What changed in this filing

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Item 1. Financial Statements

2025-08-14 compared with 2025-05-15 · 330 added, 282 removed, 565 unchanged (52% of the section changed)

3 unchanged sentences

thousands, except par value and share amounts)

March 31, 2025

June 30, 2025

December 31, 2024

Current assets:

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Intangible assets, net

Other long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Total current liabilities

Long-term liabilities:

Deferred revenue – long-term

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par value $ 0.0001 per share;

0 shares issued and outstanding at March 31, 2025, and December 31, 2024, respectively

0 shares issued and outstanding at June 30, 2025, and December 31, 2024

Common stock - 150,000,000 authorized;

par value $ 0.0001 per share;

50,494,701 and 47,101,631 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

50,728,535 and 47,101,631 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Convertible Preferred Stock - 10,000 authorized, par value $ 0.0001 per share;

8,207 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

8,207 shares issued and outstanding at June 30, 2025 and December 31, 2024

Preferred Stock

3 unchanged sentences

Total liabilities and stockholders’ equity

accompanying notes to unaudited condensed consolidated interim financial statements.

accompanying notes are an integral part of these financial statements.

Technologies, Inc.

1 unchanged sentence

thousands, except share and per share amounts)

Three Months ended March 31,

Three Months ended June 30,

Six Months ended June 30,

Product sales

Managed services

Other revenue

Technology enabled services

Total revenues

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Comprehensive loss

accompanying notes to unaudited condensed consolidated interim financial statements.

accompanying notes are an integral part of these financial statements.

Technologies, Inc.

1 unchanged sentence

thousands, except share amounts)

Months Ended March 31, 2025

Months Ended June 30, 2025

Preferred Stock

Additional Paid-In

Stockholders’

Total Stockholders’

Balance at April 1, 2025

$ ( 105,136 )

Share-based compensation expense

Dividends on convertible preferred stock

Common Stock issued upon vesting of restricted stock units

Common Stock issued with Private Placement

Reclassification of warrant liability due to warrant amendment

Net loss for the period

Balance at June 30, 2025

$ ( 109,027 )

Six months Ended June 30, 2025

Balance at January 1, 2025

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Common Stock issued with Private Placement

Net income for the period

Balance at March 31, 2025

Reclassification of warrant liability due to warrant amendment

Net loss for the period

Balance at June 30, 2025

$ ( 109,027 )

months Ended June 30, 2024

Preferred Stock

Additional Paid-In

Stockholders’

Balance at April 1, 2024

Share-based compensation expense

Dividends on convertible preferred stock

Common Stock issued upon convertible preferred stock exercising conversion rights

Common Stock issued upon vesting of restricted stock units

Net loss for the period

Balance at June 30, 2024

Six months Ended June 30, 2024

Balance at January 1, 2024

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Common Stock issued upon vesting of restricted stock units

Net income for the period

Balance at March 31, 2024

accompanying notes to unaudited condensed consolidated interim financial statements.

Net loss for the period

Balance at June 30, 2024

accompanying notes are an integral part of these financial statements.

Technologies, Inc.

Consolidated Statements of Cash Flows

Three Months ended March 31,

Six Months ended June 30,

Cash Flows From Operating Activities:

Adjustments to reconcile net income to net cash used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

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Provision for doubtful accounts

Write-off accounts receivables

Inventory obsolescence reserve

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Investment in patents and trademarks

Net cash paid for acquisition of W1, LLC

Net cash (used in) provided by investing activities

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Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Reclassification of warrant liabilities to additional paid in capital

Change in unrealized gain on short-term investments

Dividends on convertible preferred stock

Dividends settled with common stock

accompanying notes to unaudited condensed consolidated interim financial statements.

accompanying notes are an integral part of these financial statements.

Technologies, Inc.

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of Presentation

Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with

the instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange

Commission (“ SEC ”).

Certain information and footnote disclosures normally included in financial statements

prepared in accordance with U.S.

generally accepted accounting principles (“ U.S.

