Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 21, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 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 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 | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 4,875,220 | ||
Entity Common Stock, Shares Outstanding | 21,412,580 | ||
Entity Central Index Key | 0001844392 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
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, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 13,764,508 | $ 19,183,044 |
Restricted cash | 9,352,608 | 6,750,599 |
Accounts receivable, net | 1,437,786 | 208,762 |
Unbilled receivable | 350,393 | 14,978 |
Prepaid expenses and other current assets | 1,601,920 | 743,126 |
Other receivables | 30,634 | 91,498 |
Total current assets | 26,537,849 | 26,992,007 |
Property and equipment, net | 1,506,082 | 889,935 |
Capitalized software, net | 4,588,706 | 6,304,854 |
Operating lease right-of-use assets | 3,841,810 | 2,043,624 |
Goodwill | 5,837,060 | 2,382,917 |
Intangible assets, net | 6,323,279 | 5,507,693 |
Security deposits | 1,293,166 | 52,277 |
Other long-term asset | 21,668 | 28,333 |
Total assets | 49,949,620 | 44,201,640 |
Current liabilities: | ||
Accounts payable | 1,457,670 | 1,125,906 |
Accrued expenses | 5,274,716 | 2,525,037 |
Accrued fiduciary obligations | 9,024,463 | 5,541,067 |
Deferred revenue | 288,499 | 1,165,248 |
Current portion of operating lease liabilities | 1,311,295 | 784,493 |
Due to related party | 3,201 | 3,637 |
Total current liabilities | 17,359,844 | 11,145,388 |
Other long-term liabilities | 20,203,700 | 45,000 |
Operating lease liabilities, net of current portion | 4,771,871 | 1,301,828 |
Deferred tax liabilities | 1,479,880 | 2,001,012 |
Total liabilities | 43,815,295 | 14,493,228 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.0001 par value, 227,791,050 shares authorized; 21,279,032 issued and outstanding at December 31, 2022 and 20,299,727 issued and outstanding at December 31, 2021 | 2,128 | 2,030 |
Additional paid-in capital | 54,126,297 | 51,232,092 |
Accumulated deficit | (47,994,100) | (21,525,710) |
Total stockholders' equity | 6,134,325 | 29,708,412 |
Total liabilities and stockholders' equity | $ 49,949,620 | $ 44,201,640 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 23,458 | $ 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 227,791,050 | 227,791,050 |
Common stock, shares issued | 21,279,032 | 20,299,727 |
Common stock, shares outstanding | 21,279,032 | 20,299,727 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Income Statement [Abstract] | |||
Revenue | $ 24,341,874 | $ 14,226,794 | |
Costs and expenses | |||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 17,136,330 | 10,289,578 | |
General and administrative | 12,318,529 | 8,055,572 | |
Sales and marketing | 6,938,513 | 4,965,209 | |
Information technology | 6,372,795 | 2,492,060 | |
Research and development | 3,708,068 | 1,733,964 | |
Depreciation and amortization | 3,538,237 | 1,961,733 | |
Facilities | 1,012,827 | 589,926 | |
Loss on disposal of assets | 273,430 | ||
Total costs and expenses | 51,298,729 | 30,088,042 | |
Operating loss | (26,956,855) | (15,861,248) | |
Other income (expenses) | |||
Other income, net | 234,472 | 172,513 | |
Interest expense | (266,778) | (427,178) | |
Foreign exchange loss | (361) | (18,922) | |
Loss before provision for income taxes | (26,989,522) | (16,134,835) | |
Income tax expense (benefit) | (521,132) | (150,000) | |
Net loss | $ (26,468,390) | $ (15,984,835) | |
Net loss per share, basic (1) | [1] | $ (1.31) | $ (1.59) |
Net loss per share, fully diluted (1) | [1] | $ (1.31) | $ (1.59) |
Weighted average number of common shares, basic (1) | [1] | 20,239,837 | 10,076,494 |
Weighted average number of common shares, diluted (1) | [1] | 20,239,837 | 10,076,494 |
[1] Reflects 4.555821 -for-1 forward stock split that became effective September 2, 2021. The computation of basic and diluted net loss per share was retroactively adjusted for all periods presented. See Note 16 to the consolidated financial statements. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) | Sep. 02, 2021 |
Income Statement [Abstract] | |
Forward split ratio | 4.555821 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Balance at the beginning at Dec. 31, 2020 | $ (3,496,499) | $ 14 | $ 2,044,362 | $ (5,540,875) |
Balance at the beginning (in shares) at Dec. 31, 2020 | 142,369 | |||
Exchange of common shares of Marpai Health, Inc. (see Note 1) | (14) | $ (14) | ||
Exchange of common shares of Marpai Health, Inc. (in shares) | (142,369) | |||
Issuance of common shares of Marpai, Inc. (see Note 1) (1) | 17,351,935 | $ 1,115 | 17,350,820 | |
Issuance of common shares of Marpai, Inc. (in shares) | 11,147,302 | |||
Issuance of common shares in connection with initial public offering, net | 24,547,085 | $ 718 | 24,546,367 | |
Issuance of common shares in connection with initial public offering, net (in shares) | 7,187,500 | |||
Conversion of convertible notes to common stock in connection with initial public offering | 5,106,554 | $ 171 | 5,106,383 | |
Conversion of convertible notes to common stock in connection with initial public offering (in shares) | 1,712,162 | |||
Exercise of warrant | 900,000 | $ 23 | 899,977 | |
Exercise of warrant (in shares) | 225,000 | |||
Issuance of common stock upon exercise of stock options | 61 | $ 3 | 58 | |
Issuance of common stock upon exercise of stock options (in shares) | 27,763 | |||
Warrants issued for cash | 53,333 | 53,333 | ||
Share-based compensation | 1,230,792 | 1,230,792 | ||
Net loss | (15,984,835) | (15,984,835) | ||
Balance at the end at Dec. 31, 2021 | $ 29,708,412 | $ 2,030 | 51,232,092 | (21,525,710) |
Balance at the end (in shares) at Dec. 31, 2021 | 20,299,727 | 20,299,727 | ||
Issuance of common stock upon exercise of stock options | $ 206 | $ 9 | 197 | |
Issuance of common stock upon exercise of stock options (in shares) | 89,631 | |||
Share-based compensation | 2,855,385 | 2,855,385 | ||
Issuance of stock upon vesting of restricted stock units | 85 | $ 85 | ||
Issuance of stock upon vesting of restricted stock units (in shares) | 852,174 | |||
Shares issued to vendors in exchange for services | 38,627 | $ 4 | 38,623 | |
Shares issued to vendors in exchange for services (in shares) | 37,500 | |||
Net loss | (26,468,390) | (26,468,390) | ||
Balance at the end at Dec. 31, 2022 | $ 6,134,325 | $ 2,128 | $ 54,126,297 | $ (47,994,100) |
Balance at the end (in shares) at Dec. 31, 2022 | 21,279,032 | 21,279,032 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) | Sep. 02, 2021 |
Statement of Stockholders' Equity [Abstract] | |
Forward split ratio | 4.555821 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (26,468,390) | $ (15,984,835) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,538,237 | 1,961,733 |
Loss on disposal of assets | 273,430 | |
Share-based compensation | 3,105,385 | 1,230,792 |
Shares issued to vendors in exchange for services | 38,623 | |
Amortization of right-of-use asset | 598,925 | 100,160 |
Amortization of debt discount | 26,728 | |
Non-cash interest | 258,787 | 365,880 |
Convertible note issued for professional services | 75,000 | |
Deferred taxes | (521,132) | (150,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable and unbilled receivable | (597,051) | (131,509) |
Prepaid expense and other assets | 892,577 | (349,502) |
Other receivables | 60,864 | 8,540 |
Security deposit | 2,592 | |
Accounts payable | 181,436 | 41,130 |
Accounts payable - related party | (15,725) | |
Accrued expenses | (2,052,232) | 961,795 |
Accrued fiduciary obligations | (12,823,139) | 1,470,159 |
Operating lease liabilities | (661,382) | (99,884) |
Due to related party | (2,805) | (240,001) |
Other liabilities | (1,068,098) | (39,972) |
Other asset | 6,666 | (28,333) |
Net cash used in operating activities | (35,239,299) | (10,795,252) |
Cash flows from investing activities: | ||
Cash and restricted cash acquired as part of Acquisitions (see Note 4) | 33,388,149 | 11,384,035 |
Capitalization of software development costs | (602,805) | (1,463,812) |
Purchases of intangible asset | (3,050) | |
Purchase of property and equipment | (362,768) | (273,433) |
Net cash provided by investing activities | 32,422,576 | 9,643,740 |
Cash flows from financing activities: | ||
Proceeds from initial public offering, net | 25,378,663 | |
Proceeds from warrant exercises | 900,000 | |
Repayment of convertible note | (783,257) | |
Proceeds from stock option exercises | 196 | 61 |
Proceeds from convertible notes | 550,000 | |
Proceeds from short-term loan | 3,000,000 | |
Repayment of short-term loan | (3,000,000) | |
Payment for initial public offering costs | (831,577) | |
Proceeds from issuance of warrants | 53,333 | |
Net cash provided by financing activities | 196 | 25,267,223 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (2,816,527) | 24,115,711 |
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 | 23,117,116 | 25,933,643 |
Reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets | ||
Cash and cash equivalents | 13,764,508 | 19,183,044 |
Restricted cash | 9,352,608 | 6,750,599 |
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | 23,117,116 | 25,933,643 |
Supplemental disclosure of non-cash activity | ||
Conversion of convertible notes into common stock at the closing of the Acquisition, net | 4,089,921 | |
Conversion of convertible notes into common stock at the IPO | 5,106,554 | |
Office improvements included in accrued expenses | 27,567 | |
Common stock issued as part of the Acquisition | $ 8,500,000 | |
