Document and Entity Information
Document and Entity Information - shares | 12 Months Ended | |
Dec. 31, 2023 | Mar. 26, 2024 | |
Cover [Abstract] | ||
Document Type | 10-K | |
Document Annual Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2023 | |
Entity File Number | 001-40904 | |
Entity Registrant Name | MARPAI INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 86-1916231 | |
Entity Address State Or Province | FL | |
Entity Address, Address Line One | 615 Channelside Drive, Suite 207 | |
Entity Address, City or Town | Tampa | |
Entity Address, Postal Zip Code | 33602 | |
City Area Code | 855 | |
Local Phone Number | 389-7330 | |
Title of 12(b) Security | Common Shares, par value $0.0001 | |
Trading Symbol | MRAI | |
Security Exchange Name | NASDAQ | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Document Financial Statement Error Correction [Flag] | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,300,548 | |
Entity Central Index Key | 0001844392 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | FY | |
Amendment Flag | false | |
Auditor Name | UHY LLP | |
Auditor Firm ID | 1195 | |
Auditor Location | Melville, New York |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | |
Current assets: | |||
Cash and cash equivalents | $ 1,146,801 | $ 13,764,508 | |
Restricted cash | 12,344,583 | 9,352,608 | |
Accounts receivable, net | 1,125,159 | 1,437,786 | |
Unbilled receivable | 768,374 | 350,393 | |
Prepaid expenses and other current assets | 891,526 | 1,601,920 | |
Total current assets | 17,084,949 | 26,537,849 | |
Property and equipment, net | 610,860 | 1,506,082 | |
Capitalized software, net | 2,127,694 | 4,588,706 | |
Operating lease right-of-use assets | 2,372,839 | 3,841,810 | |
Goodwill | 3,017,600 | 5,837,060 | |
Intangible assets, net | 5,176,772 | 6,323,279 | |
Security deposits | 1,266,632 | 1,293,166 | |
Other long-term asset | 21,668 | 21,668 | |
Total assets | 31,679,014 | 49,949,620 | |
Current liabilities: | |||
Accounts payable | 4,648,837 | 1,457,670 | |
Accrued expenses | 2,816,154 | 5,274,716 | |
Accrued fiduciary obligations | 11,572,713 | 9,024,463 | |
Deferred revenue | 660,826 | 288,499 | |
Current portion of operating lease liabilities | 512,416 | 1,311,295 | |
Total current liabilities | 20,842,530 | 17,359,844 | |
Other long-term liabilities | 19,401,398 | 20,203,700 | |
Operating lease liabilities, net of current portion | 3,683,822 | 4,771,871 | |
Deferred tax liabilities | 1,189,742 | 1,479,880 | |
Total liabilities | 45,117,492 | 43,815,295 | |
COMMITMENTS AND CONTINGENCIES (Note 19) | |||
STOCKHOLDERS' (DEFICT) EQUITY | |||
Common stock, $0.0001 par value, 227,791,050 shares authorized; 7,960,938 issued and outstanding at December 31, 2023 and 5,319,758 issued and outstanding at December 31, 2022 | [1] | 796 | 532 |
Additional paid-in capital | 63,306,726 | 54,127,893 | |
Accumulated deficit | (76,746,000) | (47,994,100) | |
Total stockholders' (deficit) equity | (13,438,478) | 6,134,325 | |
Total liabilities and stockholders' (deficit) equity | 31,679,014 | 49,949,620 | |
Nonrelated Party | |||
Current assets: | |||
Other receivables | 8,506 | 30,634 | |
Current liabilities: | |||
Other short-term liability | 631,584 | ||
Related Party | |||
Current assets: | |||
Other receivables | $ 800,000 | ||
Current liabilities: | |||
Other short-term liability | $ 3,201 | ||
[1] Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | 12 Months Ended | |
Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ | $ 24,617 | $ 23,458 |
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 227,791,050 | 227,791,050 |
Common stock, shares issued | 7,960,938 | 5,319,758 |
Common stock, shares outstanding | 7,960,938 | 5,319,758 |
Reverse stock split ratio | 0.25 | 0.25 |
Reverse stock split | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | ||
Income Statement [Abstract] | |||
Revenue | $ 37,155,050 | $ 24,341,874 | |
Costs and expenses | |||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 24,239,117 | 17,136,330 | |
General and administrative | 19,176,895 | 12,318,529 | |
Sales and marketing | 6,596,981 | 6,938,513 | |
Information technology | 5,834,255 | 6,372,795 | |
Research and development | 1,311,695 | 3,708,068 | |
Depreciation and amortization | 3,896,833 | 3,538,237 | |
Impairment of goodwill | 3,017,600 | 0 | |
Facilities | 2,472,192 | 1,012,827 | |
Loss on disposal of assets | 335,106 | 273,430 | |
Gain on sale of business unit | (1,748,641) | ||
Total costs and expenses | 65,132,033 | 51,298,729 | |
Operating loss | (27,976,983) | (26,956,855) | |
Other income (expenses) | |||
Other income, net | 488,869 | 234,472 | |
Interest expense | (1,527,449) | (266,778) | |
Foreign exchange loss | (26,475) | (361) | |
Loss before provision for income taxes | (29,042,038) | (26,989,522) | |
Income tax benefit | (290,138) | (521,132) | |
Net loss | $ (28,751,900) | $ (26,468,390) | |
Net loss per share, basic (1) | [1] | $ (4.14) | $ (5.23) |
Net loss per share, fully diluted (1) | [1] | $ (4.14) | $ (5.23) |
Weighted average number of common shares, basic (1) | [1] | 6,951,669 | 5,059,959 |
Weighted average number of common shares, diluted (1) | [1] | 6,951,669 | 5,059,959 |
[1] Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | 12 Months Ended | ||
Jun. 29, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | |||
Reverse stock split | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
Reverse stock split ratio | 0.25 | 0.25 | 0.25 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | ||
Balance at the beginning at Dec. 31, 2021 | $ 29,708,412 | $ 507 | $ 51,233,615 | $ (21,525,710) | ||
Balance at the beginning (in shares) at Dec. 31, 2021 | [1] | 5,074,932 | ||||
Share-based compensation | 2,855,448 | 2,855,448 | ||||
Issuance of stock upon vesting of restricted stock units | 22 | $ 22 | ||||
Issuance of stock upon vesting of restricted stock units (in shares) | [1] | 213,043 | ||||
Shares issued to vendors in exchange for services | 38,627 | $ 1 | 38,626 | |||
Shares issued to vendors in exchange for services (in shares) | [1] | 9,375 | ||||
Issuance of common stock upon exercise of stock options | 206 | $ 2 | 204 | |||
Issuance of common stock upon exercise of stock options (in shares) | [1] | 22,408 | ||||
Net loss | (26,468,390) | (26,468,390) | ||||
Balance at the end at Dec. 31, 2022 | $ 6,134,325 | $ 532 | 54,127,893 | (47,994,100) | ||
Balance at the end (in shares) at Dec. 31, 2022 | 5,319,758 | 5,319,758 | [1] | |||
Share-based compensation | $ 2,098,627 | 2,098,627 | ||||
Issuance of stock upon vesting of restricted stock units | 56 | $ 56 | ||||
Issuance of stock upon vesting of restricted stock units (in shares) | [1] | 557,631 | ||||
Issuance of privately placed shares | 295,500 | $ 15 | 295,485 | |||
Issuance of privately placed shares (in share) | [1] | 150,000 | ||||
Issuance of warrants | 273,753 | $ 0 | 273,753 | |||
Shares issued to vendors in exchange for services | 79,130 | $ 2 | 79,128 | |||
Shares issued to vendors in exchange for services (in shares) | [1] | 25,000 | ||||
Issuance of common stock upon exercise of stock options | 418 | $ 5 | 413 | |||
Issuance of common stock upon exercise of stock options (in shares) | [1] | 49,835 | ||||
Issuance of round up shares in connection with reverse split | 1 | $ 1 | ||||
Issuance of round up shares in connection with reverse split (in shares) | [1] | 8,714 | ||||
Issuance of common stock in connection with public offering, net | 6,431,612 | $ 185 | 6,431,427 | |||
Issuance of common stock in connection with public offering, net (in shares) | [1] | 1,850,000 | ||||
Net loss | (28,751,900) | (28,751,900) | ||||
Balance at the end at Dec. 31, 2023 | $ (13,438,478) | $ 796 | $ 63,306,726 | $ (76,746,000) | ||
Balance at the end (in shares) at Dec. 31, 2023 | 7,960,938 | 7,960,938 | [1] | |||
[1] Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) | 12 Months Ended | ||
Jun. 29, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | |||
Reverse stock split | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. | Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
Reverse stock split ratio | 0.25 | 0.25 | 0.25 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (28,751,900) | $ (26,468,390) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,896,833 | 3,538,237 |
Loss on disposal of assets | 335,106 | 273,430 |
Share-based compensation | 2,098,683 | 3,105,385 |
Warrant expense | 241,553 | |
Shares issued to vendors in exchange for services | 79,130 | 38,623 |
Amortization of right-of-use asset | 1,501,584 | 598,925 |
Goodwill impairment charge | 3,017,600 | 0 |
Gain on sale of business unit | (1,748,641) | |
Non-cash interest | 1,527,449 | 258,787 |
Deferred taxes | (290,138) | (521,132) |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivable | (105,354) | (597,051) |
Prepaid expense and other assets | 710,394 | 892,577 |
Other receivables | 22,128 | 60,864 |
Security deposit | 26,534 | |
Accounts payable | 3,191,167 | 181,436 |
Accrued expenses | (2,496,782) | (2,052,232) |
Accrued fiduciary obligations | 2,548,250 | (12,823,139) |
Operating lease liabilities | (1,886,928) | (661,382) |
Due to related party | (3,201) | (2,805) |
Other liabilities | 337,327 | (1,068,098) |
Other asset | 6,666 | |
Net cash used in operating activities | (15,749,206) | (35,239,299) |
Cash flows from investing activities: | ||
Cash and restricted cash acquired as part of acquisition (Note 4) | 33,388,149 | |
Capitalization of software development costs | (602,805) | |
Proceeds from sale of business unit | 1,000,000 | |
Proceeds from disposal of property and equipment | 26,912 | |
Purchase of property and equipment | (362,768) | |
Net cash provided by investing activities | 1,026,912 | 32,422,576 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock in a public offering, net | 6,431,612 | |
Payments to seller for acquisition (Note 4) | (1,663,168) | |
Proceeds from issuance of warrants | 32,200 | |
Proceeds from issuance of common stock in a private offering, net | 295,500 | |
Proceeds from stock option exercises | 418 | 196 |
Net cash provided by financing activities | 5,096,562 | 196 |
Net decrease in cash, cash equivalents and restricted cash | (9,625,732) | (2,816,527) |
Cash, cash equivalents and restricted cash at beginning of period | 23,117,116 | 25,933,643 |
Cash, cash equivalents and restricted cash at end of period | 13,491,384 | 23,117,116 |
Reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets | ||
Cash and cash equivalents | 1,146,801 | 13,764,508 |
Restricted cash | 12,344,583 | 9,352,608 |
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | 13,491,384 | 23,117,116 |
Supplemental disclosure of non-cash activity investing and financing activities | ||
Measurement period adjustment to goodwill | $ 198,140 | |
Long term liability incurred in connection with the acquisition of Maestro Health, LLC (Note 4) | $ 19,900,000 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Marpai, Inc.'s (“Marpai” or the “Company”) operations are principally conducted through its wholly-owned subsidiaries, Marpai Health, Inc. (“Marpai Health”), Marpai Administrators LLC (“Marpai Administrators”), and Maestro Health LLC (“Maestro”). Marpai Administrators and Maestro are our healthcare payer subsidiaries that provide administration services to self-insured employer groups across the United States. They act as a third-party administrator (“TPA”) handling all administrative aspects of providing healthcare to self-insured employer groups. The Company has combined these two businesses to create what it believes to be the Payer of the Future, which has not only the licenses, processes and know-how of a payer but also the latest technology. This combination allows the Company to differentiate itself in the TPA market by delivering a technology-driven service that it believes can lower the overall cost of healthcare while maintaining or improving healthcare outcomes. Marpai Captive, Inc. (“Marpai Captive”) was founded in March 2022 as a Delaware corporation. Marpai Captive engages in the captive insurance market and commenced operations in the first quarter of 2023. Nature of Business The Company’s mission is to positively change healthcare for the benefit of (i) its Clients who are self-insured employers that pay for their employees’ healthcare benefits and engage the Company to administer Members' healthcare claims, (ii) employees who receive these healthcare benefits from our Clients, and (iii) healthcare providers including doctors, doctor groups, hospitals, clinics, and any other entities providing healthcare services or products. The Company provides benefits outsourcing services to clients in the United States across multiple industries. The Company’s backroom administration and TPA services are supported by a customized technology platform and a dedicated benefits call center. Under its TPA platform, the Company provides health and welfare administration, dependent eligibility verification, Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, and benefit billing services. The Company continues to monitor the effects of the global macroeconomic environment, including increasing inflationary pressures; supply chain disruptions; social and political issues; regulatory matters, geopolitical tensions; and global security issues. The Company is also mindful of inflationary pressures on its cost base and is monitoring the impact on customer preferences. Reverse Stock Split On June 29, 2023 the Company effectuated a one-for-four reverse stock split of its outstanding shares of common stock. The number of authorized shares was not adjusted in connection with the reverse stock split. Throughout these consolidated financial statements, common stock share and per share information, including employee stock options, restricted stock awards, restricted stock units and warrants, have been revised for all periods presented to give effect to the reverse stock split. |
Liquidity and Going Concern
Liquidity and Going Concern | 12 Months Ended |
Dec. 31, 2023 | |
LIQUIDITY | |
Liquidity and Going Concern | NOTE 2 – LIQUIDITY AND GOING CONCERN As shown in the accompanying consolidated financial statements as of and for the year ended December 31, 2023, the Company has an accumulated deficit of approximately $ 76.7 million and negative working capital of approximately $ 3.8 million. As of December 31, 2023, the Company had short-term debt of approximately $ 0.6 million and long-term debt of approximately $ 19.4 million and approximately $ 1.1 million of unrestricted cash on hand. For the years ended December 31, 2023 and 2022, the Company has reported operating losses and negative cash flows from operations. The Company has met its cash needs primarily through proceeds from issuing convertible notes, warrants, and sales of its common stock. The Company currently projects that it will need additional capital to fund its current operations and capital investment requirements until the Company scales to a revenue level that permits cash self-sufficiency. As a result, the Company needs to raise additional capital or secure debt funding to support on-going operations until such time. This projection is based on the Company’s current expectations regarding revenues, expenditures, cash burn rate and other operating assumptions. The sources of this capital are anticipated to be from the sale of equity and/or issuance of debt. Alternatively, or in addition, the Company may seek to sell assets which it regards as non-strategic. Any of the foregoing may not be achievable on favorable terms, or at all. Additionally, any debt or equity transactions may cause significant dilution to existing stockholders. If the Company is unable to raise additional capital moving forward, its ability to operate in the normal course and continue to invest in its product portfolio may be materially and adversely impacted and the Company may be forced to scale back operations or divest some or all of its assets. As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern through twelve months from the date these consolidated financial statements are issued. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. On December 14, 2023, the Company, through Maestro, entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Payflex Systems USA, Inc. (“Payflex”), pursuant to which the Company agreed to sell certain assets relating to the consumer directed benefits business. Pursuant to the Asset Purchase Agreement, Payflex agreed to pay the Company $ 1 million in cash as well as assume certain liabilities. In addition, provided that two customer agreements remain in place by September 1, 2024, and January 1, 2025, respectively, Payflex shall pay an additional contingent fee of $ 500,000 per customer agreement. The Asset Purchase Agreement contains customary representations and warranties and covenants. The transaction contemplated by the Asset Purchase Agreement closed on December 14, 2023. On December 14, 2023, the Company entered into a securities purchase agreement (the “First SPA”) with HillCour Investment Fund, LLC, an entity controlled by the Company’s Chief Executive Officer, pursuant to which the Company agreed to issue and sell 150,000 shares of Common Stock in a private placement, at a purchase price of $ 1.97 per share (or the consolidated closing bid price of the Company’s Common Stock on Nasdaq as of December 14, 2023). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), expressed in U.S. dollars. The accompanying consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with GAAP. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Maestro is included from November 1, 2022, the date of the Maestro Acquisition (see Note 4). All significant intercompany balances and transactions have been eliminated in consolidation. Business Combination The Company accounts for business combinations in accordance with the FASB Accounting Standard Codification (“ASC”) 805, Business Combinations . Accordingly, identifiable tangible and intangible assets acquired and liabilities assumed are recorded at their estimated fair values, the excess of the purchase consideration over the fair values of net assets acquired is recorded as goodwill, and transaction costs are expensed as incurred. The Company includes the results of operations of the businesses that are acquired as of the acquisition date. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, valuation of share-based compensation, accounting for warrants, allowance for credit losses, useful lives of internally developed software, fair values of net assets acquired, goodwill, intangible assets and property and equipment, incurred but not reported (“IBNR”) reserves, whether an arrangement is or contains a lease, the incremental borrowing rate used for operating leases, income tax accruals, the valuation allowance for deferred income taxes, and contingent liabilities. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates. Cash and Cash Equivalents Cash consists of funds held in bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts. Concentrations of Credit Risk The Company maintains cash accounts with financial institutions. At times, balances in these accounts may exceed federally insured limits. The amounts over the federally insured limits as of December 31, 2023, and 2022 were approximately $ 343,000 and $ 13,137,000 , respectively. No losses have been incurred to date on any deposit balances. For the year ended December 31, 2023 , we had one customer that accounted for 11.0 % of total revenue. For the year ended December 31, 2022 , no customer accounted for greater than 10% of total revenue. At December 31, 2023 , two customers accounted for 16.6 %, and 14.0 % of accounts receivable, respectively. At December 31, 2022, one customer accounted for 11.2 % of accounts receivable. Restricted Cash Restricted cash balances are composed of funds held on behalf of clients in a fiduciary capacity, cash held in a separate bank account pledged to a bank as collateral for a bank guarantee provided to the lessor to secure the Company’s obligations under a lease agreement, cash in a money market account as required by a credit card company for collateral, and a certificate of deposit ("CD") held for collateral for a letter of credit. Fiduciary funds generally cannot be utilized for general corporate purposes and are not a source of liquidity for the Company. A corresponding fiduciary obligation, included in current liabilities in the accompanying consolidated balance sheets, exists for disbursements to be made on behalf of the clients and may be more than the restricted cash balance if payment from customers has not been received. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accounts Receivable Accounts receivable are recorded at the net invoiced amount, net of allowances for credit losses, and do not bear interest. Unbilled receivables are for services rendered but not yet billed to the customer, which typically occurs within one month. The Company periodically reviews accounts receivable balances and provides an allowance for credit losses to the extent deemed uncollectible. The allowance for credit losses is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable and unbilled receivables. The Company determines expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition, and our expectations of changes in macro-economic conditions that may impact the collectability of outstanding receivables. Balances are considered past due based on invoiced terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company had an allowance for credit losses of $ 24,617 and $ 23,458 , as of December 31, 2023, and 2022, respectively. Fair Value Measurements The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are what market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are those that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The three levels of inputs that may be used to measure fair value are described below: Level 1—Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data. Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value measurement. The Company measures its long-lived assets, including property and equipment and intangible assets (including goodwill), at fair value on a non-recurring basis when a triggering event requires such evaluation. During the year ended December 31, 2023, the Company recorded a goodwill impairment charge of $ 3,017,600 related to its goodwill (see Note 7). The goodwill impairment charge was determined based on a combination of market capitalization including quoted market prices (Level 1 inputs) and a discounted cash flow analysis (Level 3 inputs). Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include accounts receivable, accounts payable, accrued expenses, and debt at fixed interest rates, approximate their fair values at December 31, 2023, and 2022, principally due to the short-term nature, maturities, or nature of interest rates of the above listed items. Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or circumstances exist that indicate the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets is measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by the assets. If the asset or asset group is considered to be impaired, an impairment loss would be recorded to adjust the carrying amounts to the estimated fair value. Management has determined that no impairment of long-lived assets exists, and accordingly, no impairment adjustments to the carrying amounts of the Company’s long-lived assets have been made for the years ended December 31, 2023, and 2022 . Property and Equipment Property and equipment consisting of office and computer equipment, furniture and fixtures, and leasehold improvements are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives. Useful Lives Equipment 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capitalized Software The Company complies with the guidance of ASC Topic 350-40, “Intangibles—Goodwill and Other—Internal Use Software”, in accounting for its internally developed system projects that it utilizes to provide its services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for its intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years . Amortization commences when the software is available for its intended use. Goodwill Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over the acquisition-date amounts recognized for the net identifiable assets acquired. Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. The Company operates in one reporting segment and reporting unit; therefore, goodwill is tested for impairment at the consolidated level. First, the Company assesses qualitative factors to determine whether or not it is more likely than not that the fair value of a reporting unit is less than it’s carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative goodwill impairment test comparing the fair value of the applicable reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, the Company recognizes an impairment loss in the consolidated statement of operations for the amount by which the carrying amount exceeds the fair value of the reporting unit. The Company performs its annual goodwill impairment test at December 31. There was goodwill impairment of $ 3,017,600 and $ 0 for the years ended December 31, 2023, and 2022 , respectively. Intangible Assets Intangible assets consist of customer relationships, non-compete agreements, and amounts attributed to patent and patent applications that were acquired through an acquisition and are amortized on a straight-line basis over useful lives ranging from five to ten years . The Company’s intangible assets are reviewed for impairment when events or circumstances indicate their carrying amounts may not be recoverable. The Company reviews the recoverability of its intangible assets by comparing the carrying value of such assets to the related undiscounted value of the projected cash flows associated with the assets, or asset group. If the carrying value is found to be greater, the Company records an impairment loss for the excess of book value over fair value. No impairment of the Company’s intangible assets was recorded for the years ended December 31, 2023, and 2022 . Income Taxes The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled. The Company regularly reviews deferred tax assets for realizability and establishes valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies. If the Company’s assessment of the realizability of a deferred tax asset change, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time. The Company follows ASC Topic 740-10-65-1 in accounting for uncertainty in income taxes by prescribing rules for recognition, measurement, and classification in financial statements of tax positions taken or expected to be in a tax return. This prescribes a two-step process for the financial statement measurement and recognition of a tax position. The first step involves the determination of whether it is more likely than not (greater than 50 percent likelihood) that a tax position will be sustained upon examination, based on the technical merits of the position. The second step requires that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon ultimate settlement. This topic also provides guidance on the accounting for related interest and penalties, financial statement classification and disclosure. The Company’s policy is that any interest or penalties related to uncertain tax positions are recognized in income tax expense when incurred. The Company has no uncertain tax positions or related interest or penalties requiring accrual at December 31, 2023, and 2022 . Revenue Recognition Third Party Administrator Revenue Revenue is recognized when control of the promised services is transferred to the Company’s customers in an amount that reflects the consideration expected to be entitled to in exchange for those services. As the Company completes its performance obligations, it has an unconditional right to consideration, as outlined in the Company’s contracts. Contract Balances At December 31, 2023, and 2022 , the balances of the Company’s accounts receivable from contracts with customers, net of related allowances for credit losses, were $ 1,125,159 and $ 1,437,786 , respectively, and the balance of the Company’s unbilled receivable from a contract with a customer was $ 768,374 and $ 350,393 , respectively. When the Company receives consideration from a customer prior to transferring services to the customer under the terms of the customer contracts, it records deferred revenue on the Company’s consolidated balance sheet, which represents a contract liability. At December 31, 2023, and 2022, the balance of deferred revenue was $ 660,826 and $ 288,499 , respectively. The Company anticipates that it will satisfy all of its performance obligations associated with its contract liabilities within a year. The Company also provides certain performance guarantees under their contracts with customers. Customers may be entitled to receive compensation if the Company fails to meet the guarantees. Actual performance is compared to the contractual guarantee for each measure throughout the period. At December 31, 2023 and 2022, the Company had performance guarantee liabilities of $ 165,464 and $ 244,029 , respectively, which are included in accrued expenses on the accompanying consolidated balance sheets. Significant Payment Terms Generally, the Company’s accounts receivable are expected to be collected in 30 days in accordance with the underlying payment terms. Invoices for services are typically sent to the customer on the 15th day of the month prior to the service month with a 10-day payment term. The Company does not offer discounts if the customer pays some or all of the invoiced amount prior to the due date. Consideration paid for services rendered by the Company is nonrefundable. Therefore, at the time revenue is recognized, the Company does not estimate expected refunds for services. The Company uses the practical expedient and does not account for significant financing components because the period between recognition and collection does not exceed one year for all of its contracts. Timing of Performance Obligations All of the Company’s contracts with customers obligate the Company to perform services. Services provided include health and welfare administration, dependent eligibility verification, COBRA administration, benefit billing, cost containment services and care management services. Revenue is recognized over time as services are provided as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document, and report claims, and payment is received from the customer. The Company has the right to receive payment for all services rendered. Determining and Allocating the Transaction Price The transaction price of a contract is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. To determine the transaction price of a contract, the Company considers its customary business practices and the terms of the contract. For the purpose of determining transaction prices, the Company assumes that the services will be transferred to the customer as promised in accordance with existing contracts and that the contracts will not be canceled, renewed, or modified. The Company’s contracts with customers have fixed fee prices that are determined on a per covered employee per month basis. The Company includes amounts of variable consideration in a contract’s transaction price only to the extent that it is probable that the amounts will not be subject to significant reversals (that is, downward adjustments to revenue recognized for satisfied performance obligations). In determining amounts of variable consideration to include in a contract’s transaction price, the Company relies on its experience and other evidence that supports its qualitative assessment of whether revenue would be subject to a significant reversal. The Company considers all the facts and circumstances associated with both the risk of a revenue reversal arising from an uncertain future event and the magnitude of the reversal if that uncertain event were to occur. Cost of Revenue Cost of revenues consists of (i) service fees, which primarily include vendor fees associated with the client’s benefit program selections, (ii) the direct labor cost associated with claims management and processing services, and (iii) direct labor costs associated with providing customer support and services to clients, Members, and other external stakeholders as well as direct labor costs associated with care and case management services. Captive Revenue All general insurance premiums pertain to annual policies and are reflected in income on a pro-rata basis. Loss and Loss Adjustment Expenses The establishment of loss reserves by the primary insurer is a reasonably complex and dynamic process influenced by numerous factors. These factors principally include past experience with like claims. Consequently, the reserves established are a reflection of the opinions of a large number of persons and the Company is exposed to the possibility of higher or lower than anticipated loss cost due to real expense. Share-Based Compensation The Company accounts for share-based awards issued to employees in accordance with ASC Topic 718, “Compensation—Stock Compensation”. In addition, the Company issues stock options to non-employees in exchange for consulting services and accounts for these in accordance with the provisions of Accounting Standards Update (“ASU”) 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”. Compensation expense is measured at the grant date, based on the calculated fair value of the award, and recognized as an expense over the requisite service period, which is generally the vesting period of the award. For modification of share-based payment awards, the Company records the incremental fair value of the modified award as share-based compensation on the date of modification for vested awards or over the remaining vesting period for unvested awards. The incremental compensation is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification. In addition, the Company records the remaining unrecognized compensation cost for the original cost for the original award on the modification date over the remaining vesting period for unvested awards. The Company estimates the expected term of stock options granted to employees using the simplified method, whereby the expected term equals the average of the vesting term and the original contractual term of the option. The Company utilizes this method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. For stock options granted to non-employees, the contractual term of the option is utilized as the basis for the expected term assumption. All other assumptions used to calculate the grant date fair value are generally consistent with the assumptions used for options granted to employees. For purposes of calculating share-based compensation, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the Company’s stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The expected volatility is primarily based on the historical volatility of company data while the expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected option term. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts. If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what has been recorded in the past. If there is a difference between the assumptions used in determining share-based compensation expense and the actual factors which become known over time, specifically with respect to anticipated forfeitures, the Company may change the input factors used in determining share-based compensation costs for future grants. These changes, if any, may materially impact the Company’s results of operations in the period such changes are made. Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. In addition, the Company accounts for forfeitures of awards as they occur. For share-based awards that vest based on performance conditions, expense is recognized when it is probable that the conditions will be met. Warrants to Acquire Common Shares: The Company accounts for common stock warrants as either equity-classified or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 “Distinguishing Liabilities from Equity” ("ASC 480") and ASC 815 “Derivatives and Hedging” ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Foreign Currency Translation For non-U.S. operations, the functional currency is U.S. dollars since these operations are a direct and integral component or extension of the parent company’s operations. As a result, the transactions of those operations that are denominated in foreign currencies are re-measured into U.S. dollars, and any resulting gains or losses are included in earnings. Ear nings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares for the period, considering the effect of participating securities. Diluted earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. At December 31, 2023 and 2022 , there were 1,352,153 and 957,930 common share equivalents, respectively. For the years ended December 31, 2023 and 2022 , these potential shares were excluded from the shares used to calculate diluted net loss per share as their effect would have been antidilutive. Segment Reporting Operating segments are defined as components of an entity for which separate discrete financial information is available. The Chief Operating Decision Maker (“CODM”) reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment. The Company presents financial information about its operating segment and geographical areas in Note 14 to the consolidated financial statements. Offering Costs The Company capitalizes certain legal, accounting, and other third-party fees that are directly related to an equity financing that is probable of successful completion until such financing is consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received as a result of the financing. Should a planned equity financing be abandoned, terminated, or significantly delayed, the deferred offering costs are immediately written off to operating expenses in the accompanying consolidated statements of operations in the period of determination. Leases The Company’s leases are accounted for under FASB ASC Topic 842, “ Leases ”. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities are recorded based on the present value of lease payments over the expected lease term and adjusted for lease incentives. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Options to extend or terminate a lease are included in the calculation of the lease term to the extent that the option is reasonably certain of exercise. The right-of-use (“ROU”) asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received. ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease incentives are recognized when earned and reduce our operating lease asset related to the lease. They are amortized through the operating lease assets as reductions of lease expense over the lease term. Leases with an initial term of 12 months or less that do contain purchase options or renewal terms that the Company is reasonably certain to exercise are not recorded on the accompanying consolidated balance sheets. The Company recognizes the lease expense for such leases on a straight-line basis in the accompanying consolidated statements of operations over the lease term. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. Private companies are those companies that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, it adopts the new or revised standard at the time private companies adopt the new or revised standard, unless it chooses to early-adopt the new or revised accounting standard. Therefore, the Company’s consolidated financial statements may not be comparable to certain public companies. Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $ 0 and $ 80,925 for the years ended December 31, 2023 and 2022 , respectively. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recently Issued Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (Topic 805). This ASU r |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2023 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 4 – ACQUISITIONS Maestro On November 1, 2022, the Company consummated the acquisition of Maestro. Pursuant to the terms of the Purchase Agreement (“Maestro Agreement”), Marpai agreed to acquire all of the membership interests (the “Units”) of Maestro. In consideration for Marpai’s acquisition of the Units, Marpai agreed to pay the seller (the “Seller”) an aggregate purchase price (the “Purchase Price”) of $ 19,900,000 determined on the closing date (the “Base Purchase Price”), which shall be payable on or before April 1, 2024 (the “Payment Date”), and shall accrue interest until such time that is paid, such that on the Payment Date the Purchase Price, plus all accrued and unpaid interest, shall equal $ 22,100,000 (the “Adjusted Purchase Price”). Any unpaid portion of the Purchase Price shall accrue interest at ten percent ( 10 %) per annum, compounding annually, calculated on the basis of a 365-day year for the actual number of days elapsed (the “Specified Rate”), and shall be repaid as promptly as practicable to the Seller. In addition, in the event Marpai or its subsidiaries receive proceeds from the sale of any securities in a private placement or public offering of securities (each an “Offering”), then Marpai shall pay to the Seller an amount equal to thirty-five percent ( 35 %) of the net proceeds of the Offering no later than sixty ( 60 ) days after the closing of Offering until such time as the Purchase Price has been paid in full. Notwithstanding the foregoing, Marpai shall be required to make cumulative payments, representing the Adjusted Purchase Price and any additional interest that will accrue on the Adjusted Purchase Price after the Payment Date, as follows: (i) $ 5,000,000 to be paid by December 31, 2024, (ii) $ 11,000,000 of cumulative payments to be paid by December 31, 2025, and (iii) $ 19,000,000 of cumulative payments to be paid by December 31, 2026 and (iv) $ 28,000,000 of cumulative payments to be paid by December 31, 2027. On April 19, 2023, the Company closed a public offering of 1,850,000 shares of common stock at a public offering price of $ 4.00 per share, for gross proceeds of $ 7.4 million. After deducting underwriters' discounts and offering expenses, the net proceeds from the public offering were approximately $ 6.4 million. In accordance with the terms of the Maestro agreement, $ 2,294,751 or 35 % of the net proceeds from the offering were expected to be used to pay down the debt to the Seller. Based on an agreement reached with the Seller on July 18, 2023, 50 % of the amount due or $ 1,147,376 was paid to the Seller on July 19, 2023, and the balance will be paid no later than September 18, 2023. On September 18, 2023, Marpai paid the Seller $ 200,000 and the parties agreed that the balance of $ 947,376 will be paid over the course of six payments of $ 157,896 no later then April 2024 . As of December 31, 2023, the outstanding principal balance is $ 19,900,000 and the accrued interest on the principal is $ 122,982 for a total of $ 20,022,982 of which $ 631,584 is in other short-term liabilities and $ 19,391,398 is other long-term liabilities. On February 7, 2024, the Company entered into Amendment No. 1 to Purchase Agreement (the “AXA Amendment”) with AXA S.A., a French société anonyme (“AXA”). The AXA Amendment amends the Membership Interest Purchase Agreement, dated August 4, 2022 (the “AXA Agreement”), executed by and among the Company, XL America Inc., a Delaware corporation, Seaview Re Holdings Inc., a Delaware corporation and AXA, pursuant to which the Company acquired all the membership interests of Maestro. Pursuant to the AXA Amendment, the parties agreed to reduce the Base Purchase and the Full Base Amount each Price (as defined in the AXA Agreement) by three million dollars in the aggregate, provided that by December 31, 2024, (i) the Company’s largest shareholder has contributed at least three million dollars in equity, (ii) the Company maintains a listing of its securities on Nasdaq or a nationally recognized stock exchange and (iii) between February 29, 2024 and April 15, 2024, the Company makes all timely payments owed under the AXA Agreement (collectively, the “Reduction Criteria”). In addition, the AXA Amendment provides that the requirement by the Company to pay AXA an amount equal to thirty five percent of the net proceeds, which shall be deferred for any such funds raised in calendar year 2024 such that any such payments shall be paid no later than January 15, 2025, and any amounts due as a result of private offerings of any officers or directors of the Company shall be due and payable no later than December 31, 2025. The AXA Amendment also provides that the Company shall make three monthly payments of $ 157,896 on or prior to February 29, 2024, March 31, 2024 and April 15, 2024 for the 2024 year, as well as make such total accumulated annual payments of $ 2,294,751 , $ 5,300,000 , $ 13,300,000 and $ 22,300,000 in years 2024, 2025, 2026 and 2027 if the Reduction Criteria are met or $ 2,294,751 , $ 8,300,000 , $ 16,300,000 and $ 25,300,000 in years 2024, 2025, 2026 and 2027. The Company made the payment of $ 157,896 by February 29, 2024. The following table represents the allocation of the purchase consideration among Maestro’s assets acquired and liabilities assumed at their acquisition-date fair values: December 31, 2022 Adjustment December 31, 2023 Purchase Price Purchase Price $ 19,900,000 $ 19,900,000 Purchase Price Allocation Cash $ 17,081,602 $ 17,081,602 Restricted cash 16,306,547 16,306,547 Accounts receivable 321,198 321,198 Unbilled receivable 646,189 646,189 Prepaid expenses and other current assets 1,751,371 1,751,371 Property and equipment 921,680 ( 159,920 ) 761,760 Operating lease - right of use assets 2,555,375 2,555,375 Goodwill 3,454,143 198,140 3,652,283 Trademarks 800,000 800,000 Customer relationships 840,000 840,000 Security deposits 1,240,889 1,240,889 Account payable ( 150,328 ) ( 150,328 ) Accrued expenses ( 4,554,280 ) ( 38,220 ) ( 4,592,500 ) Accrued fiduciary obligations ( 16,306,547 ) ( 16,306,547 ) Operating lease liabilities ( 4,816,490 ) ( 4,816,490 ) Deferred revenue ( 191,349 ) ( 191,349 ) Total fair value of net assets acquired and liabilities assumed $ 19,900,000 $ — $ 19,900,000 The Company recorded a measurement period adjustment to goodwill for property and equipment of $ 159,920 , that was subsequently identified as not received during the acquisition, and accrued expenses of $ 38,220 , relating to pre-acquisition liabilities. The following table summarizes the estimated fair values of Maestro’s identifiable intangible assets, their estimated useful lives and expected amortization periods: Useful Acquisition Life in Fair Value Years Trademarks $ 800,000 5 Years Customer relationships 840,000 5 Years The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2022: Year Ended December 31, 2022 (pro forma) Revenue $ 40,406,192 Net loss ( 39,774,661 ) The unaudited pro forma financial information includes adjustments that are directly attributable to the business combination and are factually supportable. The pro forma adjustments include incremental amortization expense of $ 82,000 related to intangible and tangible assets acquired. The unaudited pro forma results do not reflect any cost-saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating Maestro into the Marpai legacy business. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment consist of the following at: December 31, 2023 December 31, 2022 Equipment $ 140,890 $ 402,675 Furniture and fixtures 620,870 1,007,699 Leasehold improvements — 745,453 Total cost 761,760 2,155,827 Accumulated depreciation ( 150,900 ) ( 649,745 ) Property and equipment, net $ 610,860 $ 1,506,082 Depreciation expense was $ 340,673 and $ 397,470 for the years ended December 31, 2023 and 2022 , respectively. |
Capitalized Software
Capitalized Software | 12 Months Ended |
Dec. 31, 2023 | |
Capitalized Computer Software, Net [Abstract] | |
Capitalized Software | NOTE 6 – CAPITALIZED SOFTWARE Capitalized software consists of the following at: December 31, 2023 December 31, 2022 Capitalized software $ 8,094,385 $ 8,094,385 Accumulated amortization ( 5,966,691 ) ( 3,505,679 ) Capitalized software, net $ 2,127,694 $ 4,588,706 Amortization expense was $ 2,461,013 and $ 2,318,953 for the year ended December 31, 2023 and 2022, respectively. Estimated amortization for capitalized software for future periods is as follows: Year Ended December 31, 2024 $ 1,542,007 2025 496,744 2026 88,943 $ 2,127,694 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | NOTE 7 – GOODWILL AND INTANGIBLE ASSETS Goodwill consists of the following: Amount Balance as of December 31, 2022 $ 5,837,060 Measurement period adjustment to goodwill (Note 4) 198,140 Impairment of goodwill ( 3,017,600 ) Balance as of December 31, 2023 $ 3,017,600 The Company conducts an impairment test of goodwill on an annual basis and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce the Company’s fair value below its net equity value. During the year ended December 31, 2022, the Company determined that its goodwill was not impaired. As circumstances changed during the year ended December 31, 2023, that would, more likely than not, reduce the Company’s fair value below its net equity value, the Company performed qualitative and quantitative analyses, assessing trends in market capitalization, current and future cash flows, revenue growth rates, and the impact of macroeconomic conditions on the Company and its performance. Based on the analysis performed in connection with its annual goodwill impairment test, and primarily due to changes in the Company’s stock price and market capitalization as well as changes in the Company’s executive management team and its overall operational and financial strategy in the fourth quarter of 2023, it was determined that goodwill was impaired. As a result, the Company recorded a goodwill impairment charge in the amount of $ 3,017,600 for the year ended December 31, 2023. NOTE 7 – GOODWILL AND INTANGIBLE ASSETS (CONTINUED) Intangible assets consist of the following: December 31, 2023 Useful Gross Carrying Accumulated Net Net Carrying Life Amount Amortization Disposal Amount Trademarks 5 - 10 Years $ 2,320,000 $ ( 604,675 ) $ — $ 1,715,325 Noncompete agreements 5 Years 990,000 ( 544,500 ) — 445,500 Customer relationships 5 - 7 Years 3,760,000 ( 1,343,144 ) ( 51,359 ) 2,365,497 Patents and patent applications (*) 650,450 — — 650,450 $ 7,720,450 $ ( 2,492,319 ) $ ( 51,359 ) $ 5,176,772 (*) Patents have yet to be approved by US Patent Office. Useful life is determined upon placement into service after approval. December 31, 2022 Useful Gross Carrying Accumulated Net Net Carrying Life Amount Amortization Disposal Amount Trademarks 5 - 10 years $ 2,320,000 $ ( 292,671 ) $ — $ 2,027,329 Noncompete agreements 5 Years 990,000 ( 346,500 ) — 643,500 Customer relationships 5 - 7 Years 3,760,000 ( 758,000 ) — 3,002,000 Patents and patent applications (*) 650,450 - — 650,450 $ 7,720,450 $ ( 1,397,171 ) $ — $ 6,323,279 Amortization expense was $ 1,095,147 and 821,814 for the years ended December 31, 2023, and 2022, respectively. Customer relationships of $ 67,000 with accumulated amortization of $ 15,641 were disposed of as part of the sale of a business unit during the year ended December 31, 2023. On December 14, 2023, the Company, through Maestro, entered into an Asset Purchase Agreement with Payflex, pursuant to which the Company agreed to sell certain assets relating to the consumer directed benefits business. Pursuant to the Asset Purchase Agreement, Payflex agreed to pay the Company $ 1 million in cash as well as assume certain liabilities. In addition, provided that two customer agreements remain in place at September 1, 2024 and January 1, 2025, respectively, Payflex shall pay an additional contingent fee of $ 500,000 per customer agreement. The Asset Purchase Agreement contains customary representations and warranties and covenants. The transaction contemplated by the Asset Purchase Agreement closed on December 14, 2023. Estimated amortization for trademarks, noncompete agreements and customer relationships for future periods is as follows: Year Ended December 31, 2024 $ 1,086,863 2025 1,086,863 2026 938,645 2027 815,676 2028 256,284 Thereafter 341,991 Assets not placed in services 650,450 $ 5,176,772 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Lessee Disclosure [Abstract] | |