GAAP ”) have been condensed or

omitted pursuant to such rules and regulations.

In management’s opinion, the accompanying financial statements reflect

adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated,

and contain adequate disclosure to make the information presented not misleading.

Adjustments included herein are of a normal,

recurring nature unless otherwise disclosed in the footnotes.

The condensed consolidated financial statements and notes thereto

should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December

31, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “ Annual

Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the

instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“ SEC ”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

generally accepted

accounting principles (“ U.S.

GAAP ”) have been condensed or omitted pursuant to such rules and regulations.

In management’s

opinion, the accompanying financial statements reflect adjustments necessary to present fairly the financial position, results of operations,

and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading.

included herein are of a normal, recurring nature unless otherwise disclosed in the footnotes.

The condensed consolidated financial statements

and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year

ended December 31, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “ Annual

Report ”), as filed with the SEC on March 31, 2025 and as amended on April 25, 2025.

The accompanying condensed consolidated balance sheet as of December

31, 2024 has been derived from the audited consolidated balance sheet as of December 31, 2024, contained in the Annual Report.

The accompanying condensed consolidated

balance sheet as of June 30, 2025 has been derived from the audited consolidated balance sheet as of December 31, 2024, contained in

the Annual Report.

Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

necessary, the prior year’s information has been reclassified to conform to the current year presentation.

necessary, the prior year’s information has been reclassified to conform to the current year’s presentation.

of Consolidation

Company has two wholly owned subsidiaries, Wrap Reality, Inc., an Arizona corporation, formed in December 2020 that sells a virtual reality

(“ VR ”) training system primarily targeting law enforcement agencies and Intrensic, LLC (“Intrensic”),

which the Company acquired in August 2023, which specializes in Body Worn Camera and Digital Evidence Management solutions.

The consolidated

financial statements include the accounts of these subsidiaries after elimination of intercompany transactions and accounts.

Company has three

wholly owned subsidiaries, Wrap Reality, Inc., that sells a virtual reality (“ VR ”) training system primarily

targeting law enforcement agencies and Intrensic, LLC (“Intrensic”), specializing in Body Worn Camera and Digital

Evidence Management solutions.

The condensed consolidated financial statements include the accounts of these subsidiaries

after elimination of intercompany transactions and accounts.

and Related Information

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in fair value is recognized in the Company’s condensed consolidated statement of operations.

June 30, 2025, the Company entered into the Series A Warrant Amendment (as defined herein) and

the 2025 Warrant Amendment (as defined herein).

As a result, the Series A Warrants (as defined here) and the PIPE Warrants (as defined

herein), each satisfy the requirements outlined

in ASC 815-10-15-74(a)(1) and in ASC 815-10-15-74(a)(2).

Under ASC 815-40-35-10, the amended instruments qualify for

equity-classification on a prospective basis.

The effective date of the relating reclassification from warrant liabilities to

additional paid-in capital was June, 30, 2025.

See Footnote 8:

Warrants for additional detail.

A Preferred Stock

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accordance with the guidance contained in ASC 480-10-S99.

Company issued the Series A Warrants (as defined herein), which are classified as liabilities and measured at fair value on a recurring

basis, and the Series A Convertible Preferred Stock (the “Series A Preferred Stock”) in one transaction.

The issuance proceeds

were allocated by using the with-and-without method.

Under this method, the Company first allocated the issuance proceeds to the Series

A Warrants based on their initial fair value measurement, and then allocated the remaining proceeds to the Series A Preferred Stock.

Company issued the Series A Warrants (as defined herein), which are classified as liabilities and measured at fair value on a

recurring basis, and the Series A Convertible Preferred Stock (the “Series A Preferred Stock”) in one transaction.

issuance proceeds were allocated by using the with-and-without method.

Under this method, the Company first allocated the issuance

proceeds to the Series A Warrants based on their initial fair value measurement and then allocated the remaining proceeds to the

Series A Preferred Stock.

