Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 11, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
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 | 5701 East Hillsborough Ave., Suite 1417 | |
Entity Address, City or Town | Tampa | |
Entity Address, Postal Zip Code | 33610-5428 | |
City Area Code | 646 | |
Local Phone Number | 303-3483 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | MRAI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 20,299,708 | |
Entity Central Index Key | 0001844392 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 14,107,751 | $ 19,183,044 |
Restricted cash | 8,003,810 | 6,750,599 |
Accounts receivable | 110,436 | 208,762 |
Unbilled receivable | 14,978 | |
Prepaid expenses and other current assets | 566,901 | 743,126 |
Other receivables | 89,973 | 91,498 |
Total current assets | 22,878,871 | 26,992,007 |
Property and equipment, net | 922,476 | 889,935 |
Capitalized software, net | 6,161,243 | 6,304,854 |
Operating lease right-of-use assets | 1,918,923 | 2,043,624 |
Goodwill | 2,382,917 | 2,382,917 |
Intangible assets, net | 5,287,736 | 5,507,693 |
Other long-term asset | 80,610 | 80,610 |
Total assets | 39,632,776 | 44,201,640 |
Current liabilities: | ||
Accounts payable | 1,064,646 | 1,125,906 |
Accrued expenses | 2,174,054 | 2,525,037 |
Accrued fiduciary obligations | 6,669,528 | 5,541,067 |
Deferred revenue | 1,241,920 | 1,165,248 |
Current portion of operating lease liabilities | 813,191 | 784,493 |
Due to related party | 3,637 | 3,637 |
Total current liabilities | 11,966,976 | 11,145,388 |
Other long-term liabilities | 45,000 | 45,000 |
Operating lease liabilities, net of current portion | 1,152,052 | 1,301,828 |
Deferred tax liabilities | 2,001,012 | 2,001,012 |
Total liabilities | 15,165,040 | 14,493,228 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.0001 par value, 227,791,050 shares authorized; 20,299,727 issued and outstanding at March 31, 2022 and December 31, 2021 | 2,030 | 2,030 |
Additional paid-in capital | 51,481,080 | 51,232,092 |
Accumulated deficit | (27,015,374) | (21,525,710) |
Total stockholders' equity | 24,467,736 | 29,708,412 |
Total liabilities and stockholders' equity | $ 39,632,776 | $ 44,201,640 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 227,791,050 | 227,791,050 |
Common stock, shares issued | 20,299,727 | 20,299,727 |
Common stock, shares outstanding | 20,299,727 | 20,299,727 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $ 6,218,809 | |
Costs and expenses | ||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 4,546,795 | |
General and administrative | 2,902,133 | $ 801,837 |
Sales and marketing | 1,559,116 | 321,120 |
Information technology | 1,134,273 | |
Research and development | 593,107 | 264,011 |
Depreciation and amortization | 825,398 | 18,154 |
Facilities | 196,594 | |
Total costs and expenses | 11,757,416 | 1,405,122 |
Operating loss | (5,538,607) | (1,405,122) |
Other income (expenses) | ||
Other income, net | 48,997 | 6,698 |
Interest expense | (3,945) | (183,440) |
Foreign exchange gain (loss) | 3,891 | (9,750) |
Loss before provision for income taxes | (5,489,664) | (1,591,614) |
Net loss | $ (5,489,664) | $ (1,591,614) |
Net loss per share, basic | $ (0.28) | $ (0.55) |
Net loss per share, fully diluted | $ (0.28) | $ (0.55) |
Weighted average number of common shares, basic | 19,629,213 | 2,897,412 |
Weighted average number of common shares, diluted(1) | 19,629,213 | 2,897,412 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | Sep. 02, 2021 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
Forward split ratio | 4.555821 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at the beginning at Dec. 31, 2020 | $ 14 | $ 2,044,362 | $ (5,540,875) | $ (3,496,499) |
Balance at the beginning (in shares) at Dec. 31, 2020 | 142,369 | |||
Fair value of warrants issued with convertible note | 50,833 | 50,833 | ||
Share-based compensation | 230,478 | 230,478 | ||
Net loss | (1,591,614) | (1,591,614) | ||
Balance at the end at Mar. 31, 2021 | $ 14 | 2,325,673 | (7,132,489) | (4,806,802) |
Balance at the end (in shares) at Mar. 31, 2021 | 142,369 | |||
Balance at the beginning at Dec. 31, 2021 | $ 2,030 | 51,232,092 | (21,525,710) | $ 29,708,412 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 20,299,727 | 20,299,727 | ||
Share-based compensation | 248,988 | $ 248,988 | ||
Net loss | (5,489,664) | (5,489,664) | ||
Balance at the end at Mar. 31, 2022 | $ 2,030 | $ 51,481,080 | $ (27,015,374) | $ 24,467,736 |
Balance at the end (in shares) at Mar. 31, 2022 | 20,299,727 | 20,299,727 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) | Sep. 02, 2021 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) | |
Forward split ratio | 4.555821 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (5,489,664) | $ (1,591,614) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 825,398 | 18,154 |
Share-based compensation | 665,652 | 230,478 |
Amortization of right-of-use asset | 33,381 | 20,662 |
Amortization of debt discount | 26,728 | |
Non-cash interest | 155,474 | |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivable | 113,304 | |
Prepaid expense and other assets | 176,225 | 106,832 |
Other receivables | 1,525 | |
Accounts payable | (61,258) | 327,080 |
Accrued expenses | (767,650) | (31,178) |
Accrued fiduciary obligations | 1,128,461 | |
Operating lease liabilities | (29,758) | (22,909) |
Other liabilities | 76,672 | |
Net cash used in operating activities | (3,327,712) | (760,293) |
Cash flows from investing activities: | ||
Capitalization of software development costs | (393,319) | (500,180) |
Purchase of property and equipment | (101,051) | (9,355) |
Net cash used in investing activities | (494,370) | (509,535) |
Cash flows from financing activities: | ||
Proceeds from convertible notes | 325,000 | |
Proceeds from issuance of warrants | 50,833 | |
Net cash provided by financing activities | 375,833 | |
Net decrease in cash, cash equivalents and restricted cash | (3,822,082) | (893,995) |
Cash, cash equivalents and restricted cash at beginning of period | 25,933,643 | 1,817,932 |
Cash, cash equivalents and restricted cash at end of period | 22,111,561 | 923,937 |
Reconciliation of cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheet | ||
Cash and cash equivalents | 14,107,751 | 862,835 |
Restricted cash | 8,003,810 | 61,102 |
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows | $ 22,111,561 | $ 923,937 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2022 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Marpai, Inc. (“Marpai” or the “Company”) was formed as a Delaware corporation on January 22, 2021 with the intention to facilitate an initial public offering (“IPO”) and other related transactions in order to carry on the business of two healthcare subsidiaries, Marpai Health, Inc. (“Marpai Health”) and Continental Benefits LLC (“Continental Benefits”). Marpai Health, a Delaware corporation, was incorporated on February 14, 2019. On March 21, 2019, EYME Technologies Ltd. (“EYME”), a wholly owned subsidiary of Marpai Health located in Israel, was formed. Marpai Health, along with its wholly owned subsidiary, EYME, are hereinafter referred to as “Marpai Health”. On April 1, 2021,the Company consummated the acquisition of Continental Benefits. Pursuant to the terms of the Amended and Restated Equity Interest Purchase and Reorganization Agreement, as was further addended on May 7, 2021 (collectively, the “Agreement”), the stockholders of Marpai Health and the sole member of Continental