PART I Key Information This section details the significant risks and uncertainties faced by the company, covering operational, competitive, regulatory, and country-specific challenges in Türkiye Risk Factors This subsection details various risks materially affecting Marti's business, including operational challenges, market competition, regulatory hurdles, Türkiye's economic volatility, and public company burdens like internal control weaknesses - The company has a limited operating history, making future prospects difficult to evaluate 35 - Marti has a history of significant operating losses and may not achieve or maintain profitability, with revenue decreasing by 6.8% in 2024 to $18.7 million 3940 - The business is highly dependent on retaining and attracting drivers and riders, facing intense competition from other mobility platforms 4195 - Operations concentrated in Türkiye expose the company to significant political, economic, and currency exchange rate risks, including high inflation and lira volatility 219237247 - As a public company, Marti faces compliance costs and has identified material weaknesses in internal control over financial reporting related to processes, personnel, and risk assessment 285294 Information on the Company This section provides a detailed overview of Marti Technologies, Inc., outlining its history, business model, services, market position, and strategic direction as Türkiye's leading urban mobility platform History and Development of the Company Marti Technologies, Inc. was formed through a business combination on July 10, 2023, establishing its principal executive office in Istanbul, Türkiye - The company was formed through a business combination between Galata Acquisition Corp. and Marti Delaware, consummated on July 10, 2023 312313 Business Overview Marti is Türkiye's leading urban mobility platform, offering ride-hailing and two-wheeled electric vehicle services through a single app, operating in a growing market with a vertically integrated model and strong brand recognition - Marti offers two main services: ride-hailing (car, motorcycle, taxi) and shared two-wheeled electric vehicles (e-mopeds, e-bikes, e-scooters) 317 Key User and Fleet Metrics (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | Unique Riders (Ride-hailing & Two-wheeled) | > 5.9 million | | Total Rides (Ride-hailing & Two-wheeled) | > 109 million | | Unique Ride-hailing Riders | 1.66 million | | Registered Ride-hailing Drivers | 262,000 | | Two-wheeled Electric Vehicle Fleet Size | > 38,000 | - The company operates in the Turkish shared mobility market, estimated at $10-$15 billion, and aims to capture a larger share of the total $55-$65 billion consumer mobility market 324 - Marti monetized its ride-hailing service starting in October 2024 through driver subscription packages and launched a dynamic pricing model in January 2025 319328 - The company emphasizes a vertically integrated business model, handling app development, fleet operations, and vehicle design/assembly in-house 355356357 - In February 2024, Marti acquired the intellectual property and software assets of Zoba, an AI-powered platform for dynamic fleet optimization 390 Organizational Structure Marti Technologies, Inc. is the parent company, holding 100% direct ownership in its Delaware subsidiary, which in turn holds the Turkish subsidiary Significant Subsidiaries | Name of Subsidiary | Country of Incorporation | Proportion of ownership interest | | :--- | :--- | :--- | | Marti Technologies I Inc. | Delaware | 100% (direct) | | Marti İleri Teknoloji A.Ş. | Türkiye | 100% (indirect) | Property, Plants and Equipment The company's headquarters are in Istanbul, Türkiye, with five warehouses supporting its two-wheeled electric vehicle business, deemed adequate for current operations - The company operates five warehouses with a total area of 6,268 square meters to support its two-wheeled electric vehicle business 408 Operating and Financial Review and Prospects This section analyzes Marti's financial performance, highlighting a revenue decrease and widened net loss in FY2024, alongside improved gross profit and a shift to a single reporting segment, with liquidity managed through cash and convertible notes Operating Results In FY2024, Marti's revenue decreased by 6.8% to $18.7 million, while net loss significantly increased to $73.9 million due to share-based compensation, despite improved gross profit and strong ride-hailing growth Consolidated Results of Operations (in thousands) | | Year Ended December 31, | | | | :--- | :--- | :--- | :--- | | | 2024 | 2023 | 2022 | | Revenue | $18,660 | $20,030 | $24,988 | | Gross profit | $(2,889) | $(4,055) | $(2,104) | | Loss from operations | $(65,310) | $(30,603) | $(14,881) | | Net loss for the period | $(73,881) | $(33,815) | $(14,246) | - Revenue decreased by $1.4 million (6.8%) in 2024, primarily due to a 5.7% decrease in the average number of daily two-wheeled electric vehicles deployed 438 - General and administrative expenses increased by 225.5% in 2024 to $49.2 million, mainly due to a $37.2 million share-based compensation expense 445 - The number of unique ride-hailing riders grew by 233.5% to 1.66 million in 2024, and registered drivers increased by 145.9% to 