Long term liability incurred in connection with the acquisition | $ 19,900,000 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Marpai, Inc. (“Marpai”) 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”). In July 2022, Continental Benefits LLC changed its name to Marpai Administrators LLC (“Marpai Administrators”) . 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, Marpai Health 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 “CB Agreement”), the stockholders of Marpai Health and the sole member of Continental Benefits 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 “CB Acquisition”). As part of the CB 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 CB 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 CB 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 CB 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 Note 4 for additional information. On November 1, 2022, Marpai consummated the acquisition of Maestro Health, LLC (“Maestro”). Pursuant to the terms of the Purchase Agreement ("Maestro Agreement"), Marpai agreed to acquire all of the membership interests (the “Units”) of Maestro, a Delaware limited liability company (the “Maestro Acquisition”). In consideration for Marpai’s acquisition of the Units, Marpai agreed to pay the sellers 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 Debt 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. For accounting purposes, Maestro was considered the acquiree and Marpai was considered the acquirer. The acquisition was accounted for using the acquisition method of accounting, and Marpai was considered the acquiror. See Note 4 for additional information. Marpai Captive, Inc. (“Marpai Captive”), a Delaware corporation was founded in March 2022, as a subsidiary of the Marpai. Marpai Captive is intended to engage in the captive insurance market if and when management decides to enter this market. Marpai Captive commenced operations in the first quarter of 2023. Marpai, along with its wholly owned subsidiaries are hereinafter referred to as the “Company”. The Company did not generate any revenues prior to the acquisition of Continental Benefits. Table of Contents NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED) 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 16. 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, (ii) employees who receive these healthcare benefits from its clients, and (iii) healthcare providers including doctors, doctor groups, hospitals, clinics, and any other entities providing healthcare services or products. The Company’s operations are principally conducted through its wholly owned subsidiaries Marpai Health, Marpai Administrators, and Maestro Health. The Company provides benefits outsourcing services to clients in the United States across multiple industries. The Companies’ 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, the Company provides health and welfare administration, dependent eligibility verification, Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, and benefit billing services. As of the date these consolidated financial statements were available to be issued, there was no substantial impact and the Company will continue to monitor the potential impact of these factors on the Company’s consolidated financial statements. The Company continues to monitor the effects of the global coronavirus pandemic outbreak, ("COVID-19") and 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. |
Liquidity and Going Concern
Liquidity and Going Concern | 12 Months Ended |
Dec. 31, 2022 | |
LIQUIDITY | |
Liquidity and Going Concern | NOTE 2 – LIQUIDITY AND GOING CONCERN Since inception, the Company has met its cash needs through proceeds from issuing convertible notes, warrants and its IPO. As shown in the accompanying consolidated financial statements as of and for the year ended December 31, 2022, the Company has an accumulated deficit of $ 47,994,100 , working capital of $ 9,178,005 , debt of $ 20,203,700 and $ 13,764,508 of unrestricted cash on hand. For the years ended December 31, 2022 and 2021, the Company has reported operating losses and negative cash flows from operations. 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 debt. Alternatively, or in addition, the Company may seek to sell assets which it regards as non-strategic. Any of the fore going 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 available to be 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
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. Marpai Administrators is included as of April 1, 2021, the date of the CB Acquisition (see Note 4) and Maestro 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 Financial Accounting Standard Board’s (“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, 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. 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, 2022 and 2021 was approximately $ 13,137,000 and $ 18,777,000 , respectively. No losses have been incurred to date on any deposit balances. For the years ended December 31, 2022 and 2021 , no customer accounted for greater than 10% of total revenue. At December 31, 2022 , one customer accounted for 11.2 % of accounts receivable. At December 31, 2021, three customers accounted for 43 %, 26 %, and 24 % of accounts receivable, respectively. 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 of 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. Table of Contents 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. The allowance is based on our estimate of expected credit losses for outstanding trade accounts receivables 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, including the ongoing COVID-19 pandemic, 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 $ 23,458 and $ 0 , as of December 31, 2022 and 2021, 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. Accounting Standards Codification (“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. 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, 2022 and 2021, 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 adjustments to the carrying amounts of the Company’s long-lived assets have been made for the years ended December 31, 2022 and 2021 . 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 Table of Contents 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 no goodwill impairment for the years ended December 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 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, 2022 and 2021 . 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 changes, 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, 2022 and 2021 . 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. Table of Contents NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contract Balances At December 31, 2022 and 2021, the balances of the Company’s accounts receivable from contracts with customers, net of related allowances for credit losses, were $ 1,437,786 and $ 208,762 , respectively, and the balance of the Company’s unbilled receivable from a contract with a customer was $ 350,393 and $ 14,978 , 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, 2022 and 2021, the balance of deferred revenue was $ 288,499 and $ 1,165,248 , 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, 2022 and 2021, the Company had performance guarantee liabilities of $ 244,029 and $ 418,988 , 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 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, 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 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. 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 claim management and processing services, and (iii) direct labor costs associated with providing customer support and services to the clients, members, and other external stakeholders as well as direct labor costs associated with care and case management services. Table of Contents NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 peer 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 580"). 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 Operations Operations outside the United States include EYME. Foreign operations are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws, possible limitations on foreign investment and income repatriation, government price or foreign exchange controls, and restrictions on currency exchange. 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. Table of Contents NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2022 and 2021 , there were 3,831,720 and 2,556,119 common share equivalents, respectively. For the years ended December 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. Segments 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 12 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. 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. Table of Contents NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Advertising Advertising costs are expensed as incurred. Advertising costs amounted to $ 80,925 and $ 1,261,296 for the years ended December 31, 2022 and 2021 , respectively. Recently Adopted Accounting Pronouncements In August 2020, the FASB issued 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 embedde |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 4 – ACQUISITIONS Maestro On November 1, 2022, Marpai consummated the acquisition of Maestro for a purchase price of $ 19.9 million. Goodwill generated from this acquisition primarily represented the value that was expected from the increased scale and synergies as a result of the integration of the Maestro business into the Marpai legacy business. Maestro generated revenue for the two months after acquisition of $ 3,427,333 and incurred a net loss of $ 1,948,268 . NOTE 4 – ACQUISITION (CONTINUED) Table of Contents The acquisition accounting for Maestro as reflected in these consolidated financial statements is preliminary and based on current estimates and currently available information, and are subject to revision based on final determinations of fair value and final allocations of purchase price to the identifiable assets and liabilities acquired. The estimated fair values that are not yet finalized relate primarily to the valuation of intangible assets, property and equipment, and income taxes. The following table represents the preliminary allocation of the purchase consideration among Maestro’s assets acquired and liabilities assumed at their preliminary estimated acquisition-date fair values: Purchase Price Purchase Price $ 19,900,000 Purchase Price Allocation Cash $ 17,081,602 Restricted cash 16,306,547 Accounts receivable 321,198 Unbilled receivable 646,189 Prepaid expenses and other current assets 1,751,371 Property and equipment 921,680 Operating lease - right of use assets 2,555,375 Goodwill 3,454,143 Trademarks 800,000 Customer relationships 840,000 Security deposits 1,240,889 Account payable ( 150,328 ) Accrued expenses ( 4,554,280 ) Accrued fiduciary obligations ( 16,306,547 ) Operating lease liabilities ( 4,816,490 ) Deferred revenue ( 191,349 ) Total fair value of net assets acquired and liabilities assumed $ 19,900,000 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, 2021: Year Ended December 31, Year Ended December 31, 2021 (pro forma) (pro forma) Revenue $ 40,406,192 $ 37,809,557 Net loss ( 39,774,661 ) ( 44,417,127 ) 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. Table of Contents NOTE 4 – ACQUISITION (CONTINUED) Marpai Administrators (Formerly Continental Benefits) On April 1, 2021, Marpai consummated the acquisition of Marpai Administrators. According to the CB Agreement, Marpai Administrators was valued, on a cash-free and debt-free basis, at $ 8.5 million. In addition, pursuant to the CB 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 Marpai Administrators’ 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 Marpai Administrators’ 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 US Patent Office. Useful life is determined upon placement into service after approval. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2021: Year Ended December 31, 2021 (pro forma) Revenue $ 18,441,875 Net loss ( 18,034,702 ) Table of Contents NOTE 4 – ACQUISITION (CONTINUED) 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 | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment consist of the following at: December 31, 2022 December 31, 2021 Equipment $ 402,675 $ 222,222 Furniture and fixtures 1,007,699 341,769 Leasehold improvements 745,453 621,527 Total cost 2,155,827 1,185,518 Accumulated depreciation ( 649,745 ) ( 295,583 ) Property and equipment, net $ 1,506,082 $ 889,935 Depreciation expense was $ 397,470 and $ 199,649 for the years ended December 31, 2022 and 2021 , respectively. |
