MultiSensor AI(MSAI) - 2024 Q1 - Quarterly Report

Financial Performance - Revenue for the three months ended March 31, 2024, was $2,275,000, representing a 132% increase compared to $980,000 for the same period in 2023[27] - Operating loss for Q1 2024 was $2,565,000, an improvement from a loss of $3,176,000 in Q1 2023[27] - Net loss for the three months ended March 31, 2024, was $3,922,000, compared to a net loss of $2,907,000 in the same period last year[27] - The company reported a basic net loss per share of $(0.33) for Q1 2024, compared to $(5.65) for Q1 2023[27] - The company reported net losses and negative cash flows from operations, raising substantial doubt about its ability to continue as a going concern[48][49] - The company incurred a net loss of $3.9 million for Q1 2024, compared to a net loss of $2.9 million in Q1 2023, indicating ongoing financial challenges[214] Assets and Liabilities - Total current assets decreased to $9,093,000 as of March 31, 2024, down from $12,513,000 as of December 31, 2023[26] - Total liabilities decreased to $12,752,000 as of March 31, 2024, from $16,640,000 as of December 31, 2023[26] - Cash and cash equivalents at the end of Q1 2024 were $491,000, down from $1,155,000 at the end of 2023[26] - Trade accounts receivable decreased to $677,000 as of March 31, 2024, from $2,440,000 as of December 31, 2023[26] - Contract liabilities decreased to $1,154 as of March 31, 2024, from $2,065 at the beginning of the year[66] - As of March 31, 2024, the company's stockholders' equity was approximately $3.5 million, meeting the Nasdaq listing requirement of $2.5 million[189] Revenue Composition - Product sales accounted for $2,022 of total revenue in Q1 2024, up from $755 in Q1 2023, indicating a 167% increase[65] - Two customers accounted for 23% and 20% of total net revenue for the three months ended March 31, 2024, highlighting customer concentration risks[59] Expenses - Cost of goods sold for the three months ended March 31, 2024, was approximately $1.4 million, an increase of $0.9 million, or 202%, from approximately $0.5 million for the same period in 2023[163] - Gross margin for the three months ended March 31, 2024, was approximately 38%, a decrease from approximately 53% for the same period in 2023[164] - Selling, general and administrative expenses for the three months ended March 31, 2024, were approximately $3.2 million, a decrease of $0.3 million, or 10%, from approximately $3.5 million for the same period in 2023[165] - Depreciation expense for the three months ended March 31, 2024, was approximately $0.3 million, an increase of $0.1 million, or 52%, from approximately $0.2 million for the same period in 2023[166] - Interest expense for the three months ended March 31, 2024, was approximately $0.04 million, a decrease of $0.05 million, or 92%, from approximately $0.05 million for the same period in 2023[167] Financing Activities - The Company entered into a line of credit agreement with B1 Bank providing a revolving credit commitment of $3,000, with a maturity date of January 22, 2024[71] - As of March 31, 2024, there was no outstanding debt balance, and the Company repaid a total of $900 borrowed under the line of credit in December 2023[73][72] - The Company issued Financing Notes totaling $6,805 on December 19, 2023, as part of a Business Combination, with a maturity date set for three years after the closing[87][88] - The Company converted $4.5 million of Financing Notes into common stock at a price of $5 per share, resulting in a loss of $0.9 million recorded under loss on financing transaction[138] - The company issued 327,500 shares of common stock related to the principal balance of the Financing Notes, along with 327,500 Inducement Shares, totaling 663,318 shares issued[139] Future Outlook and Plans - The company plans to raise additional liquidity and reduce operating expenses in response to financial challenges, although these plans are subject to market conditions[49] - The company is focused on expanding its multi-sensor systems for industrial applications, including cloud-based software and services[34] - The company is committed to expanding its SaaS capabilities, which will require significant investment and is subject to uncertainties regarding customer demand and operational scalability[220] - The company has a limited operating history in providing SaaS solutions, which complicates the evaluation of future prospects and associated risks[221] Tax and Compliance - The company's provision for income taxes was a $31 tax expense for Q1 2024, compared to a $15 tax benefit for Q1 2023, with effective tax rates of (0.78)% and (7.97)% respectively, both below the U.S. statutory tax rate of 21%[111] - The company maintains a valuation allowance on its deferred tax assets until sufficient evidence supports the reversal of this allowance[111] - The company experienced an ownership change as defined under Internal Revenue Code Section 382, subjecting tax attributes to an annual limitation[112] Internal Controls and Governance - The company plans to hire additional accounting personnel to address material weaknesses in internal controls over financial reporting identified in previous audits[207] - The company has not identified any material claims or legal actions as of March 31, 2024, that would adversely affect its financial position[109] - The company is classified as an emerging growth company, allowing it to delay the adoption of new accounting standards until they apply to private companies[199]