OTC: MRAI

More employers, particularly
among the small and mid-sized enterprises (“SME”), are taking advantage of innovative captive and consortium models to move
towards gaining greater control over their healthcare spending by self-insuring. Self-insuring enables an employer to capture the margin
an insurance company would otherwise take while also enabling significant savings as an employer does a better job managing its member
population.

Health plans and employers
are increasingly looking to control costs through various programs, including payment integrity, care management, care navigation, reference-based
pricing, claims repricing, centers of excellence, specialty/narrow networks, and subrogation.

As of 2025, employee benefits remain a significant and growing component
of total employee compensation, increasing at a faster pace than wages in recent years. According to the U.S. Bureau of Labor Statistics,
benefits account for approximately 32–33% of total compensation for private industry workers, up from roughly 30% five years ago,
driven primarily by healthcare cost inflation.

TPAs now play an expanded
role that includes analytics, compliance support, and digital service delivery in addition to traditional claims processing.

The growing demand for TPA services is supported by:

● Continued adoption of self-funded and alternative funding insurance plans, increasing administrative complexity.

● Employers’ ongoing challenges in balancing benefit costs with competitive offerings amid rising healthcare expenses.

● Sustained year-over-year increases in health benefit costs, driving demand for outsourced administration, compliance, and cost-containment
solutions.

The TPA sector remains highly fragmented, with numerous regional and
specialty providers operating across benefits administration, compliance, and related services.

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Market Opportunities

According to the Kaiser Family
Foundation, 67% of covered workers in SME are enrolled in self-funded plans. We are transforming the self-funded employer health plan
market through cutting-edge technology and our proprietary Marpai Saves “bundle” for enhanced outcomes and reduced costs.

We provide the tools
for our Members, and we support those Members who may need additional guidance to address health concerns at an earlier stage, allowing
for more cost-effective treatment.

Our Products and Services

We derive our revenues
from three general sources: Health Plan Administration services, In-House Ancillary services, and Third-Party Vendor services.

Health Plan Administration Services

Our core service offerings
include handling all aspects of administration related to a healthcare plan. We typically design for our Client, the SME, a healthcare
benefit plan which allows the Client to define the coverage it would like to provide to its employees (the “Members”). We
then manage the plan for the Client by providing the following services:

● Providing Members with access to a provider network via relationships with Aetna, Cigna, and regional networks;

● Answering Members’ calls and requests related to their health plan via phone, email and via our mobile app;

● Value added services to help Members find providers and care management as well as to answer questions, including claims and benefits;

● Validating and adjudicating claims from Members, including automated adjudication;

● Promoting health and the use of high-quality medical professionals (the “Providers”) to the Member population;

● Paying claims on behalf of our Clients; and

● Sourcing stop-loss insurance via our underwriters.

As plan
administrators, we do not bear the financial risk with respect to the cost of the claims for any Client. The risk is borne by the
self-insured Clients and the stop-loss insurance companies, if the Client purchased stop-loss insurance policies to protect
themselves from unplanned healthcare costs.

We also sell complementary services to our Clients including care management,
case management, actuarial services, and bill review services.

In-House Ancillary Services

Our In-House Ancillary Services
are derived from our in-house products related to our role as the administrator of the Clients’ health plans but are ancillary to
paying claims such as;

Clinical Care Management
- a nurse-led, proactive guide for at-risk Members across the care continuum so they get the optimal high-quality care at the right
time and avoid excessive, inappropriate, and overpriced care. Instead of simply treating a condition, the nurses take a personal, holistic
approach, to help Members.

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Repricing Insights
- out-of-network claims are a reality for any health plan. Our product encompasses all the negotiation and adjudication related to
out-of-network claims. Clients often save up to 60% of the initial billed amount on their out-of-network claims.

Marpai PACCS - Pharmacy
Advocacy Cost Containment Solution is our Member-driven pharmacy savings program that focuses on specialty and high-cost medications designed
to generate up to 75% savings.

MarpaiRx - our national
pharmacy benefit management program that saves Clients and Members money and delivers a value-add Member experience. We grant access to
prescriptions at affordable rates and coordinate pharmacy and medical benefits to ensure that the right care is delivered and paid for
in a way that reduces the overall cost of healthcare. We disclose all rebate information to our clients.

Third-Party Vendor Services

Some of our revenues are
derived from services that are provided to our Clients and Members by third party vendors. We typically pass through most of these revenues
to these vendors and their contribution to our gross profit is relatively small. These services include network access fees that are charged
by the provider networks (such as Aetna or Cigna) when our Members visit network Providers (doctors, hospitals etc.) as well as some cost
containment services, and other services provided by third party vendors.