Capitalized Software
Capitalized Software | 12 Months Ended |
Dec. 31, 2022 | |
Capitalized Computer Software, Net [Abstract] | |
Capitalized Software | NOTE 6 – CAPITALIZED SOFTWARE Capitalized software consists of the following at: December 31, 2022 December 31, 2021 Capitalized software $ 8,094,385 $ 7,161,571 Accumulated amortization ( 3,505,679 ) ( 1,186,727 ) Net carrying amount 4,588,706 5,974,844 Capitalized software in-process — 330,010 Capitalized software, net $ 4,588,706 $ 6,304,854 Amortization expense was $ 2,318,953 and $ 1,186,727 for the year ended December 31, 2022 and 2021, respectively. Estimated amortization for capitalized software for future periods is as follows: Year Ended December 31, 2023 $ 2,461,011 2024 1,542,008 2025 496,744 2026 88,943 $ 4,588,706 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
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, 2021 $ 2,382,917 Acquisition 3,454,143 Balance as of December 31, 2022 $ 5,837,060 Table of Contents NOTE 7 – GOODWILL AND INTANGIBLE ASSETS (CONTINUED) Intangible assets consist of the following: December 31, 2022 Useful Gross Carrying Accumulated Net Carrying Life Amount Amortization 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 December 31, 2021 Useful Gross Carrying Accumulated Net Carrying Life Amount Amortization Amount Trademarks 10 years $ 1,520,000 $ ( 114,000 ) $ 1,406,000 Noncompete agreements 5 Years 990,000 ( 148,500 ) 841,500 Customer relationships 7 Years 2,920,000 ( 312,857 ) 2,607,143 Patents and patent applications (*) 653,050 - 653,050 $ 6,083,050 $ ( 575,357 ) $ 5,507,693 (*) Patents have yet to be approved by US Patent Office. Useful life is determined upon placement into service after approval. Amortization expense was $ 821,814 and 575,357 for the year ended December 31, 2022 and 2021, respectively. Estimated amortization for trademarks, intangible assets and customer relationships for future periods is as follows: Year Ended December 31, 2023 $ 1,095,143 2024 1,095,143 2025 1,095,143 2026 946,643 2027 842,476 Thereafter 598,282 Assets not placed in services 650,450 $ 6,323,279 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Lessee Disclosure [Abstract] | |
Leases | NOTE 8 – LEASES The Company leases office space and certain equipment under operating leases that expire between 2023 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 recording in the accompanying consolidated statements of operations were $ 1,117,193 and $ 666,830 for the years ended December 31, 2022 and 2021. 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, 2022, including any optional extensions, are as follows: Year Ended December 31, 2023 $ 1,885,604 2024 1,098,134 2025 1,108,012 2026 1,088,112 2027 939,600 Thereafter 1,961,640 Total lease payments 8,081,102 Less: imputed interest ( 1,997,936 ) Present value of lease liabilities 6,083,166 Less: current lease liabilities ( 1,311,295 ) Long-term lease liabilities $ 4,771,871 The weighted average remaining lease term, including the optional extension, was 5.9 years and 2.6 years as of December 31, 2022 and 2021, respectively. The weighted average operating lease discount rate was 9.11 % and 6.0 % as of December 31, 2022 and 2021, respectively. 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. Table of Contents NOTE 8 – LEASES (CONTINUED) Sublease income recorded as other income for the years ended December 31, 2022 and 2021 was approximately $ 196,465 and $ 172,476 , respectively. The following is a summary as of December 31, 2022, of the contractual sublease income: Year Ended December 31, 2023 $ 151,355 Total sublease income $ 151,355 |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation | NOTE 9 – 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 6,300,000 shares, thus bringing the total number of stock options and restricted stock units (“RSUs”) that may be issued pursuant to the Plan to 7,803,421 . During the year ended December 31, 2022, the Board of Directors of the Company approved the issuance of 2,370,576 stock options and 1,427,404 RSUs. In addition, during the year ended December 31, 2022, 115,827 stock options and 140,614 RSU's were either exercised or canceled respectively. As of December 31, 2022, the remaining number of underlying shares available for future issuances under the Plan is 2,699,263 . 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 options and share awards granted under the stock option plan during the year ended December 31, 2022 and 2021 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants: 2022 2021 Risk-free interest rates 3.61 % 0.91 % Expected life 5 years 5 years Expected volatility 41.00 % 40.81 % 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, 2022 1,472,988 $ 1.92 8.98 $ 3,616,248 Granted 2,370,576 1.11 Forfeited/Cancelled ( 26,196 ) 0.002 Exercised ( 89,631 ) 0.002 Balance at December 31, 2022 3,727,737 1.47 8.91 $ 203,295 Exercisable at December 31, 2022 1,697,083 $ 1.54 8.74 $ 130,188 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, 2022 1,058,235 $ 0.95 Options granted 2,370,576 0.46 Options forfeited/cancelled ( 26,196 ) 1.97 Options exercised ( 89,631 ) 1.28 Options vested ( 1,282,330 ) 0.97 At December 31, 2022 2,030,654 $ 0.66 Table of Contents NOTE 9 – SHARE-BASED COMPENSATION (CONTINUED) For the years ended December 31, 2022 and 2021, the Company recognized $ 828,860 and $ 394,311 of stock compensation expense relating to stock options, respectively. As of December 31, 2022, there was $ 1,301,599 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, 2022 708,615 $ 1.42 Granted — — Forfeited/cancelled — — Vested ( 485,677 ) 1.44 Outstanding at December 31, 2022 222,938 $ 1.48 For the years ended December 31, 2022 and 2021, the Company recognized $ 1,301,599 and $ 836,481 of stock compensation expense relating to RSAs, respectively. As of December 31, 2022, there was $ 312,631 of unrecognized compensation expense related to unvested restricted share awards that is expected to be recognized over a weighted-average period of approximately 1 year. Restricted Stock Units On June 14, 2022, the Board of Directors of the Company authorized the grant of 1,427,404 RSU's of which 1,346,154 were granted to an officer who joined the Company in February 2022. Of the RSUs granted to the officer, 192,308 vested immediately and the balance of 1,153,846 will vest 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. The Company accrued an amount of $ 74,359 in accrued expenses in the consolidated balance sheets, reflecting this minimum value obligation as of December 31, 2022. In addition, the Company agreed to issue to the officer a one-time grant of fully vested shares of the Company’s 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. Included in accrued expenses as of December 31, 2022 in the consolidated balance sheets is an amount of $ 250,000 representing the full value of the signing bonus. On November 23, 2022, the Company canceled 140,614 RSUs held by an officer of the Company in exchange for a cash bonus of $ 147,645 . These RSUs were due to vest on November 28, 2022. The following table summarizes the restricted stock units activity: Restricted Stock Units Value Outstanding at January 1, 2022 — $ — Granted 1,427,404 1.11 Forfeited/cancelled ( 140,614 ) 1.11 Vested ( 994,963 ) 1.11 Outstanding at December 31, 2022 291,827 $ 1.11 For the year ended December 31, 2022 and 2021, the Company recognized $ 1,406,548 and $ 0 of stock compensation expense relating to RSUs, respectively. As of December 31, 2022, there was of unrecognized compensation expense related to unvested RSUs that is expected to be recognized over a period of two months for one employee of $ 333,332 and four years for another employee of $ 39,313 . |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2022 | |
Warrants and Rights Note Disclosure [Abstract] | |