On June 30, 2025, the Company and Holders of the Series A Warrants (as defined herein) amended the Series A Warrants, which allowed the Company to account for the Series A Warrants as equity under ASC 480 and a reclassification was recorded from

warrant liability to additional paid-in-capital.

Company recognizes revenue under ASC Topic 606 - Revenue from Contracts with Customers (“ASC 606”).

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that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.

Company enters into contracts that include various combinations of products, accessories, software and services, each of which are generally

distinct and are accounted for as separate performance obligations.

Product sales include BolaWrap products and accessories.

services revenue represents the consulting services provided to customers as a result of the Company’s acquisition of W1, LLC (“W1”)

in February 2025.

Other revenue includes VR revenues, service, training and shipping revenues.

Company enters into contracts that include various combinations of products, accessories, software and services, each of which are

generally distinct and are accounted for as separate performance obligations.

Product sales include BolaWrap products and

Managed services revenue represents the consulting services provided to customers of W1 Global, LLC (“W1”).

Other revenue includes VR

revenues, service, training and shipping revenues.

timing of revenue recognition may differ from the timing of invoicing to customers.

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A contract asset is recognized when revenue is recognized

prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing.

prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized after invoicing.

The Company recognizes

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the related product.

Royalties are also charged to cost of products sold.

Royalties are also charged to the cost of products sold.

loss per share (EPS) is computed by dividing net loss, less any dividends, accretion or decretion, redemption or induced conversion,

if any, on our Series A Preferred Stock, by the weighted average number of shares outstanding during the reported period.

if any, on the Company’s Series A Preferred Stock, by the weighted average number of shares outstanding during the reported period.

computing diluted EPS, we adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back

the dividends (declared or cumulative undeclared) applicable to the Series A Preferred Stock.

Such add-back would also include any

adjustments to equity in the period to accrete the Series A Preferred Stock to its redemption price, or recorded upon a redemption

or induced conversion, if any.

We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements,

to include the dilution from potential shares resulting from the issuance of the Series A Preferred Stock, restricted stock units,

and stock options.

Stock options and restricted stock units exercisable or issuable for a total of 7,595,515

shares and 5,476,219

shares of Common Stock were outstanding as of March 31, 2025 and 2024, respectively.

These securities are not included in the

computation of diluted net loss per common share for the periods presented as their inclusion would be antidilutive due to losses

incurred by the Company.

Reclassification

of Prior Year Presentation

prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on

the reported results of operations.

An adjustment has been made to the Consolidated Balance Sheet and Consolidated Statements of Cash

Flows for the quarterly period ending March 31, 2024 and the fiscal year ended December 31, 2024, to reclassify the Series A Preferred

Stock at par value.

Such add-back would also include any adjustments

to equity in the period to accrete the Series A Preferred Stock to its redemption price, or recorded upon a redemption or induced conversion,

We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from

potential shares resulting from the issuance of the Series A Preferred Stock, restricted stock units, and stock options.

Stock options

and restricted stock units exercisable or issuable for a total of 2,413,595 shares and 4,903,951 shares of Common Stock were outstanding

as of June 30, 2025 and 2024, respectively.

These securities are not included in the computation of diluted net loss per common share

for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company.

Issued Accounting Guidance Not Yet Effective

November 4, 2024, the FASB issued ASU 2024-03,2 (“ASU 2024-03”) which requires disaggregated disclosure of income statement

expenses for public business entities (“PBEs”).

ASU 2024-03 does not change the expense captions an entity presents on the

face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures

within the footnotes to the financial statements.

ASU 2024-03 adds ASC 220-40 to require a footnote disclosure about specific expenses

by requiring PBEs to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that

includes any of the following natural expenses:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible

asset amortization, and (5) depreciation, depletion, and amortization (DD&A) recognized as part of oil- and gas-producing activities

or other types of depletion expenses.

The tabular disclosure would also include certain other expenses, when applicable.

does not change or remove existing expense disclosure requirements;

however, it may affect where that information appears in the footnotes

to the financial statements.

ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods

within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company has not yet adopted this ASU during the

year ended December 31, 2024.

The Company is currently evaluating the impacts of ASU 2024-03 on its financial statements.

November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregation

of certain costs and expenses, including employee compensation, and requires other improvements to disclosures.

The amendments in this

update are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15,

The update may be applied on a prospective or retrospective basis.

The Company is evaluating the impact of ASU 2024-03 on the Company’s notes to

the consolidated financial statements.

REVENUE AND PRODUCT COSTS

consists of product revenue and other revenue.

consists of product revenue, technology enabled services, and managed services.

Product sales include BolaWrap products and accessories.

Other revenue includes VR revenue,

service, training and shipping revenue.

Technology enables services includes VR revenue, service, training and shipping revenue.

Managed services revenue includes consulting

services delivered to third parties and billed on an agreed hourly fee basis when enforceable right to payment exists.

timing of revenue recognition may differ from the timing of invoicing to customers.

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after all revenue recognition criteria are met.

The table below details the activity in our contract liabilities during the three months

ended March 31, 2025.

OF CONTRACT LIABILITIES

Estimated costs for the Company’s standard warranty, generally one-year, are charged

to cost of products sold when revenue is recorded for the related product.

Royalties are also charged to the cost of products sold.

table below details the activity in our contract liabilities during the six months ended June 30, 2025.

SCHEDULE OF CONTRACT LIABILITIES

Balance at January 1, 2025

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Transfer to revenue

Balance at March 31, 2025

Balance at June 30, 2025

Current portion

Long-term portion

of March 31, 2025, the Company’s deferred revenue of $ 350 consisted of $ 57 related to VR, $ 234 related to Intrensic, $ 54 related

to BolaWrap extended warranties and services and $ 5 related to training.

costs for the Company’s standard warranty, generally one-year, are charged to cost of products sold when revenue is recorded for

the related product.

Royalties are also charged to the cost of products sold.

of June 30, 2025, the Company’s deferred revenue of $ 325 consisted of Technology Enabled Services.

FINANCIAL INSTRUMENTS

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1 -Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

2 —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted 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

2 -Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted 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 related assets or liabilities;

3 —Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported

by little or no market data.

following table shows the Company’s short-term investments by significant investment category as of March 31, 2025, and December

OF SHORT TERM INVESTMENTS

As of March 31, 2025

3 -Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by

little or no market data.

following table shows the Company’s short-term investments by significant investment category as of June 30, 2025, and December

SCHEDULE OF SHORT TERM INVESTMENTS

As of June 30, 2025

Money Market Funds

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as available for sale.

During the three months ended March 31, 2025, as well as the three months ended March 31, 2024, no gain (loss)

was recorded to comprehensive loss.

During the six months ended June 30, 2025, as well as the six months ended June 30, 2024, no gain (loss) was recorded

to comprehensive loss.

warrant liabilities are measured at fair value on a recurring basis.

The subsequent measurement of the warrant liabilities as of March

The subsequent measurement of the warrant liabilities as of June

30, 2025, is classified as Level 3 due to the use of an observable market quote in a non-active market and the management’s assumption

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of the period of warrant liabilities:

OF FAIR OF WARRANT LIABILITIES

March 31, 2025

Fair value at inception for December 31, 2024 or the beginning of the period for March 31, 2025

SCHEDULE OF FAIR OF WARRANT LIABILITIES

June 30, 2025

December 31, 2024

Fair value at inception for December 31, 2024 or the beginning of the period for June 30, 2025

Warrants issued with Private Placement

Change in fair value of warrant liabilities

Reclassification of warrant liabilities to equity

Fair value as of period end

Company uses the modified Black-Scholes option pricing model to determine the fair value of warrant liabilities.

The following table

summarizes the assumptions used to compute the fair value of the Company’s warrants:

OF BLACK SCHOLES OPTION PRICING MODEL OF WARRANT LIABILITIES

March 31, 2025

Company used a Monte Carlo simulation to estimate the fair value of warrant liabilities as of June 30, 2025, being the date the

Company entered into the Series A Warrant Amendment and the 2025 Warrant Amendment.