Benefits, LLC contributed their respective shares and ownership interests in Marpai Health and Continental Benefits to Marpai in consideration for shares of the Marpai’s Class A and Class B common stock. Additionally, options to purchase 1,027,602 shares of Marpai Health’s common stock and warrants to purchase 1,366,746 shares of Marpai Health’s common stock were exchanged, on a one-to-one basis, for options and warrants to purchase shares of Marpai’s Class A common stock (the above transactions are hereinafter referred to as the “Acquisition”). As part of the Acquisition, approximately $3,800,000 of Marpai Health’s convertible promissory notes were exchanged for shares of common stock of Marpai immediately prior to the Acquisition, and pursuant to a note exchange agreement, Marpai acquired Marpai Health’s certain outstanding convertible promissory notes, with aggregate outstanding principal and accrued but unpaid interest of $2,198,459, in exchange for the issuance of Marpai’s convertible promissory notes of an equivalent aggregate principal amount. The Agreement called for Continental Benefits to not have less than $4,762,000 of cash on hand, and to have no debt at the time of closing of the Acquisition. For accounting purposes, Continental Benefits was considered the acquiree and Marpai Health was considered the acquirer. The acquisition was accounted for using the acquisition method of accounting. See Notes 5 for additional information. Marpai, along with its wholly owned subsidiaries, Marpai Health and Continental Benefits, are hereinafter referred to as the “Company”. The Company did not generate any revenues prior to the acquisition of Continental Benefits. Marpai Captive, Inc. (“Marpai Captive”), a Delaware corporation was founded in March 2022, as a subsidiary of the Company. Marpai Captive is intended to engage in the captive insurance market. As of the date that the unaudited condensed consolidated financial statements were available for issuance, Marpai Captive is in its initial exploratory phase and has not yet commenced its operations. Initial Public Offering On October 26, 2021, the Company consummated its IPO of 7,187,500 shares of class A common stock, par value $0.0001 per share (“common stock”) for a price of $4.00 per share, generating gross proceeds of $28,750,000, which is described in Note 14. Convertible notes in the amount of $5,106,554 were converted into equity as a result of the IPO. 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 the latter’s healthcare claims, to whom the Company refers as “Clients”, (ii) employees who receive these healthcare benefits from its clients, to whom the Company refers as “Members”, and (iii) healthcare providers including doctors, doctor groups, hospitals, clinics, and any other entities providing healthcare services or products to whom the Company refers as “Providers”. The Company’s operations are conducted through its wholly owned subsidiaries Marpai Health and Continental Benefits. NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED) Marpai Health is engaged in developing artificial intelligence and healthcare technology that enables the analysis of data to predict and prevent costly events related to diagnostic errors, hospital visits and administrative issues. Continental Benefits and its wholly owned subsidiary WellSystems, LLC (“WellSystems”) provide benefits outsourcing services to clients in the United States across multiple industries. Continental Benefits’ backroom administration and third-party administration (“TPA”) services are supported by a customized technology platform and a dedicated benefits call center. Under its TPA platform, Continental Benefits provides health and welfare administration, dependent eligibility verification, Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, and benefit billing services. Continental Benefits and WellSystems are Florida limited liability companies. The global coronavirus pandemic outbreak (“COVID-19”) continues to adversely impact commercial activity, globally and in the United States, and has contributed to significant volatility in financial markets. The outbreak could have a continued adverse impact on economic and market conditions, including business and financial services disruption. As of the date these condensed consolidated financial statements were available to be issued, there was no substantial impact and the Company will continue to monitor the potential impact of COVID-19, and potential related variants, on the Company’s condensed consolidated financial statements. |
UNAUDITED INTERIM CONDENSED CON
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2022 | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | NOTE 2 - UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s (i) condensed consolidated financial position as of March 31, 2022, (ii) condensed consolidated results of operations for the three months ended March 31, 2022, (iii) condensed consolidated statements of changes in shareholders’ equity for the three months ended March 31, 2022 and (iv) condensed consolidated cash flows for the three months ended March 31, 2022. The results for the three month period ended March 31, 2022, as applicable, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for its year ended December 31, 2021. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, EYME and Marpai Health, for all the periods presented and Continental Benefits from April 1, 2021, the date of the Acquisition (see Note 5). All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company’s significant accounting policies are discussed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. |
LIQUIDITY
LIQUIDITY | 3 Months Ended |
Mar. 31, 2022 | |
LIQUIDITY | |
LIQUIDITY | NOTE 3 – LIQUIDITY The accompanying condensed consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying condensed consolidated financial statements as of March 31, 2022, the Company has an accumulated deficit of $27,015,374 and working capital of $10,911,895. At March 31, 2022, the Company had no debt and $14,107,751 of unrestricted cash on hand. Since inception, the Company has met its cash needs through proceeds from issuing convertible notes, warrants and its IPO. The Company’s current liquid assets reflecting net proceeds from the IPO are sufficient to fund working capital and operating activities and fund capital expenditures through at least the first half of 2023. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Combination The Company accounts for business combinations in accordance with the Financial Accounting Standard Board’s (“FASB”) Accounting Standard Codification (“ASC”) 805, Business Combinations 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,valuation of the Company’s common stock prior to the IPO, accounting for warrants, allowance for doubtful accounts, useful lives of internally developed software,fair values of net assets acquired, goodwill, intangible assets and property and equipment, 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. 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 and cash in a money market account as required by a credit card company for collateral. 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 condensed 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 4 - 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 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 condensed 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 no goodwill impairment for the three months ended March 31, 2022 and 2021. 