III
Director and Interim Chief Executive Officer and President
Same
Robert Nadolny
Chief Financial Officer
Same
Peter Baird
Chief Commercial Officer
Same
Steve Guidry
General Counsel
Same
Steven Winch
Director and Senior Advisor
Same
David Gow
Director
CEO and President of Center for Houston’s Future
Reid Ryan
Director
Founder and CEO of Ryan-Sanders Baseball, Inc.
Petros Kitsos
Director
Managing Principal of TBL Companies, LLC
Margaret Chu
Director
CFO and Executive Advisor of Infillion
Daniel Friedberg
Director
Managing Member of 325 Capital
The remaining information required by this Item will be included in our definitive proxy statement for our 2025 Annual Meeting of Stockholders (the “2025 Proxy Statement”), expected to be filed with the SEC no later than 120 days after December 31, 2024, and is incorporated herein by reference.
Item 11.Executive Compensation.
The information required by this Item will be included in the 2025 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 2025 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 2025 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 2025 Proxy Statement and is incorporated herein by reference.
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PART IV
Item 15.Exhibits and Financial Statement Schedules
(a)(1) Financial Statements.
The following financial statements are filed as part of this report under Item 8—“Financial Statements and Supplementary Data.”
Index to Consolidated Financial Statements
Pages
Report of Independent Registered Public Accounting Firm (PCAOB ID No.34)
63
Consolidated Balance Sheets as of December 31, 2024 and 2023
64
Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023
65
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2024 and 2023
66
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023
67
Notes to the Consolidated Financial Statements
69 to 87
(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.
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(a)(3) Exhibits.
The following is a list of exhibits filed as part of this Annual Report on Form 10-K.
3
Incorporated by Reference
Filed /
Furnished
Exhibit
Description
Form
Exhibit
Filing Date
Herewith
2.1†
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.
8-K
2.1
12/6/2022
2.2
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.
8-K
2.2
6/28/2023
2.3
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.
8-K
2.2
9/20/2023
3.1
Second Amended and Restated Certificate of Incorporation MultiSensor AI Holdings, Inc. , as amended through February 12, 2024
*
3.2
Second Amended and Restated Bylaws of MultiSensor AI Holdings, Inc.
*
4.1
Warrant Agreement, dated as of October 18, 2021, by and between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent.
8-K
4.1
10/21/2021
4.2
Form of Pre-Funded Warrant and 325 Capital, LLC
8-K
4.1
7/1/2024
4.3
Description of Registrant’s Securities
10-K
4.2
3/29/2024
10.1
Earnout Waiver Agreement dated March 7, 2024
8-K
10.1
3/7/2024
10.2
Lock-Up Waiver Agreement dated March 7, 2024
8-K
10.2
3/7/2024
10.3
Subscription Agreement, dated March 31, 2024, by and between MultiSensor AI Holdings, Inc. and David Gow
8-K/A
10.3
4/4/2024
10.4
Common Stock Purchase Agreement, dated April 16, 2024, between MultiSensor AI Holdings, Inc. and B. Riley Principal Capital II, LLC
8-K
10.1
4/17/2024
10.5
Registration Rights Agreement, dated April 16, 2024 by and between MultiSensor AI Holdings, Inc. and B. Riley Principal Capital II, LLC
8-K
10.2
4/17/2024
10.6
Form of Conversion Agreement re: Note Conversion Inducement Offer and Notice of Conversion of the Convertible Promissory Note, dated December 19, 2023
8-K
10.1
4/8/2024
10.7
Form of Inducement Agreement re: Note Conversion Inducement Offer and Notice of Conversion of the Convertible Promissory Note, dated December 19, 2023
8-K/A
10.1
4/4/2024
10.8
Form of Note Amendment to the Convertible Promissory Note, dated as of December 19, 2023
8-K/A
10.2
4/4/2024
10.9
Subscription Agreement, effective as of March 31, 2024, by and between MultiSensor AI Holdings, Inc. and David Gow
8-K/A
10.3
4/4/2024
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10.10
Form of Note Amendment to the Convertible Promissory Note, dated as of December 19, 2023
8-K
10.1
5/1/2024
10.11
Form of PIPE Lock-Up Agreement
S-1
10.17
6/26/2024
10.12†
Securities Purchase Agreement, dated June 27, 2024, by and between the Company and 325 Capital, LLC
8-K
10.1
7/1/2024
10.13
Registration Rights Agreement, dated July 1, 2024, by and between the Company and 325 Capital, LLC
8-K
10.2
7/1/2024
10.14
Voting Agreement, dated July 1, 2024, by and among the Company and certain Key Holders
8-K
9.1
7/1/2024
10.15
Placement Agency Agreement, dated June 27, 2024, by and between the Company and Roth Capital Partners, LLC
8-K
1.2
7/1/2024
10.16#
Consulting Agreement, dated November 26, 2024 by and between Gary Strahan and MultiSensor AI Holdings, Inc.
8-K
10.1
11/27/2024
10.17#
Infrared Cameras Holdings, Inc. 2023 Incentive Award Plan
10-K
10.14
3/29/2024
10.18#
Form of Restricted Stock Unit Grant Notice and Award Agreement (Deferred RSUs 2023 Incentive Award Plan)
8-K
10.15
12/21/2023
10.19#
Form of Stock Option Grant Notice and Agreement (2023 Incentive Award Plan)
8-K
10.16
12/21/2023
10.20#
Form of Restricted Stock Unit Grant Notice and Agreement as Amended (2023 Incentive Award Plan)
*
10.21#
Amended and Restated 2020 Equity Incentive Plan of Infrared Camera Holdings, Inc.
8-K
10.12
12/21/2023
10.22#
Form of Stock Option Agreement (2020 Equity Incentive Plan)
8-K
10.13
12/21/2023
19.1
Insider Trading Policies and Procedures
*
21.1
List of subsidiaries
8-K
21.1
12/21/2023
23.1
Consent of Deloitte & Touche LLP
*
31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
*
31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
*
32.1
Section 1350 Certification of Chief Executive Officer
**
32.2
Section 1350 Certification of Chief Financial Officer
**
97.1
Policy for Recovery of Erroneously Awarded Compensation
10-K
97.1
3/29/2024
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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*
Filed herewith
**
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.
None.
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SIGNATURES
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.
MultiSensor AI Holdings, Inc.
Date: March 28, 2025
By:
/s/ Stuart V. Flavin III
Stuart V. Flavin III
Interim Chief Executive Officer, Interim President 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.
Name
Title
Date
/s/ Stuart V. Flavin III
Interim Chief Executive Officer, Interim President and Director
March 28, 2025
Stuart V. Flavin III
(Interim Principal Executive Officer)
/s/ Robert Nadolny
Chief Financial Officer
March 28, 2025
Robert Nadolny
(Principal Financial Officer and Principal Accounting Officer)
/s/ Steven Winch
Director
March 28, 2025
Steven Winch
/s/ David Gow
Director
March 28, 2025
David Gow
/s/ Reid Ryan
Director
March 28, 2025
Reid Ryan
/s/ Daniel M. Friedberg
Director
March 28, 2025
Daniel M. Friedberg
/s/ Petros Kitsos
Director
March 28, 2025
Petros Kitsos
/s/ Margaret Chu
Director
March 28, 2025
Margaret Chu
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