10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40904

“

MARPAI, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware		86-1916231
(State or other jurisdiction of incorporation)		(IRS Employer Identification Number)

615 Channelside Drive, Suite 207

Tampa, Florida 33602

(Address of principal executive offices)

(855) 389-7330

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	MRAI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.



Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 9, 2024, there were 10,308,038 shares of the Company’s common stock, par value $0.0001 per share, outstanding.

MARPAI, INC.

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	22
Item 6.	Exhibits	23
SIGNATURES		24

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements.

MARPAI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	March 31, 2024			December 31, 2023
	(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents	$	851		$	1,147
Restricted cash		12,761			12,345
Accounts receivable, net of allowance for credit losses of $25 and $25		366			1,124
Unbilled receivable		727			768
Due from buyer for sale of business unit		800			800
Prepaid expenses and other current assets		1,000			901
Total current assets		16,505			17,085

Property and equipment, net		579			611
Capitalized software, net		1,512			2,127
Operating lease right-of-use assets		2,311			2,373
Goodwill		3,018			3,018
Intangible assets, net		4,874			5,177
Security deposits		1,267			1,267
Other long-term asset		22			22
Total assets	$	30,088		$	31,680
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	3,824		$	4,649
Accrued expenses		3,076			2,816
Accrued fiduciary obligations		9,510			11,573
Deferred revenue		1,481			661
Current portion of operating lease liabilities		523			512
Other short-term liabilities		1,709			632
Total current liabilities		20,123			20,843

Other long-term liabilities		19,724			19,401
Operating lease liabilities, net of current portion		3,547			3,684
Deferred tax liabilities		1,190			1,190
Total liabilities		44,584			45,118
COMMITMENTS AND CONTINGENCIES (Note 16)
STOCKHOLDERS’ DEFICIT
Common stock, $0.0001 par value, 227,791,050 shares authorized; 10,308,038 shares and 7,960,938 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (1)		1			1
Additional paid-in capital		66,595			63,307
Accumulated deficit		(81,092	)		(76,746	)
Total stockholders’ deficit		(14,496	)		(13,438	)
Total liabilities and stockholders’ deficit	$	30,088		$	31,680

(1) Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the unaudited condensed consolidated financial statements.

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

MARPAI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share data)


	Three months ended March 31,
	2024			2023
Revenue	$	7,385		$	9,672
Costs and expenses
Cost of revenue (exclusive of depreciation and amortization shown separately below)		4,871			6,409
General and administrative		3,421			5,226
Sales and marketing		602			2,179
Information technology		1,124			2,187
Research and development		7			500
Depreciation and amortization		951			1,044
Facilities		474			650
Total costs and expenses		11,450			18,195
Operating loss		(4,065	)		(8,523	)
Other income (expenses)
Other income		120			50
Interest expense, net		(398	)		(385	)
Foreign exchange loss		(3	)		(15	)
Loss before provision for income taxes		(4,346	)		(8,873	)
Income tax expense		—			—
Net loss	$	(4,346	)	$	(8,873	)
Net loss per share, basic & fully diluted (1)	$	(0.46	)	$	(1.68	)
Weighted average shares of common stock outstanding, basic and diluted (1)		9,405,775			5,290,661

(1) Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the unaudited condensed consolidated financial statements.

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

MARPAI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(in thousands, except share data)


	Common Stock
					Additional Paid-		Accumulated			Total Stockholders’
Three months ended March 31, 2024	Shares (1)		Amount		In Capital		Deficit			Deficit
Balance, January 1, 2024		7,960,938	$	1	$	63,307	$	(76,746	)	$	(13,438	)
Share-based compensation		-		-		561		-			561
Issuance of common stock upon vesting of restricted stock units		115,000		-		-		-			-
Issuance of common stock in connection with public offering, net		2,232,100		-		2,727		-			2,727
Net loss		-		-		-		(4,346	)		(4,346	)
Balance, March 31, 2024		10,308,038	$	1	$	66,595	$	(81,092	)	$	(14,496	)

Three months ended March 31, 2023
Balance, January 1, 2023		5,319,758	$	1	$	54,128	$	(47,994	)	$	6,135
Share-based compensation		-		-		748		-			748
Issuance of common stock upon vesting of restricted stock units		33,387		-		-		-			-
Shares issued to vendors in exchange for services		25,000		-		79		-			79
Issuance of common stock upon exercise of stock options		24,976		-		-		-			-
Net loss		-		-		-		(8,873	)		(8,873	)
Balance, March 31, 2023		5,403,121	$	1	$	54,955	$	(56,867	)	$	(1,911	)

(1) Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the unaudited condensed consolidated financial statements.

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

MARPAI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Three months ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(4,346	)	$	(8,873	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		951			1,044
Share-based compensation		561			623
Common stock issued to vendors in exchange for services		—			79
Amortization of right-of-use asset		62			252
Non-cash interest		423			388
Changes in operating assets and liabilities:
Accounts receivable and unbilled receivable		800			(239	)
Prepaid expense and other assets		(99	)		162
Accounts payable		(825	)		653
Accrued expenses		215			(1,416	)
Accrued fiduciary obligations		(2,063	)		—
Operating lease liabilities		(126	)		(363	)
Other liabilities		862			1,149
Net cash used in operating activities		(3,585	)		(6,541	)
Cash flows from investing activities:

SEC Form 10-Q filed by Marpai Inc.