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 (January 17, 2025). In February 2021, Marpai Health granted warrants at a 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 on 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 Marpai Administrators Acquisition, Marpai Health’s outstanding warrants in the amount of 1,290,815 shares 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 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 per share. The Company estimated the fair value of the warrants to be $ 0 based on a Black-Scholes option pricing model. The warrants were exercised on December 10, 2021 for total proceeds of $ 900,000 . The following assumptions were used when calculating the issuance date fair value: Exercise price of the warrants $ 4.00 Contractual life of the warrants 0.4 years Current value of the underlying common stock $ 2.58 Expected volatility 40.08 % Expected dividend yield — % Risk-free interest rate 0.06 % 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 were 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. The following assumptions were used when calculating the issuance date fair value: Exercise price of the warrants $ 5.00 Contractual life of the warrants 5 years Current value of the underlying common stock $ 4.00 Expected volatility 40.08 % Expected dividend yield 0.00 % Risk-free interest rate 1.20 % Table of Contents NOTE 10 – WARRANTS (CONTINUED) The table below summarizes the Company’s warrant activities: Number of Common Exercise Price Weighted Shares Range Per Average Warrants Share Exercise Price Balance at January 1, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Granted — — — Forfeited — — — Exercised — — — Balance at December 31, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Balance at January 1, 2021 364,466 $ 1.43 $ 1.43 Granted 1,509,407 4.00 to 7.90 6.72 Forfeited — — — Exercised ( 225,000 ) 4.00 4.00 Balance at December 31, 2021 1,648,873 $ 1.43 to 7.90 $ 5.92 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11 – INCOME TAXES The effective tax rate was 1.9 % and 0.9 % for the years ended December 31, 2022 and 2021 , respectively. The effective tax rate differs from the federal tax rate of 21 % for the year ended December 31, 2022 and 2021 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: 12/31/2022 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 % 12/31/2021 Income tax expense (benefit) at federal statutory rate 21.0 % Change in valuation allowance ( 20.1 )% Return to provision adjustments ( 0.5 )% Permanent differences 0.5 % Other - net ( 0.0 )% Income tax expense (benefit) 0.9 % At December 31, 2022 and 2021 , the Company had federal and state net operating losses (“NOLs”) in the amount of $ 29,547,000 and $ 26,649,000 respectively. While the federal NOLs do not expire, 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. Table of Contents NOTE 11 – INCOME TAXES (CONTINUED) Temporary differences which give rise to a significant portion of deferred tax assets are as follows at: December 31, 2022 December 31, 2021 Deferred income tax assets (liabilities): Startup costs $ 1,035,317 $ 1,001,272 Stock compensation - RSAs 875,498 584,881 Net operating loss - Federal 6,204,900 2,244,367 Net operating loss - State 1,264,598 522,491 Accrued expenses - 174,289 Amortization ( 1,217,409 ) ( 1,682,939 ) Depreciation ( 262,179 ) ( 333,501 ) Operating lease assets ( 813,972 ) ( 393,985 ) Operating lease liabilities 1,370,631 350,236 Deferred revenue 45,388 — 8,502,772 2,467,111 Less: Valuation allowance ( 9,982,652 ) ( 4,468,123 ) Deferred tax liabilities, net $ ( 1,479,880 ) $ ( 2,001,012 ) 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, 2022 , a valuation allowance of $ 9,982,652 has been recorded to recognize the portion of the deferred tax asset that is more likely than not to be realized. 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. The Company and its subsidiaries income tax returns for 2019, 2020 and 2021 are open to review by the tax authorities. 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. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 12 – 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, 2022 December 31, 2021 United States $ 17,993,006 $ 14,369,511 Israel 4,103,931 2,759,512 Total long-lived assets $ 22,096,937 $ 17,129,023 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 13 – RELATED PARTY TRANSACTIONS The Company receives consulting services and marketing services from various shareholders and directors. The total cost of these consulting services are recorded in general and administrative expenses for the years ended December 31, 2022 and 2021 was approximately $ 208,000 and $ 1,100,000 , respectively. The total cost of marketing services are recorded in sales and marketing expenses for the years ended December 31, 2022 and 2021 was approximately $ 341,000 and $ 1,725,000 , respectively. The accounts payable to these certain shareholders as of December 31, 2022 and, 2021 was approximately $ 0 and $ 297,000 , respectively, and are included in accounts payable on the accompanying consolidated balance sheets. Table of Contents NOTE 13 – RELATED PARTY TRANSACTIONS (CONTINUED) The Company entered into a sublease with an affiliate of a director and shareholder (Note 8), and the total sublease income for the years ended December 31, 2022 and 2021 was approximately $ 0 and $ 69,000 , respectively. The receivable balance on the sublease as of December 31, 2022 and 2021 was approximately $ 0 and $ 41,000 , respectively, and is included in other receivables on the accompanying 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 consolidated balance sheets as of December 31, 2022 and 2021 in the amount of $ 3,201 and $ 3,637 , respectively. On April 1, 2021, in order to enable Marpai Administrators and its employees to continue to operate in an effective manner immediately following the Acquisition, the Company entered into a Transition Services Agreement with a shareholder and its affiliate, pursuant to which the shareholder provided Marpai Administrators transitional services through May 31, 2021 and in return, the Company paid for the time spent by employees and third-party service providers on a cost- incurred basis. On May 7, 2021, the Company entered into a supplemental Transition Service Agreement whereby the shareholder agreed to provide additional treasury and banking services to the Company through July 1, 2021 at a rate of $ 6,000 per month. Total cost for the year ended December 31, 2021 was $ 18,000 . |
Accrued Severance Pay and Emplo
Accrued Severance Pay and Employee Retirement Plan | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED SEVERANCE PAY | |
Accrued Severance Pay and Employee Retirement Plan | NOTE 14 – ACCRUED SEVERANCE PAY AND EMPLOYEE RETIRMENT 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 consolidated balance sheet. Total expenses related to severance pay amounted to $ 144,896 and $ 132,031 for the years ended December 31, 2022 and 2021, 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, 2022 and 2021 was $ 343,682 and $ 194,979 , 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 year ended December 31, 2022 was $ 45,279 . |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Expenses | NOTE 15 – ACCRUED EXPENSES Accrued expenses consisted of the following: December 31, 2022 December 31, 2021 Employee compensation $ 1,433,327 $ 897,288 Accrued bonuses 1,712,009 743,038 Performance guarantee liabilities 244,029 418,988 Other accrued expenses and liabilities 1,885,351 465,723 Accrued expenses $ 5,274,716 $ 2,525,037 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | NOTE 16 – 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 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, 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. Table of Contents NOTE 16 – STOCKHOLDERS’ EQUITY (CONTINUED) On December 10, 2021, a shareholder exercised warrants to purchase 225,000 shares of the Company’s common stock at $ 4 per share for total proceeds of $ 900,000 . (Note 10) During the year ended December 31, 2022, the Company issued 37,500 shares of common stock to vendors in consideration for services rendered. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 17 – SUBSEQUENT EVENTS Management has evaluated subsequent events through March 29, 2023, the date the consolidated financial statements were available for issuance. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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. Marpai Administrators is included as of April 1, 2021, the date of the CB Acquisition (see Note 4) and Maestro 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 Financial Accounting Standard Board’s (“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, 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. |
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, 2022 and 2021 was approximately $ 13,137,000 and $ 18,777,000 , respectively. No losses have been incurred to date on any deposit balances. For the years ended December 31, 2022 and 2021 , no customer accounted for greater than 10% of total revenue. At December 31, 2022 , one customer accounted for 11.2 % of accounts receivable. At December 31, 2021, three customers accounted for 43 %, 26 %, and 24 % of accounts receivable, respectively. |
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 of 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. The allowance is based on our estimate of expected credit losses for outstanding trade accounts receivables 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, including the ongoing COVID-19 pandemic, 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 $ 23,458 and $ 0 , as of December 31, 2022 and 2021, 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. Accounting Standards Codification (“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. |
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, 2022 and 2021, 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 adjustments to the carrying amounts of the Company’s long-lived assets have been made for the years ended December 31, 2022 and 2021 . |
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 no goodwill impairment for the years ended December 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 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, 2022 and 2021 . |
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 changes, 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, 2022 and 2021 . |
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. Table of Contents NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contract Balances At December 31, 2022 and 2021, the balances of the Company’s accounts receivable from contracts with customers, net of related allowances for credit losses, were $ 1,437,786 and $ 208,762 , respectively, and the balance of the Company’s unbilled receivable from a contract with a customer was $ 350,393 and $ 14,978 , 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, 2022 and 2021, the balance of deferred revenue was $ 288,499 and $ 1,165,248 , 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, 2022 and 2021, the Company had performance guarantee liabilities of $ 244,029 and $ 418,988 , 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 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, 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 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. |
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 claim management and processing services, and (iii) direct labor costs associated with providing customer support and services to the clients, members, and other external stakeholders as well as direct labor costs associated with care and case management services. |