The valuation was performed based on the amended

terms of the Series A Warrants and PIPE Warrants.

The following table summarizes the assumptions used to compute the fair value of the

Company’s warrants:

SCHEDULE OF BLACK SCHOLES OPTION PRICING MODEL OF WARRANT LIABILITIES

CARLO SIMULATION MODEL – PIPE WARRANTS

June 30, 2025

Expected stock price volatility

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Dividends yield

Fair Value Per Warrant Share

CARLO SIMULATION MODEL – 2025 WARRANTS

June 30, 2025

Expected stock price volatility

Risk-free interest rate

Dividends yield

Fair Value Per Warrant Share

Company used the modified Black-Scholes option pricing model to determine the fair value of warrant liabilities as of December 31, 2024.

The following table summarizes the assumptions used to compute the fair value of the Company’s warrants:

December 31, 2024

Expected stock price volatility

Risk-free interest rate

Dividends yield

Weighted average expected life of warrants (years)

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Inventories consisted of the following:

March 31, 2025

December 31, 2024

SCHEDULE OF INVENTORY

Finished goods

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Inventories - net

Inventory reserve expense was $ 169 and $ 187

for the three and six months ended June 30, 2025, respectively, and $ 12 and $ 12 for the three and six months ended June 30, 2024, respectively.

PROPERTY AND EQUIPMENT, NET

and equipment consisted of the following:

OF PROPERTY AND EQUIPMENT

March 31, 2025

SCHEDULE OF PROPERTY AND EQUIPMENT

June 30, 2025

December 31, 2024

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Property and equipment, net

expense was $ 40 and $ 116 for the three months ended March 31, 2025 and 2024, respectively.

expense was $ 27 and

three and six months ended June 30, 2025, respectively, and $ 114 and $ 230 for the three and six months ended June 30, 2024,

respectively.

INTANGIBLE ASSETS

1 unchanged sentence

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS

March 31, 2025

June 30, 2025

December 31, 2024

Amortizable intangible assets:

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Total intangible assets, net

expense was $ 115 and $ 107 for the three months ended March 31, 2025 and 2024, respectively.

of March 31, 2025, future amortization expense is as follows:

expense was $ 123 and $ 238 for the three and six months ended June 30, 2025, respectively, and $ 113 and $ 220 for the three and six months

ended June 30, 2024, respectively.

of June 30, 2025, future amortization expense is as follows:

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

2025 (6 months)

Total estimated amortization expense

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

are obligated to pay royalties pursuant to an exclusive Amended and Restated Intellectual Property License Agreement (the “License

Agreement”), dated as of September 30, 2016, with Syzygy Licensing, LLC (“Syzygy”), a private technology invention,

consulting and licensing company owned and controlled by Elwood G.

Norris, a founder and former officer and current 5% or greater stockholder

of the Company, and James A.

Barnes, a former officer and stockholder of the Company (see Note 13).

Accounts payable includes $ 81 due

to Syzygy as of March 31, 2025, and December 31, 2024.

liabilities consist of the following:

SCHEDULE OF ACCRUED LIABILITIES

March 31, 2025

June 30, 2025

December 31, 2024

Patent and legal costs

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Accrued purchases

Accrued lease payable

Taxes and other

1 unchanged sentence

SCHEDULE OF PRODUCT WARRANTY LIABILITY

Months Ended March 31,

Six Months Ended June 30,

Balance, beginning of period

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payable by the Company, of which $ 5,185 was allocated to the PIPE Warrants.

June 30, 2025, the Company entered into a warrant amendment (the “Series A Warrant Amendment”) with the Required Holders

(as defined in the Series A Purchase Agreement), pursuant to which, the Required Holders agreed to amend the terms of the Series A Warrants

to make certain adjustments to the definition of “Black Scholes Value” in each of the Series A Warrants, as described in

the Series A Warrant Amendment, such that the underlying price per share as used in such calculation equals the sum of the price per

share being offered in cash in the applicable Fundamental Transaction (as defined in the Series A Warrants), if any, plus the value of

the non-cash consideration being offered in the applicable Fundamental Transaction, if any.