Leases | NOTE 8 – LEASES The Company leases office space and certain equipment under operating leases that expire between 2024 and 2030 . The terms of the leases provide for rental payments with escalation clauses and contain options that allow the Company to extend or terminate the lease agreements. Operating lease costs recorded in the accompanying consolidated statements of operations were $ 1,479,399 and $ 1,117,193 for the years ended December 31, 2023, and 2022. The Company’s future lease payments, which are presented as current maturities of operating leases and noncurrent operating lease liabilities on the Company’s accompanying consolidated balance sheet as of December 31, 2023, including any optional extensions, are as follows: Year Ended December 31, 2024 $ 909,296 2025 916,671 2026 927,671 2027 939,600 2028 876,385 Thereafter 1,085,258 Total lease payments 5,654,881 Less: imputed interest ( 1,458,643 ) Present value of lease liabilities 4,196,238 Less: current lease liabilities ( 512,416 ) Long-term lease liabilities $ 3,683,822 The weighted average remaining lease term, including the optional extension, was 6.1 years and 5.9 years as of December 31, 2023, and 2022, respectively. The weighted average operating lease discount rate was 9.9 % and 9.11 % as of December 31, 2023, and 2022, respectively. The Company does not recognize lease liabilities or lease assets on the consolidated balance sheets for short-term leases (leases with a lease term of twelve months or less as of the commencement date). Rather, any short-term lease payments are recognized as an expense on a straight-line basis over the lease term. The Company recognized expense of $ 132,080 for short-term lease commitments. On January 15, 2021, Marpai Administrators entered into a sublease with an expiration date of November 30, 2023. The sublease calls for monthly rent payments of approximately $ 14,000 plus tax. On July 18, 2023, Maestro entered into a sublease with an expiration date of July 31, 2027. The sublease calls for monthly rent payments of $ 40,000 . Sublease income recorded as other income for the years ended December 31, 2023, and 2022 was approximately $ 368,172 and $ 196,465 , respectively. The following is a summary as of December 31, 2023, of the contractual sublease income: Year Ended December 31, 2024 $ 480,000 2025 480,000 2026 480,000 2027 280,000 Total sublease income $ 1,720,000 |
Loss and Loss Adjustment Expens
Loss and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2023 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Loss and Loss Adjustment Expenses | NOTE 9 – LOSS AND LOSS ADJUSTMENT EXPENSES The following tables show changes in aggregate reserves for the Company's loss and loss adjustment expenses: December 31, 2023 December 31, 2022 Net reserves at January 1, $ — $ — Incurred loss and loss adjustment expenses Provisions for insured events of the current year 388,498 — Change in provision for insured events of prior year — — Total incurred loss and loss adjustment expense 388,498 — Payments Loss and loss adjustment expenses attributable to insured events of the current year 122,957 — Loss and loss adjustment expenses attributable to insured events of the prior year — — Total payments 122,957 — Net reserves at December 31, $ 265,541 $ — |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | NOTE 10 – REVENUE Disaggregation of Revenue The following tables illustrates the disaggregation of revenue by similar products: December 31, 2023 December 31, 2022 Third Party Administrator services $ 36,829,145 $ 24,341,874 Captive insurance 325,905 — Total $ 37,155,050 $ 24,341,874 |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation | NOTE 11 – SHARE-BASED COMPENSATION Global Incentive Plan On May 31, 2022, the shareholders of the Company approved the Company’s Board of Directors proposal to increase the Company’s Global Incentive Plan (the “Plan”) by 1,575,000 shares, thus bringing the total number of stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) that may be issued pursuant to the Plan to 1,950,855 . On May 31, 2023, the shareholders of the Company approved the Company’s Board of Directors' proposal to increase the Company’s Plan by an additional 500,000 shares, thus bringing the total number of stock options, RSUs and RSAs that may be issued pursuant to the Plan to 2,450,855 . Under the terms of the Plan, on the grant date, the Board of Directors determines the vesting schedule of each stock option and RSUs on an individual basis. All stock options expire the earlier of (1) ten years from the date of the grant, (2) May 31, 2031, or (3) 90 days after the termination of employment of the grantee. Stock Options The fair value of stock options and share awards granted under the stock option plan during the year ended December 31, 2023, and 2022 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants: 2023 2022 Risk-free interest rates 3.43 % to 4.44 % 3.61 % Expected life 5 years 5 years Expected volatility 41 % to 186.14 % 41.00 % Expected dividend yield 0.00 % 0.00 % The following table summarizes the stock option activity: Weighted Average Aggregate Number of Weighted Average Remaining Intrinsic Options Exercise Price Contractual Term Value Balance at January 1, 2023 931,934 $ 5.88 8.91 $ 203,295 Granted 717,250 2.56 Forfeited/Cancelled ( 385,394 ) 4.99 Exercised ( 49,833 ) 0.01 Balance at December 31, 2023 1,213,957 4.43 8.70 $ — Exercisable at December 31, 2023 707,435 $ 5.32 8.43 $ — The following table summarizes the Company’s non-vested stock options activity: Weighted-Average Non-vested Options Grant Date Fair Outstanding Value At January 1, 2023 507,664 $ 2.64 Options granted 717,250 1.50 Options forfeited/cancelled ( 331,200 ) 2.12 Options exercised ( 9,870 ) 5.42 Options vested ( 377,322 ) 1.80 At December 31, 2023 506,522 $ 1.67 NOTE 11 – SHARE-BASED COMPENSATION (CONTINUED) For the years ended December 31, 2023, and 2022, the Company recognized $ 894,154 and $ 828,860 of stock compensation expense relating to stock options, respectively. As of December 31, 2023, there was $ 824,918 of unrecognized stock compensation expense related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately two years . Restricted Stock Awards In July 2019, the Board of Directors authorized grants of restricted stock awards (“RSAs”) through a restricted stock award purchase agreement to certain founders, consultants, and advisors of the Company. Certain grants to the Company’s founders were fully vested at the date of incorporation, other grants vest over a four-year period on each anniversary of the grant date, based on continued employment, and other grants vested based on various milestones. The shares of common stock underlying the RSAs are issued upon grant. The following table summarizes the restricted stock awards activity: Weighted-Average Restricted Stock Grant Date Fair Value Awards Per Share Outstanding at January 1, 2023 55,735 $ 5.92 Granted — — Forfeited/cancelled — — Vested ( 55,735 ) 5.92 Outstanding at December 31, 2023 — $ — For the years ended December 31, 2023, and 2022, the Company recognized $ 297,354 and $ 1,301,599 of stock compensation expense relating to RSAs, respectively. As of December 31, 2023 , there was $ 0 of unrecognized compensation expense related to unvested restricted share awards. Restricted Stock Units On June 14, 2022, the Board of Directors of the Company authorized the grant of 356,851 RSUs, of which 336,538 were granted to an officer of the Company who joined the Company in February 2022. Of the RSUs granted to the officer, 48,077 vested immediately and the balance of 288,461 vested in equal quarterly installments through February 28, 2023. Under the terms of the officer’s employment agreement, the Company also agreed to guarantee the minimum value of the RSUs on their vesting dates. On February 28, 2023, the Company issued 33,387 fully vested RSUs to an officer upon his one-year anniversary of employment. On August 2, 2023, the Company issued 28,090 fully vested RSUs to an officer. On August 16, 2023, the Company issued 400,000 RSUs which fully vested on September 7, 2023, to an advisor, and the Company also agreed to guarantee the minimum value of the RSUs on their vesting dates. The Company accrued $ 548,450 in accounts payable in the consolidated balance sheet, reflecting this minimum value obligation as of December 31, 2023. The following table summarizes the restricted stock units activity: Restricted Stock Units Value Outstanding at January 1, 2023 72,957 $ 4.44 Granted 580,227 1.58 Forfeited/cancelled ( 127,605 ) 3.25 Vested ( 525,579 ) 1.57 Outstanding at December 31, 2023 — $ — For the years ended December 31, 2023, and 2022, the Company recognized $ 782,175 and $ 1,406,548 of stock compensation expense relating to RSUs, respectively. As of December 31, 2023, there was no unrecognized compensation expense related to unvested RSUs. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2023 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | NOTE 12 – WARRANTS Upon closing of the Company's public offering (Note 18), the Company issued to the underwriter, warrants to purchase 92,500 shares of common stock (the “Underwriter’s Warrants”). The Underwriter’s Warrants are exercisable at a per share exercise price equal to 125 % of the public offering price per share in the offering, which was determined to be $ 5.00 . The Underwriter’s Warrants are exercisable at any time, in whole or in part, from October 19, 2023, through April 19, 2028. On December 7, 2023, the Company issued warrants to a former executive management member to purchase 140,000 shares of common stock for $ 32,200 cash received. The warrants are exercisable at a per share exercise price of $ 2.50 . The warrants are exercisable at any time, in whole or in part, from December 7, 2023, through December 6, 2028. The following assumptions were used to calculate the issuance date fair value: Exercise price of the warrants $ 2.50 Contractual life of the warrants 5 years Current value of the underlying common stock $ 2.03 Expected volatility 186.14 % Expected dividend yield 0.00 % Risk-free interest rate 4.12 % The table below summarizes the Company’s warrant activities: Number of Common Exercise Price Weighted Share Range Per Average Warrants Share Exercise Price Balance at January 1, 2023 412,218 $ 5.72 to $ 31.60 $ 23.68 Granted 232,500 $ 2.50 to $ 5.00 3.49 Forfeited — — — Exercised — — — Balance at December 31, 2023 644,718 $ 2.50 to $ 31.60 $ 16.40 Balance at January 1, 2022 412,218 $ 5.72 to $ 31.60 $ 23.68 Granted — — — Forfeited — — — Exercised — — — Balance at December 31, 2022 412,218 $ 5.72 to $ 31.60 $ 23.68 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13 – INCOME TAXES Income tax benefit consists of the following: December 31, 2023 December 31, 2022 Current: Federal $ — $ — State — — Foreign — — Total Current — — Deferred: Federal ( 224,224 ) ( 456,438 ) State ( 65,914 ) ( 64,694 ) Total Deferred ( 290,138 ) ( 521,132 ) Income tax benefit $ ( 290,138 ) $ ( 521,132 ) The effective tax rate was 1.0 % and 1.9 % for the years ended December 31, 2023, and 2022 , respectively. The effective tax rate differs from the federal tax rate of 21 % for the years ended December 31, 2023, and 2022 due primarily to the full valuation allowance and other discrete items. Reconciliation between the effective tax rate on loss before provision for income taxes and the statutory tax rate is as follows: 12/31/2023 Income tax expense (benefit) at federal statutory rate 21.0 % State and local taxes 0.2 % Change in valuation allowance ( 15.8 )% Change in state and local tax rates 0.9 % Permanent book to tax differences ( 3.3 )% Provision to return adjustments 0.3 % Earnings of foreign subsidiary ( 2.7 )% Earnings of captive insurance subsidiary ( 0.1 )% Other - net 0.5 % Income tax expense (benefit) 1.0 % 12/31/2022 Income tax expense (benefit) at federal statutory rate 21.0 % State taxes 0.2 % Change in valuation allowance ( 20.4 )% Change in deferred tax liability 1.9 % Permanent differences ( 1.4 )% Other - net 0.6 % Income tax expense (benefit) 1.9 % At December 31, 2023 , the Company had federal and state net operating losses (“NOLs”) in the amount of approximately $ 48,241,000 and $ 39,697,000 respectively. While the federal NOLs carryforward indefinitely, the Tax Cuts & Jobs Act of 2017 limits the amount of federal net operating loss utilized each year after December 31, 2020, to 80 % of taxable income. The state NOLs start expiring in 2031. Temporary differences which give rise to a significant portion of deferred tax assets are as follows at: December 31, 2023 December 31, 2022 Deferred income tax assets (liabilities): Startup costs $ 1,016,420 $ 1,035,317 Stock compensation - RSAs 1,068,953 875,498 Net operating losses - Federal 10,130,630 6,204,900 Net operating losses - State and Local 1,820,726 1,264,598 Accrued expenses - - Amortization ( 898,046 ) ( 1,217,409 ) Depreciation ( 257,764 ) ( 262,179 ) Operating lease assets ( 587,268 ) ( 813,972 ) Operating lease liabilities 1,038,552 1,370,631 Deferred revenue 45,980 45,388 Allowance for Doubtful Accounts ( 6,093 ) — 13,372,090 8,502,772 Less: Valuation allowance ( 14,561,832 ) ( 9,982,652 ) Deferred tax liabilities, net $ ( 1,189,742 ) $ ( 1,479,880 ) Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred since inception. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2023 , a valuation allowance of $ 14,561,832 has been recorded to recognize the portion of the deferred tax asset that is more likely than not to be realized. The net change in the valuation allowance was $ 4,579,180 . The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The Company and its subsidiaries income tax returns for 2019 through 2022 remain subject to examination by tax jurisdictions. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “Inflation Reduction Act") that includes, among other provisions, changes to the U.S. corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income,” and a one percent excise tax on net repurchases of stock after December 31, 2022. The Company is continuing to evaluate the Inflation Reduction Act and its requirements, as well as the application to its business. At December 31, 2023 and 2022, there are $ 0 unrecognized tax benefits that if recognized would affect the annual effective tax rate. During the years ended December 31, 2023 and 2022, the Company recognized $ 0 in interest and penalties. The Company had $ 0 for the payment of interest and penalties accrued at December 31, 2023 and 2022, respectively. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 14 – SEGMENT INFORMATION Research and development activities are conducted through EYME in Israel. Geographic long-lived asset information presented below is based on the physical location of the assets at the end of year. All of the Company’s revenues are derived from customers located in the United States. Long-lived assets including goodwill, intangible assets, capitalized software, property and equipment and operating lease right-of-use, by geographic region, are as follows at: December 31, 2023 December 31, 2022 United States $ 12,014,390 $ 17,993,006 Israel 1,291,375 4,103,931 Total long-lived assets $ 13,305,765 $ 22,096,937 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 15 – RELATED PARTY TRANSACTIONS The Company receives consulting services and marketing services from various shareholders and directors. The total cost of these consulting services recorded in general and administrative expenses for the years ended December 31, 2023, and 2022, was approximately $ 88,000 and $ 208,000 , respectively. The total cost of marketing services is recorded in sales and marketing expenses for the years ended December 31, 2023, and 2022, was approximately $ 0 and $ 341,000 , respectively. NOTE 15 – RELATED PARTY TRANSACTIONS (CONTINUED) On December 30, 2020, the Company received an advance from a certain investor for reimbursement of certain expenses. This was recorded as a related party transaction on the accompanying consolidated balance sheet as of December 31, 2022, in the amount of $ 3,201 . This amount was repaid during the year ended December 31, 2023. On December 7, 2023, the Company issued a warrant to a former executive management member (see Note 12). On December 14, 2023, the Company entered into a securities purchase agreement with an entity controlled by the Company’s Chief Executive Officer (see Note 2). Subsequent to December 31, 2023, the Company entered into capital raising agreements with certain related parties (see Note 20). |
Accrued Severance Pay and Emplo
Accrued Severance Pay and Employee Retirement Plan | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED SEVERANCE PAY | |
Accrued Severance Pay and Employee Retirement Plan | NOTE 16 – ACCRUED SEVERANCE PAY AND EMPLOYEE RETIREMENT PLAN EYME’s employees are all based in Israel. Pursuant to Israel’s Severance Pay Law, Israeli employees are entitled to severance pay equal to one month’s salary for each year of employment, or a portion thereof. All of the employees of EYME elected to be included under section 14 of the Severance Pay Law, 1963 (“Section 14”). According to this section, these employees are entitled only to monthly deposits, at a rate of 8.33 % of their monthly salary, made in their name with insurance companies. Payments in accordance with Section 14 release the Company from any future severance payments (under the above Israeli Severance Pay Law) in respect of those employees; therefore, related assets and liabilities are not presented in the accompanying consolidated balance sheet. Total expenses related to severance pay amounted to $ 49,040 and $ 144,896 for the years ended December 31, 2023, and 2022, respectively. The Company excluding Maestro, has a defined contribution plan covering eligible employees with at least one month of service. The Company fully matches employee contributions up to 5 % of the total compensation. Total expense for the years ended December 31, 2023, and 2022, was $ 318,745 and $ 343,682 , respectively. Maestro has a defined contribution plan covering eligible employees with at least one month of service. The Company fully matches employee contributions up to 5 % of the total compensation. Total expense for the years ended December 31, 2023, and 2022, was $ 321,149 and $ 45,279 , respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Expenses | NOTE 17 – ACCRUED EXPENSES Accrued expenses consisted of the following: December 31, 2023 December 31, 2022 Employee compensation $ 1,202,145 $ 1,433,327 Accrued bonuses 178,000 1,712,009 Performance guarantee liabilities 165,464 244,029 Other accrued expenses and liabilities 1,270,545 1,885,351 Total accrued expenses $ 2,816,154 $ 5,274,716 |
