DEF: Marpai, Inc. Seeks Shareholder Approval for Blank Check Preferred Stock and Board Realignments

Marpai, Inc. is convening its annual stockholder meeting on August 27, 2025, to vote on the election of six directors, the ratification of its independent auditor, and a significant proposal to authorize 2,000,000 shares of blank-check preferred stock.

Summary

• Marpai, Inc. will hold its Annual Meeting of Stockholders on August 27, 2025, at its U.S. office in Tampa, Florida.
• Stockholders are asked to vote on three key proposals: the election of six directors, the ratification of UHY LLP as the independent registered public accounting firm for fiscal year 2025, and an amendment to the Certificate of Incorporation to authorize 2,000,000 shares of blank-check preferred stock.
• The Board of Directors unanimously recommends voting FOR all proposals.
• As of the record date, June 30, 2025, there were 16,534,186 shares of Class A Common Stock issued and outstanding.
• The company reported a net loss of $(22,088) thousand for the fiscal year ended December 31, 2024, an improvement from a net loss of $(28,752) thousand in 2023, primarily due to decreased operating and financing expenses.
• Total Shareholder Return (TSR) for an initial $100 investment decreased by approximately 59% from $52.58 as of December 31, 2023, to $24.64 as of December 31, 2024.
• CEO Damien Lamendola's compensation actually paid increased by 147% from $288 thousand in 2023 to $712 thousand in 2024, while other Named Executive Officers' compensation decreased by 66% from $2,468 thousand to $840 thousand over the same period.
• The proposed blank-check preferred stock would grant the Board the sole authority to determine the voting powers, preferences, and rights of such shares, intended to provide flexibility for capital raising and strategic transactions.
• Mohsen Moazami will not be re-nominated as a director, and Damien Lamendola is slated to assume the role of Chairman of the Board following the meeting, with Yaron Eitan stepping down as Chairman but remaining a Director.

Sentiment

Score: 3

Explanation: The document outlines necessary corporate governance actions and shows a reduction in net loss, which is positive. However, the significant decline in TSR, the 'not probable' uplisting, and the potential for dilution from blank-check preferred stock, combined with a history of related-party financing, indicate substantial challenges and risks for shareholders. The overall financial performance (TSR) is poor, despite the reduced net loss.

Positives

• Net loss decreased by 23% from approximately $(28.75) million in 2023 to $(22.09) million in 2024, attributed to a decrease in operating and financing expenses.
• The authorization of blank-check preferred stock could provide the company with flexibility to attract investment capital and pursue strategic opportunities like mergers and acquisitions without requiring further stockholder approval for each issuance.
• The Board has a diverse set of skills and experiences, including expertise in healthcare, technology, finance, accounting, and M&A, which is believed to advance stockholder interests.
• The company has adopted a Code of Ethics and Insider Trading Policy, designed to promote compliance with securities laws and prevent speculative transactions by insiders.

Negatives

• Total Shareholder Return (TSR) decreased significantly by approximately 59% from 2023 to 2024, with the value of an initial $100 investment falling from $52.58 to $24.64.
• The special RSU grant for uplisting to a national securities exchange is contingent on successful uplisting, which is stated as 'currently not probable,' indicating a potential failure to achieve this strategic goal.
• The authorization of blank-check preferred stock could dilute the voting power and economic interests of existing common stockholders and potentially be used as an anti-takeover measure.
• The company has experienced significant executive turnover, with changes in CEO, CFO, President, and COO roles in late 2023 and 2024, and several former executives receiving severance or special agreements.
• The company continues to operate at a net loss, reporting $(22,088) thousand in 2024.

Risks

• Dilution of Common Stockholders' Rights: The authorization of 2,000,000 shares of blank-check preferred stock could allow the Board to issue shares with superior dividend, liquidation, conversion, or voting rights, adversely affecting existing common stockholders' voting power and economic interests.
• Anti-Takeover Measure: The blank-check preferred stock could be used to discourage, delay, or prevent a change in control of the company, potentially entrenching current management or deterring hostile takeovers.
• Uncertainty of Preferred Stock Issuance: While the Board has no definitive plans to issue preferred stock, the approval grants them broad authority to do so without further stockholder approval, creating uncertainty regarding future capital structure and potential impact on common stock.
• Uplisting Uncertainty: The special RSU grant tied to uplisting to a national securities exchange is noted as 'currently not probable,' indicating a risk that this strategic goal may not be achieved.
• Executive Compensation Structure: The CEO's annual salary is $1.00, with significant compensation coming from RSU grants and potential future equity awards tied to unadjusted EBITDA targets, which may not align with overall shareholder return if not carefully managed.
• Reliance on Related Party Financing: The company has repeatedly engaged in private placements with HillCour (controlled by CEO Damien Lamendola) and other insiders, which could raise concerns about potential conflicts of interest and reliance on related party financing.

Future Outlook

The Board has no definitive plans to issue preferred stock but believes its authorization will provide flexibility for capital raising, merger and acquisition opportunities, and the issuance of stock dividends or splits. Executive compensation plans include potential equity awards for the CEO, CFO, and President upon achieving $5 million of unadjusted EBITDA within a calendar fiscal year. The new Chief Operating Officer's annual incentive bonus for 2026 is tied to achieving profitability and revenue targets of $50 million, $75 million, or $100 million.