As consideration for entering into the Series

A Warrant Amendment, the Company and the Required Holders agreed to amend the term of the Series A Warrants to be six and one-half years

from the date of issuance.

Additionally,

on June 30, 2025, the Company entered into a warrant amendment (the “2025 Warrant Amendment”) with certain of the PIPE Purchasers,

pursuant to which, such PIPE Purchasers agreed to amend the terms of their respective PIPE Warrants to make certain adjustments to the

definition of “Black Scholes Value,” as described in the 2025 Warrant Amendment, such that the underlying price per share

as used in such calculation equals the sum of the price per share being offered in cash in the applicable Fundamental Transaction (as

defined in the PIPE Warrants), if any, plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction,

As consideration for entering into the 2025 Warrant Amendment, the Company and the applicable PIPE Purchasers agreed to amend

the term of their respective 2025 Warrants to be five and one-half years from the date of issuance.

ASC 815-40-35-10, upon effective amendment on June 30, 2025, each of the Series A Warrants and PIPE Warrants qualify for

equity-classification.

Immediately before the equity reclassification, such warrants were each revalued at fair value with the

resulting gain or loss being recorded in the Statement of Operations.

After fair value remeasurement, the reclassification from

warrant liabilities to additional paid-in capital was completed.

See Footnote 3:

Financial Instruments for details of the fair value

measurement and impact on the Statement of Operations.

Company determines if an arrangement is a lease at inception.

The guidance in FASB ASC Topic 842, Leases defines a lease as a contract,

or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for

a period of time in exchange for consideration.

Operating lease right of use (“ROU”) assets and lease liabilities are recognized

based on the present value of future minimum lease payments over the lease term at commencement date.

The Company’s leases do not

provide an implicit rate.

Due to a lack of financing history or ability, the Company uses an estimate of low-grade debt rate published

by the Federal Reserve Bank as its incremental borrowing rate based on the information available at the commencement date in determining

the present value of future payments.

The ROU asset includes any lease payments made and excludes lease incentives and initial direct

costs incurred.

The guidance in FASB ASC Topic 842, Leases defines a lease as a

contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an

identified asset) for a period of time in exchange for consideration.

Operating lease right of use (“ROU”) assets and

lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement

The Company’s leases do not provide an implicit rate.

Due to a lack of financing history or ability, the Company uses an

estimate of low-grade debt rate published by the Federal Reserve Bank as its incremental borrowing rate based on the information

available at the commencement date in determining the present value of future payments.

The ROU asset includes any lease payments

made and excludes lease incentives and initial direct costs incurred.

leases beginning on or after January 1, 2019, lease components are accounted for separately from non-lease components for all asset classes.

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also reassessed the lease classification and concluded that the lease continues to be an operating lease.

expense was $ 74 and $ 71 for the three months ended March 31, 2025, and 2024, respectively.

lease expense for capitalized operating leases included in operating activities was $156 and $249 for the three months ended March 31,

2025, and 2024, respectively.

lease obligations recorded on the balance sheet at March 31, 2025 are:

expense was $ 84

for the three and six months ended June 30, 2025, respectively, and $ 72

for the three and six months ended June 30, 2024, respectively.

Operating lease expense for capitalized operating leases included in

operating activities was $ 156

for the three and six months ended June 30, 2025, respectively, and $ 166

for the three months and six months ended June 30, 2024.

lease obligations recorded on the balance sheet at June 30, 2025 are:

SCHEDULE OF OPERATING LEASE OBLIGATIONS

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Total Operating Lease Liability

lease payments included in the measurement of lease liabilities on the balance sheet at March 31, 2025 for future periods are as follows:

lease payments included in the measurement of lease liabilities on the balance sheet at June 30, 2025 for future periods are as follows:

SCHEDULE OF OPERATING LEASE, LIABILITY, TO BE PAID, MATURITY

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leases contain provisions for payment of real estate taxes, insurance and maintenance costs by the Company.