Stockholders' (Deficit) Equity
Stockholders' (Deficit) Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' (Deficit) Equity | NOTE 18 – STOCKHOLDERS’ (DEFICIT) EQUITY On April 19, 2023, the Company closed its public offering of 1,850,000 shares of common stock at a public offering price of $ 4.00 per share, for gross proceeds of $ 7.4 million. After deducting underwriters' discounts and offering expenses, the net proceeds from the public offering were approximately $ 6.4 million. In accordance with the terms of the Maestro Agreement, $ 2,294,751 or 35 % of the net proceeds from the offering were expected to be used to pay down the debt to the Seller (see Note 4). During the years ended December 31, 2023, and 2022, the Company issued 25,000 and 9,375 shares of common stock to a vendor in consideration for services rendered. On December 14, 2023, the Company issued 150,000 shares of common stock via a private placement sale. During the year ended December 31, 2023, the Company issued warrants to a former executive management member (see Note 12). |
Litigation and Loss Contingenci
Litigation and Loss Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Loss Contingencies | NOTE 19 - LITIGATION AND LOSS CONTINGENCIES From time to time, the Company may be subject to other legal proceedings, claims, investigations, and government inquiries (collectively, legal proceedings) in the ordinary course of business. It may receive claims from third parties asserting, among other things, infringement of their intellectual property rights, defamation, labor and employment rights, privacy, and contractual rights. There are no currently pending legal proceedings that the Company believes will have a material adverse impact on the Company’s business or consolidated financial statements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 20 – SUBSEQUENT EVENTS On January 16, 2024, the Company entered into a securities purchase agreement (the “Second SPA”) with certain Company insiders consisting of HillCour Investment Fund, LLC (“HillCour”), an entity controlled by the Company’s Chief Executive Officer, the Company’s Chairman, and one of the Company’s directors, pursuant to which the Company agreed to issue and sell 1,322,100 shares of Common Stock in a private placement, at a purchase price of $ 0.9201 per share (or the consolidated closing bid price of the Company’s Common Stock on Nasdaq as of January 16, 2024). The securities issued in the First SPA and Second SPA are exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder. The securities have not been registered under the Securities Act and may not be sold in the United States absent registration or an exemption from registration. On February 5, 2024, the Company entered into an Agreement of Sale of Future Receipts (the “Libertas Agreement”) with Libertas Funding LLC (“Libertas”) to sell future receipts totaling $ 2,193,000 for a purchase price of $ 1,700,000 . The sold amount of future receipts is to be delivered weekly to Libertas at predetermined amounts over a period of nine months. The agreement contains an early delivery discount fee for delivering the future receivables before the end of the contract term and an origination fee. The Company’s Chief Executive Officer provided a guarantee for the funding agreement through various entities the Chief Executive Officer controls. On February 7, 2024, the Company entered into an amendment with AXA, see Note 5. On March 7, 2024, the Company entered into a securities purchase agreement with HillCour Investment Fund, LLC, an entity controlled by the Company’s Chief Executive Officer, Damien Lamendola, pursuant to which we agreed to issue and sell 910,000 shares of Common Stock in a private placement, at a purchase price of $ 1.65 per share (or the consolidated closing bid price of the Company’s Common Stock on Nasdaq as of March 7, 2024). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), expressed in U.S. dollars. The accompanying consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with GAAP. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Maestro is included from November 1, 2022, the date of the Maestro Acquisition (see Note 4). All significant intercompany balances and transactions have been eliminated in consolidation. |
Business Combination | Business Combination The Company accounts for business combinations in accordance with the FASB Accounting Standard Codification (“ASC”) 805, Business Combinations . Accordingly, identifiable tangible and intangible assets acquired and liabilities assumed are recorded at their estimated fair values, the excess of the purchase consideration over the fair values of net assets acquired is recorded as goodwill, and transaction costs are expensed as incurred. The Company includes the results of operations of the businesses that are acquired as of the acquisition date. |
Use of Estimates | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, valuation of share-based compensation, accounting for warrants, allowance for credit losses, useful lives of internally developed software, fair values of net assets acquired, goodwill, intangible assets and property and equipment, incurred but not reported (“IBNR”) reserves, whether an arrangement is or contains a lease, the incremental borrowing rate used for operating leases, income tax accruals, the valuation allowance for deferred income taxes, and contingent liabilities. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash consists of funds held in bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company maintains cash accounts with financial institutions. At times, balances in these accounts may exceed federally insured limits. The amounts over the federally insured limits as of December 31, 2023, and 2022 were approximately $ 343,000 and $ 13,137,000 , respectively. No losses have been incurred to date on any deposit balances. For the year ended December 31, 2023 , we had one customer that accounted for 11.0 % of total revenue. For the year ended December 31, 2022 , no customer accounted for greater than 10% of total revenue. At December 31, 2023 , two customers accounted for 16.6 %, and 14.0 % of accounts receivable, respectively. At December 31, 2022, one customer accounted for 11.2 % of accounts receivable. |
Restricted Cash | Restricted Cash Restricted cash balances are composed of funds held on behalf of clients in a fiduciary capacity, cash held in a separate bank account pledged to a bank as collateral for a bank guarantee provided to the lessor to secure the Company’s obligations under a lease agreement, cash in a money market account as required by a credit card company for collateral, and a certificate of deposit ("CD") held for collateral for a letter of credit. Fiduciary funds generally cannot be utilized for general corporate purposes and are not a source of liquidity for the Company. A corresponding fiduciary obligation, included in current liabilities in the accompanying consolidated balance sheets, exists for disbursements to be made on behalf of the clients and may be more than the restricted cash balance if payment from customers has not been received. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the net invoiced amount, net of allowances for credit losses, and do not bear interest. Unbilled receivables are for services rendered but not yet billed to the customer, which typically occurs within one month. The Company periodically reviews accounts receivable balances and provides an allowance for credit losses to the extent deemed uncollectible. The allowance for credit losses is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable and unbilled receivables. The Company determines expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition, and our expectations of changes in macro-economic conditions that may impact the collectability of outstanding receivables. Balances are considered past due based on invoiced terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company had an allowance for credit losses of $ 24,617 and $ 23,458 , as of December 31, 2023, and 2022, respectively. |
Fair Value Measurements | Fair Value Measurements The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are what market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are those that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The three levels of inputs that may be used to measure fair value are described below: Level 1—Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data. Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value measurement. The Company measures its long-lived assets, including property and equipment and intangible assets (including goodwill), at fair value on a non-recurring basis when a triggering event requires such evaluation. During the year ended December 31, 2023, the Company recorded a goodwill impairment charge of $ 3,017,600 related to its goodwill (see Note 7). The goodwill impairment charge was determined based on a combination of market capitalization including quoted market prices (Level 1 inputs) and a discounted cash flow analysis (Level 3 inputs). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include accounts receivable, accounts payable, accrued expenses, and debt at fixed interest rates, approximate their fair values at December 31, 2023, and 2022, principally due to the short-term nature, maturities, or nature of interest rates of the above listed items. |
Long-Lived Assets | Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or circumstances exist that indicate the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets is measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by the assets. If the asset or asset group is considered to be impaired, an impairment loss would be recorded to adjust the carrying amounts to the estimated fair value. Management has determined that no impairment of long-lived assets exists, and accordingly, no impairment adjustments to the carrying amounts of the Company’s long-lived assets have been made for the years ended December 31, 2023, and 2022 . |
Property and Equipment | Property and Equipment Property and equipment consisting of office and computer equipment, furniture and fixtures, and leasehold improvements are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives. Useful Lives Equipment 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term |
Capitalized Software | Capitalized Software The Company complies with the guidance of ASC Topic 350-40, “Intangibles—Goodwill and Other—Internal Use Software”, in accounting for its internally developed system projects that it utilizes to provide its services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for its intended use. Costs for upgrades and enhancements are capitalized, whereas costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by-project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three to five years . Amortization commences when the software is available for its intended use. |
Goodwill | Goodwill Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over the acquisition-date amounts recognized for the net identifiable assets acquired. Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. The Company operates in one reporting segment and reporting unit; therefore, goodwill is tested for impairment at the consolidated level. First, the Company assesses qualitative factors to determine whether or not it is more likely than not that the fair value of a reporting unit is less than it’s carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative goodwill impairment test comparing the fair value of the applicable reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, the Company recognizes an impairment loss in the consolidated statement of operations for the amount by which the carrying amount exceeds the fair value of the reporting unit. The Company performs its annual goodwill impairment test at December 31. There was goodwill impairment of $ 3,017,600 and $ 0 for the years ended December 31, 2023, and 2022 , respectively. |
Intangible Assets | Intangible Assets Intangible assets consist of customer relationships, non-compete agreements, and amounts attributed to patent and patent applications that were acquired through an acquisition and are amortized on a straight-line basis over useful lives ranging from five to ten years . The Company’s intangible assets are reviewed for impairment when events or circumstances indicate their carrying amounts may not be recoverable. The Company reviews the recoverability of its intangible assets by comparing the carrying value of such assets to the related undiscounted value of the projected cash flows associated with the assets, or asset group. If the carrying value is found to be greater, the Company records an impairment loss for the excess of book value over fair value. No impairment of the Company’s intangible assets was recorded for the years ended December 31, 2023, and 2022 . |
Income Taxes | Income Taxes The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled. The Company regularly reviews deferred tax assets for realizability and establishes valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies. If the Company’s assessment of the realizability of a deferred tax asset change, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time. The Company follows ASC Topic 740-10-65-1 in accounting for uncertainty in income taxes by prescribing rules for recognition, measurement, and classification in financial statements of tax positions taken or expected to be in a tax return. This prescribes a two-step process for the financial statement measurement and recognition of a tax position. The first step involves the determination of whether it is more likely than not (greater than 50 percent likelihood) that a tax position will be sustained upon examination, based on the technical merits of the position. The second step requires that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon ultimate settlement. This topic also provides guidance on the accounting for related interest and penalties, financial statement classification and disclosure. The Company’s policy is that any interest or penalties related to uncertain tax positions are recognized in income tax expense when incurred. The Company has no uncertain tax positions or related interest or penalties requiring accrual at December 31, 2023, and 2022 . |
Revenue Recognition | Revenue Recognition Third Party Administrator Revenue Revenue is recognized when control of the promised services is transferred to the Company’s customers in an amount that reflects the consideration expected to be entitled to in exchange for those services. As the Company completes its performance obligations, it has an unconditional right to consideration, as outlined in the Company’s contracts. Contract Balances At December 31, 2023, and 2022 , the balances of the Company’s accounts receivable from contracts with customers, net of related allowances for credit losses, were $ 1,125,159 and $ 1,437,786 , respectively, and the balance of the Company’s unbilled receivable from a contract with a customer was $ 768,374 and $ 350,393 , respectively. When the Company receives consideration from a customer prior to transferring services to the customer under the terms of the customer contracts, it records deferred revenue on the Company’s consolidated balance sheet, which represents a contract liability. At December 31, 2023, and 2022, the balance of deferred revenue was $ 660,826 and $ 288,499 , respectively. The Company anticipates that it will satisfy all of its performance obligations associated with its contract liabilities within a year. The Company also provides certain performance guarantees under their contracts with customers. Customers may be entitled to receive compensation if the Company fails to meet the guarantees. Actual performance is compared to the contractual guarantee for each measure throughout the period. At December 31, 2023 and 2022, the Company had performance guarantee liabilities of $ 165,464 and $ 244,029 , respectively, which are included in accrued expenses on the accompanying consolidated balance sheets. Significant Payment Terms Generally, the Company’s accounts receivable are expected to be collected in 30 days in accordance with the underlying payment terms. Invoices for services are typically sent to the customer on the 15th day of the month prior to the service month with a 10-day payment term. The Company does not offer discounts if the customer pays some or all of the invoiced amount prior to the due date. Consideration paid for services rendered by the Company is nonrefundable. Therefore, at the time revenue is recognized, the Company does not estimate expected refunds for services. The Company uses the practical expedient and does not account for significant financing components because the period between recognition and collection does not exceed one year for all of its contracts. Timing of Performance Obligations All of the Company’s contracts with customers obligate the Company to perform services. Services provided include health and welfare administration, dependent eligibility verification, COBRA administration, benefit billing, cost containment services and care management services. Revenue is recognized over time as services are provided as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document, and report claims, and payment is received from the customer. The Company has the right to receive payment for all services rendered. Determining and Allocating the Transaction Price The transaction price of a contract is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. To determine the transaction price of a contract, the Company considers its customary business practices and the terms of the contract. For the purpose of determining transaction prices, the Company assumes that the services will be transferred to the customer as promised in accordance with existing contracts and that the contracts will not be canceled, renewed, or modified. The Company’s contracts with customers have fixed fee prices that are determined on a per covered employee per month basis. The Company includes amounts of variable consideration in a contract’s transaction price only to the extent that it is probable that the amounts will not be subject to significant reversals (that is, downward adjustments to revenue recognized for satisfied performance obligations). In determining amounts of variable consideration to include in a contract’s transaction price, the Company relies on its experience and other evidence that supports its qualitative assessment of whether revenue would be subject to a significant reversal. The Company considers all the facts and circumstances associated with both the risk of a revenue reversal arising from an uncertain future event and the magnitude of the reversal if that uncertain event were to occur. |