Company Goals

● To be the leader in affordable intelligent, healthcare for self-funded employers.

● To improve outcomes for our Members while lowering healthcare costs to our Clients.

● To utilize our competency in deep learning and data analytics to drive efficiencies in operations and increase profitability.

● To capitalize on the large fragmented TPA market with favorable macro-economic trends.

Technology Delivers Superior Value - Marpai Saves

We bring deep learning and data analytics to the rapidly growing, TPA
sector to deliver affordable intelligent, healthcare to our Clients and their Members. We proactively engage Members in an effort to reduce
avoidable, excessive, inappropriate and overpriced care. We use data analytics and our in- house clinical management team to identify
and connect at-risk members, remind Members to have annual exams and guide them to low-cost, quality in network providers. The myMarpai
app is a personal health guide that gives Members on-demand access to benefits, costs, deductibles, telehealth and more.

Government Regulation

Overview

The healthcare industry is
highly regulated and continues to undergo significant changes as third-party payers, such as Medicare and Medicaid, traditional indemnity
insurers, managed care organizations and other private payers, increase efforts to control cost, and increase the effectiveness of healthcare
services. Healthcare companies are subject to extensive and complex federal, state, and local laws, regulations, and judicial decisions.

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Fraud and Abuse

Health care fraud and abuse
laws have been enacted at the federal and state levels to regulate both the provision of services to government program beneficiaries
and the methods and requirements for submitting claims for services rendered to such beneficiaries. In addition, certain fraud and abuse
laws may extend to payer sources other than federal or state-funded programs. Under these laws, individuals and organizations can be penalized
for various activities, including submitting claims for services that are not provided, are billed in a manner other than as actually
provided, are not medically necessary, are provided by an improper person, are accompanied by an illegal inducement to utilize or refrain
from utilizing a service or product, or are billed in a manner that does not comply with applicable government requirements. Both individuals
and organizations are subject to prosecution under the criminal and civil fraud and abuse statutes relating to health care providers.

Noncompliance with the Anti-Kickback
Law can result in civil, administrative and/or criminal penalties, restrictions on the ability to operate in certain jurisdictions, and
exclusion from participation in Medicare, Medicaid or other federal healthcare programs. In addition, non-compliance can result in the
need to curtail and/or restructure operations. Any penalties, damages, fines, exclusions, curtailment or restructuring of operations could
adversely affect the ability to operate a business, financial condition, and results of operations. A violation of the Anti-Kickback Law
can serve as a false or fraudulent claim for purposes of the civil False Claims Act and the civil monetary penalties statute.

The so-called Stark Law prohibits
physician referrals of Medicare patients to an entity providing certain “designated health services” if the physician or an
immediate family member of the physician has any financial relationship with the entity and the financial relationship does not fall within
one of the enumerated exceptions to the Stark Law. The Stark Law also prohibits state receipt of federal Medicaid matching funds for services
furnished pursuant to a prohibited referral. In addition to the Stark Law, many states have their own self-referral bans, which may extend
to all self-referrals, regardless of the payer.

The federal False Claims
Act imposes liability for the submission (or causing the submission) of false or fraudulent claims for payment to the federal government,
including for certain violations of the Stark Law. The knowing and improper failure to return an overpayment can serve as the basis for
a False Claims Act action and Medicare and Medicaid overpayments must be reported and returned within 60 days of identification. Furthermore,
violation of the Stark Law also resulted in denial of payment for the underlying testing services. The private parties (known as “qui
tam relators”) of the False Claims Act allow a private individual to bring an action on behalf of the federal government and to
share in any amounts paid by the defendant to the government in connection with the action. Various states have enacted similar laws modeled
after the False Claims Act that apply to items and services reimbursed under Medicaid and other state health care programs, and, in several
states, such laws apply to claims submitted to all payers.

The federal Healthcare Fraud
Statute prohibits the knowing and willful execution of a scheme to defraud any health care benefit program, including a private insurer.
It also prohibits falsifying, concealing or covering up a material fact or making any materially false, fictitious, or fraudulent statement
in connection with the delivery of or payment for health care benefits, items, or services. In addition, state analogs often prohibit
similar conduct.

The federal False Claims
Act also provides that private parties may bring an action on behalf of (and in the name of) the United States to prosecute a federal
False Claims Act violation. These qui tam relators may share in a percentage of the proceeds that result from a federal False Claims Act
action or settlement. A person or entity found to have violated the federal False Claims Act may be held liable for a per claim civil
penalty. For penalties assessed after June 19, 2020, whose associated violations occurred after November 2, 2015, the penalties range
from $11,665 to $23,331 for each false claim, plus three times the amount of damages sustained by the government. The minimum and maximum
per claim penalty amounts are subject to annual increases for inflation.

