Our Bond, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Our Bond Inc. (“ Bond ,” “ we ,” “ us ,” “ our ” or the “ Company ”) was formed under the laws of the State of Delaware on April 11, 2017. We provide preventative personal security (the “ Bond Preventative Personal Security Platform ”) powered by artificial intelligence (“ AI ”). Once activated, the cloud-based Bond Preventative Personal Security Platform provides users with remote protective services via phone app (using its Bond Preventative Personal Security Platform) and with 24/7 support from our Personal Security Agents, who are in Bond Command Centers and can respond rapidly. We use third party AI tools like ChatGPT internally across the spectrum of our operations. Additionally, we have developed and continue to develop Bond AI capabilities. Bond’s AI (which is currently in production) consists largely of proprietary rule-based systems that assist us in identification of potential anomalies for further review by our agents. 32 Bond’s vision is to leverage AI to enable personal security services to be more scalable, effective and ultimately affordable for more people. The Bond Preventative Personal Security Platform is designed with that vision, allowing us to incorporate increasing amounts of AI over time as technology advances. The chart below shows some of the key areas where we have incorporated AI, their current state and future plans: Task AI currently in use by Bond AI in R&D Anomaly detection Bond-developed rule-based systems based on past data and expert input Bond-developed machine learning models trained on past anomaly data Supporting agent decision-making Third-party AI tools for agent decision support Implementing a RAG incorporating Bond processes and content with third-party data Automated translation Third-party AI tools for translation of services and content Third-party tools for automated live translation of calls Automating quality assurance Automated test suites for code Automated assessment of live agent performance AI interviewing, hiring, and training agents Video interviews and third-party AI assessment to accelerate hiring funnel Increased use of automation and virtual agents in agent training and onboarding processes Creation of content that facilitates informing end users about the Bond service and platform Third-party AI tools for generating and optimizing marketing content, including videos and images None Automating of agent administrative tasks None Automated transcription, translation, and summarization of cases Automatically triaging active calls to identify “hot” cases None Automated analysis of active calls to flag high-risk cases for supervisor attention Automatically triaging incoming calls in overload situations None Virtual agents that gather information about situations and prioritize cases for human agents Facial recognition for “bad actors” None Integrating third-party facial recognition technology with Bond’s platform Automating and optimizing customer messaging None Automated CRM suites that use AI to customize messaging for each customer Automating drone response to reported incidents None Patented techniques for autonomous drone navigation and collision avoidance We offer 14 distinct services through our phone app (the “ Bond App ”) and fully automated Bond Command Centers located around the world, that allow Bond members to choose when and how Bond will keep them secure while preserving their privacy. The Bond Preventative Personal Security Platform is a multilayered, multifaceted technology platform that incorporates numerous technologies, inputs and outputs to other systems, and third-party information. It allows us to perform a large number of multi-functional activities relative to a large number of end-users/members, with a high level of precision, speed and reliability, as well as affordably, in a manner that is automated. The core functionality includes: (1) “look after” a massively scalable number of members/end-users simultaneously; at their or their guardians request, monitor them, collect data from multiple sources – on the phone of the member, from what Bond historically knows about the member; from what Bond knows about the area/location of the member, from what the member has shared with Bond – in order to detect anomalies in real time; (2) communicate with the member in order to verify their status, potentially engage Bond Personal Security Agents in order to calm, guide, deter or orchestrate help for the member; (3) record and analyze all activities in the Bond sphere, which included on the phones of the end-users, in the Command Centers and through our technology. 33 Corporate Organization We conduct our operations through eight wholly owned subsidiaries, organized as follows: ● TG- 17 (Israel) Ltd. was incorporated in 2017 and provides R&D services to Our Bond, Inc. Since 2023 the subsidiary operates also as Command Center for Israel and global users (members). ● Bond Bodyguard New York, Inc., a New York corporation, was incorporated in 2020 for the sole purpose of obtaining bodyguard licenses in the US. Services are given under Our Bond, Inc. Currently, we are licensed in 11 states and submitted application for additional states. ● TG-17 (UK) Ltd. was incorporated in 2023 to provide services to UK citizens and global members. ● TG-17 France, was incorporated in 2024 to provide services to French citizens and global members. ● TG-17 Belgium, a société à responsabilité limitée, was incorporated in 2025 to provide services to Belgian citizens and global members. ● TG-17 (Canada) Inc., a corporation subject to the Business Corporations Act (Ontario), was incorporated in 2025 to provide services to Canadian citizens and global members. ● TG-17 Brazil Ltda., was incorporated in 2025 to provide services to Brazilian citizens and global members. ● TG-17 Mexico., was incorporated in 2025 to provide services to Mexican citizens and global members. All subsidiaries are 100% controlled/owned by Our Bond, Inc. Components of Results of Operations Net Revenues. The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, which provides a five-step framework through which revenue is recognized when control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that the Company concludes are within the scope of ASC 606, management performs the following five steps: (i) identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract(s); (iii) determines the transaction price, including whether there are any constraints on variable consideration; (iv) allocates the transaction price to the performance obligations; and (v) recognizes revenue when (or as) the Company satisfies a performance obligation. 