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 peer 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 580"). 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 Operations | Foreign Operations Operations outside the United States include EYME. Foreign operations are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws, possible limitations on foreign investment and income repatriation, government price or foreign exchange controls, and restrictions on currency exchange. |
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, 2022 and 2021 , there were 3,831,720 and 2,556,119 common share equivalents, respectively. For the years ended December 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. |
Segments | Segments 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 12 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 $ 80,925 and $ 1,261,296 for the years ended December 31, 2022 and 2021 , respectively. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2020, the FASB issued 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 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 if 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 no t have a material impact to the Company’s 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. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements 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. In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848) - Deferral of the Sunset Date of Topic 848 (ASU 2022-06), which extends the optional transition relief to ease the potential burden in accounting for reference rate reform on financial reporting. The transition relief is provided through December 31, 2024 based on the expectation that the LIBOR will cease to be published as of June 30, 2023. The amendments are effective prospectively at any point through December 31, 2024. The Company will continue to monitor new contracts that could potentially be eligible for contract modification relief through December 31, 2024. 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 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 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, 2022 | |
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 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Maestro | |
Business Acquisition [Line Items] | |
Summary of Assets Acquired and Liabilities Assumed at their Preliminary Estimated Acquisition Date Fair Value | The following table represents the preliminary allocation of the purchase consideration among Maestro’s assets acquired and liabilities assumed at their preliminary estimated acquisition-date fair values: Purchase Price Purchase Price $ 19,900,000 Purchase Price Allocation Cash $ 17,081,602 Restricted cash 16,306,547 Accounts receivable 321,198 Unbilled receivable 646,189 Prepaid expenses and other current assets 1,751,371 Property and equipment 921,680 Operating lease - right of use assets 2,555,375 Goodwill 3,454,143 Trademarks 800,000 Customer relationships 840,000 Security deposits 1,240,889 Account payable ( 150,328 ) Accrued expenses ( 4,554,280 ) Accrued fiduciary obligations ( 16,306,547 ) Operating lease liabilities ( 4,816,490 ) Deferred revenue ( 191,349 ) Total fair value of net assets acquired and liabilities assumed $ 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, 2021: Year Ended December 31, Year Ended December 31, 2021 (pro forma) (pro forma) Revenue $ 40,406,192 $ 37,809,557 Net loss ( 39,774,661 ) ( 44,417,127 ) |
Continental Benefits | |
Business Acquisition [Line Items] | |
Summary of Assets Acquired and Liabilities Assumed at their Preliminary Estimated Acquisition Date Fair Value | The following table represents the allocation of the purchase consideration among the Marpai Administrators’ 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 |
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, 2021: Year Ended December 31, 2021 (pro forma) Revenue $ 18,441,875 Net loss ( 18,034,702 ) |
Marpai Administrators | |
Business Acquisition [Line Items] | |
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 Marpai Administrators’ 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 US Patent Office. Useful life is determined upon placement into service after approval. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment consist of the following at: December 31, 2022 December 31, 2021 Equipment $ 402,675 $ 222,222 Furniture and fixtures 1,007,699 341,769 Leasehold improvements 745,453 621,527 Total cost 2,155,827 1,185,518 Accumulated depreciation ( 649,745 ) ( 295,583 ) Property and equipment, net $ 1,506,082 $ 889,935 |
Capitalized Software (Tables)
Capitalized Software (Tables) - Capitalized Software | 12 Months Ended |
Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Capitalized Software | Capitalized software consists of the following at: December 31, 2022 December 31, 2021 Capitalized software $ 8,094,385 $ 7,161,571 Accumulated amortization ( 3,505,679 ) ( 1,186,727 ) Net carrying amount 4,588,706 5,974,844 Capitalized software in-process — 330,010 Capitalized software, net $ 4,588,706 $ 6,304,854 |
Summary of Estimated Amortization for Capitalized Software | Estimated amortization for capitalized software for future periods is as follows: Year Ended December 31, 2023 $ 2,461,011 2024 1,542,008 2025 496,744 2026 88,943 $ 4,588,706 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Goodwill | Goodwill consists of the following: Amount Balance as of December 31, 2021 $ 2,382,917 Acquisition 3,454,143 Balance as of December 31, 2022 $ 5,837,060 |
Intangible assets other than capitalized software | |
Finite-Lived Intangible Assets [Line Items] | |
Summary of Capitalized Software | Intangible assets consist of the following: December 31, 2022 Useful Gross Carrying Accumulated Net Carrying Life Amount Amortization 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 December 31, 2021 Useful Gross Carrying Accumulated Net Carrying Life Amount Amortization Amount Trademarks 10 years $ 1,520,000 $ ( 114,000 ) $ 1,406,000 Noncompete agreements 5 Years 990,000 ( 148,500 ) 841,500 Customer relationships 7 Years 2,920,000 ( 312,857 ) 2,607,143 Patents and patent applications (*) 653,050 - 653,050 $ 6,083,050 $ ( 575,357 ) $ 5,507,693 (*) Patents have yet to be approved by US Patent Office. Useful life is determined upon placement into service after approval. |
Summary of Estimated Amortization for Capitalized Software | Estimated amortization for trademarks, intangible assets and customer relationships for future periods is as follows: Year Ended December 31, 2023 $ 1,095,143 2024 1,095,143 2025 1,095,143 2026 946,643 2027 842,476 Thereafter 598,282 Assets not placed in services 650,450 $ 6,323,279 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Lessee Disclosure [Abstract] | |
Summary of Future Lease Payments of Operating Leases | Year Ended December 31, 2023 $ 1,885,604 2024 1,098,134 2025 1,108,012 2026 1,088,112 2027 939,600 Thereafter 1,961,640 Total lease payments 8,081,102 Less: imputed interest ( 1,997,936 ) Present value of lease liabilities 6,083,166 Less: current lease liabilities ( 1,311,295 ) Long-term lease liabilities $ 4,771,871 |
Summary of Contractual Sublease Income | The following is a summary as of December 31, 2022, of the contractual sublease income: Year Ended December 31, 2023 $ 151,355 Total sublease income $ 151,355 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 1,472,988 $ 1.92 8.98 $ 3,616,248 Granted 2,370,576 1.11 Forfeited/Cancelled ( 26,196 ) 0.002 Exercised ( 89,631 ) 0.002 Balance at December 31, 2022 3,727,737 1.47 8.91 $ 203,295 Exercisable at December 31, 2022 1,697,083 $ 1.54 8.74 $ 130,188 |
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, 2022 1,058,235 $ 0.95 Options granted 2,370,576 0.46 Options forfeited/cancelled ( 26,196 ) 1.97 Options exercised ( 89,631 ) 1.28 Options vested ( 1,282,330 ) 0.97 At December 31, 2022 2,030,654 $ 0.66 |
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 ( 485,677 ) 1.44 Outstanding at December 31, 2022 222,938 $ 1.48 |
Schedule of fair value of options and share awards granted under the stock option plan | The fair value of options and share awards granted under the stock option plan during the year ended December 31, 2022 and 2021 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants: 2022 2021 Risk-free interest rates 3.61 % 0.91 % Expected life 5 years 5 years Expected volatility 41.00 % 40.81 % 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, 2022 — $ — Granted 1,427,404 1.11 Forfeited/cancelled ( 140,614 ) 1.11 Vested ( 994,963 ) 1.11 Outstanding at December 31, 2022 291,827 $ 1.11 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Class of Warrant or Right [Line Items] | |
Schedule of warrant activities | The table below summarizes the Company’s warrant activities: Number of Common Exercise Price Weighted Shares Range Per Average Warrants Share Exercise Price Balance at January 1, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Granted — — — Forfeited — — — Exercised — — — Balance at December 31, 2022 1,648,873 $ 1.43 to 7.90 $ 5.92 Balance at January 1, 2021 364,466 $ 1.43 $ 1.43 Granted 1,509,407 4.00 to 7.90 6.72 Forfeited — — — Exercised ( 225,000 ) 4.00 4.00 Balance at December 31, 2021 1,648,873 $ 1.43 to 7.90 $ 5.92 |
Marpai Warrants | |
Class of Warrant or Right [Line Items] | |
Schedule of assumptions used when calculating the issuance date fair value of warrants | The following assumptions were used when calculating the issuance date fair value: Exercise price of the warrants $ 4.00 Contractual life of the warrants 0.4 years Current value of the underlying common stock $ 2.58 Expected volatility 40.08 % Expected dividend yield — % Risk-free interest rate 0.06 % The following assumptions were used when calculating the issuance date fair value: Exercise price of the warrants $ 5.00 Contractual life of the warrants 5 years Current value of the underlying common stock $ 4.00 Expected volatility 40.08 % Expected dividend yield 0.00 % Risk-free interest rate 1.20 % Table of Contents |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation between the Effective Tax Rate on Loss before Provision for Income Taxes and the Statutory Tax Rate | 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 % 12/31/2021 Income tax expense (benefit) at federal statutory rate 21.0 % Change in valuation allowance ( 20.1 )% Return to provision adjustments ( 0.5 )% Permanent differences 0.5 % Other - net ( 0.0 )% Income tax expense (benefit) 0.9 % |