262,000 440 Key Metrics and Non-GAAP Measures | Metric (in thousands, except per ride data) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Rides (millions) | 31.71 | 21.93 | 28.56 | | Adjusted EBITDA | $(19,274) | $(17,692) | $(3,873) | | Pre-Depreciation Contribution per Ride | $0.17 | $0.24 | $0.22 | Liquidity and Capital Resources Marti's liquidity is primarily from operations and financing, with $5.1 million cash at year-end 2024, significant convertible note liabilities, and a share repurchase program authorized to support future operations - As of December 31, 2024, the company had $5.1 million in cash and cash equivalents 466 Consolidated Cash Flows (in thousands) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash (used in) operating activities | $(25,077) | $(14,866) | $(5,466) | | Net cash provided by/(used in) investing activities | $(1,039) | $(4,820) | $(8,160) | | Net cash provided by financing activities | $11,841 | $28,612 | $11,259 | - The company has significant financing through convertible notes, with the total amount reaching approximately $73.0 million as of the report date 152485 - In January 2024, the Board authorized a share repurchase program of up to $2.5 million, with no shares repurchased as of December 31, 2024 505 Critical Accounting Estimates Management's financial statement preparation involves significant estimates for useful lives of assets, legal contingencies, and share-based compensation, with revenue recognition varying for vehicle rentals and driver subscription packages - Critical accounting estimates include useful lives of property and equipment, legal contingencies, valuation of deferred income taxes, and share-based compensation 512 - Revenue from vehicle rentals is accounted for as operating lease revenue under ASC 842, while revenue from driver subscription packages, started in October 2024, is recognized under ASC 606 515516517 Estimated Useful Lives of Assets | Asset Type | Estimated Economic Life | | :--- | :--- | | Rental electric scooters | 2–3 years | | Rental electric bikes | 2–3 years | | Rental electric mopeds | 3–4 years | | Furniture and fixtures | 7 years | | Leasehold improvements | 1–5 years | Directors, Senior Management and Employees This section details the company's leadership, compensation, board practices, and human capital, including executive officers, board composition, incentive plans, and employee count Directors and Senior Management The company's executive leadership includes Oğuz Alper Öktem (CEO) and Cankut Durgun (President), supported by a seven-member Board of Directors with diverse expertise and five independent members - The executive leadership includes Oğuz Alper Öktem (Founder, CEO, Director), Cankut Durgun (Co-founder, President, Director), and Deniz Terlemez (Interim CFO) 530531533535 - The Board of Directors consists of seven members, including five independent directors with diverse backgrounds 530 Compensation In 2024, executive officers received $2.6 million in cash compensation and significant equity awards under the 2023 Incentive Award Plan, which also governs non-employee director compensation - Aggregate cash compensation paid to executive officers in 2024 was $2,600,168 548 - In 2024, directors and executive officers were granted equity awards under the 2023 Plan, including 7,189,263 RSUs and 902,399 fully-vested Ordinary Shares 551 - The 2023 Incentive Award Plan has an initial share limit of 17,262,448 Ordinary Shares, with provisions for automatic increases based on earnout events and performance targets 556 - The Non-Employee Director Compensation Program includes annual cash retainers and annual equity awards 576578 Board Practices Marti's seven-member Board of Directors is classified into three staggered terms, with five independent directors and established Audit, Compensation, and Nominating and Corporate Governance Committees, compliant with NYSE American rules - The Board consists of seven directors, divided into three classes with staggered three-year terms 581586 - The Board has three main committees: Audit, Compensation, and Nominating and Corporate Governance, with defined responsibilities and independent members 594597598 - Agah Ugur is designated as the "audit committee financial expert" 594 Employees As of December 31, 2024, Marti employed 442 full-time employees, all based in Türkiye, comprising both white-collar and gray-blue collar staff, with competitive compensation and an employee share ownership plan - As of December 31, 2024, the company had 442 full-time employees, all based in Türkiye 604 Major Shareholders and Related Party Transactions This section details the company's ownership structure and related party dealings, including major shareholders and significant transactions stemming from the 2023 business combination and subsequent financing activities Major Shareholders As of March 31, 2025, major shareholders include 405 MSTV I LP (23.3%), Farragut Investor Entities (17.3%), and co-founders, with directors and executive officers collectively owning 54.8% of outstanding shares Beneficial Ownership of 5% or Greater Shareholders (as of March 31, 2025) | Beneficial Owners | Percentage of all Ordinary Shares | | :--- | :--- | | 405 MSTV I LP | 