Our Bond, Inc. 10-Q

Item 2. 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. 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. 17 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. 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. 18 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. 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 three months ended March 31, 2026, the Company demonstrated annual recurring revenue (“ARR”) of approximately $10 million and total bookings of $10.5 million. For the three months ended March 31, 2025, the Company demonstrated ARR of approximately $9.74 million and total bookings of $10.6 million. The Company use ARR as a metric to measure customer demand and growth, and use 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. 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. 19 Results of Operations Comparison of the three months ended March 31, 2026 to the three months ended March 31, 2025 Net Revenues The majority of our net revenues for the three months ended March 31, 2026 and 2025, were generated from our B2B services. For the three months ended March 31, 2026, 15.47% of our revenue was generated from cloud-based SaaS services, while 84.53% came from our physical service offerings. This compares to 14.67% and 85.33%, respectively, for the three months ended March 31, 2025. Total revenue increased by $98,000 or approximately 4.36% to $2,347,000 for the three months ended March 31, 2026, compared to approximately $2,249 for the three months ended March 31, 2025. This increase reflects continued demand for our security services and modest growth in our customer base during the three months ended March 31, 2026 compared to the same period in 2025 Cost of Services Sold. Our cost of services sold increased slightly by $124,000 or approximately 5.7% to $2,300,000 for the three months ended March 31, 2026 compared to $2,176,000 for the three months ended March 31, 2025. This modest change is not considered significant and primarily reflects the Company’s continued global expansion and the use of outsourced services to support its growth initiatives. Three Months Ended March 31, 2026 March 31, 2025 ($ in thousands) Command Center Operations $ 853 $ 581 Security Services 1,447 1,595 $ 2,300 $ 2,176 Operating Expenses. Our operating expenses for the three months ended March31, 2026 and 2025 were as follows: Three Months Ended March 31, 2026 March 31, 2025 ($ in thousands) General and Administrative $ 2,441 $ 1,026 Research and Development 691 555 Sales and Marketing 3,290 277 $ 6,422 $ 1,858 Our operating expenses for the three months ended March 31, 2026, were approximately $6,422,000 compared to approximately $1,858,000 for the three months ended March 31, 2025, an increase of approximately $4,564,000. The increase in operating expenses for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was primarily attributable to non-recurring costs associated with the Company’s transition to and operation as a public company following the completion of its public listing on February 4, 2026. Such costs included approximately $1.2 million of one-time expenses related to the public listing transaction, a $2.0 million strategic marketing investment related to 2026 (TV ads that will be aired in the second half of 2026), approximately $0.8 million of investor relations expenses, and approximately $0.4 million of incremental public company operating costs, primarily consisting of increased directors and officers insurance premiums and accounting-related expenses. Net Profit/Loss As a result of the foregoing, the Company suffered a net loss of approximately $6,703,000 for the three months ended March 31, 2026, compared to a net loss of approximately $2,162,000 for the three months ended March 31, 2025. 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. 20 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. In alignment with Bond’s business plan and operating model, management projects that as sales and the number of end-users increase, utilization of the overall Bond platform will improve, driving the company toward profitability. When referring to the Bond platform, we include the full ecosystem that enables and supports the service globally, including: command centers around the world; security agents; engineering resources responsible for developing, maintaining, and enhancing the technology that powers the app, command centers, and cloud infrastructure; as well as the company’s relationships with third parties, first responders, and other key partners. At this stage, the Bond platform has been built to scale and support a significant global end-user base. We continue to gradually onboard additional end-users as we secure new customers and as existing corporate customers expand the population of employees offered the Bond service. At the same time, we are steadily increasing our investments in marketing and sales in order to accelerate growth and advance the company toward profitability. Summary of Cash Flows The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025. Three Months Ended March 31, 2026 March 31, 2025 ($ in thousands) Net cash (used in) operating activities $ (4,410 ) $ (1,416 ) Net cash (used in) investing activities (11 ) - Net cash provided by financing activities 7,607 2,127 Effect of exchange rate changes on cash (27 ) (17 ) Cash and cash equivalents at end of period $ 3,758 $ 1,420 Operating Activities. We continue to experience negative cash flow from operating activities as we expand our business. Cash flows from operating activities are significantly affected by investments to support the growth of our business, including expenditures related to product and service development, engineering resources required to maintain and enhance our technology platform, Command Center operations, and selling, general and administrative functions. In addition, operating cash flows during the three months ended March 31, 2026 were adversely affected by non-recurring costs associated with the Company’s transition to and operation as a public company following the completion of its public listing on February 4, 2026. Such costs included approximately $1.2 million of one-time expenses related to the public listing transaction, a $2.0 million strategic marketing investment related to 2026 (TV ads that will be aired in the second half of 2026), approximately $0.8 million of investor relations expenses, and approximately $0.4 million of incremental public company operating costs, primarily consisting of increased directors and officers insurance premiums and accounting-related expenses. Operating cash flow also continue to be impacted by working capital requirements associated with supporting our growth, including fluctuations in personnel-related expenditures, accounts payable, and other current assets and liabilities. Net cash used in operating activities for the three months ended March 31, 2026 was approximately $4,410,000 which reflects our net loss of approximately $6,703,000. Net cash used in operating activities for the three months ended March 31, 2025 was approximately $1,416,000 which reflects our net loss of approximately $2,162,000. 