Schedule of Deferred Tax Assets, Net | December 31, 2022 December 31, 2021 Deferred income tax assets (liabilities): Startup costs $ 1,035,317 $ 1,001,272 Stock compensation - RSAs 875,498 584,881 Net operating loss - Federal 6,204,900 2,244,367 Net operating loss - State 1,264,598 522,491 Accrued expenses - 174,289 Amortization ( 1,217,409 ) ( 1,682,939 ) Depreciation ( 262,179 ) ( 333,501 ) Operating lease assets ( 813,972 ) ( 393,985 ) Operating lease liabilities 1,370,631 350,236 Deferred revenue 45,388 — 8,502,772 2,467,111 Less: Valuation allowance ( 9,982,652 ) ( 4,468,123 ) Deferred tax liabilities, net $ ( 1,479,880 ) $ ( 2,001,012 ) |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 December 31, 2021 United States $ 17,993,006 $ 14,369,511 Israel 4,103,931 2,759,512 Total long-lived assets $ 22,096,937 $ 17,129,023 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following: December 31, 2022 December 31, 2021 Employee compensation $ 1,433,327 $ 897,288 Accrued bonuses 1,712,009 743,038 Performance guarantee liabilities 244,029 418,988 Other accrued expenses and liabilities 1,885,351 465,723 Accrued expenses $ 5,274,716 $ 2,525,037 |
Organization and Description _2
Organization and Description of Business - Additional Information (Details) | 12 Months Ended | ||||||
Nov. 01, 2022 USD ($) | Oct. 28, 2021 USD ($) shares | Oct. 26, 2021 USD ($) $ / shares shares | Apr. 01, 2021 USD ($) shares | Jan. 22, 2021 Item | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2022 $ / shares | |
Business Acquisition [Line Items] | |||||||
Number of healthcare subsidiaries | Item | 2 | ||||||
Warrants to purchase shares of common stock | shares | 1,648,873 | ||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Price per share | $ / shares | $ 4 | ||||||
Proceeds from initial public offering | $ 25,378,663 | ||||||
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 | ||||||
Convertible promissory notes acquired | $ 2,198,459 | ||||||
Amount of convertible promissory notes exchanged for shares of common stock | 3,800,000 | ||||||
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 | ||||||
Debt at the time of closing of Acquisition | 0 | ||||||
Purchase Price | $ 8,500,000 | ||||||
Maestro | |||||||
Business Acquisition [Line Items] | |||||||
Purchase Price | $ 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 |
Liquidity and Going Concern - A
Liquidity and Going Concern - Additional Information (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LIQUIDITY | ||
Accumulated deficit | $ 47,994,100 | $ 21,525,710 |
Working capital | 9,178,005 | |
Total debt | 20,203,700 | |
Cash and cash equivalents | $ 13,764,508 | $ 19,183,044 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) Customer Segment shares | Dec. 31, 2021 USD ($) Customer shares | |
Summary of Significant Accounting Policies [Line Items] | ||
Amounts over the federally insured limits | $ 13,137,000 | $ 18,777,000 |
Losses incurred to date on deposit balances | $ 0 | |
Number of customers who accounted for greater than 10% of accounts receivable | Customer | 1 | 3 |
Number of customers who accounted for greater than ten percent of revenue | Customer | 0 | 0 |
Allowance for credit losses | $ 23,458 | $ 0 |
Impairment of long-lived assets | $ 0 | 0 |
Number of reporting segment | Segment | 1 | |
Number of operating segments | Segment | 1 | |
Goodwill impairment charges | $ 0 | 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 | 1,437,786 | 208,762 |
Unbilled receivables from contracts with customers | 350,393 | 14,978 |
Deferred revenue | 288,499 | 1,165,248 |
Performance guarantee liabilities | $ 244,029 | $ 418,988 |
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 | 3,831,720 | 2,556,119 |
Advertising expenses | $ 80,925 | $ 1,261,296 |
Accounting Standards Update 2020-06 | ||
Summary of Significant Accounting Policies [Line Items] | ||
Change in accounting principle, accounting standards update, adopted | true | |
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2022 | |
Change in accounting principle, accounting standards update, immaterial effect | true | |
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 | |
Credit Concentration Risk | Accounts Receivable | Customer one | ||
Summary of Significant Accounting Policies [Line Items] | ||
Customer Percentage | 11.20% | 43% |
Credit Concentration Risk | Accounts Receivable | Customer two | ||
Summary of Significant Accounting Policies [Line Items] | ||
Customer Percentage | 26% | |
Credit Concentration Risk | Accounts Receivable | Customer three | ||
Summary of Significant Accounting Policies [Line Items] | ||
Customer Percentage | 24% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2022 | |
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] | |
Estimated useful lives | Shorter of useful life of asset or lease term |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - USD ($) | 2 Months Ended | 12 Months Ended | ||
Nov. 01, 2022 | Apr. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2022 | |
Continental Benefits | ||||
Business Acquisition [Line Items] | ||||
Total purchase price paid, net of cash acquired | $ 8,500,000 | |||
Incremental amortization expense related to intangible and tangible assets acquired | $ 297,736 | |||
Marpai Administrators | ||||
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 | |||
Maestro | ||||
Business Acquisition [Line Items] | ||||
Revenue of acquiree since acquisition date | $ 3,427,333 | |||
Net loss of acquiree since acquisition date | $ 1,948,268 | |||
Total purchase price paid, net of cash acquired | $ 19,900,000 | |||
Incremental amortization expense related to intangible and tangible assets acquired | $ 82,000 |
Acquisition - Summary of Assets
Acquisition - Summary of Assets Acquired and Liabilities Assumed at their Preliminary Estimated Acquisition Date Fair Value (Details) - USD ($) | 12 Months Ended | |||
Nov. 01, 2022 | Apr. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Purchase Price | ||||
Cash acquired | $ (33,388,149) | $ (11,384,035) | ||
Purchase Price Allocation | ||||
Goodwill | $ 5,837,060 | $ 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 | Noncompete agreements | ||||
Purchase Price Allocation | ||||
Intangible assets | 990,000 | |||
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 | |||
Maestro | ||||
Purchase Price | ||||
Total purchase price paid, net of cash acquired | $ 19,900,000 | |||
Purchase Price Allocation | ||||
Cash | 17,081,602 | |||
Restricted cash | 16,306,547 | |||
Accounts receivable | 321,198 | |||
Unbilled receivable | 646,189 | |||
Prepaid expenses and other current assets | 1,751,371 | |||
Property and equipment | 921,680 | |||
Operating lease - right of use assets | 2,555,375 | |||
Goodwill | 3,454,143 | |||
Security deposits | 1,240,889 | |||
Account payable | (150,328) | |||
Accrued expenses | (4,554,280) | |||
Accrued fiduciary obligations | (16,306,547) | |||
Operating lease liabilities | (4,816,490) | |||
Deferred revenue | (191,349) | |||
Total fair value of net assets acquired and liabilities assumed | 19,900,000 | |||
Maestro | Trademarks | ||||
Purchase Price Allocation | ||||
Intangible assets | 800,000 | |||
Maestro | Customer relationships | ||||
Purchase Price Allocation | ||||
Intangible assets | $ 840,000 |
Acquisition - Summary of Identi
Acquisition - Summary of Identifiable Intangible Assets at Estimated Fair Values and Useful Lives with Expected Amortization Periods (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Maestro | Trademarks | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 800,000 |
Useful Life in Years | 5 years |
Maestro | Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 840,000 |
Useful Life in Years | 5 years |
Marpai Administrators | Trademarks | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 1,520,000 |
Useful Life in Years | 10 years |
Marpai Administrators | Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 2,920,000 |
Useful Life in Years | 7 years |
Marpai Administrators | Patents and patent applications | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 650,000 |
Marpai Administrators | Noncompete agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquisition Fair Value | $ 990,000 |
Useful Life in Years | 5 years |
Acquisition - Summary of Unaudi
Acquisition - Summary of Unaudited Pro Forma Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Maestro | ||
Business Acquisition [Line Items] | ||
Proforma revenue | $ 40,406,192 | $ 37,809,557 |
Proforma net loss | $ (39,774,661) | (44,417,127) |
Continental Benefits | ||
Business Acquisition [Line Items] | ||
Proforma revenue | 18,441,875 | |
Proforma net loss | $ (18,034,702) |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | $ 2,155,827 | $ 1,185,518 |
Accumulated depreciation | (649,745) | (295,583) |
Property and equipment, net | 1,506,082 | 889,935 |
Equipment | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | 402,675 | 222,222 |
Furniture and Fixtures | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | 1,007,699 | 341,769 |
Leasehold Improvements | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Total cost | $ 745,453 | $ 621,527 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 397,470 | $ 199,649 |
Capitalized Software - Summary
Capitalized Software - Summary of Intangible Assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Capitalized Computer Software, Net [Abstract] | ||
Capitalized software | $ 8,094,385 | $ 7,161,571 |
Accumulated amortization | (3,505,679) | (1,186,727) |
Net carrying amount | 4,588,706 | 5,974,844 |
Capitalized software in-process | 330,010 | |
Capitalized software, net | $ 4,588,706 | $ 6,304,854 |
Capitalized Software - Addition
Capitalized Software - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Capitalized Computer Software, Net [Abstract] | ||
Amortization expense | $ 2,318,953 | $ 1,186,727 |
Capitalized Software - Estimate
Capitalized Software - Estimated Amortization for Capitalized Software (Details) - Capitalized Software | Dec. 31, 2022 USD ($) |
Estimated amortization for capitalized software | |
2023 | $ 2,461,011 |
2024 | 1,542,008 |
2025 | 496,744 |
2026 | 88,943 |
Finite lived intangible assets, net | $ 4,588,706 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Jul. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||
Accounts payable - related party | $ 0 | $ 297,000 | |
Due to related parties | 3,201 | 3,637 | |
Consulting services | General and Administrative | |||
Related Party Transaction [Line Items] | |||
Related party transaction expense | 208,000 | 1,100,000 | |
Marketing services | Sales and Marketing | |||
Related Party Transaction [Line Items] | |||
Related party transaction expense | 341,000 | 1,725,000 | |
Keystone Systems LTD | |||