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 Revenue Recognition 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. 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. The Company had performance guarantee liabilities of $368,699, which is included in accrued expenses on the accompanying condensed consolidated balance sheet as of March 31, 2022. NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 15 th 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 the Company’s 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, and benefit billing. 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 control of these services is transferred to 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 denominated per covered employee per month. 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. Earnings (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 March 31, 2022 and 2021, there were 2,346,764 and 5,860,326 common share equivalents, respectively. For the three months ended March 31, 2022 and 2021, these potential shares were excluded from the shares used to calculate diluted net loss per share as their effect would have been antidilutive. NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recently Issued Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted earnings per share (“EPS”) calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement. Furthermore, ASU 2020-06 requires the application of the converted method for calculating diluted earnings per share, and the treasury stock method will be no longer available. In addition, ASU 2020-06 clarifies that an average market price should be used to calculate the diluted EPS denominator in cases in which the exercise prices may change on the basis of an entity’s share price or changes in the entity’s share price may affect the number of shares that may be used to settle a financial instrument and that an entity should use the weighted-average share count from each quarter when calculating the year-to-date weighted-average share. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact to the Company’s condensed consolidated financial statements, since all of the Company’s convertible debt were converted to equity at the IPO or repaid during the year ended December 31, 2021. In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU No. 2020-04 provides guidance on optional expedients for a limited time to ease the operational burden in accounting for (or recognizing the effects of) reference rate reform (LIBOR) on financial reporting. This guidance is effective upon the ASUs issuance on March 12, 2020 and companies may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the potential effects of this guidance on its condensed consolidated financial statements. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITION. | |
ACQUISITION | NOTE 5 – ACQUISITION On April 1, 2021, the Company consummated the acquisition of Continental Benefits. According to the Agreement, Continental Benefits was valued, on a cash-free and debt-free basis, at $8.5 million. In addition, pursuant to the Agreement, Marpai Health was valued at an assumed pre-money valuation of the last convertible note’s conversion price of $35 million. The following table represents the allocation of the purchase consideration among the Continental Benefits’ assets acquired and liabilities assumed at their estimated acquisition-date fair values: Purchase Price Equity value $ 13,262,000 Cash acquired (4,762,000) Total purchase price paid, net of cash acquired $ 8,500,000 Purchase Price Allocation Restricted cash $ 6,622,035 Accounts receivable 92,231 Prepaid expenses and other current assets 131,414 Property and equipment 1,601,990 Noncompete agreements 990,000 Capitalized software 1,200,000 Operating lease - right of use assets 1,763,960 Goodwill 2,382,917 Trademarks 1,520,000 Patents and patent applications 650,000 Customer relationships 2,920,000 Security deposits 54,869 Account payable (925,608) Accrued expenses (1,267,708) Accrued fiduciary obligations (4,070,908) Operating lease liabilities (1,763,960) Deferred tax liability (2,151,012) Deferred revenue (1,205,220) Other long-term liabilities (45,000) Total fair value of net assets acquired and liabilities assumed $ 8,500,000 The following table summarizes the estimated fair values of Continental Benefits’ identifiable intangible assets, their estimated useful lives and expected amortization periods: Useful Acquisition Life in Fair Value Years Trademarks $ 1,520,000 10 Years Noncompete agreements 990,000 5 Years Customer relationships 2,920,000 7 Years Patents and patent applications 650,000 (*) (*) Patents have yet to be approved by the United States Patent and Trademark Office. Useful life is determined upon placement into service after approval. NOTE 5 – ACQUISITION (CONTINUED) The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2021: Three Months Ended March 31, 2021 (pro forma) Revenue $ 4,215,081 Net loss (3,641,481) 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 $297,736 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 the two companies. 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 | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment consist of the following at: March 31, 2022 December 31, 2021 Equipment $ 222,222 $ 222,222 Furniture and fixtures 341,769 341,769 Leasehold improvements 725,179 621,527 Total cost 1,289,170 1,185,518 Accumulated depreciation (366,694) (295,583) Property and equipment, net $ 922,476 $ 889,935 Depreciation expense was $71,111 and $18,154 for the three months ended March 31, 2022 and 2021, respectively. |
CAPITALIZED SOFTWARE
CAPITALIZED SOFTWARE | 3 Months Ended |
Mar. 31, 2022 | |
CAPITALIZED SOFTWARE. | |
CAPITALIZED SOFTWARE | NOTE 7 – CAPITALIZED SOFTWARE Capitalized software consists of the following at: March 31, 2022 December 31, 2021 Capitalized software $ 7,161,571 $ 7,161,571 Accumulated amortization (1,723,656) (1,186,727) Net carrying amount 5,437,915 5,974,844 Capitalized software in-process 723,328 330,010 Capitalized software, net $ 6,161,243 $ 6,304,854 Amortization expense was $536,929 for the three months ended March 31, 2022. There was no amortization expense for capitalized software for the three months ended March 31, 2021. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
INTANGIBLE ASSETS. | |
INTANGIBLE ASSETS | NOTE 8 – INTANGIBLE ASSETS Intangible assets consist of the following: March 31, 2022 Useful Gross Carrying Accumulated Net Carrying Life Amount Amortization Amount Trademarks 10 Years $ 1,520,000 $ (160,500) $ 1,359,500 Noncompete agreements 5 Years 990,000 (199,000) 791,000 Customer relationships 7 Years 2,920,000 (433,214) 2,486,786 Patents and patent applications (*) 650,450 — 650,450 $ 6,080,450 $ (792,714) $ 5,287,736 (*) Patents have yet to be approved by the United States Patent and Trademark Office. Useful life is determined upon placement into service after approval. Amortization expense was $217,358 for the three months ended March 31, 2022. There was no amortization expense for intangible assets for the three months ended March 31, 2021. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | NOTE 9 – SHARE-BASED COMPENSATION Stock Options The Company has a Global Stock Incentive Plan (the “Plan”) under which the Company may grant stock options for up to 1,503,421 common shares. Both incentive stock options and non-qualified stock options expire ten years from the date of the grant. The fair value of options and share awards granted under the stock option plan during the three months ended March 31, 2021 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants: 2021 Risk-free interest rates 0.91 % Expected life 5 years Expected volatility 40.81 % Expected dividend yield 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, 2022 1,472,988 $ 1.92 8.98 $ 3,616,248 Granted — Forfeited/Cancelled (13,667) 0.002 Exercised — Balance at March 31, 2022 1,459,321 1.94 8.76 $ 710,438 Exercisable at March 31, 2022 545,267 $ 1.60 8.58 $ 375,959 NOTE 9 – SHARE-BASED COMPENSATION (CONTINUED) The following table summarizes the Company’s non-vested stock options: Weighted-Average Non-vested Options Grant Date Fair Outstanding Value At January 1, 2022 1,058,235 $ 0.95 Options granted — Options forfeited/cancelled (13,667) 2.58 Options exercised — Options vested (130,515) 0.95 At March 31, 2022 914,053 $ 0.92 For the three months ended March 31, 2022 and 2021, the Company recognized $104,402 and $81,175 of stock compensation expense relating to stock options, respectively. As of March 31, 2022, there was $947,792 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 four years. Restricted Stock Awards In July 2019, the Board of Directors of the Company 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, 2022 708,615 $ 1.42 Granted — — Forfeited/cancelled — — Vested (110,617) 1.44 Outstanding at March 31, 2022 597,998 $ 1.42 For the three months ended March 31, 2022 and 2021, the Company recognized $144,585 and $149,303 of stock compensation expense relating to RSAs, respectively. As of March 31, 2022, there was $801,672 of unrecognized compensation expense related to unvested restricted share awards that is expected to be recognized over a weighted-average period of approximately two years. During the three months ended March 31,2022, the Company recorded an additional share-based compensation expense of $416,667 relating to its employment contract with an officer who joined the Company on February 28, 2022. Under the terms of the contract the Company agreed to issue to the officer a one-time grant of fully vested shares of the Company’s Class A common stock with a fair market value of $250,000 as a signing bonus to be provided following the twelve month anniversary of the officer’s start date with the Company. The Company also agreed to issue an equity grant subject to the approval of the Company’s board of directors comprised of restricted shares with a fair market value of $2 million subject to the terms of the Plan that will vest over 12 months in four equal quarterly installments. The grant of the restricted shares is expected to occur after March 31, 2022. Included in accrued expenses in the condensed consolidated balance sheets is an amount of $416,667 representing the full value of the signing bonus and the prorated value of the vested restricted shares. |
WARRANTS
WARRANTS | 3 Months Ended |
Mar. 31, 2022 | |
WARRANTS | |
WARRANTS | NOTE 10 – WARRANTS Marpai Health Warrants On January 17, 2020, Marpai Health issued warrants to an investor to purchase up to 364,466 common shares at an exercise price of $1.43 per share. The warrants were issued in connection with a certain convertible note. The Company estimated the fair value of the warrants to be $213,828 based on a Black-Scholes option pricing model and recorded it as debt discount which amortizes to interest expense over the period of the loan and as additional paid-in capital. The warrants expire and are no longer exercisable at the fifth anniversary of the date the warrants were issued. In February 2021, Marpai Health granted warrants at a warrant purchase price of $0.05 per share to several founders of Marpai Health to purchase up to 926,349 shares of common stock at an exercise price of $7.90 per share. The warrants expire and are no longer exercisable at the fifth anniversary of the date the warrants were issued. The warrants were purchased for a cash payment of $50,833, which was reflected in additional paid-in capital when the proceeds were received. On April 1, 2021, as part of the Acquisition, Marpai Health’s outstanding warrants to purchase up to 1,290,815 shares of common stock were automatically converted into warrants to purchase Marpai common stock at the same exercise price and terms they were initially granted by Marpai Health. Marpai Warrants In April 2021, Marpai granted five year warrants at a warrant purchase price of $0.05 per share to a consultant of the Company to purchase up to 45,558 shares of common stock at an exercise price of $7.90 per share. The warrants were purchased for a cash payment of $2,500, which was reflected in additional paid-in capital when the proceeds were received. In July 2021, Marpai issued warrants to an investor to purchase up to 225,000 common shares at an exercise price of $4.00 per share in connection with a short-term promissory note. The Company estimated the fair value of the warrants to be $0 based on a Black-Scholes option pricing model and as such, no debt discount was recorded. The warrants were exercised on December 10, 2021 for total proceeds of $900,000. Upon closing of the IPO, the Company issued to the representatives of its underwriter warrants to purchase 312,500 shares of common stock (5% of the aggregate number of shares of common stock sold in the offering as compensation) (the “Underwriter’s Warrants”). The Underwriter’s Warrants will be 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 based on the IPO price of $4.00. The Underwriter’s Warrants are exercisable at any time, in whole or in part, from April 4, 2022 (the “Initial Exercise Date”) through October 26, 2026. NOTE 10 – WARRANTS (CONTINUED) The table below summarizes the Company’s warrant activities: Number of Warrants to Exercise Price Weighted Purchase Common Range Per Average Shares Share Exercise Price Balance at January 1, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Granted — — — Forfeited — — — Exercised — — — Balance at March 31, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Balance at January 1, 2021 364,466 $ 1.43 $ 1.43 Granted 926,349 7.90 7.90 Forfeited — — — Exercised — — — Balance at March 31, 2021 1,290,815 $ 1.43 to 7.90 $ 6.07 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2022 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 11 – 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: March 31, 2022 December 31, 2021 United States $ 13,662,661 $ 14,369,511 Israel 3,010,634 2,759,512 Total long-lived assets $ 16,673,295 $ 17,129,023 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS The Company receives consulting services and marketing services from various shareholders and directors. The total cost of these consulting services for the three months ended March 31, 2022 and 2021 was approximately $70,000 and $246,000, respectively. The total cost of marketing services for the three months ended March 31, 2022 and 2021 was approximately $565,000 and $321,000, respectively. The accounts payable to these certain shareholders as of March 31, 2022 and December 31, 2021 was approximately $123,000 and $297,000, respectively, and are included in accounts payable on the accompanying condensed consolidated balance sheets. On December 30, 2020, the Company received an advance from a certain investor for reimbursement of certain expenses. This is recorded as due to related party on the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021 in the amount of $3,637 and $3,637, respectively. The Company was reimbursed for the three months ended March 