23.3% | | Farragut Investor Entities | 17.3% | | Esra Unluaslan Durgun | 15.9% | | Sumed Equity Ltd. | 11.3% | | Keystone Group, L.P. | 8.3% | | Funds managed by Weiss Asset Management LP | 6.9% | Beneficial Ownership of Directors and Executive Officers (as of March 31, 2025) | Name | Percentage of all Ordinary Shares | | :--- | :--- | | Oguz Alper Öktem | 15.4% | | Cankut Durgun | 15.9% | | Daniel Freifeld | 18.1% | | All directors and executive officers as a group (8 individuals) | 54.8% | Related Party Transactions The company engaged in several related party transactions, primarily linked to its 2023 business combination and financing, including issuance of Founder Shares, Private Placement Warrants, and convertible note agreements with affiliates of directors - The Sponsor purchased 3,593,750 Founder Shares and 7,250,000 Private Placement Warrants in connection with the initial public offering of Galata 612618 - Callaway Capital Management, an affiliate of director Daniel Freifeld, has an option to subscribe for up to $40 million in Convertible Notes and has made commitments for over $21 million 623626628 - Marti İleri Teknoloji A.Ş. (subsidiary) provided term loan credit facilities to Marti Delaware (parent) and acted as a guarantor for a loan from PFG 640641642 - In February 2025, the company engaged law firm Quinn Emanuel Urquhart & Sullivan, LLP, where director Alex Spiro is a partner, for legal services with fees not to exceed $100,000 643 Financial Information This section references the consolidated financial statements and discusses legal proceedings, including an ongoing lawsuit with Istanbul taxi owners, and the company's policy of retaining all future earnings for business growth - The company is engaged in a significant lawsuit with the Istanbul Otomobilciler Esnaf Odası regarding its ride-hailing services, with the case sent back for retrial and a hearing postponed to May 23, 2025 646651 - The company has never declared or paid cash dividends and intends to retain earnings for growth 652 Additional Information This section covers corporate and legal information, including material contracts, exchange controls, and a detailed summary of tax considerations for the company, which is treated as a U.S. domestic corporation for federal income tax purposes despite its Cayman Islands incorporation Taxation This subsection details U.S., Türkiye, and Cayman Islands tax considerations, noting Marti is treated as a U.S. domestic corporation for federal income tax purposes, subject to U.S. tax on worldwide income, while its Turkish subsidiary faces a 25% corporate tax rate - Despite being a Cayman Islands company, Marti is treated as a domestic corporation for U.S. federal income tax purposes and is subject to U.S. tax on its worldwide income 676962 - Distributions to U.S. Holders are generally treated as dividends, potentially qualifying for the dividends received deduction or lower long-term capital gains rates 677678 - Distributions to non-U.S. Holders are generally subject to a 30% U.S. withholding tax, unless reduced by an applicable tax treaty 682 - The Turkish subsidiary is subject to a 25% corporate income tax rate in Türkiye as of 2023 698964 - The Cayman Islands imposes no direct corporate, income, capital gains, or withholding taxes on the company 707961 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is foreign currency fluctuations between the Turkish Lira and U.S. Dollar, with no significant interest rate risk or use of derivatives, and it utilizes the extended transition period for new accounting standards as an emerging growth company - The primary market risk is foreign currency risk, as the company operates in Türkiye (Turkish Lira) but reports in U.S. dollars 720 - The company does not have significant exposure to interest rate risk as it has no financial liabilities with a variable interest rate component 719 - As an emerging growth company, Marti has elected to use the extended transition period for complying with new or revised financial accounting standards 721 PART II Controls and Procedures Management concluded that as of December 31, 2024, disclosure controls and procedures were not effective due to three material weaknesses in internal control over financial reporting, though one IT-related weakness was remediated - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were not effective 731 - Three material weaknesses in internal control over financial reporting were identified as of December 31, 2024: inadequate processes, insufficient accounting personnel with GAAP expertise, and insufficient risk assessment 738739741 - A material weakness from 2023 related to general IT controls was successfully remediated as of December 31, 2024, through new IT policies, change management, and additional IT personnel 743746 Other Information This section covers governance and compliance, including principal accountant fees, a share repurchase program, foreign private issuer status, an insider trading policy, and a cybersecurity risk management program overseen by the Audit Committee Principal Accountant Fees and Services For FY2024, Grant Thornton served as auditor with $530,000 in audit fees, while KPMG served in FY2023 with $802,546 in audit fees, with no other fees