Related Party Transaction [Line Items] | |||
Service income | 0 | 69,000 | |
Receivable - related party | $ 0 | 41,000 | |
HillCour, LLC | Transitional services | |||
Related Party Transaction [Line Items] | |||
Treasury and banking services expense per month | $ 6,000 | ||
Total cost | $ 18,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Summary of Goodwill (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Goodwill [Line Items] | |
Balance as of December 31, 2021 | $ 2,382,917 |
Acquisition | 3,454,143 |
Balance as of December 31, 2022 | $ 5,837,060 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 5 years | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 10 years | |
Intangible assets other than capitalized software | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 7,720,450 | $ 6,083,050 |
Accumulated Amortization | (1,397,171) | (575,357) |
Finite lived intangible assets, net | 6,323,279 | $ 5,507,693 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 10 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 2,320,000 | $ 1,520,000 |
Accumulated Amortization | (292,671) | (114,000) |
Finite lived intangible assets, net | $ 2,027,329 | $ 1,406,000 |
Trademarks [Member] | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 5 years | |
Trademarks [Member] | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 10 years | |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 5 years | 5 years |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 990,000 | $ 990,000 |
Accumulated Amortization | (346,500) | (148,500) |
Finite lived intangible assets, net | 643,500 | $ 841,500 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 7 years | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 3,760,000 | $ 2,920,000 |
Accumulated Amortization | (758,000) | (312,857) |
Finite lived intangible assets, net | $ 3,002,000 | 2,607,143 |
Customer Relationships [Member] | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 5 years | |
Customer Relationships [Member] | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives | 7 years | |
Patents [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 650,450 | 653,050 |
Finite lived intangible assets, net | $ 650,450 | $ 653,050 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated amortization for intangible assets for future periods (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Intangible assets other than capitalized software | ||
Estimated amortization for capitalized software | ||
2023 | $ 1,095,143 | |
2024 | 1,095,143 | |
2025 | 1,095,143 | |
2026 | 946,643 | |
2027 | 842,476 | |
Thereafter | 598,282 | |
Finite lived intangible assets, net | 6,323,279 | $ 5,507,693 |
Patents [Member] | ||
Estimated amortization for capitalized software | ||
Assets not placed in services | 650,450 | |
Finite lived intangible assets, net | $ 650,450 | $ 653,050 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 821,814 | $ 575,357 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Jan. 15, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Lessee, Lease, Description [Line Items] | |||
Lease expiration beginning year | 2023 | ||
Lease expiration ending year | 2030 | ||
Option to extend | true | ||
Option to terminate | true | ||
Operating lease costs | $ 1,117,193 | $ 666,830 | |
Sublease income | $ 196,465 | $ 172,476 | |
Operating Lease, Weighted Average Discount Rate, Percent | 9.11% | 6% | |
Remaining lease term, including the optional extension | 5 years 10 months 24 days | 2 years 7 months 6 days | |
Marpai Administrators | |||
Lessee, Lease, Description [Line Items] | |||
Sublease income | $ 14,000 |
Leases - Future Lease Payments
Leases - Future Lease Payments of Operating Leases (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Future lease payments, which are presented as current maturities of operating leases | ||
2023 | $ 1,885,604 | |
2024 | 1,098,134 | |
2025 | 1,108,012 | |
2026 | 1,088,112 | |
2027 | 939,600 | |
Therafter | 1,961,640 | |
Total lease payments | 8,081,102 | |
Less: imputed interest | (1,997,936) | |
Present value of lease liabilities | 6,083,166 | |
Less: current lease liabilities | (1,311,295) | $ (784,493) |
Long-term lease liabilities | $ 4,771,871 | $ 1,301,828 |
Leases - Contractual Sublease I
Leases - Contractual Sublease Income (Details) | Dec. 31, 2022 USD ($) |
Expected sublease income | |
2023 | $ 151,355 |
Total sublease income | $ 151,355 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) - USD ($) | 12 Months Ended | |||
May 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 14, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Remaining number of underlying shares available for future issuances | 2,699,263 | |||
Stock Options | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Expiration term of award | 10 years | |||
Stock compensation expense | $ 828,860 | $ 394,311 | ||
Unrecognized stock compensation expense | $ 1,301,599 | |||
Unrecognized stock compensation expense, expected to be recognized over a weighted-average period | 2 years | |||
Increase in number of shares authorized | 6,300,000 | 2,370,576 | ||
Stock options exercised or canceled | 115,827 | |||
Restricted Stock Units | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Number of shares authorized | 7,803,421 | 1,427,404 | ||
Stock compensation expense | $ 1,406,548 | $ 0 | ||
Increase in number of shares authorized | 1,427,404 | |||
Termination term after the termination of employment of the grantee | 90 days | |||
Shares exercised | 140,614 |
Share-Based Compensation - Fair
Share-Based Compensation - Fair Value of options (Details) - Stock Options | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rates | 3.61% | 0.91% |
Expected life | 5 years | 5 years |
Expected volatility | 41% | 40.81% |
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, 2022 $ / shares shares | |
Non-vested Options Outstanding | |
At the beginning | shares | 1,058,235 |
Options granted | shares | 2,370,576 |
Options forfeited/cancelled | shares | (26,196) |
Options exercised | shares | (89,631) |
Options vested | shares | (1,282,330) |
At the end | shares | 2,030,654 |
Weighted-Average Grant Date Fair Value | |
At the beginning (in dollars per share) | $ / shares | $ 0.95 |
Options granted (in dollars per share) | $ / shares | 0.46 |
Options forfeited/cancelled (in dollars per share) | $ / shares | 1.97 |
Options exercised (in dollars per share) | $ / shares | 1.28 |
Options vested (in dollars per share) | $ / shares | 0.97 |
At the end (in dollars per share) | $ / shares | $ 0.66 |
Share-Based Compensation- Stock
Share-Based Compensation- Stock Option Activity (Details) - Stock Options - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | ||
Balance at the beginning | 1,472,988 | |
Granted | 2,370,576 | |
Forfeited/Cancelled | (26,196) | |
Exercised | (89,631) | |
Balance at the end | 3,727,737 | 1,472,988 |
Exercisable at the end | 1,697,083 | |
Weighted Average Exercise Price | ||
Balance at the beginning (in dollars per share) | $ 1.92 | |
Granted (in dollars per share) | 1.11 | |
Forfeited/Cancelled (in dollars per share) | 0.002 | |
Exercised (in dollars per share) | 0.002 | |
Balance at the end (in dollars per share) | 1.47 | $ 1.92 |
Exercisable at the end (in dollars per share) | $ 1.54 | |
Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value | ||
Balance (in years) | 8 years 10 months 28 days | 8 years 11 months 23 days |
Exercisable at the end (in years) | 8 years 8 months 26 days | |
Aggregate Intrinsic Value, balance | $ 203,295 | $ 3,616,248 |
Exercisable at the end (in dollars) | $ 130,188 |
Share-Based Compensation- Restr
Share-Based Compensation- Restricted Stock Awards Activity (Details) - $ / shares | 12 Months Ended | |
Nov. 23, 2022 | Dec. 31, 2022 | |
Restricted Stock Awards | ||
Restricted Stock Awards | ||
Outstanding at the beginning | 708,615 | |
Vested | (485,677) | |
Outstanding at the end | 222,938 | |
Weighted-Average Grant Date Fair Value Per Share | ||
Outstanding at the beginning (in dollars per share) | $ 1.42 | |
Vested (in dollars per share) | 1.44 | |
Outstanding at the end (in dollars per share) | $ 1.48 | |
Restricted Stock Units | ||
Restricted Stock Awards | ||
Granted | 1,427,404 | |
Forfeited/cancelled | (140,614) | (140,614) |
Vested | (994,963) | |
Outstanding at the end | 291,827 | |
Weighted-Average Grant Date Fair Value Per Share | ||
Granted (in dollars per share) | $ 1.11 | |
Forfeited/cancelled (in dollars per share) | 1.11 | |
Vested (in dollars per share) | 1.11 | |
Outstanding at the end (in dollars per share) | $ 1.11 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Stock Awards (Details) - USD ($) | 12 Months Ended | |||||
Nov. 23, 2022 | Jun. 14, 2022 | Feb. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2022 | |
Accrued Liabilities | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Share-based compensation expense capitalized | $ 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 | $ 1,301,599 | $ 836,481 | ||||
Unrecognized compensation expense related to unvested restricted share awards | $ 312,631 | |||||
Unrecognized compensation expense related to unvested restricted share awards recognized over a weighted-average period | 1 year | |||||
Amount of fully vested stock with a fair market value | $ 250,000 | |||||
Restricted Stock Units | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Stock compensation expense | $ 1,406,548 | $ 0 | ||||
Number of shares authorized | 1,427,404 | 7,803,421 | ||||
Number of shares granted | 1,427,404 | |||||
Amount of restricted shares with a fair market value | $ 192,308 | |||||
Minimum value obligation | $ 74,359 | |||||
RSUs cancelled | 140,614 | 140,614 | ||||
Cash bonus | $ 147,645 | |||||
Restricted Stock Units | Minimum | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Unrecognized compensation expense related to unvested restricted share awards recognized over a weighted-average period | 2 months | |||||
Unrecognized compensation expense related to unvested restricted share awards | $ 333,332 | |||||
Restricted Stock Units | Maximum | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Unrecognized compensation expense related to unvested restricted share awards recognized over a weighted-average period | 4 years | |||||
Unrecognized compensation expense related to unvested restricted share awards | $ 39,313 | |||||
Restricted Stock Units | Vested immediately | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Number of shares granted | 1,346,154 | |||||