Cost of Revenue | Cost of Revenue Cost of revenues consists of (i) service fees, which primarily include vendor fees associated with the client’s benefit program selections, (ii) the direct labor cost associated with claims management and processing services, and (iii) direct labor costs associated with providing customer support and services to clients, Members, and other external stakeholders as well as direct labor costs associated with care and case management services. Captive Revenue All general insurance premiums pertain to annual policies and are reflected in income on a pro-rata basis. Loss and Loss Adjustment Expenses The establishment of loss reserves by the primary insurer is a reasonably complex and dynamic process influenced by numerous factors. These factors principally include past experience with like claims. Consequently, the reserves established are a reflection of the opinions of a large number of persons and the Company is exposed to the possibility of higher or lower than anticipated loss cost due to real expense. |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based awards issued to employees in accordance with ASC Topic 718, “Compensation—Stock Compensation”. In addition, the Company issues stock options to non-employees in exchange for consulting services and accounts for these in accordance with the provisions of Accounting Standards Update (“ASU”) 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”. Compensation expense is measured at the grant date, based on the calculated fair value of the award, and recognized as an expense over the requisite service period, which is generally the vesting period of the award. For modification of share-based payment awards, the Company records the incremental fair value of the modified award as share-based compensation on the date of modification for vested awards or over the remaining vesting period for unvested awards. The incremental compensation is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification. In addition, the Company records the remaining unrecognized compensation cost for the original cost for the original award on the modification date over the remaining vesting period for unvested awards. The Company estimates the expected term of stock options granted to employees using the simplified method, whereby the expected term equals the average of the vesting term and the original contractual term of the option. The Company utilizes this method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. For stock options granted to non-employees, the contractual term of the option is utilized as the basis for the expected term assumption. All other assumptions used to calculate the grant date fair value are generally consistent with the assumptions used for options granted to employees. For purposes of calculating share-based compensation, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the Company’s stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The expected volatility is primarily based on the historical volatility of company data while the expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected option term. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts. If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what has been recorded in the past. If there is a difference between the assumptions used in determining share-based compensation expense and the actual factors which become known over time, specifically with respect to anticipated forfeitures, the Company may change the input factors used in determining share-based compensation costs for future grants. These changes, if any, may materially impact the Company’s results of operations in the period such changes are made. Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. In addition, the Company accounts for forfeitures of awards as they occur. For share-based awards that vest based on performance conditions, expense is recognized when it is probable that the conditions will be met. |
Warrants to Acquire Common Shares: | Warrants to Acquire Common Shares: The Company accounts for common stock warrants as either equity-classified or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 “Distinguishing Liabilities from Equity” ("ASC 480") and ASC 815 “Derivatives and Hedging” ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. |
Foreign Currency Translation | Foreign Currency Translation For non-U.S. operations, the functional currency is U.S. dollars since these operations are a direct and integral component or extension of the parent company’s operations. As a result, the transactions of those operations that are denominated in foreign currencies are re-measured into U.S. dollars, and any resulting gains or losses are included in earnings. |
Earnings (Loss) Per Share | Ear nings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares for the period, considering the effect of participating securities. Diluted earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. At December 31, 2023 and 2022 , there were 1,352,153 and 957,930 common share equivalents, respectively. For the years ended December 31, 2023 and 2022 , these potential shares were excluded from the shares used to calculate diluted net loss per share as their effect would have been antidilutive. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an entity for which separate discrete financial information is available. The Chief Operating Decision Maker (“CODM”) reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment. The Company presents financial information about its operating segment and geographical areas in Note 14 to the consolidated financial statements. |
Offering Costs | Offering Costs The Company capitalizes certain legal, accounting, and other third-party fees that are directly related to an equity financing that is probable of successful completion until such financing is consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received as a result of the financing. Should a planned equity financing be abandoned, terminated, or significantly delayed, the deferred offering costs are immediately written off to operating expenses in the accompanying consolidated statements of operations in the period of determination. |
Leases | Leases The Company’s leases are accounted for under FASB ASC Topic 842, “ Leases ”. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities are recorded based on the present value of lease payments over the expected lease term and adjusted for lease incentives. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Options to extend or terminate a lease are included in the calculation of the lease term to the extent that the option is reasonably certain of exercise. The right-of-use (“ROU”) asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received. ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease incentives are recognized when earned and reduce our operating lease asset related to the lease. They are amortized through the operating lease assets as reductions of lease expense over the lease term. Leases with an initial term of 12 months or less that do contain purchase options or renewal terms that the Company is reasonably certain to exercise are not recorded on the accompanying consolidated balance sheets. The Company recognizes the lease expense for such leases on a straight-line basis in the accompanying consolidated statements of operations over the lease term. |
Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. Private companies are those companies that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, it adopts the new or revised standard at the time private companies adopt the new or revised standard, unless it chooses to early-adopt the new or revised accounting standard. Therefore, the Company’s consolidated financial statements may not be comparable to certain public companies. |
Advertising | Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $ 0 and $ 80,925 for the years ended December 31, 2023 and 2022 , respectively. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (Topic 805). This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. For the Company, the new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU No. 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which is intended to enhance the transparency surrounding the use of supplier finance programs. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The guidance becomes effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company does not have any supplier finance programs and does not believe the impact of adopting this accounting standard update will be material to the consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies that contractual sale restrictions are not considered in measuring fair value of equity securities and requires additional disclosures for equity securities subject to contractual sale restrictions. The standard is effective for public companies for fiscal years beginning after December 15, 2023. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which will add required disclosures of significant expenses for each reportable segment, as well as certain other disclosures to help investors understand how the Chief Operating Decision Maker evaluates segment expenses and operating results. The new standard will also allow disclosure of multiple measures of segment profitability, if those measures are used to allocate resources and assess performance. The amendments will be effective for public companies for fiscal years beginning after December 15, 2023. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The standard will be effective for public companies for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Estimated Useful Lives of Property and Equipment | Useful Lives Equipment 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Business Combinations [Abstract] | |
Summary of Assets Acquired and Liabilities Assumed at their Acquisition Date Fair Value | The following table represents the allocation of the purchase consideration among Maestro’s assets acquired and liabilities assumed at their acquisition-date fair values: December 31, 2022 Adjustment December 31, 2023 Purchase Price Purchase Price $ 19,900,000 $ 19,900,000 Purchase Price Allocation Cash $ 17,081,602 $ 17,081,602 Restricted cash 16,306,547 16,306,547 Accounts receivable 321,198 321,198 Unbilled receivable 646,189 646,189 Prepaid expenses and other current assets 1,751,371 1,751,371 Property and equipment 921,680 ( 159,920 ) 761,760 Operating lease - right of use assets 2,555,375 2,555,375 Goodwill 3,454,143 198,140 3,652,283 Trademarks 800,000 800,000 Customer relationships 840,000 840,000 Security deposits 1,240,889 1,240,889 Account payable ( 150,328 ) ( 150,328 ) Accrued expenses ( 4,554,280 ) ( 38,220 ) ( 4,592,500 ) Accrued fiduciary obligations ( 16,306,547 ) ( 16,306,547 ) Operating lease liabilities ( 4,816,490 ) ( 4,816,490 ) Deferred revenue ( 191,349 ) ( 191,349 ) Total fair value of net assets acquired and liabilities assumed $ 19,900,000 $ — $ 19,900,000 |
Summary of Identifiable Intangible Assets at Estimated Fair Values and Useful Lives with Expected Amortization Periods | The following table summarizes the estimated fair values of Maestro’s identifiable intangible assets, their estimated useful lives and expected amortization periods: Useful Acquisition Life in Fair Value Years Trademarks $ 800,000 5 Years Customer relationships 840,000 5 Years |
Summary of Unaudited Pro Forma Information | The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2022: Year Ended December 31, 2022 (pro forma) Revenue $ 40,406,192 Net loss ( 39,774,661 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment consist of the following at: December 31, 2023 December 31, 2022 Equipment $ 140,890 $ 402,675 Furniture and fixtures 620,870 1,007,699 Leasehold improvements — 745,453 Total cost 761,760 2,155,827 Accumulated depreciation ( 150,900 ) ( 649,745 ) Property and equipment, net $ 610,860 $ 1,506,082 |
Capitalized Software (Tables)
Capitalized Software (Tables) - Capitalized Software | 12 Months Ended |
Dec. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Intangible Assets | Capitalized software consists of the following at: December 31, 2023 December 31, 2022 Capitalized software $ 8,094,385 $ 8,094,385 Accumulated amortization ( 5,966,691 ) ( 3,505,679 ) Capitalized software, net $ 2,127,694 $ 4,588,706 |
Summary of Estimated Amortization for Capitalized Software | Estimated amortization for capitalized software for future periods is as follows: Year Ended December 31, 2024 $ 1,542,007 2025 496,744 2026 88,943 $ 2,127,694 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Goodwill | Goodwill consists of the following: Amount Balance as of December 31, 2022 $ 5,837,060 Measurement period adjustment to goodwill (Note 4) 198,140 Impairment of goodwill ( 3,017,600 ) Balance as of December 31, 2023 $ 3,017,600 |
Intangible Assets other than Capitalized Software | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Intangible Assets | Intangible assets consist of the following: December 31, 2023 Useful Gross Carrying Accumulated Net Net Carrying Life Amount Amortization Disposal Amount Trademarks 5 - 10 Years $ 2,320,000 $ ( 604,675 ) $ — $ 1,715,325 Noncompete agreements 5 Years 990,000 ( 544,500 ) — 445,500 Customer relationships 5 - 7 Years 3,760,000 ( 1,343,144 ) ( 51,359 ) 2,365,497 Patents and patent applications (*) 650,450 — — 650,450 $ 7,720,450 $ ( 2,492,319 ) $ ( 51,359 ) $ 5,176,772 (*) Patents have yet to be approved by US Patent Office. Useful life is determined upon placement into service after approval. December 31, 2022 Useful Gross Carrying Accumulated Net Net Carrying Life Amount Amortization Disposal Amount Trademarks 5 - 10 years $ 2,320,000 $ ( 292,671 ) $ — $ 2,027,329 Noncompete agreements 5 Years 990,000 ( 346,500 ) — 643,500 Customer relationships 5 - 7 Years 3,760,000 ( 758,000 ) — 3,002,000 Patents and patent applications (*) 650,450 - — 650,450 $ 7,720,450 $ ( 1,397,171 ) $ — $ 6,323,279 |
Summary of Estimated Amortization for Capitalized Software | Estimated amortization for trademarks, noncompete agreements and customer relationships for future periods is as follows: Year Ended December 31, 2024 $ 1,086,863 2025 1,086,863 2026 938,645 2027 815,676 2028 256,284 Thereafter 341,991 Assets not placed in services 650,450 $ 5,176,772 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Lessee Disclosure [Abstract] | |
Summary of Future Lease Payments of Operating Leases | Year Ended December 31, 2024 $ 909,296 2025 916,671 2026 927,671 2027 939,600 2028 876,385 Thereafter 1,085,258 Total lease payments 5,654,881 Less: imputed interest ( 1,458,643 ) Present value of lease liabilities 4,196,238 Less: current lease liabilities ( 512,416 ) Long-term lease liabilities $ 3,683,822 |
Summary of Contractual Sublease Income | The following is a summary as of December 31, 2023, of the contractual sublease income: Year Ended December 31, 2024 $ 480,000 2025 480,000 2026 480,000 2027 280,000 Total sublease income $ 1,720,000 |
Loss and Loss Adjustment Expe_2
Loss and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Schedule of Changes in Aggregate Reserves of Loss and Loss Adjustment Expenses | The following tables show changes in aggregate reserves for the Company's loss and loss adjustment expenses: December 31, 2023 December 31, 2022 Net reserves at January 1, $ — $ — Incurred loss and loss adjustment expenses Provisions for insured events of the current year 388,498 — Change in provision for insured events of prior year — — Total incurred loss and loss adjustment expense 388,498 — Payments Loss and loss adjustment expenses attributable to insured events of the current year 122,957 — Loss and loss adjustment expenses attributable to insured events of the prior year — — Total payments 122,957 — Net reserves at December 31, $ 265,541 $ — |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following tables illustrates the disaggregation of revenue by similar products: December 31, 2023 December 31, 2022 Third Party Administrator services $ 36,829,145 $ 24,341,874 Captive insurance 325,905 — Total $ 37,155,050 $ 24,341,874 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | The following table summarizes the stock option activity: Weighted Average Aggregate Number of Weighted Average Remaining Intrinsic Options Exercise Price Contractual Term Value Balance at January 1, 2023 931,934 $ 5.88 8.91 $ 203,295 Granted 717,250 2.56 Forfeited/Cancelled ( 385,394 ) 4.99 Exercised ( 49,833 ) 0.01 Balance at December 31, 2023 1,213,957 4.43 8.70 $ — Exercisable at December 31, 2023 707,435 $ 5.32 8.43 $ — |