incurred in either year Accountant Fees (in thousands) | Fee Category | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | $530,000 | $802,546 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | Total | $530,000 | $802,546 | Purchases of Equity Securities by the Issuer and Affiliated Purchasers In January 2024, Marti's Board authorized a share repurchase program of up to $2.5 million of its Class A ordinary shares, with no shares repurchased as of December 31, 2024 - A share repurchase program of up to $2.5 million was authorized in January 2024 755 - As of December 31, 2024, no Class A ordinary shares have been repurchased under the program 755 Cybersecurity Marti has implemented a cybersecurity risk management program based on the NIST framework, with oversight from the Board's Audit Committee and a dedicated Network and Cybersecurity team responsible for threat management - The company has developed a cybersecurity risk management program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) 766 - The Board's Audit Committee has oversight responsibility for cybersecurity risk and receives regular reports from management 769770 - A dedicated Network and Cybersecurity team, supervised by the CTO, is responsible for assessing and managing cybersecurity threats and incidents 772 PART III Financial Statements This section contains the audited consolidated financial statements for Marti Technologies, Inc. for fiscal years 2022-2024, including notes on business combination, going concern, revenue recognition, financial liabilities, share-based compensation, and subsequent events Note 2 – Basis of Presentation and Going Concern The financial statements are prepared under U.S. GAAP, with the company reporting recurring operating losses and an accumulated deficit, yet management believes it can continue as a going concern, and its Turkish subsidiary changed its functional currency to USD due to hyperinflation - The company has experienced recurring operating losses, with a net loss of $73.9 million and accumulated deficit of $139.5 million as of December 31, 2024 822 - Management has concluded that the company can continue as a going concern for at least the next twelve months, supported by its strategic plan and subsequent financing 823826 - Due to hyperinflation in Türkiye, the Turkish subsidiary changed its functional currency from Turkish Lira (TL) to U.S. Dollar (USD) effective March 1, 2022 820821 Note 12 – Short-Term and Long-Term Financial Liabilities As of December 31, 2024, total financial liabilities were $74.7 million, largely comprising long-term convertible notes maturing in 2028 with a 15% annual interest rate and a $1.65 conversion price, with incentive shares treated as a debt discount Financial Liabilities, Net (as of Dec 31) | Liability Type | 2024 | 2023 | | :--- | :--- | :--- | | Term loan, net | $1,679,732 | $6,637,024 | | Convertible notes, short term | $2,876,163 | $5,359,454 | | Convertible notes, long term | $70,119,275 | $53,254,219 | | Total financial liabilities, net | $74,675,170 | $65,250,697 | - Convertible notes accrue interest at 15.00% per annum (10.00% cash, 5.00% PIK) and have a conversion price of $1.65 per share 921926 - In 2024, the company issued incentive shares to convertible note lenders, with a fair value of $3,760,909 recorded as a debt discount to be amortized over the debt's term 921 Note 21 – Share-Based Compensation The company recorded $35.7 million in share-based compensation expense in 2024, primarily due to a long-term incentive plan for co-founders, with awards granted under the 2023 Incentive Award Plan Share-Based Compensation Expense | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Long-term incentive plan | $28,279,364 | - | - | | Restricted stock units | $5,349,337 | $1,887,735 | $1,420,763 | | Board of directors compensation | $1,516,887 | - | - | | Stock options given to employees | $514,956 | $101,414 | $215,227 | | Total | $35,660,544 | $1,991,885 | $1,662,883 | - The 2023 Incentive Award Plan authorizes up to 30,002,672 ordinary shares for issuance, with automatic increases based on performance events 945 - As of December 31, 2024, total unrecognized compensation cost related to unvested employee stock options was $3,590,372, to be recognized over a weighted-average period of 3 years 950 Note 25 – Subsequent Events Following FY2024, Marti extended its share repurchase program, secured an additional $25 million in convertible notes, saw its Istanbul taxi lawsuit sent back for retrial, and granted significant RSUs and shares to co-founders upon achieving performance milestones - In March and April 2025, the company secured agreements for an additional $25 million in convertible notes 984985 - The share repurchase program was extended to October 9, 2025, and the ceiling price was increased to $6.00 per share 982 - The lawsuit filed by the Istanbul taxi owners' association was overturned on appeal and sent back for retrial, with the next hearing scheduled for May 23, 2025 986987988 - In January 2025, the company granted a substantial number of RSUs and fully-vested ordinary shares to its co-founders after achieving specific long-term incentive plan (LTIP) milestones 990
Marti Technologies(MRT) - 2024 Q4 - Annual Report