Restricted Stock Units | Vest in equal quarterly installments through february 28, 2023 | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Amount of restricted shares with a fair market value | $ 1,153,846 |
Convertible Debt - Marpai Healt
Convertible Debt - Marpai Health Convertible Notes - 2020 Convertible Notes (Details) | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |
Cash proceeds from issuance of convertible notes | $ 550,000 |
Convertible Debt - Marpai Conve
Convertible Debt - Marpai Convertible Notes - June 2021 Notes (Details) | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |
Proceeds from convertible notes | $ 550,000 |
Convertible Debt - Minimum Annu
Convertible Debt - Minimum Annual Payments for the Future Periods (Details) | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Conversion of convertible notes to common stock in connection with initial public offering | $ 5,106,554 |
Repayment of convertible note | $ 783,257 |
Warrants - Marpai Health Warran
Warrants - Marpai Health Warrants (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Feb. 28, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 10, 2021 | Apr. 01, 2021 | Jan. 17, 2020 | |
Class of Warrant or Right [Line Items] | ||||||
Warrants to purchase common shares | 225,000 | |||||
Warrants exercise price | $ 4 | |||||
Price per share | $ 4 | |||||
Cash payment for purchase of warrants | $ 53,333 | |||||
Marpai Health Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants to purchase common shares | 926,349 | 1,290,815 | 364,466 | |||
Warrants exercise price | $ 7.90 | $ 1.43 | ||||
Purchase price per share | $ 0.05 | |||||
Fair value of the warrants | $ 213,828 | |||||
Cash payment for purchase of warrants | $ 50,833 | |||||
Underwriter warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants to purchase common shares | 312,500 | |||||
Percentage of underwriters compensation | 5% | |||||
Exercise price, Percentage on public offering price | 125% | |||||
Warrants exercise price | $ 5 |
Warrants - Assumptions Fair Val
Warrants - Assumptions Fair Value Of Warrants - Marpai Health Warrants (Details) - Marpai Warrants | Dec. 31, 2022 USD ($) shares yr |
Measurement Input, Exercise Price [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | $ | 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 | 4 |
Measurement Input, Price Volatility [Member] | |
Class of Warrant or Right [Line Items] | |
Measurement input of warrants | 40.08 |
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 | 1.20 |
Warrants - Marpai Warrants (Det
Warrants - Marpai Warrants (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Dec. 10, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 28, 2021 | Dec. 31, 2020 | |
Class of Warrant or Right [Line Items] | |||||||
Warrants to purchase common shares | 225,000 | ||||||
Warrants exercise price | $ 4 | ||||||
Cash payment for purchase of warrants | $ 53,333 | ||||||
Proceeds from warrant exercises | $ 900,000 | $ 900,000 | |||||
Price per share | $ 4 | ||||||
IPO [Member] | |||||||
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 | ||||||
Underwriter warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants to purchase common shares | 312,500 | ||||||
Warrants exercise price | $ 5 | ||||||
Percentage of underwriters compensation | 5% | ||||||
Exercise price, Percentage on public offering price | 125% |
Warrants - Assumptions Fair V_2
Warrants - Assumptions Fair Value Of Warrants - Marpai Warrants (Details) | 12 Months Ended | |||||||
Dec. 31, 2022 USD ($) yr shares $ / shares | Dec. 10, 2021 $ / shares shares | Jul. 31, 2021 $ / shares shares | Apr. 30, 2021 $ / shares shares | Apr. 01, 2021 shares | Feb. 28, 2021 $ / shares shares | Dec. 31, 2020 $ / shares | Jan. 17, 2020 $ / shares shares | |
Class of Warrant or Right [Line Items] | ||||||||
Warrants to purchase common shares | shares | 225,000 | |||||||
Warrants exercise price | $ / shares | $ 4 | |||||||
Price per share | $ / shares | $ 4 | |||||||
Marpai Warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants to purchase common shares | shares | 225,000 | 45,558 | ||||||
Warrants exercise price | $ / shares | $ 4 | $ 7.90 | $ 1.43 | |||||
Marpai Warrants | Measurement Input, Exercise Price [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Measurement input of warrants | $ | 4 | |||||||
Marpai Warrants | Measurement Input, Expected Term [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Measurement input of warrants | yr | 0.4 | |||||||
Marpai Warrants | Measurement Input, Share Price [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Measurement input of warrants | shares | 2.58 | |||||||
Marpai Warrants | Measurement Input, Price Volatility [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Measurement input of warrants | 40.08 | |||||||
Marpai Warrants | Measurement Input, Expected Dividend Rate [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Measurement input of warrants | 0 | |||||||
Marpai Warrants | Measurement Input, Risk Free Interest Rate [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Measurement input of warrants | 0.06 | |||||||
Underwriter warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Percentage Of Underwriters Compensation | 5% | |||||||
Warrants to purchase common shares | shares | 312,500 | |||||||
Exercise price, Percentage on public offering price | 125% | |||||||
Warrants exercise price | $ / shares | $ 5 | |||||||
Marpai Health Warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrants to purchase common shares | shares | 1,290,815 | 926,349 | 364,466 | |||||
Warrants exercise price | $ / shares | $ 7.90 | $ 1.43 |
Warrants - Schedule of Warrant
Warrants - Schedule of Warrant Activities (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Warrant or Right [Line Items] | ||
Beginning balance | 1,648,873 | |
Ending balance | 1,648,873 | |
Weighted Average Exercise Price | ||
Beginning balance | $ 5.92 | |
Ending balance | $ 5.92 | |
Minimum | ||
Exercise Price Range Per Share | ||
Beginning balance | 1.43 | |
Ending balance | 1.43 | |
Maximum | ||
Exercise Price Range Per Share | ||
Beginning balance | $ 7.90 | |
Ending balance | $ 7.90 | |
Marpai Warrants | ||
Class of Warrant or Right [Line Items] | ||
Beginning balance | 1,648,873 | 364,466 |
Granted | 0 | 1,509,407 |
Exercised | (225,000) | |
Ending balance | 1,648,873 | 1,648,873 |
Exercise Price Range Per Share | ||
Beginning balance | $ 1.43 | |
Exercised | $ 0 | 4 |
Weighted Average Exercise Price | ||
Beginning balance | 5.92 | 1.43 |
Granted | 6.72 | |
Exercised | 0 | 4 |
Ending balance | 5.92 | 5.92 |
Marpai Warrants | Minimum | ||
Exercise Price Range Per Share | ||
Granted | 4 | |
Ending balance | 1.43 | |
Marpai Warrants | Maximum | ||
Exercise Price Range Per Share | ||
Granted | $ 7.90 | |
Ending balance | $ 7.90 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Effective tax rate | 1.90% | 0.90% |
Federal tax rate | 21% | 21% |
Maximum percentage of taxable income can be utilized for operating losses | 80% | |
Valuation allowance | $ 9,982,652 | $ 4,468,123 |
Minimum corporate income tax rate | 15% | |
Excise tax on net repurchase of stock | 1% | |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating losses | $ 29,547,000 | 29,547,000 |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating losses | $ 26,649,000 | $ 26,649,000 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes and the Statutory Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) at federal statutory rate | 21% | 21% |
State Taxes | 0.20% | |
Change in valuation allowance | (20.40%) | (20.10%) |
Change in deferred tax liability | 1.90% | |
Return to provision adjustments | (0.50%) | |
Permanent differences | (1.40%) | 0.50% |
Other - net | (0.60%) | (0.00%) |
Income tax expense (benefit) | 1.90% | 0.90% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Startup costs | $ 1,035,317 | $ 1,001,272 |
Stock compensation - RSAs | 875,498 | 584,881 |
Net operating loss - Federal | 6,204,900 | 2,244,367 |
Net operating loss - State | 1,264,598 | 522,491 |
Accrued Expenses | 174,289 | |
Amortization | (1,217,409) | (1,682,939) |
Depreciation | (262,179) | (333,501) |
Operating lease assets | (813,972) | (393,985) |
Operating lease liabilities | 1,370,631 | 350,236 |
Deferred revenue | 45,388 | |
Deferred tax assets, gross | 8,502,772 | 2,467,111 |
Less: Valuation allowance | (9,982,652) | (4,468,123) |
Deferred tax liabilities, net | $ (1,479,880) | $ (2,001,012) |
Segment Information - Schedule
Segment Information - Schedule of Long-lived Assets by Geographic Region (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 22,096,937 | $ 17,129,023 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | 17,993,006 | 14,369,511 |
Israel | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets | $ 4,103,931 | $ 2,759,512 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) | 12 Months Ended | ||||
Dec. 10, 2021 USD ($) $ / shares shares | Oct. 28, 2021 USD ($) $ / shares shares | Sep. 02, 2021 | Dec. 31, 2022 shares | Dec. 31, 2021 USD ($) shares | |
Subsidiary, Sale of Stock [Line Items] | |||||
Forward split ratio | 4.555821 | ||||
Proceeds from initial public offering | $ | $ 25,378,663 | ||||
Net proceeds from offering | $ | $ 24,547,086 | ||||
Warrants to purchase common shares | 225,000 | ||||
Warrants exercise price | $ / shares | $ 4 | ||||
Proceeds from warrant exercises | $ | $ 900,000 | $ 900,000 | |||
Common Stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares issued | 11,147,302 | ||||
Shares issued to vendors in exchange for services (in shares) | 37,500 | ||||
Initial Public Offering | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares issued | 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 | 937,500 |
Accrued Severance Pay and Emp_2
Accrued Severance Pay and Employee Retirement Plan - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Percentage on monthly salary under severance pay law | 8.33% | |
Severance expenses | $ 144,896 | $ 132,031 |
Excluding Maestro Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution percentage of match | 5% | |
Total expense on contribution | $ 343,682 | $ 194,979 |
Maestro Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution percentage of match | 5% | |
Total expense on contribution | $ 45,279 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Liabilities, Current [Abstract] | ||
Employee compensation | $ 1,433,327 | $ 897,288 |
Accrued bonuses | 1,712,009 | 743,038 |
Performance guarantee liabilities | 244,029 | 418,988 |
Other accrued expenses and liabilities | 1,885,351 | 465,723 |
Accrued expenses | $ 5,274,716 | $ 2,525,037 |