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. 21 Net cash used in investing activities for the three months ended March 31, 2026 was approximately $11,000 which was entirely attributable to purchases of IT and other Electronic equipment. Financing Activities Net cash provided by financing activities was $7.6 million during the three months ended March 31, 2026, consisting primarily of $2.95 million in proceeds from the issuance of Series D convertible preferred stock, $2.5 million in proceeds from the issuance of a promissory note, and $3.5 million from the exercise of common warrants, partially offset by repayments of related party loans, promissory note and stock issuance costs. Issuance of Series D Preferred Stock On October 27, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) for the issuance and sale of up to 549,451 shares of Series D Preferred Stock. During 2025, the Company completed four closings under the SPA and issued an aggregate of 225,275 shares of Series D Preferred Stock for gross proceeds of approximately $2.1 million. During the three months ended March 31, 2026, the Company completed the remaining closings under the SPA and issued an additional 324,176 shares of Series D Preferred Stock for aggregate gross proceeds of approximately $2.95 million. Issuance costs incurred during the three months ended March 31, 2026 were approximately $0.2 million. Exercise of Series C and Series D Common Warrants During February 2026, holders of the Company’s Series C and Series D warrants exercised warrants to purchase an aggregate of 1,041,433 shares of the Company’s common stock. The Series C warrants were exercised at an exercise price of $3.2475 per share, and the Series D warrants were exercised at an exercise price of $12.35 per share. As a result of these exercises, the Company received aggregate gross proceeds of approximately $3.46 million. Promissory Note On March 1, 2026, the Company issued a Promissory Note in the principal amount of $2,500,000. The Promissory Note bears interest at a rate of 10% per annum and matures on September 1, 2026. The Company is required to apply 25% of the net proceeds from any future offerings or issuances of the Company’s securities toward repayment of the Promissory Note until it is paid in full. In the event of default, the Promissory Note will bear interest at a rate of 24% per annum, and any late payments will be subject to a late fee equal to 10% of the overdue amount. The following table summarizes our financing activities for the three months ended March 31, 2026 and 2025. Three Months Ended March 31, 2026 March 31, 2025 ($ in thousands) Payments as part of Related Party Loans $ (555 ) $ (350 ) Issuance of Series CF Preferred Stock - 2,535 Issuance of Series CF Preferred Stock fundraising fees - (58 ) Issuance of Series D convertible preferred stock 2,950 - Issuance of Series D convertible preferred stock - issuance costs (271 ) - Issuance of Promissory Note 3,000 - Payment of Promissory Note (500) - Exercise of Series C Common Warrants 3,356 - Exercise of Series C Common Warrants - issuance costs (235 ) - Exercise of Series D Common Warrants 100 - Exercise of Series D Common Warrants - - issuance costs (7 ) - Exercise of Common Stock Warrants 19 - Direct Listing Costs (250 ) - $ 7,607 $ 2,127 Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 22 Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements and the related notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In preparing the condensed consolidated financial statements, we apply accounting policies and estimates that affect the reported amounts and related disclosures. Inherent in such policies are certain key assumptions and estimates made by management, which we believe best reflect our underlying business and economic conditions. Our estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances. We regularly re-evaluate our estimates used in the preparation of the condensed consolidated financial statements based on our latest assessment of the current and projected business and economic environment. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates. There have been no material changes to our critical accounting policies and estimates as described in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report on Form 10-K. Recently Accounting Pronouncements and SEC Rules See Note 1 to our Consolidated Financial Statements included elsewhere in this Form 10-Q for recently adopted accounting pronouncements and SEC rules and recently issued accounting pronouncements not yet adopted as of the date of this report. Contractual Obligations and Commitments In addition to ongoing capital expenditures and working capital needs to fund operations over the next twelve (12) months, our contractual obligations to make future payments primarily relate to our operating lease obligations and insurance obligations, all of which are governed by agreements with month-to-month terms, and which are generally terminable after a notice period at any time. We purchase equipment and software necessary to conduct our operations on an as-needed basis. Known Trends, Events and Uncertainties We are not currently aware of any trends, events, or uncertainties that are reasonably likely to have a material effect on our financial condition. For a further discussion of factors that may affect future operating results, see the section entitled “Risk Factors” in our most recent annual report on Form 10-K. Item 3. 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.