34 The Company provides comprehensive security solutions. The company’s flagship offering is a cloud-based Software-as-a-Service (“ SaaS ”) that delivers a preventative personal security solution platform. Additionally, the Company offers comprehensive and customized services designed to protect its clients. These services include, but are not limited to, on/off premise guards, assets protection, threat assessment and monitoring and other tailored-made security services. Revenue is recognized either over time or at a point in time, depending on the nature of each customer’s agreement. For its subscription-based SaaS solution delivered through the Company’s platform, revenue is typically recognized over time as services are made available on an on-going basis. In contrast, for performance obligations of services described above other than the SaaS solution, we generally satisfy our obligations vis-à-vis each deliverable as it occurs and is provided to the customer. The customers simultaneously receives and avails the benefits of our services, at which point these performance obligations are deemed to be satisfied. We group the above services offerings into one broad category which generates all of Company’s revenue through, primarily, the following sales: ● B2B (or B2G): selling to private or public institutions who use the services in order to protect their people (employees, students, residents, etc.). ● B2B2C: selling to or through corporations so they can sell/subsidize/gift Bond services to their own consumers. ● DTC: selling directly to consumers. ● Dsf The Company combines and accounts for multiple contracts as a single contract when they are negotiated together with the same customer at or near the same time in order to achieve a single commercial objective, or when the contracts are related in other ways. Transaction price may be comprised of fixed consideration and variable consideration. The Company’s contracts are typically for fixed consideration. For all contracts with customers that have more than one performance obligation, the Company allocates the transaction price to each separate performance obligation based on the relative SSP of each performance obligation. The SSP is typically the price at which the Company sells service separately to a customer. The best evidence of an SSP, if available, is the observable price charged in similar circumstances and to similar customers. If an SSP is not directly observable, the Company estimates SSP using various observable inputs including historical internal pricing data and cost-plus expected margin analysis due to the limited standalone sales history. For the year ended December 31, 2025, the Company demonstrated annual recurring revenue (“ARR”) of approximately $10 million and total bookings of $10.6 million. For the year ended December 31, 2024, the Company demonstrated ARR of approximately $9.7 million and total bookings of $10.3 million. The Company’s use of ARR as a metric to measure customer demand and growth, and the use of booking values act as an indicator of customer engagement, including new sales and renewals. These figures highlight consistent growth and increasing customer demand. Total bookings represent the aggregate dollar value of all customer contracts executed during a given period, inclusive of both recurring subscription and service commitments and any associated one-time fees (e.g., implementation, setup or training). Bookings are expressed based on the total committed contract value, regardless of the timing of invoicing or revenue recognition under U.S. GAAP. We calculate ARR using a trailing actuals method to provide a conservative measure of recurring revenue. Specifically, we determine average Monthly Recurring Revenue (“ MRR ”) based on actual recurring revenue recognized over the prior 12 months and multiply that amount by 12 to derive ARR. This method smooths short-term fluctuations and reflects actual earned recurring revenue rather than forward-looking projections. ARR excludes one-time fees, usage-based overages, and non-recurring revenues. No adjustments are made for potential future churn, upgrades, or downgrades beyond the actual results in the trailing period. Cost of Services Sold. Cost of Services sold primarily consists of our Command Center operations and other rendered services that we outsource to third-party for particular security services offering. As a subscription-based business, our model emphasizes scalability so that most costs do not increase linearly with revenue growth. 