Management Comments

• The Board believes that the collective skills, experiences and qualifications of our directors provide our Board with the expertise and experience necessary to advance the interests of our stockholders.
• Our Board unanimously recommends that the stockholders vote FOR all proposals being put before our stockholders at the Meeting.
• The Board has no definitive plans, proposals or arrangements to issue any shares of blank check preferred stock. The Board believes, however, that approval of this Charter Amendment Proposal will provide the flexibility to take advantage of opportunities as they arise and will improve the Companys ability to attract investment capital as various series of preferred stock may be customized to meet the needs of particular transactions or market conditions.
• Our management believes that Proposal 2 is a routine matter for which brokers will have authority to vote your shares at the Meeting if you do not give instruction on how to vote your shares.
• The Board believes that the overall enterprise risk management process is more properly overseen by all of the members of the Board.
• The creation of the blank check preferred stock has not been proposed by the Board for an anti-takeover-related purpose and the Board has no knowledge of any current efforts to obtain control of the Company or to effect large accumulations of our voting stock.

Industry Context

This proxy statement reflects a common practice for publicly traded companies to seek shareholder approval for corporate governance matters, including director elections and auditor ratification. The proposal to authorize blank-check preferred stock is a strategic move often employed by companies to enhance financial flexibility for future capital raises or M&A activities without requiring subsequent shareholder votes for each specific issuance. This can be particularly relevant in dynamic industries like healthcare technology, where rapid access to capital for growth or strategic partnerships is crucial. The company's continued net losses and declining TSR suggest it is in a growth or turnaround phase, where such financial flexibility could be critical, but also carries inherent risks for existing common shareholders.

Comparison to Industry Standards

• The authorization of blank-check preferred stock is a common corporate finance tool, but its potential for dilution and anti-takeover effects is a standard concern for corporate governance advocates and investors. Companies like Marpai, operating in the healthcare technology sector, often seek such flexibility to compete with larger, more established players or to fund innovative projects.
• The company's net loss of $(22.09) million in 2024, while an improvement from 2023, indicates it is not yet profitable, which is common for growth-stage technology companies but contrasts with profitable industry leaders.
• The significant decline in Total Shareholder Return (TSR) from $52.58 to $24.64 (a 59% decrease) suggests underperformance relative to many industry benchmarks or broader market indices during the period. For example, a typical S&P 500 index fund would have likely seen positive returns over this period.
• The executive compensation structure, particularly the CEO's $1.00 salary supplemented by substantial RSU grants and performance-based equity, is an increasingly common practice in tech and growth companies, aiming to align management incentives with long-term shareholder value, though the declining TSR raises questions about the effectiveness of this alignment in the short term.

Management Changes

Corporate Governance

Related Party Transactions

• Marpai, Inc. entered into multiple private placement agreements to issue common stock to HillCour (controlled by CEO Damien Lamendola) and other insiders:
• December 14, 2023: 150,000 shares at $1.97 per share.
• January 16, 2024: 1,322,100 shares at $0.9201 per share (including purchases by Yaron Eitan and Robert Pons).
• March 7, 2024: 910,000 shares at $1.65 per share.
• August 28, 2024: 1,351,351 shares (out of 2,702,702 total) at $0.481 per share.
• On December 5, 2024, the company issued 621,194 shares at $1.13 per share in a private placement, with significant purchases by Yaron Eitan (110,619 shares), Steve Johnson (5,000 shares), and John Powers (10,000 shares).
• Yaron Eitan received a monthly retainer of $15,000 (later $22,750) for consulting services until July 2023, when he transitioned to an employment agreement with an annual salary of $168,000.
• Former CEO Edmundo Gonzalez received approximately $88,000 in consulting services in 2023.
• Following his termination as President, Product and Development, Lutz Finger entered into an advisory agreement for monthly retainer fees ($27,000 then $28,000) and received RSU grants, which were later cancelled and replaced with stock options.
• Separation agreements with former executives (Edmundo Gonzalez, Yoram Bibring, Gonen Antebi) included severance payments, extended option exercise periods, or warrants.

Stakeholder Impact

• Shareholders: Common stockholders face potential dilution of voting power and economic interests if the proposed blank-check preferred stock is authorized and issued with superior rights. Existing common stockholders have experienced a significant decline in Total Shareholder Return (TSR). The company's reliance on private placements with insiders may raise concerns about equitable access to investment opportunities.
• Employees: Executive compensation includes performance-based equity awards, potentially incentivizing management to achieve financial targets.
• Management: Key executives have received substantial RSU grants and have potential for additional equity awards based on company performance (e.g., unadjusted EBITDA targets).
• Creditors: The authorization of preferred stock could impact the company's capital structure, potentially affecting its creditworthiness depending on the terms of any issued preferred shares.

Next Steps

• Hold the Annual Meeting of Stockholders on August 27, 2025, to vote on the proposed resolutions.
• If approved, the Board will file the Amendment to the Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to authorize preferred stock.
• The company will announce preliminary voting results at the meeting and file a Current Report on Form 8-K announcing the final voting results.
• The Board will continue to oversee risk management, with specific committees focusing on financial, accounting, and compensation risks.
• Management will work towards achieving $5 million of unadjusted EBITDA within a calendar fiscal year to trigger additional RSU grants for key executives.
• The Chief Operating Officer will work towards achieving 2026 annual incentive bonus targets tied to profitability and revenue ($50M, $75M, or $100M).

Key Dates

Recommendation

Keywords

Marpai Inc, SEC filing, proxy statement, annual meeting, corporate governance, preferred stock, blank check stock, director election, independent auditor, executive compensation, related party transactions, shareholder vote, stock dilution, risk management, financial reporting, UHY LLP, Damien Lamendola, Yaron Eitan, Steve Johnson, John Powers, Dallas Scrip, corporate finance, capital raise, healthcare technology