2022 and 2021 in the amount of $0 and $94,801 respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 13 – ACCRUED EXPENSES Accrued expenses consisted of the following: March 31, 2022 December 31, 2021 Employee compensation $ 589,712 $ 897,288 Accrued bonuses 963,881 743,038 Performance guarantee liabilities 368,699 418,988 Other accrued expenses and liabilities 251,762 465,723 Accrued expenses $ 2,174,054 $ 2,525,037 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 14 – STOCKHOLDERS’ EQUITY The Company effected a 4.555821-for-1 forward stock split on September 2, 2021. All share and per share information in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect this forward stock split. On October 28, 2021, the Company consummated its IPO of 6,250,000 shares of class A common stock for a price of $4.00 per share, generating gross proceeds of $28,750,000 less certain underwriting discounts and commissions. The Company also granted the underwriters a 45-day option to purchase up to 937,500 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the initial public offering. The Company’s underwriters exercised the over-allotment option in full on October 28, 2021. The IPO, including the sale of the 937,500 over-allotment option shares, closed on October 29, 2021 and was made pursuant to the Registration Statement on Form S-1, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 26, 2021. A final prospectus describing the terms of its initial public offering was filed with the SEC on October 28, 2021. The net proceeds to the Company from its IPO and the exercise in full of the over-allotment option are $24,547,086, after deducting underwriting commissions and offering expenses. The Company intends to use the net proceeds from its IPO to fund research and development which includes hiring new A.I. scientists and acquiring data from third parties, sales and marketing activities, to repay approximately $783,257 of convertible note debt, and for working capital, general corporate purposes, and potential acquisitions. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 15 – INCOME TAXES The effective tax rate was 0% for the three months ended March 31, 2022 and 2021. The effective tax rate differs from the federal tax rate of 21% for the three months ended March 31, 2022 and 2021 due primarily to the full valuation allowance, and other discrete items. At December 31, 2021, the Company had federal and state net operating losses (“NOLs”) in the amount of $10,687,462 and $11,173,080 respectively. These NOLs expire from 2031 to 2041 or have indefinite lives. However, the Tax Cuts & Jobs Act of 2017 limits the amount of net operating loss utilized each year after December 31, 2020 to 80% of taxable income. Income tax expense is recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between amounts reported for income tax purposes and financial statement purposes, using current tax rates. A valuation allowance is recognized if it is anticipated that some or all of a deferred tax asset will not be realized. The Company must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent that the Company believes that recovery is not likely, it must establish a valuation allowance. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The Company and its subsidiaries income tax returns for 2019 and 2020 are open to review by the tax authorities. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS Management has evaluated subsequent events through May 11, 2022, the date the condensed consolidated financial statements were available for issuance. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business Combination | Business Combination The Company accounts for business combinations in accordance with the Financial Accounting Standard Board’s (“FASB”) Accounting Standard Codification (“ASC”) 805, Business Combinations |
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,valuation of the Company’s common stock prior to the IPO, accounting for warrants, allowance for doubtful accounts, useful lives of internally developed software,fair values of net assets acquired, goodwill, intangible assets and property and equipment, 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. |
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 and cash in a money market account as required by a credit card company for collateral. 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 condensed 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. |
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 |
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 condensed 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 no goodwill impairment for the three months ended March 31, 2022 and 2021. |
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 |
Revenue Recognition | Revenue Recognition 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. 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. The Company had performance guarantee liabilities of $368,699, which is included in accrued expenses on the accompanying condensed consolidated balance sheet as of March 31, 2022. NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 15 th 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 the Company’s 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, and benefit billing. 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 control of these services is transferred to 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 denominated per covered employee per month. 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. |
Earnings (Loss) Per Share | Earnings (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 March 31, 2022 and 2021, there were 2,346,764 and 5,860,326 common share equivalents, respectively. For the three months ended March 31, 2022 and 2021, these potential shares were excluded from the shares used to calculate diluted net loss per share as their effect would have been antidilutive. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted earnings per share (“EPS”) calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement. Furthermore, ASU 2020-06 requires the application of the converted method for calculating diluted earnings per share, and the treasury stock method will be no longer available. In addition, ASU 2020-06 clarifies that an average market price should be used to calculate the diluted EPS denominator in cases in which the exercise prices may change on the basis of an entity’s share price or changes in the entity’s share price may affect the number of shares that may be used to settle a financial instrument and that an entity should use the weighted-average share count from each quarter when calculating the year-to-date weighted-average share. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact to the Company’s condensed consolidated financial statements, since all of the Company’s convertible debt were converted to equity at the IPO or repaid during the year ended December 31, 2021. In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU No. 2020-04 provides guidance on optional expedients for a limited time to ease the operational burden in accounting for (or recognizing the effects of) reference rate reform (LIBOR) on financial reporting. This guidance is effective upon the ASUs issuance on March 12, 2020 and companies may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the potential effects of this guidance on its condensed consolidated financial statements. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITION. | |