35 Operating Expenses . Operating expenses consist of general and administrative expenses, which are primarily salaries, professional fees, and expenses related to the administrative functions of the Company, research and development expenses, which consist primarily of product development costs and salaries, and sales and marketing expenses, which represent advertising and direct marketing costs, as well as the associated personnel costs. Results of Operations Comparison of the year ended December 31, 2025 to the year ended December 31, 2024 Net Revenues The majority of our net revenues for the years ended December 31, 2025 and 2024, were generated from our B2B services. For the year ended December 31, 2025, 15.32% of our revenue was generated from cloud-based SaaS services, while 84.68% came from our physical service offerings. This compares to 14.71% and 85.29%, respectively, for the year ended December 31, 2024. Total revenue increased by $236, or approximately 2.4% to $9,972 for the year ended December 31, 2025, compared to approximately $9,736 for the year ended December 31, 2024. This increase is due to expansion of our customer base and higher demand for our security services during the year ended December 31, 2025 compared to the same period in 2024. Cost of Services Sold. Our cost of services sold increased slightly by $380, or approximately 4.21% to $9,406 for the year ended December 31, 2025 compared to $9,027 for the year ended December 31, 2024. This modest change is not considered significant and primarily reflects the Company’s continued global expansion and the use of outsourced services to support its growth initiatives. Year Ended December 31, 2025 2024 Command Center Operations $ 2,422 $ 2,103 Security Services $ 6,984 $ 6,924 $ 9,406 $ 9,027 Operating Expenses. Our operating expenses for the year ended December 31, 2025 and 2024 were as follows: Year Ended December 31, 2025 2024 General and Administrative $ 5,971 $ 6,162 Research and Development $ 2,526 $ 2,713 Sales and Marketing $ 1,321 $ 1,417 $ 9,818 $ 10,292 36 Our operating expenses for the year ended December 31, 2025, were approximately $9,818 compared to approximately $10,292 for the year ended December 31, 2024, a decrease of approximately $474 or approximately 4.6%. Net Profit/Loss As a result of the foregoing, the Company suffered a net loss of $10,549 for the year ended December 31, 2025, compared to a net loss of $11,017 for the year ended December 31, 2024, a difference of approximately 4.25%. Off-Balance Sheet Arrangements As of March 31, 2025 we have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Liquidity and Capital Resources Overview Since inception, we have funded our operations primarily through proceeds from sales of our capital stock and, to a lesser extent, cash flow generated from operating activities. Based on our current operating plan, we believe that our existing cash and cash equivalents, together with anticipated cash generated from operations, will support our working capital and capital expenditure requirements for the near term. Our future capital requirements will depend on many factors, including the pace of growth in our customer base, the timing and extent of investments in our platform and services, expansion of our sales and marketing activities, and general economic conditions. To support our operations and growth initiatives, the Company expects to obtain additional capital through equity financing and other financing instruments that have been arranged or are available to the Company. Summary of Cash Flows The following table summarizes our cash flows for the year ended December 31, 2025 and 2024. ( in thousands ) Year Ended December 31, 2025 2024 Net cash (used in) operating activities $ (6,922 ) $ (8,157 ) Net cash (used in) investing activities (34 ) (62 ) Net cash provided by financing activities 6,943 7,540 Effect of exchange rate changes on cash (114 ) (32 ) Cash and cash equivalents at end of period $ 599 $ 726 Operating Activities. We continue to experience negative cash flows from operations as we expand our business. Our cash flows from operating activities are significantly affected by our cash investments to support the growth of our business in areas such as product and service development, such as engineering resources needed to maintain and refresh the technology platform, the Command Center operations, and selling, general and administrative. Our operating cash flows are also affected by our working capital needs to support growth and fluctuations in personnel-related expenditures, accounts payable and other current assets and liabilities. 37 Net cash used in operating activities for the year ended December 31, 2025 was approximately $6,922 which reflects our net loss of $10,549. Net cash used in operating activities for the year ended December 31, 2024 was approximately $8,157 which reflects our net loss of $11,017. Investing Activities Our investing activities have consisted primarily of the purchases of assets and equipment. We have invested in assets and equipment to support our Command Center growth. Net cash used in investing activities for the year ended December 31, 2024 was approximately $34 which was entirely attributable to purchases of IT and other Electronic equipment. Net cash used in investing activities for the year ended December 31, 2024 was approximately $62 which was entirely attributable to purchases of IT and other Electronic equipment. Financing Activities In November 2023, the Company completed the initial closing of its Series B Preferred Stock financing. Following the initial closing, the Company completed additional closings in early 2024, issuing 2,050,895 additional shares of Series B-1 Preferred Stock for total consideration of $3,000,000 at a price of $1.462533 per share. Issuance of Series CF-1 Preferred Stock On June 21, 2024, the Company entered into a listing agreement, under regulation Crowdfunding (also known as Reg CF), whereby the Company agrees to sell securities to eligible investors through the funding portal through special purpose vehicle. The offering was closed on April 30, 2025, and the Company had raised a total of $2,032,000 and issued 957,102 shares of Series CF-1 Preferred Stock with par value of $0.0001 each, at a price per stock of $2.12343. The total fees recorded as of September 30, 2025 were $143. On September 2024, in parallel to Reg CF and under the same terms, the Company started to offer and sell securities under rule 506(c) of regulation D to accredited investors. The offering was closed on June 