Summary of Non-vested Stock Options Activity | The following table summarizes the Company’s non-vested stock options activity: Weighted-Average Non-vested Options Grant Date Fair Outstanding Value At January 1, 2023 507,664 $ 2.64 Options granted 717,250 1.50 Options forfeited/cancelled ( 331,200 ) 2.12 Options exercised ( 9,870 ) 5.42 Options vested ( 377,322 ) 1.80 At December 31, 2023 506,522 $ 1.67 |
Summary of Restricted Stock Awards Activity | The following table summarizes the restricted stock awards activity: Weighted-Average Restricted Stock Grant Date Fair Value Awards Per Share Outstanding at January 1, 2023 55,735 $ 5.92 Granted — — Forfeited/cancelled — — Vested ( 55,735 ) 5.92 Outstanding at December 31, 2023 — $ — |
Schedule of Fair Value of Options and Share Awards Granted under the Stock Option Plan | The fair value of stock options and share awards granted under the stock option plan during the year ended December 31, 2023, and 2022 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants: 2023 2022 Risk-free interest rates 3.43 % to 4.44 % 3.61 % Expected life 5 years 5 years Expected volatility 41 % to 186.14 % 41.00 % Expected dividend yield 0.00 % 0.00 % |
Summary of Restricted Stock Units Activity | The following table summarizes the restricted stock units activity: Restricted Stock Units Value Outstanding at January 1, 2023 72,957 $ 4.44 Granted 580,227 1.58 Forfeited/cancelled ( 127,605 ) 3.25 Vested ( 525,579 ) 1.57 Outstanding at December 31, 2023 — $ — |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Class of Warrant or Right [Line Items] | |
Schedule of Assumptions Used for Calculating Issuance Date Fair Value of Warrants | The following assumptions were used to calculate the issuance date fair value: Exercise price of the warrants $ 2.50 Contractual life of the warrants 5 years Current value of the underlying common stock $ 2.03 Expected volatility 186.14 % Expected dividend yield 0.00 % Risk-free interest rate 4.12 % |
Schedule of Warrant Activities | The table below summarizes the Company’s warrant activities: Number of Common Exercise Price Weighted Share Range Per Average Warrants Share Exercise Price Balance at January 1, 2023 412,218 $ 5.72 to $ 31.60 $ 23.68 Granted 232,500 $ 2.50 to $ 5.00 3.49 Forfeited — — — Exercised — — — Balance at December 31, 2023 644,718 $ 2.50 to $ 31.60 $ 16.40 Balance at January 1, 2022 412,218 $ 5.72 to $ 31.60 $ 23.68 Granted — — — Forfeited — — — Exercised — — — Balance at December 31, 2022 412,218 $ 5.72 to $ 31.60 $ 23.68 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Benefit | Income tax benefit consists of the following: December 31, 2023 December 31, 2022 Current: Federal $ — $ — State — — Foreign — — Total Current — — Deferred: Federal ( 224,224 ) ( 456,438 ) State ( 65,914 ) ( 64,694 ) Total Deferred ( 290,138 ) ( 521,132 ) Income tax benefit $ ( 290,138 ) $ ( 521,132 ) |
Schedule of Reconciliation between the Effective Tax Rate on Loss before Provision for Income Taxes and the Statutory Tax Rate | 12/31/2023 Income tax expense (benefit) at federal statutory rate 21.0 % State and local taxes 0.2 % Change in valuation allowance ( 15.8 )% Change in state and local tax rates 0.9 % Permanent book to tax differences ( 3.3 )% Provision to return adjustments 0.3 % Earnings of foreign subsidiary ( 2.7 )% Earnings of captive insurance subsidiary ( 0.1 )% Other - net 0.5 % Income tax expense (benefit) 1.0 % 12/31/2022 Income tax expense (benefit) at federal statutory rate 21.0 % State taxes 0.2 % Change in valuation allowance ( 20.4 )% Change in deferred tax liability 1.9 % Permanent differences ( 1.4 )% Other - net 0.6 % Income tax expense (benefit) 1.9 % |
Schedule of Deferred Tax Assets, Net | December 31, 2023 December 31, 2022 Deferred income tax assets (liabilities): Startup costs $ 1,016,420 $ 1,035,317 Stock compensation - RSAs 1,068,953 875,498 Net operating losses - Federal 10,130,630 6,204,900 Net operating losses - State and Local 1,820,726 1,264,598 Accrued expenses - - Amortization ( 898,046 ) ( 1,217,409 ) Depreciation ( 257,764 ) ( 262,179 ) Operating lease assets ( 587,268 ) ( 813,972 ) Operating lease liabilities 1,038,552 1,370,631 Deferred revenue 45,980 45,388 Allowance for Doubtful Accounts ( 6,093 ) — 13,372,090 8,502,772 Less: Valuation allowance ( 14,561,832 ) ( 9,982,652 ) Deferred tax liabilities, net $ ( 1,189,742 ) $ ( 1,479,880 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Long-lived Assets by Geographic Region | Long-lived assets including goodwill, intangible assets, capitalized software, property and equipment and operating lease right-of-use, by geographic region, are as follows at: December 31, 2023 December 31, 2022 United States $ 12,014,390 $ 17,993,006 Israel 1,291,375 4,103,931 Total long-lived assets $ 13,305,765 $ 22,096,937 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following: December 31, 2023 December 31, 2022 Employee compensation $ 1,202,145 $ 1,433,327 Accrued bonuses 178,000 1,712,009 Performance guarantee liabilities 165,464 244,029 Other accrued expenses and liabilities 1,270,545 1,885,351 Total accrued expenses $ 2,816,154 $ 5,274,716 |
Organization and Description _2
Organization and Description of Business - Additional Information (Details) | Jun. 29, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reverse stock split | one-for-four |
Liquidity and Going Concern - A
Liquidity and Going Concern - Additional Information (Details) - USD ($) | Dec. 14, 2023 | Dec. 31, 2023 | Dec. 31, 2022 |
Liquidity [Line Items] | |||
Accumulated deficit | $ 76,746,000 | $ 47,994,100 | |
Working capital | 3,800,000 | ||
Short term debt | 600,000 | ||
Long term debt | 19,400,000 | ||
Cash and cash equivalents | $ 1,146,801 | $ 13,764,508 | |
Private Placement [Member] | |||
Liquidity [Line Items] | |||
Common stock, shares issued | 150,000 | ||
Purchase price | $ 1.97 | ||
Payflex | Asset Purchase Agreement | |||
Liquidity [Line Items] | |||
Amount agreed to pay in cash | $ 1,000,000 | ||
Additional contingent fee receivable | $ 500,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2023 USD ($) Customer Segment shares | Dec. 31, 2022 USD ($) Customer shares | |
Summary of Significant Accounting Policies [Line Items] | ||
Amounts over the federally insured limits | $ 343,000 | $ 13,137,000 |
Losses incurred to date on deposit balances | $ 0 | |
Number of customers who accounted for greater than 10% of accounts receivable | Customer | 2 | 1 |
Number of customers who accounted for greater than ten percent of revenue | Customer | 1 | 0 |
Allowance for credit losses | $ 24,617 | $ 23,458 |
Impairment of long-lived assets | $ 0 | 0 |
Number of reporting segment | Segment | 1 | |
Number of operating segments | Segment | 1 | |
Goodwill impairment charge | $ 3,017,600 | 0 |
Impairment of intangible assets | 0 | 0 |
Uncertain tax positions | 0 | 0 |
Uncertain tax positions, interest or penalties | 0 | 0 |
Accounts receivable from contracts with customers | 1,125,159 | 1,437,786 |
Unbilled receivables from contracts with customers | 768,374 | 350,393 |
Deferred revenue | 660,826 | 288,499 |
Performance guarantee liabilities | $ 165,464 | $ 244,029 |
Accounts receivable, payments term | 30 days | |
Number of shares excluded to calculate diluted net earnings per share as their effect would have been antidilutive | shares | 1,352,153 | 957,930 |
Advertising expenses | $ 0 | $ 80,925 |
Minimum | ||
Summary of Significant Accounting Policies [Line Items] | ||
Useful lives | 5 years | |
Minimum | Capitalized Software | ||
Summary of Significant Accounting Policies [Line Items] | ||
Useful lives | 3 years | |
Maximum | ||
Summary of Significant Accounting Policies [Line Items] | ||
Useful lives | 10 years | |
Maximum | Capitalized Software | ||
Summary of Significant Accounting Policies [Line Items] | ||
Useful lives | 5 years | |
Revenue Concentration Risk | Revenue | Customer one | ||
Summary of Significant Accounting Policies [Line Items] | ||
Customer Percentage | 11% | |
Credit Concentration Risk | Accounts Receivable | Customer one | ||
Summary of Significant Accounting Policies [Line Items] | ||
Customer Percentage | 16.60% | 11.20% |
Credit Concentration Risk | Accounts Receivable | Customer two | ||
Summary of Significant Accounting Policies [Line Items] | ||
Customer Percentage | 14% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details) | Dec. 31, 2023 |
Equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Furniture and Fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | us-gaap:UsefulLifeShorterOfTermOfLeaseOrAssetUtilityMember |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | 12 Months Ended | |||||||||
Apr. 15, 2024 USD ($) | Mar. 31, 2024 USD ($) | Feb. 29, 2024 USD ($) | Sep. 18, 2023 USD ($) Installment | Jul. 19, 2023 USD ($) | Jul. 18, 2023 | Apr. 19, 2023 USD ($) $ / shares shares | Nov. 01, 2022 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | ||||||||||
Net proceeds from offering | $ 6,431,612 | |||||||||
Other long-term liabilities | 19,401,398 | $ 20,203,700 | ||||||||
Maestro | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase Price | $ 19,900,000 | 19,900,000 | $ 19,900,000 | |||||||
Adjusted Purchase Price | $ 22,100,000 | |||||||||
Accrue interest percent | 10% | |||||||||
Percentage of net proceeds of the Offering | 35% | |||||||||
Number of days after closing of offering | 60 days | |||||||||
2024 | $ 5,000,000 | |||||||||
2025 | 11,000,000 | |||||||||
2026 | 19,000,000 | |||||||||
2027 | $ 28,000,000 | |||||||||
Accumulated Annual Payments 2024 | 2,294,751 | |||||||||
Accumulated Annual Payments 2025 | 5,300,000 | |||||||||
Accumulated Annual Payments 2026 | 13,300,000 | |||||||||
Accumulated Annual Payments 2027 | 22,300,000 | |||||||||
Accumulated annual payments reduction criteria amount 2024 | 2,294,751 | |||||||||
Accumulated annual payments reduction criteria amount 2025 | 8,300,000 | |||||||||
Accumulated annual payments reduction criteria amount 2026 | 16,300,000 | |||||||||
Accumulated annual payments reduction criteria amount 2027 | 25,300,000 | |||||||||
Property And Equipment, Adjustment During Period | (159,920) | |||||||||
Accrued expense, Adjustment during period | (38,220) | |||||||||
Business acquisition, outstanding principle balance | 19,900,000 | |||||||||
Business acquisition, accrued interest on principle | 122,982 | |||||||||
Other liabilities | 20,022,982 | |||||||||
Other short-term liability | 631,584 | |||||||||
Other long-term liabilities | 19,391,398 | |||||||||
Incremental amortization expense related to intangible and tangible assets acquired | $ 82,000 | |||||||||
Debt Seller | Maestro | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Payment on net proceeds of offering until such time as purchase price paid in full | $ 2,294,751 | |||||||||
Percentage of payment on net proceeds of offering until such time as purchase price paid in full | 35% | |||||||||
Percentage of payment on net proceeds of offering due amount as purchase price to be paid | 50% | |||||||||
Payment on net proceeds of offering due amount as purchase price to be paid | $ 947,376 | $ 1,147,376 | ||||||||
Number of installments for payment of consideration | Installment | 6 | |||||||||
Business acquisition month and year due for consideration payment | 2024-04 | |||||||||
Payment on net proceeds of offering due amount as purchase price to be paid in six payments | $ 157,896 | |||||||||
Paid to seller | $ 200,000 | |||||||||
Subsequent Event | Maestro | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Paid to seller | $ 157,896 | |||||||||
Business combination, monthly payments | $ 157,896 | |||||||||
Scenario Forecast | Maestro | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business combination, monthly payments | $ 157,896 | $ 157,896 | ||||||||
Public Offering | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Number of shares issued | shares | 1,850,000 | |||||||||
Price per share | $ / shares | $ 4 | |||||||||
Gross proceeds from offering | $ 7,400,000 | |||||||||
Net proceeds from offering | $ 6,400,000 |
Acquisitions - Summary of Asset
Acquisitions - Summary of Assets Acquired and Liabilities Assumed at their Preliminary Estimated Acquisition Date Fair Value (Details) - USD ($) | 12 Months Ended | ||
Nov. 01, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Purchase Price Allocation | |||
Goodwill | $ 3,017,600 | $ 5,837,060 | |
Maestro | |||
Purchase Price | |||
Purchase Price | $ 19,900,000 | 19,900,000 | 19,900,000 |
Purchase Price Allocation | |||
Cash | 17,081,602 | 17,081,602 | |
Restricted cash | 16,306,547 | 16,306,547 | |
Accounts receivable | 321,198 | 321,198 | |
Unbilled receivable | 646,189 | 646,189 | |
Prepaid expenses and other current assets | 1,751,371 | 1,751,371 | |
Property and equipment | 761,760 | 921,680 | |
Operating lease - right of use assets | 2,555,375 | 2,555,375 | |
Goodwill | 3,652,283 | 3,454,143 | |
Security deposits | 1,240,889 | 1,240,889 | |
Account payable | (150,328) | (150,328) | |
Accrued expenses | (4,592,500) | (4,554,280) | |
Accrued fiduciary obligations | (16,306,547) | (16,306,547) | |
Operating lease liabilities | (4,816,490) | (4,816,490) | |
Deferred revenue | (191,349) | (191,349) | |
Total fair value of net assets acquired and liabilities assumed | 19,900,000 | 19,900,000 | |
Property And Equipment, Adjustment During Period | (159,920) | ||
Measurement period adjustment to Goodwill (Note 5) | (198,140) | ||
Accrued expense, Adjustment during period | (38,220) | ||
Total fair value of net assets acquired and liabilities assumed, Adjustment During Period | 0 | ||
Maestro | Trademarks | |||
Purchase Price Allocation | |||
Intangible assets | 800,000 | 800,000 | |
Maestro | Customer relationships | |||
Purchase Price Allocation | |||
Intangible assets | $ 840,000 | $ 840,000 |
Acquisitions - Summary of Ident
Acquisitions - Summary of Identifiable Intangible Assets at Estimated Fair Values and Useful Lives with Expected Amortization Periods (Details) - Maestro | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Trademarks | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 800,000 |
Useful Life in Years | 5 years |
Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 840,000 |
Useful Life in Years | 5 years |
Acquisitions - Summary of Unaud
Acquisitions - Summary of Unaudited Pro Forma Information (Details) - Maestro | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | |
Proforma revenue | $ 40,406,192 |
Proforma net loss | $ (39,774,661) |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | $ 761,760 | $ 2,155,827 |
Accumulated depreciation | (150,900) | (649,745) |
Property and equipment, net | 610,860 | 1,506,082 |
Equipment | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | 140,890 | 402,675 |
Furniture and Fixtures | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | 620,870 | 1,007,699 |
Leasehold Improvements | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | $ 0 | $ 745,453 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 340,673 | $ 397,470 |
Capitalized Software - Summary
Capitalized Software - Summary of Intangible Assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Capitalized Computer Software, Net [Abstract] | ||
Capitalized software | $ 8,094,385 | $ 8,094,385 |
Accumulated amortization | (5,966,691) | (3,505,679) |
Capitalized software, net | $ 2,127,694 | $ 4,588,706 |
Capitalized Software - Addition
Capitalized Software - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Capitalized Computer Software, Net [Abstract] | ||
Amortization expense | $ 2,461,013 | $ 2,318,953 |
Capitalized Software - Estimate
Capitalized Software - Estimated Amortization for Capitalized Software (Details) - Capitalized Software | Dec. 31, 2023 USD ($) |
Estimated amortization for capitalized software | |
2024 | $ 1,542,007 |
2025 | 496,744 |
2026 | 88,943 |
Net Carrying Amount | $ 2,127,694 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Summary of Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance as of December 31, 2022 | $ 5,837,060 | |
Measurement period adjustment to goodwill (Note 4) | 198,140 | |
Impairment of goodwill | (3,017,600) | $ 0 |
Balance as of December 31, 2023 | $ 3,017,600 | $ 5,837,060 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 14, 2023 | |
Goodwill [Line Items] | |||
Goodwill impairment charge | $ 3,017,600 | $ 0 | |
Amortization expense | 1,095,147 | 821,814 | |
Asset Purchase Agreement | Payflex | |||
Goodwill [Line Items] | |||
Amount agreed to pay in cash | $ 1,000,000 | ||
Additional contingent fee receivable | $ 500,000 | ||
Customer relationships | |||
Goodwill [Line Items] | |||
Disposal of intangible assets | 67,000 | ||
Accumulated amortization | 1,343,144 | $ 758,000 | |
Customer relationships | Disposed of Sale | |||
Goodwill [Line Items] | |||
Accumulated amortization | $ 15,641 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 5 years | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 10 years | |
Intangible Assets other than Capitalized Software | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 7,720,450 | $ 7,720,450 |
Accumulated Amortization | (2,492,319) | (1,397,171) |
Net Disposal | (51,359) | |
Net Carrying Amount | 5,176,772 | 6,323,279 |
Trademarks | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 2,320,000 | 2,320,000 |
Accumulated Amortization | (604,675) | (292,671) |
Net Carrying Amount | $ 1,715,325 | $ 2,027,329 |
Trademarks | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 5 years | 5 years |
Trademarks | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 10 years | 10 years |