Summary of assets acquired and liabilities assumed at their estimated acquisition | Purchase Price Equity value $ 13,262,000 Cash acquired (4,762,000) Total purchase price paid, net of cash acquired $ 8,500,000 Purchase Price Allocation Restricted cash $ 6,622,035 Accounts receivable 92,231 Prepaid expenses and other current assets 131,414 Property and equipment 1,601,990 Noncompete agreements 990,000 Capitalized software 1,200,000 Operating lease - right of use assets 1,763,960 Goodwill 2,382,917 Trademarks 1,520,000 Patents and patent applications 650,000 Customer relationships 2,920,000 Security deposits 54,869 Account payable (925,608) Accrued expenses (1,267,708) Accrued fiduciary obligations (4,070,908) Operating lease liabilities (1,763,960) Deferred tax liability (2,151,012) Deferred revenue (1,205,220) Other long-term liabilities (45,000) Total fair value of net assets acquired and liabilities assumed $ 8,500,000 |
Summary of estimated fair values of identifiable intangible assets, their estimated useful lives and expected amortization periods | Useful Acquisition Life in Fair Value Years Trademarks $ 1,520,000 10 Years Noncompete agreements 990,000 5 Years Customer relationships 2,920,000 7 Years Patents and patent applications 650,000 (*) (*) Patents have yet to be approved by the United States Patent and Trademark Office. Useful life is determined upon placement into service after approval. |
Summary of consolidated information of the Company as if the business combination had occurred on January 1, 2020 | Three Months Ended March 31, 2021 (pro forma) Revenue $ 4,215,081 Net loss (3,641,481) |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Summary of property and equipment | March 31, 2022 December 31, 2021 Equipment $ 222,222 $ 222,222 Furniture and fixtures 341,769 341,769 Leasehold improvements 725,179 621,527 Total cost 1,289,170 1,185,518 Accumulated depreciation (366,694) (295,583) Property and equipment, net $ 922,476 $ 889,935 |
CAPITALIZED SOFTWARE (Tables)
CAPITALIZED SOFTWARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Capitalized Software | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of capitalized software | March 31, 2022 December 31, 2021 Capitalized software $ 7,161,571 $ 7,161,571 Accumulated amortization (1,723,656) (1,186,727) Net carrying amount 5,437,915 5,974,844 Capitalized software in-process 723,328 330,010 Capitalized software, net $ 6,161,243 $ 6,304,854 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Intangible assets other than capitalized software | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of capitalized software | March 31, 2022 Useful Gross Carrying Accumulated Net Carrying Life Amount Amortization Amount Trademarks 10 Years $ 1,520,000 $ (160,500) $ 1,359,500 Noncompete agreements 5 Years 990,000 (199,000) 791,000 Customer relationships 7 Years 2,920,000 (433,214) 2,486,786 Patents and patent applications (*) 650,450 — 650,450 $ 6,080,450 $ (792,714) $ 5,287,736 (*) Patents have yet to be approved by the United States Patent and Trademark Office. Useful life is determined upon placement into service after approval. |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SHARE-BASED COMPENSATION | |
Schedule of fair value of options and share awards granted under the stock option plan | 2021 Risk-free interest rates 0.91 % Expected life 5 years Expected volatility 40.81 % Expected dividend yield 0.00 % |
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, 2022 1,472,988 $ 1.92 8.98 $ 3,616,248 Granted — Forfeited/Cancelled (13,667) 0.002 Exercised — Balance at March 31, 2022 1,459,321 1.94 8.76 $ 710,438 Exercisable at March 31, 2022 545,267 $ 1.60 8.58 $ 375,959 |
Summary of non-vested stock options activity | The following table summarizes the Company’s non-vested stock options: Weighted-Average Non-vested Options Grant Date Fair Outstanding Value At January 1, 2022 1,058,235 $ 0.95 Options granted — Options forfeited/cancelled (13,667) 2.58 Options exercised — Options vested (130,515) 0.95 At March 31, 2022 914,053 $ 0.92 |
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, 2022 708,615 $ 1.42 Granted — — Forfeited/cancelled — — Vested (110,617) 1.44 Outstanding at March 31, 2022 597,998 $ 1.42 |
WARRANTS (Tables)
WARRANTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
WARRANTS | |
Schedule of warrant activities | Number of Warrants to Exercise Price Weighted Purchase Common Range Per Average Shares Share Exercise Price Balance at January 1, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Granted — — — Forfeited — — — Exercised — — — Balance at March 31, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Balance at January 1, 2021 364,466 $ 1.43 $ 1.43 Granted 926,349 7.90 7.90 Forfeited — — — Exercised — — — Balance at March 31, 2021 1,290,815 $ 1.43 to 7.90 $ 6.07 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SEGMENT INFORMATION | |
Schedule of long-lived assets by geographic region | March 31, 2022 December 31, 2021 United States $ 13,662,661 $ 14,369,511 Israel 3,010,634 2,759,512 Total long-lived assets $ 16,673,295 $ 17,129,023 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | March 31, 2022 December 31, 2021 Employee compensation $ 589,712 $ 897,288 Accrued bonuses 963,881 743,038 Performance guarantee liabilities 368,699 418,988 Other accrued expenses and liabilities 251,762 465,723 Accrued expenses $ 2,174,054 $ 2,525,037 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) | Oct. 28, 2021USD ($)shares | Oct. 26, 2021USD ($)$ / sharesshares | Apr. 01, 2021USD ($)shares | Jan. 22, 2021item | Mar. 31, 2022$ / shares | Dec. 31, 2021$ / shares |
Business Acquisition [Line Items] | ||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Price per share | $ / shares | $ 4 | |||||
Initial public offering | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued | shares | 6,250,000 | |||||
Proceeds from initial public offering | $ 28,750,000 | |||||
Conversion of convertible notes to common stock in connection with initial public offering | $ 5,106,554 | |||||
Class A common stock | Initial public offering | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued | shares | 7,187,500 | |||||
Common stock, par value | $ / shares | $ 0.0001 | |||||
Price per share | $ / shares | $ 4 | |||||
Proceeds from initial public offering | $ 28,750,000 | |||||
Marpai Health | ||||||
Business Acquisition [Line Items] | ||||||
Options to purchase shares of common stock | shares | 1,027,602 | |||||
Warrants to purchase shares of common stock | shares | 1,366,746 | |||||
Conversion ratio | 1 | |||||
Amount of convertible promissory notes exchanged for shares of common stock | shares | 3,800,000 | |||||
Convertible promissory notes acquired | $ 2,198,459 | |||||
Continental Benefits | ||||||
Business Acquisition [Line Items] | ||||||
Number of healthcare subsidiaries | item | 2 | |||||
Minimum cash on hand required at the time of closing of Acquisition | 4,762,000,000,000 | |||||
Debt at the time of closing of Acquisition | $ 0 |
LIQUIDITY (Details)
LIQUIDITY (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 |
LIQUIDITY | |||
Accumulated deficit | $ 27,015,374 | $ 21,525,710 | |
Working capital | 10,911,895 | ||
Cash and cash equivalents | $ 14,107,751 | $ 19,183,044 | $ 862,835 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Capitalized Software (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Expected economic life of the underlying software | 5 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Expected economic life of the underlying software | 10 years |