Many states have
also adopted some form of anti-kickback and anti-referral laws and false claims acts and civil monetary penalties and other fraud and
abuse provisions that apply regardless of payer, in addition to items and services reimbursed under Medicaid and other state programs.
A determination of liability under such laws could result in fines, penalties, and exclusion, as well as restrictions on the ability to
operate in these jurisdictions.

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State and Federal Privacy and Data Security Laws

The Health Insurance Portability
and Accountability Act of 1996 and its implementing regulations (HIPAA) and the Health Information Technology for Economic and Clinical
Health Act of 2009 and its implementing regulations (HITECH) govern the collection, use, disclosure, maintenance and transmission of identifiable
patient information (“Protected Health Information” or “PHI”). HIPAA and HITECH apply to covered entities, which
may include health plans as well as to those entities that contract with covered entities (“Business Associates”). HITECH
imposes breach notification obligations that require the reporting of breaches of “Unsecured Protected Health Information”
or PHI that has not been encrypted or destroyed in accordance with federal standards. Furthermore, the regulations established standard
data content and format requirements for submitting electronic claims and other administrative health transactions. Health care providers
and health plans are required to use standard formats when transmitting claims, referrals, authorizations, and certain other transactions
electronically. Business Associates are subject to potentially significant civil and criminal penalties for violating HIPAA.

In addition to HIPAA, we
are subject to other state and federal laws and regulations that address privacy, data protection and the collection, storing, sharing,
use, transfer, disclosure and protection of certain types of data. Such regulations include the CAN-SPAM Act, the Telephone Consumer Protection
Act of 1991, Section 5(a) of the Federal Trade Commission Act, and the California Consumer Privacy Act (“CCPA”), as amended
by the California Privacy Rights Act (“CPRA”), which, where applicable, provides consumers with additional privacy rights.

In addition, other federal
and state laws afford additional protections to certain categories of sensitive information. Such protections are commonly afforded to
substance abuse, mental health, or information concerning certain contagious diseases.

In addition to the federal
privacy and security laws and regulations, most states have enacted data security laws, and breach notification laws, governing other
types of personal data such as employee and customer information.

State Managed Care Laws

State insurance and managed
care laws and regulations regulate contractual relationships with managed care organizations, utilization review programs and third-party
administrator activities. These regulations differ from state to state, and may contain network, contracting, and financial and reporting
requirements, as well as specific standards for delivery of services, payment of claims, and adequacy of health care professional networks.
These laws may apply to us in the event we engage in business transactions with state managed care programs.

State Laws Governing Licensure of Healthcare Professionals

State professional licensing
boards contain requirements for the licensure of health care professionals and typically require a healthcare professional who is providing
professional services in that state to be licensed. Some state licensing boards specifically address the licensure of professionals who
are providing services via telephone or other electronic means. The requirements for licensure generally apply where individuals are engaged
in a licensed activity. If we elect to hire a licensed professional to engage in a licensed profession, those individuals may be subject
to state licensing laws. In addition, hiring licensed professionals may implicate state prohibitions on the corporate practice of medicine.

Employees

As of December 31, 2025,
we had a total of 107 full-time employees. None of them are parties to any labor agreements or are represented by any labor union.

Competition

Although we believe that
the services we offer our Clients are differentiated, we operate in a highly competitive market. We only provide administrative services
to self-insured employers who provide healthcare benefits to their employees. These self-insured employers can always elect to abandon
self- insurance and simply buy medical insurance from one of the large players such as, Aetna, Cigna, or United Healthcare. There can
be no assurances that our Clients or prospective Clients will remain self-insured for any given period. If the number of employers which
choose to self-insure declines, the size of our target market will shrink.

Also, there are other technology-driven
companies delivering TPA services to self-insured employers. Like us, they provide machine learning predictions models targeted at measuring
risks for their employees, identifying Members susceptible to adverse healthcare events before they occur, and provide proactive guidance
for preventive care. We compete with nearly 1,000 health insurance entities, all of whom are vying for the same business - the management
of healthcare benefits for self-insured employers. There is only one TPA at a time for every employer wanting to provide health benefits
via a self-insured model, and an employer may remain with the same TPA for many years. This means that although the market is very large,
not all of it is accessible by us in any one year. In addition to the very large health insurance companies, the TPA industry has thousands
of companies across the United States with the vast majority being less sophisticated small regional players. They may service only a
handful of clients and provide limited benefit plans and services.

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