Based on the provided financial report articles, the title of the article is: "FORM 10-Q" This is a quarterly report filed with the Securities and Exchange Commission (SEC) by MultiSensor AI Holdings, Inc.
MultiSensor AI Holdings, Inc. (MSAI) filed its quarterly report for the period ended June 30, 2024. The company reported a net loss of $2.1 million, or $0.09 per share, compared to a net loss of $1.5 million, or $0.06 per share, in the same period last year. Revenue increased to $1.4 million, up from $0.9 million in the prior year. The company’s cash and cash equivalents decreased to $3.4 million, down from $5.1 million at the end of the prior year. MSAI’s total assets decreased to $6.3 million, down from $8.5 million at the end of the prior year. The company’s management’s discussion and analysis of financial condition and results of operations provides an overview of the company’s financial performance and highlights the challenges it faces in the current market.
Overview
MultiSensor AI Holdings, Inc. (MSAI) is a manufacturer and distributor of highly sensitive and accurate infrared cameras and other sensor systems, comprising hardware and software, for condition-based monitoring and other uses in a variety of industrial settings. The company also provides services, including training, calibration, and repairs for its customers. Most of MSAI’s customers are in the United States and operate in the distribution and logistics, manufacturing, utility, and oil and gas sectors.
Merger
On December 19, 2023, MSAI (formerly known as SportsMap Tech Acquisition Corp.) completed a business combination with Infrared Cameras Holdings Inc. (Legacy ICI). As a result, Legacy ICI became a wholly-owned subsidiary of MSAI. The business combination was accounted for as a reverse acquisition, with Legacy ICI being the accounting acquirer.
Financing Transaction
As part of the business combination, MSAI issued $6.805 million in convertible promissory notes (Financing Notes) to a number of investors. The Financing Notes mature in three years and are convertible into MSAI common stock at $10 per share. MSAI also issued warrants to the Financing Investors to purchase an aggregate of 340,250 shares of common stock.
By June 30, 2024, all of the $6.2 million of the Financing Notes and $0.2 million of the SMAP Related Party Promissory Notes were converted to equity, resulting in a $1.4 million loss recorded as “Loss on Financing Transaction.”
Note Conversions
MSAI entered into various agreements to induce the conversion of the remaining Financing Notes into common stock at a reduced conversion price of $5 per share. This resulted in the issuance of additional shares as an inducement.
Equity Line of Credit
In April 2024, MSAI entered into a $25 million equity line of credit with B. Riley Principal Capital II. As of June 30, 2024, MSAI had utilized $58,000 of this facility.
Concurrent Public Offering and Private Placement
On July 1, 2024, MSAI completed a public offering of 6.25 million shares of common stock at $1.60 per share, raising $10 million in gross proceeds. Concurrently, MSAI issued and sold 2.77 million shares and pre-funded warrants to purchase 6.6 million shares in a private placement, raising an additional $15 million.
Financial Performance
For the three months ended June 30, 2024, MSAI reported revenue of $2.1 million, an increase of 59% from the prior year period. Gross margin improved to 75% from negative 45% in the prior year period, primarily due to no inventory impairment charges in the current period.
Operating expenses increased 152% to $6.4 million, driven by a $3.2 million increase in share-based compensation expense. Net loss for the quarter was $6.4 million, compared to a $0.7 million loss in the prior year period.
For the six months ended June 30, 2024, revenue increased 90% to $4.4 million, while gross margin improved to 56% from negative 4% in the prior year period. Operating expenses increased 167% to $9.9 million, again driven by higher share-based compensation. Net loss for the six-month period was $10.3 million, compared to a $3.6 million loss in the prior year.
Liquidity and Capital Resources
MSAI has historically funded its operations through cash flows, lines of credit, convertible notes, and promissory notes. As of June 30, 2024, the company had $0.2 million in cash and cash equivalents.
There is substantial doubt about MSAI’s ability to continue as a going concern, as it will require additional capital to execute its business plan. The company believes the $24.6 million raised through the July 2024 public offering and private placement will provide sufficient liquidity to fund operations for the foreseeable future.
Outlook
MSAI faces several challenges, including the need to raise additional capital, continued operating losses, and compliance with Nasdaq listing requirements. However, the company believes the recent financing transactions and strategic changes, such as the addition of a Purchaser representative to the board, will help strengthen its financial position and operational performance going forward.