Capitalized Software | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Expected economic life of the underlying software | 3 years |
Capitalized Software | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Expected economic life of the underlying software | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Good will (Details) | 3 Months Ended | |
Mar. 31, 2022USD ($)segment | Mar. 31, 2021USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of reporting segment | segment | 1 | |
Goodwill impairment charges | $ | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Impairment of intangible assets | $ 0 | $ 0 |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 5 years | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Revenue Recognition | |
Performance guarantee liabilities | $ 368,699 |
Accounts receivable, payments term | 30 days |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings (Loss) Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share | ||
Number of shares excluded to calculate diluted net earnings per share as their effect would have been antidilutive | 2,346,764 | 5,860,326 |
ACQUISITION - Additional Inform
ACQUISITION - Additional Information (Details) | Apr. 01, 2021USD ($) |
Continental Benefits | |
Business Acquisition [Line Items] | |
Total purchase price paid, net of cash acquired | $ 8,500,000 |
Marpai Health | |
Business Acquisition [Line Items] | |
Assumed pre-money valuation of the last convertible note's conversion price | $ 35,000,000 |
ACQUISITION - Preliminary purch
ACQUISITION - Preliminary purchase consideration (Details) - USD ($) | Apr. 01, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Purchase Price Allocation | |||
Goodwill | $ 2,382,917 | $ 2,382,917 | |
Continental Benefits | |||
Purchase Price | |||
Equity value | $ 13,262,000 | ||
Cash acquired | (4,762,000) | ||
Total purchase price paid, net of cash acquired | 8,500,000 | ||
Purchase Price Allocation | |||
Restricted cash | 6,622,035 | ||
Accounts receivable | 92,231 | ||
Prepaid expenses and other current assets | 131,414 | ||
Property and equipment | 1,601,990 | ||
Operating lease - right of use assets | 1,763,960 | ||
Goodwill | 2,382,917 | ||
Security deposits | 54,869 | ||
Account payable | (925,608) | ||
Accrued expenses | (1,267,708) | ||
Accrued fiduciary obligations | (4,070,908) | ||
Operating lease liabilities | (1,763,960) | ||
Deferred tax liability | (2,151,012) | ||
Deferred revenue | (1,205,220) | ||
Other long-term liabilities | (45,000) | ||
Total fair value of net assets acquired and liabilities assumed | 8,500,000 | ||
Continental Benefits | Capitalized Software | |||
Purchase Price Allocation | |||
Intangible assets | 1,200,000 | ||
Continental Benefits | Trademarks | |||
Purchase Price Allocation | |||
Intangible assets | 1,520,000 | ||
Continental Benefits | Patents and patent applications | |||
Purchase Price Allocation | |||
Intangible assets | 650,000 | ||
Continental Benefits | Customer relationships | |||
Purchase Price Allocation | |||
Intangible assets | 2,920,000 | ||
Continental Benefits | Noncompete agreements | |||
Purchase Price Allocation | |||
Intangible assets | $ 990,000 |
ACQUISITION - The estimated fai
ACQUISITION - The estimated fair values of Continental Benefits (Details) - Continental Benefits | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Trademarks | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 1,520,000 |
Useful Life in Years | 10 years |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 2,920,000 |
Useful Life in Years | 7 years |
Patents and patent applications | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 650,000 |
Noncompete agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 990,000 |
Useful Life in Years | 5 years |
ACQUISITION - Unaudited pro for
ACQUISITION - Unaudited pro forma summary (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
ACQUISITION. | ||
Proforma revenue | $ 4,215,081 | |
Proforma net loss | $ (3,641,481) | |
Incremental amortization expense related to intangible and tangible assets acquired | $ 297,736 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Total cost | $ 1,289,170 | $ 1,185,518 | |
Accumulated depreciation | (366,694) | (295,583) | |
Property and equipment, net | 922,476 | 889,935 | |
Depreciation expense | 71,111 | $ 18,154 | |
Equipment | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Total cost | 222,222 | 222,222 | |
Furniture and Fixtures | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Total cost | 341,769 | 341,769 | |
Leasehold Improvements | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Total cost | $ 725,179 | $ 621,527 |
CAPITALIZED SOFTWARE (Details)
CAPITALIZED SOFTWARE (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
CAPITALIZED SOFTWARE. | |||
Capitalized software | $ 7,161,571 | $ 7,161,571 | |
Accumulated amortization | (1,723,656) | (1,186,727) | |
Net carrying amount | 5,437,915 | 5,974,844 | |
Capitalized software in-process | 723,328 | 330,010 | |
Capitalized software, net | 6,161,243 | $ 6,304,854 | |
Amortization expense | $ 536,929 | $ 0 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Amortization expense | $ 217,358 | $ 0 |
Intangible assets other than capitalized software | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 6,080,450 | |
Accumulated Amortization | 792,714 | |
Net Carrying Amount | $ 5,287,736 | |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 10 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 1,520,000 | |
Accumulated Amortization | 160,500 | |
Net Carrying Amount | $ 1,359,500 | |
Noncompete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 5 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 990,000 | |
Accumulated Amortization | 199,000 | |
Net Carrying Amount | $ 791,000 | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 7 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 2,920,000 | |
Accumulated Amortization | 433,214 | |
Net Carrying Amount | 2,486,786 | |
Patents and patent applications | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 650,450 | |
Net Carrying Amount | $ 650,450 |
INTANGIBLE ASSETS - Estimated a
INTANGIBLE ASSETS - Estimated amortization for intangible assets for future periods (Details) | Mar. 31, 2022USD ($) |
Intangible assets other than capitalized software | |
Estimated amortization for capitalized software | |
Finite lived intangible assets, net | $ 5,287,736 |
Patents and patent applications | |
Estimated amortization for capitalized software | |
Finite lived intangible assets, net | $ 650,450 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Options (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense | $ 416,667 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares authorized | 1,503,421 | |
Expiration term of award | 10 years | |
Stock compensation expense | $ 104,402 | $ 81,175 |
Unrecognized stock compensation expense | $ 947,792 | |
Unrecognized stock compensation expense, expected to be recognized over a weighted-average period | 4 years |
SHARE-BASED COMPENSATION - Fair
SHARE-BASED COMPENSATION - Fair Value of options (Details) - Stock Options | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rates | 0.91% |
Expected life | 5 years |
Expected volatility | 40.81% |
Expected dividend yield | 0.00% |
SHARE-BASED COMPENSATION - St_2
SHARE-BASED COMPENSATION - Stock Option Activity (Details) - Stock Options - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Number of Options | ||