Noncompete Agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 5 years | 5 years |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 990,000 | $ 990,000 |
Accumulated Amortization | (544,500) | (346,500) |
Net Carrying Amount | 445,500 | 643,500 |
Customer Relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 3,760,000 | 3,760,000 |
Accumulated Amortization | (1,343,144) | (758,000) |
Net Disposal | (51,359) | |
Net Carrying Amount | $ 2,365,497 | $ 3,002,000 |
Customer Relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 5 years | 5 years |
Customer Relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life | 7 years | 7 years |
Patents and Patent Applications | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 650,450 | $ 650,450 |
Net Carrying Amount | $ 650,450 | $ 650,450 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Estimated amortization for intangible assets for future periods (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Intangible Assets other than Capitalized Software | ||
Estimated amortization for capitalized software | ||
2024 | $ 1,086,863 | |
2025 | 1,086,863 | |
2026 | 938,645 | |
2027 | 815,676 | |
2028 | 256,284 | |
Thereafter | 341,991 | |
Net Carrying Amount | 5,176,772 | $ 6,323,279 |
Patents [Member] | ||
Estimated amortization for capitalized software | ||
Assets not placed in services | 650,450 | |
Net Carrying Amount | $ 650,450 | $ 650,450 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Jul. 18, 2023 | Jan. 15, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Lease expiration beginning year | 2024 | |||
Lease expiration ending year | 2030 | |||
Option to extend | true | |||
Option to terminate | true | |||
Operating lease costs | $ 1,479,399 | $ 1,117,193 | ||
Sublease income | $ 368,172 | $ 196,465 | ||
Operating Lease, Weighted Average Discount Rate, Percent | 9.90% | 9.11% | ||
Short-term lease commitments expense | $ 132,080 | |||
Remaining lease term, including the optional extension | 6 years 1 month 6 days | 5 years 10 months 24 days | ||
Marpai Administrators | ||||
Lessee, Lease, Description [Line Items] | ||||
Sublease income | $ 14,000 | |||
Maestro | ||||
Lessee, Lease, Description [Line Items] | ||||
Sublease income | $ 40,000 |
Leases - Future Lease Payments
Leases - Future Lease Payments of Operating Leases (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Future lease payments, which are presented as current maturities of operating leases | ||
2024 | $ 909,296 | |
2025 | 916,671 | |
2026 | 927,671 | |
2027 | 939,600 | |
2028 | 876,385 | |
Therafter | 1,085,258 | |
Total lease payments | 5,654,881 | |
Less: imputed interest | (1,458,643) | |
Present value of lease liabilities | 4,196,238 | |
Less: current lease liabilities | (512,416) | $ (1,311,295) |
Long-term lease liabilities | $ 3,683,822 | $ 4,771,871 |
Leases - Contractual Sublease I
Leases - Contractual Sublease Income (Details) | Dec. 31, 2023 USD ($) |
Expected sublease income | |
2024 | $ 480,000 |
2025 | 480,000 |
2026 | 480,000 |
2027 | 280,000 |
Total sublease income | $ 1,720,000 |
Loss and Loss Adjustment Expe_3
Loss and Loss Adjustment Expenses - Schedule of Changes in Aggregate Reserves of Loss and Loss Adjustment Expenses (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Incurred loss and loss adjustment expenses | |
Provisions for insured events of the current year | $ 388,498 |
Total incurred loss and loss adjustment expense | 388,498 |
Payments | |
Loss and loss adjustment expenses attributable to insured events of the current year | 122,957 |
Total payments | 122,957 |
Net reserves at end of period | $ 265,541 |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 37,155,050 | $ 24,341,874 |
Third Party Administrator Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 36,829,145 | $ 24,341,874 |
Captive Insurance | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 325,905 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) - USD ($) | 12 Months Ended | ||||
May 31, 2023 | May 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jun. 14, 2022 | |
Stock Options | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Expiration term of award | 10 years | ||||
Stock compensation expense | $ 894,154 | $ 828,860 | |||
Unrecognized stock compensation expense | $ 824,918 | ||||
Unrecognized stock compensation expense, expected to be recognized over a weighted-average period | 2 years | ||||
Increase in number of shares authorized | 500,000 | 1,575,000 | |||
Restricted Stock Units | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of shares authorized | 2,450,855 | 1,950,855 | 356,851 | ||
Stock compensation expense | $ 782,175 | $ 1,406,548 | |||
Termination term after the termination of employment of the grantee | 90 days |
Share-Based Compensation - Fair
Share-Based Compensation - Fair Value of options (Details) - Stock Options | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rates | 3.61% | |
Risk-free interest rates, Minimum | 3.43% | |
Risk-free interest rates, Maximum | 4.44% | |
Expected life | 5 years | 5 years |
Expected volatility, Minimum | 41% | |
Expected volatility, Maximum | 186.14% | |
Expected volatility | 41% | |
Expected dividend yield | 0% | 0% |
Share-Based Compensation - Non-
Share-Based Compensation - Non-vested Stock Options Activity (Details) - Stock Options | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Non-vested Options Outstanding | |
At the beginning | shares | 507,664 |
Options granted | shares | 717,250 |
Options forfeited/cancelled | shares | (331,200) |
Options exercised | shares | (9,870) |
Options vested | shares | (377,322) |
At the end | shares | 506,522 |
Weighted-Average Grant Date Fair Value | |
At the beginning (in dollars per share) | $ / shares | $ 2.64 |
Options granted (in dollars per share) | $ / shares | 1.5 |
Options forfeited/cancelled (in dollars per share) | $ / shares | 2.12 |
Options exercised (in dollars per share) | $ / shares | 5.42 |
Options vested (in dollars per share) | $ / shares | 1.8 |
At the end (in dollars per share) | $ / shares | $ 1.67 |
Share-Based Compensation- Stock
Share-Based Compensation- Stock Option Activity (Details) - Stock Options - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Number of Options | ||
Balance at the beginning | 931,934 | |
Granted | 717,250 | |
Forfeited/Cancelled | (385,394) | |
Exercised | (49,833) | |
Balance at the end | 1,213,957 | 931,934 |
Exercisable at the end | 707,435 | |
Weighted Average Exercise Price | ||
Balance at the beginning (in dollars per share) | $ 5.88 | |
Granted (in dollars per share) | 2.56 | |
Forfeited/Cancelled (in dollars per share) | 4.99 | |
Exercised (in dollars per share) | 0.01 | |
Balance at the end (in dollars per share) | 4.43 | $ 5.88 |
Exercisable at the end (in dollars per share) | $ 5.32 | |
Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value | ||
Balance (in years) | 8 years 8 months 12 days | 8 years 10 months 28 days |
Exercisable at the end (in years) | 8 years 5 months 4 days | |
Aggregate Intrinsic Value, balance | $ 203,295 |
Share-Based Compensation- Restr
Share-Based Compensation- Restricted Stock Awards Activity (Details) - $ / shares | 12 Months Ended | |
Jun. 14, 2022 | Dec. 31, 2023 | |
Restricted Stock Awards | ||
Restricted Stock Awards | ||
Outstanding at the beginning | 55,735 | |
Vested | (55,735) | |
Weighted-Average Grant Date Fair Value Per Share | ||
Outstanding at the beginning (in dollars per share) | $ 5.92 | |
Vested (in dollars per share) | $ 5.92 | |
Restricted Stock Units | ||
Restricted Stock Awards | ||
Outstanding at the beginning | 72,957 | |
Granted | 336,538 | 580,227 |
Forfeited/cancelled | (127,605) | |
Vested | (525,579) | |
Weighted-Average Grant Date Fair Value Per Share | ||
Outstanding at the beginning (in dollars per share) | $ 4.44 | |
Granted (in dollars per share) | 1.58 | |
Forfeited/cancelled (in dollars per share) | 3.25 | |
Vested (in dollars per share) | $ 1.57 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Awards (Details) - USD ($) | 12 Months Ended | |||||||
Aug. 16, 2023 | Aug. 02, 2023 | Feb. 28, 2023 | Jun. 14, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | May 31, 2023 | May 31, 2022 | |
Restricted Stock Awards | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Vesting period | 4 years | |||||||
Stock compensation expense | $ 297,354 | $ 1,301,599 | ||||||
Unrecognized compensation expense related to unvested restricted share awards | $ 0 | |||||||
Number of shares vested | 55,735 | |||||||
Restricted Stock Units | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Stock compensation expense | $ 782,175 | $ 1,406,548 | ||||||
Number of shares authorized | 356,851 | 2,450,855 | 1,950,855 | |||||
Number of shares granted | 336,538 | 580,227 | ||||||
Number of shares vested | 525,579 | |||||||
Minimum value obligation | $ 548,450 | |||||||
RSUs cancelled | 127,605 | |||||||
Restricted Stock Units | Officer | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Vesting period | 1 year | |||||||
Number of shares vested | 28,090 | 33,387 | ||||||
Restricted Stock Units | Advisor | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of shares vested | 400,000 | |||||||
Restricted Stock Units | Vested immediately | Officer | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of shares vested | 48,077 | |||||||
Restricted Stock Units | Vest in equal quarterly installments through February 28, 2023 | Officer | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of shares vested | 288,461 |
Warrants - Additional Informati
Warrants - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 07, 2023 | Dec. 31, 2023 | |
Class of Warrant or Right [Line Items] | ||
Warrants to purchase common shares | 140,000 | |
Proceeds from issuance of warrants | $ 32,200 | $ 32,200 |
Warrants exercise price | $ 2.5 | |
Underwriter warrants | ||
Class of Warrant or Right [Line Items] | ||
Warrants to purchase common shares | 92,500 | |
Exercise price, percentage on public offering price | 125% | |
Warrants exercise price | $ 5 |
Warrants - Assumptions Fair Val
Warrants - Assumptions Fair Value of Warrants (Details) - Marpai Warrants | Dec. 31, 2023 yr USD ($) shares |
Measurement Input, Exercise Price [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | $ | 2.5 |
Measurement Input, Expected Term [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | yr | 5 |
Measurement Input, Share Price [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | shares | 2.03 |
Measurement Input, Price Volatility [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | 186.14 |
Measurement Input, Expected Dividend Rate [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | 0 |
Measurement Input, Risk Free Interest Rate [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | 4.12 |
Warrants - Schedule of Warrant
Warrants - Schedule of Warrant Activities (Details) - Marpai Warrants - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Class of Warrant or Right [Line Items] | ||
Beginning balance | 412,218 | 412,218 |
Granted | 232,500 | 0 |
Exercised | 0 | |
Ending balance | 644,718 | 412,218 |
Weighted Average Exercise Price | ||
Beginning balance | $ 23.68 | $ 23.68 |
Granted | 3.49 | |
Ending balance | 16.4 | 23.68 |
Minimum | ||
Exercise Price Range Per Share | ||
Beginning balance | 5.72 | 5.72 |
Granted | 2.5 | |
Ending balance | 2.5 | 5.72 |
Maximum | ||
Exercise Price Range Per Share | ||
Beginning balance | 31.6 | 31.6 |
Granted | 5 | |
Ending balance | $ 31.6 | $ 31.6 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Benefit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Deferred: | ||
Federal | $ (224,224) | $ (456,438) |
State | (65,914) | (64,694) |
Total Deferred | (290,138) | (521,132) |
Income tax benefit | $ (290,138) | $ (521,132) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||
Effective tax rate | 1% | 1.90% |
Maximum percentage of taxable income can be utilized for operating losses | 80% | |
Federal tax rate | 21% | 21% |
Valuation allowance | $ 14,561,832 | $ 9,982,652 |
Net change in valuation allowance | $ 4,579,180 | |
Minimum corporate income tax rate | 15% | |
Excise tax on net repurchase of stock | 1% | |
Unrecognized tax benefits that if recognized would affect annual effective tax rate | $ 0 | 0 |
Interest and penalties recognized | 0 | 0 |
Payment of interest and penalties accrued | 0 | $ 0 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating losses | 48,241,000 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating losses | $ 39,697,000 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes and the Statutory Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) at federal statutory rate | 21% | 21% |
State and local taxes | 0.20% | 0.20% |
Change in valuation allowance | (15.80%) | (20.40%) |
Change in state and local tax rates | 0.90% | |
Permanent differences | (1.40%) | |
Permanent book to tax differences | (3.30%) | |
Provision to return adjustments | 0.30% | |
Earnings of foreign subsidiary | (2.70%) | |
Earnings of captive insurance subsidiary | (0.10%) | |
Change in deferred tax liability | 1.90% | |
Other - net | 0.50% | 0.60% |
Income tax expense (benefit) | 1% | 1.90% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Startup costs | $ 1,016,420 | $ 1,035,317 |
Stock compensation - RSAs | 1,068,953 | 875,498 |
Net operating losses - Federal | 10,130,630 | 6,204,900 |
Net operating losses - State and Local | 1,820,726 | 1,264,598 |
Amortization | (898,046) | (1,217,409) |
Depreciation | (257,764) | (262,179) |
Operating lease assets | (587,268) | (813,972) |
Operating lease liabilities | 1,038,552 | 1,370,631 |
Deferred revenue | 45,980 | 45,388 |
Allowance for Doubtful Accounts | (6,093) | |
Deferred tax assets, gross | 13,372,090 | 8,502,772 |
Less: Valuation allowance | (14,561,832) | (9,982,652) |
Deferred tax liabilities, net | $ (1,189,742) | $ (1,479,880) |
Segment Information - Schedule
Segment Information - Schedule of Long-lived Assets by Geographic Region (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 13,305,765 | $ 22,096,937 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 12,014,390 | 17,993,006 |
Israel | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 1,291,375 | $ 4,103,931 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Accounts payable - related party | $ 4,648,837 | $ 1,457,670 |
Receivable - related party | 1,125,159 | 1,437,786 |
Consulting Services | ||
Related Party Transaction [Line Items] | ||
Related party transaction expense | 88,000 | 208,000 |
Marketing Services | ||
Related Party Transaction [Line Items] | ||
Related party transaction expense | $ 0 | 341,000 |
Other short-term liability | $ 3,201 |
Accrued Severance Pay and Emp_2
Accrued Severance Pay and Employee Retirement Plan - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Percentage on monthly salary under severance pay law | 8.33% | |
Severance expenses | $ 49,040 | $ 144,896 |
Excluding Maestro Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution percentage of match | 5% | |
Total expense on contribution | $ 318,745 | 343,682 |
Maestro Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution percentage of match | 5% | |
Total expense on contribution | $ 321,149 | $ 45,279 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Accrued Liabilities, Current [Abstract] | ||
Employee compensation | $ 1,202,145 | $ 1,433,327 |
Accrued bonuses | 178,000 | 1,712,009 |
Performance guarantee liabilities | 165,464 | 244,029 |
Other accrued expenses and liabilities | 1,270,545 | 1,885,351 |
Accrued expenses | $ 2,816,154 | $ 5,274,716 |
Stockholders' (Deficit) Equity
Stockholders' (Deficit) Equity - Additional Information (Details) - USD ($) | 12 Months Ended | ||||
Dec. 14, 2023 | Apr. 19, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | ||
Subsidiary, Sale of Stock [Line Items] | |||||
Net proceeds from offering | $ 6,431,612 | ||||
Maestro Health LLC | Debt Seller | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Payment on net proceeds of offering until such time as purchase price paid in full | $ 2,294,751 | ||||
Percentage of payment on net proceeds of offering until such time as purchase price paid in full | 35% | ||||
Common Stock [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares issued | [1] | 1,850,000 | |||
Shares issued to vendors in exchange for services (in shares) | [1] | 25,000 | 9,375 | ||
Public Offering | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares issued | 1,850,000 | ||||
Gross proceeds from offering | $ 7,400,000 | ||||
Net proceeds from offering | $ 6,400,000 | ||||
Price per share | $ 4 | ||||
Private Placement | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, shares issued | 150,000 | ||||
[1] Reflects 1-for-4 reverse stock split that became effective June 29, 2023. See Note 1 to the consolidated financial statements. |
Short-Term Loan - Additional In
Short-Term Loan - Additional Information (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Short-Term Debt [Abstract] | |
Short-term loan | $ 0.6 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) | Mar. 07, 2024 | Jan. 16, 2024 | Dec. 14, 2023 | Feb. 05, 2024 |
Private Placement | ||||
Subsequent Event [Line Items] | ||||
Shares issued | 150,000 | |||
Purchase price | $ 1.97 | |||
Subsequent Event | Libertas Agreement | Libertas Funding LLC | ||||
Subsequent Event [Line Items] | ||||
Amount of future receipts agreed to sell | $ 2,193,000 | |||
Sale of future receipt purchase price | $ 1,700,000 | |||
Subsequent Event | Common Stock | Securities Purchase Agreement | Private Placement | HillCour Investment Fund, LLC | ||||
Subsequent Event [Line Items] | ||||
Shares issued | 910,000 | |||
Purchase price | $ 1.65 | |||
Subsequent Event | Common Stock | Second Securities Purchase Agreement | Private Placement | HillCour Investment Fund, LLC | ||||
Subsequent Event [Line Items] | ||||
Shares issued | 1,322,100 | |||
Purchase price | $ 0.9201 |