17, 2025, we issued an aggregate of 2,411,364 shares of Series CF-1 Preferred Stock for gross proceeds of $5,120,342. Issuance of Series F Preferred Stock On June 19, 2025, we issued an aggregate of 10,000 shares of Series F Preferred Stock with par value of $0.0001 to Doron Kempel in exchange for his surrender of 3,334 shares of Common Stock. Issuance of Series C Preferred Stock On June 25, 2025, we issued an aggregate of 329,671 shares of Series C Preferred Stock with par value of $0.0001, together with warrants to purchase 1,333,335 shares of Common Stock, for an aggregate consideration of $3,000,000 to Ascent Partners Fund LLC. The warrants are exercisable at a price of $3.2475 per share, with expiration dates as follows: 333,334 warrants have an expiration date of eight (8) months, 333,334 warrants have an expiration date of sixteen (16) months, and 666,667 warrants have an expiration date of two (2) years from the issuance date. Issuance of Series CF-2 Preferred Stock On July, 2025, the Company entered into a listing agreement, under regulation Crowdfunding (also known as Reg CF), whereby the Company agreed to sell securities to eligible investors through the funding portal through special purpose vehicle. The offering was closed on September 5, 2025, and the Company had raised a total of $819,000 and issued 212,033 shares of Series CF-2 Preferred Stock with par value of $0.0001 each, at a price per share of $2.12343. The total fees recorded as of September 30, 2025 were $56. Our net cash provided by financing activities for the year ended December 31, 2025 was approximately $6,943 compared to approximately $7,540 for the year ended December 31, 2024, a decrease of approximately $597 or 8%. 38 Issuance of Series D Preferred Stock On October 27, 2025, we issued an aggregate of 109,891 shares of Series D Preferred Stock, together with warrants to purchase 25,000,000 shares of Common Stock, for an aggregate consideration of $1,000,000 to Ascent. The warrants are exercisable at a price of $12.35 per share, with expiration dates as follows: 16,000,000 warrants have an expiration date of nine (9) months, 3,000,000 warrants have an expiration date of sixteen (16) months, and 6,000,000 warrants have an expiration date of two (2) years from the issuance date. On December 1, 2025, we issued 32,967 additional shares of Series D Preferred Stock to Ascent for additional consideration of $300,000. On December 12, 2025, we issued 49,451 additional shares of Series D Preferred Stock for additional consideration of $450,000. On December 22, 2025, we issued 32,967 additional shares of Series D Preferred Stock to Ascent for additional consideration of $300,000. The following table summarizes our financing activities for the year ended December 31, 2025 and 2024. ( in thousands ) Year Ended December 31, 2025 2024 Proceeds from Related Party Loans $ 451 $ 1,195 Payments as part of Related Party Loans $ (1,605 ) $ (910 ) Issuance of Series B-1 Preferred Stock - $ 3,000 Issuance of Series CF Preferred Stock 2,799 $ 4,352 Issuance of Series CF Preferred Stock fundraising fees (46 ) $ (97 ) Issuance of Series CF-2 Preferred Stock 819 - Issuance of Series CF-2 Preferred Stock fundraising fees (57 ) - Issuance of Series C convertible preferred stock 3,000 - Issuance of Series C convertible preferred stock - issuance costs (254 ) - Issuance of Series D convertible preferred stock 2,050 - Issuance of Series D convertible preferred stock - issuance costs (126 ) - Cash dividends paid (88 ) - $ 6,943 $ 7,540 Critical Accounting Estimates Below is a discussion of the accounting policies that management believes are critical. We consider these policies critical because they involve significant judgments and assumptions and require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. Our accounting policies have been established to conform with generally accepted accounting principles in the United States of America (“ U.S. GAAP ”).] Emerging Growth Company Status We are an “emerging growth company,” as defined in the JOBS Act. Under Section 107 of the JOBS Act, emerging growth companies are permitted to use an extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards that have different effective dates for public and private companies. We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company, or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B). By electing to extend the transition period for complying with new or revised accounting standards, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. 39 Cash and Cash Equivalents Cash equivalents include short-term highly liquid investments that are readily convertible to cash when originally purchased with maturities of three months or less. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, restricted cash and short-term deposit, other accounts receivable, trade payables, other accounts payable and accrued expenses approximate their fair values due to the short-term maturities of such instruments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820, “Fair Value Measurements and Disclosures” establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: ● Level 1 inputs are quoted prices in active markets for identical assets and liabilities; ● Level 2 inputs, inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or ● Level 3 unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Accounts Receivable We have trade receivables which are recorded at the invoiced amount and do not bear interest. We evaluate the collectability of accounts receivable on a regular basis based on economic assessment of market conditions and review of customer financial history. Property and Equipment, Net Property and equipment are recorded at cost, net of accumulated depreciation. Expenditures for major additions and improvements to property and equipment are capitalized and repairs and maintenance costs are expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the respective accounts and any related gain or loss are included in loss from operations in the period of disposal. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the property and equipment: Leases We determine if an arrangement is or contains a lease at inception. Operating leases with lease terms of more than 12 months are included in operating lease assets, accrued and other current liabilities, and long-term operating lease liabilities on our consolidated balance sheet. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments over the lease term. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using our incremental borrowing rate. Operating lease assets also include initial direct costs incurred and prepaid lease payments, minus any lease incentives. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. 40 Impairment of Long-Lived Assets The Company assesses the recoverability of its long-lived assets, including property and equipment and right-of-use assets, for indicators of impairment. If events or changes in circumstances indicate impairment, the Company measures recoverability by a comparison of the asset’s carrying amount to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. When quoted market prices are not available, the Company uses the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset as an estimate of fair value. Research and Development Costs Research and development costs are expensed in the period incurred. Research and development expenses primarily consist of costs incurred in performing research and development activities and include salaries, stock-based compensation, employee benefits, system qualification and testing incurred before releasing new system designs into production, depreciation and amortization, professional services fees, and facilities expenses. Severance Pay All the Israeli Company’s employees elected to be included under Section 14 of the Israeli Severance Compensation Act, 1963 (“ Section 14 ”). According to Section 14, 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 Compensation Law) in respect of those employees. These deposits are not recorded as an asset in the Company’s balance sheet. Income Taxes We apply the provisions set forth in FASB ASC Topic 740, Income Taxes, to account for the uncertainty in income taxes. In the preparation of income tax returns in federal and state jurisdictions, we assert certain tax positions based on its understanding and interpretation of income tax laws. The taxing authorities may challenge these positions, and the resolution of the matters could result in recognition of income tax expense in our consolidated financial statements. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns. The Company uses the “more likely than not” criterion for recognizing the income tax benefit of uncertain income tax positions and to establish measurement criteria for income tax benefits. The Company has evaluated the impact of its tax positions and believes its income tax filing positions and deductions will be sustained upon examination. Stock-Based Compensation We adopted the fair value recognition provisions of Accounting Standards Codification No. 718, “Share-Based Payment” (“ ASC 718 ”). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statement of operations. We estimate the fair value of stock options granted using the Black-Scholes options pricing model. The option-pricing model requires a number of assumptions, of which the most significant are expected stock price volatility and the expected option term. For employees, the expected term is calculated using the plain vanilla formula as there is not sufficient historical information to provide a clear basis for a different calculation. Expected volatility was calculated based on similar publicly traded companies which operate in the same industry. 41 The risk-free interest rate is based on the yield from U.S. treasury zero-coupon bonds with an equivalent term. Net Income per Share Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common and potentially dilutive shares outstanding during the period, using the treasury stock method. Any anti-dilutive effect of equity awards outstanding is not included in the computation of diluted net income per share. Foreign Currency Translation and Transaction Gains and Losses The functional currency of our wholly owned subsidiaries in Isreal, U.K. and France are the New Israeli Shekel, Pound Sterling and Euro, respectively. Accordingly, asset and liability accounts of the subsidiaries are translated into U.S. dollars using the current exchange rate in effect at the balance sheet date and equity accounts are translated into U.S. dollars using historical rates. The revenues and expenses are translated using the average exchange rates in effect during the period, and gains and losses from foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the consolidated balance sheet. Comprehensive Loss We are required to report all components of comprehensive loss, including net loss, in the financial statements in the period in which they are recognized. Comprehensive gain or loss is defined as a change in equity of a business enterprise during a period, resulting from transactions and other events and circumstances from non-owner sources. Our currency translation adjustment is the components of other comprehensive income (loss) that is excluded from the reported net income (loss) for all periods presented. Recently Accounting Pronouncements and SEC Rules See Note 3 to our Consolidated Financial Statements included elsewhere in this Form 10-K for recently adopted accounting pronouncements and SEC rules and recently issued accounting pronouncements not yet adopted as of the date of this report. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. We are a smaller reporting company as defined by Rule 229.10(f)(1) and are not required to provide information under this item.