Balance at the beginning | 1,472,988 | |
Forfeited/Cancelled | (13,667) | |
Balance at the end | 1,459,321 | 1,472,988 |
Exercisable at the end | 545,267 | |
Weighted Average Exercise Price | ||
Balance at the beginning (in dollars per share) | $ 1.92 | |
Forfeited/Cancelled (in dollars per share) | 0.002 | |
Balance at the end (in dollars per share) | 1.94 | $ 1.92 |
Exercisable at the end (in dollars per share) | $ 1.60 | |
Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value | ||
Balance (in years) | 8 years 9 months 3 days | 8 years 11 months 23 days |
Exercisable at the end (in years) | 8 years 6 months 29 days | |
Balance at the beginning (in dollars) | $ 3,616,248 | |
Balance at the end (in dollars) | 710,438 | $ 3,616,248 |
Exercisable at the end (in dollars) | $ 375,959 |
SHARE-BASED COMPENSATION - Non-
SHARE-BASED COMPENSATION - Non-vested Stock Options (Details) - Stock Options | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Non-vested Options Outstanding | |
At the beginning | shares | 1,058,235 |
Options forfeited/cancelled | shares | (13,667) |
Options vested | shares | (130,515) |
At the end | shares | 914,053 |
Weighted-Average Grant Date Fair Value | |
At the beginning (in dollars per share) | $ / shares | $ 0.95 |
Options forfeited/cancelled (in dollars per share) | $ / shares | 2.58 |
Options vested (in dollars per share) | $ / shares | 0.95 |
At the end (in dollars per share) | $ / shares | $ 0.92 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Awards Activity (Details) - Restricted Stock Awards | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Restricted Stock Awards | |
Outstanding at the beginning | shares | 708,615 |
Vested | shares | (110,617) |
Outstanding at the end | shares | 597,998 |
Weighted-Average Grant Date Fair Value Per Share | |
Outstanding at the beginning (in dollars per share) | $ / shares | $ 1.42 |
Vested (in dollars per share) | $ / shares | 1.44 |
Outstanding at the end (in dollars per share) | $ / shares | $ 1.42 |
SHARE-BASED COMPENSATION - Re_2
SHARE-BASED COMPENSATION - Restricted Stock Awards (Details) | Feb. 28, 2022USD ($)item | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation expense | $ 416,667 | ||
Accrued Liabilities | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense capitalized | $ 416,667 | ||
Officer [Member] | Class A common stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Amount of fully vested stock with a fair market value | $ 250,000 | ||
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 12 months | 4 years | |
Stock compensation expense | $ 144,585 | $ 149,303 | |
Unrecognized compensation expense related to unvested restricted share awards | $ 801,672 | ||
Unrecognized compensation expense related to unvested restricted share awards recognized over a weighted-average period | 2 years | ||
Amount of restricted shares with a fair market value | $ 2,000,000 | ||
Number of equal installments | item | 4 |
WARRANTS - Marpai Health Warran
WARRANTS - Marpai Health Warrants (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 28, 2021 | Mar. 31, 2021 | Mar. 31, 2022 | Apr. 01, 2021 | Jan. 17, 2020 | |
Class of Warrant or Right [Line Items] | |||||
Price per share | $ 4 | ||||
Cash payment for purchase of warrants | $ 50,833 | ||||
Marpai Health Warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants to purchase common shares | 926,349 | 1,290,815 | 364,466 | ||
Purchase price per share | $ 0.05 | ||||
Warrants exercise price | $ 7.90 | $ 1.43 | |||
Fair value of the warrants | $ 213,828 | ||||
Cash payment for purchase of warrants | $ 50,833 |
WARRANTS - Marpai Warrants (Det
WARRANTS - Marpai Warrants (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Jul. 31, 2021 | Apr. 30, 2021 | Mar. 31, 2021 | Oct. 28, 2021 | Dec. 31, 2020 | |
Class of Warrant or Right [Line Items] | |||||
Cash payment for purchase of warrants | $ 50,833 | ||||
Initial public offering | |||||
Class of Warrant or Right [Line Items] | |||||
Purchase price per share | $ 4 | ||||
Marpai Warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants term | 5 years | ||||
Purchase price per share | $ 0.05 | ||||
Warrants to purchase common shares | 225,000 | 45,558 | |||
Warrants exercise price | $ 4 | $ 7.90 | $ 1.43 | ||
Cash payment for purchase of warrants | $ 2,500 | ||||
Proceeds from warrant exercises | $ 900,000 | ||||
Fair value of the warrants | $ 0 |
WARRANTS - Underwriter Warrants
WARRANTS - Underwriter Warrants (Details) | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Price per share | $ 4 |
Underwriter warrants | |
Class of Warrant or Right [Line Items] | |
Percentage Of Underwriters Compensation | 5.00% |
Warrants to purchase common shares | shares | 312,500 |
Exercise price, Percentage on public offering price | 125.00% |
Warrants exercise price | $ 5 |
WARRANTS - Summary Of Company W
WARRANTS - Summary Of Company Warrant Activities (Details) - Marpai Warrants - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Number Of Common Shares Warrants | ||
Beginning balance | 1,648,873 | 364,466 |
Granted | 926,349 | |
Forfeited | 0 | |
Exercised | 0 | |
Ending balance | 1,648,873 | 1,290,815 |
Exercise Price Range Per Share | ||
Beginning balance | $ 1.43 | |
Granted | 7.90 | |
Weighted Average Exercise Price | ||
Beginning balance | $ 5.92 | 1.43 |
Granted | 7.90 | |
Ending balance | 5.92 | 6.07 |
Minimum | ||
Exercise Price Range Per Share | ||
Beginning balance | 1.43 | |
Ending balance | 1.43 | 1.43 |
Maximum | ||
Exercise Price Range Per Share | ||
Beginning balance | 7.90 | |
Ending balance | $ 7.90 | $ 7.90 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 16,673,295 | $ 17,129,023 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 13,662,661 | 14,369,511 |
Israel | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 3,010,634 | $ 2,759,512 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | ||||
Accounts payable | $ 123,000 | $ 297,000 | ||
Due to related parties | 3,637 | $ 3,637 | ||
Related party, reimbursement expenses | 0 | $ 94,801 | ||
Consulting services | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | 70,000 | 246,000 | ||
Marketing services | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expense | $ 565,000 | $ 321,000 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES | ||
Employee compensation | $ 589,712 | $ 897,288 |
Accrued bonuses | 963,881 | 743,038 |
Performance guarantee liabilities | 368,699 | 418,988 |
Other accrued expenses and liabilities | 251,762 | 465,723 |
Accrued expenses | $ 2,174,054 | $ 2,525,037 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | Oct. 28, 2021USD ($)$ / sharesshares | Sep. 02, 2021 | Mar. 31, 2022$ / shares |
Subsidiary, Sale of Stock [Line Items] | |||
Forward split ratio | 4.555821 | ||
Price per share | $ / shares | $ 4 | ||
Net proceeds from offering | $ 24,547,086 | ||
Repayment of debt | $ 783,257 | ||
Initial public offering | |||
Subsidiary, Sale of Stock [Line Items] | |||
Number of shares issued | shares | 6,250,000 | ||
Proceeds from initial public offering | $ 28,750,000 | ||
Share Price | $ / shares | $ 4 | ||
Over allotment | |||
Subsidiary, Sale of Stock [Line Items] | |||
Number of shares issued | shares | 937,500 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||||
Effective tax rate | 0.00% | 0.00% | ||
Federal tax rate | 21.00% | 21.00% | ||
Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
Federal tax rate | 80.00% | |||
Net operating losses | $ 10,687,462 | |||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating losses | $ 11,173,080 |