These expenses are treated

as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

The Company had $ 23

and $ 9 variable lease expenses for the three months ended March 31, 2025 and 2024, respectively.

Company had $ 0 and $ 11 short-term lease expense for the three months ended March 31, 2025 and 2024, respectively.

The Company does not

have any finance leases.

These expenses are

treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

variable lease expenses for the three and six months ended June 30, 2025, respectively, and $ 14

for the three and six months ended June 30, 2024, respectively.

Company had $ 0 and $ 0 short-term lease expense for the three and six months ended June 30, 2025, respectively, and $ 4 and $ 15 for

the three and six months ended June 30, 2024, respectively.

The Company does not have any finance leases.

STOCKHOLDERS’ EQUITY

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The October 2024 Certificate of Amendment

was filed with the Secretary of State of the State of Delaware, effective as of October 14, 2024.The holders of the Series A Preferred

was filed with the Secretary of State of the State of Delaware, effective as of October 14, 2024.

The holders of the Series A Preferred

Stock have no voting rights, other than with respect to certain matters affecting the rights of the Series A Preferred Stock.

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effective with the Secretary of State on December 6, 2024.

the time of issuance, $ 2,036

of the net proceeds less transaction cost of the Series A Purchase Agreement was allocated to the 10,000

the time of issuance, $ 2,036 of the net proceeds less transaction cost of the Series A Purchase Agreement was allocated to the 10,000

shares of Series A Preferred Stock initially issued.

As of December 31, 2024, a total of 1,793

shares of Series A Preferred Stock were converted into approximately 1,468,000

shares of Common Stock.

There were no additional conversions in the three months end March 31, 2025.

As of March 31, 2025, the

Company has authorized, declared and paid $ 164

in dividends in the form of shares of the Company’s Common Stock during the three months ended March 31, 2025.

For the three

months ended March 31, 2024, authorized and declared dividends totaling $ 189 ,

of which $ 60

was paid in cash, $ 129

was paid in shares of the Company’s Common Stock.

As of December 31, 2024, a total of 1,793 shares of Series A Preferred Stock were

converted into approximately 1,468,000 shares of Common Stock.

There were no additional conversions in the six months end June 30, 2025.

As of June 30, 2025, the Company has authorized, declared and paid $ 328 in dividends in the form of shares of the Company’s Common

Stock during the six months ended June 30, 2025.

For the six months ended June 30, 2024, authorized and declared dividends totaling $ 189 ,

of which $ 60 was paid in cash, $ 129 was paid in shares of the Company’s Common Stock.

SHARE-BASED COMPENSATION

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to 16,500,000 shares which was adopted by the Board on November 12, 2024, and by our stockholders on December 23, 2024.

of March 31, 2025, there were 4,848,259 shares of Common Stock remaining available for grant under the 2017 Plan.

following table summarizes stock option activity for the three months ended March 31, 2025:

of June 30, 2025, there were 4,004,187 shares of Common Stock remaining available for grant under the 2017 Plan.

following table summarizes stock option activity for the six months ended June 30, 2025:

SCHEDULE OF STOCK OPTION ACTIVITY

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Forfeited, cancelled, expired

Outstanding March 31, 2025

Exercisable March 31, 2025

of March 31, 2025, there were 4,806,045 service-based stock options outstanding, and 1,290,166 performance-based stock options outstanding

Outstanding June 30, 2025

Exercisable June 30, 2025

of June 30, 2025, there were 5,571,545 service-based stock options outstanding, and 1,290,166 performance-based stock options outstanding

which were granted in October 2023 to the Company’s current Chief Executive Officer, subject to vesting based on future market

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SCHEDULE OF STOCK OPTION ACTIVITY, FAIR VALUE OF ASSUMPTIONS

For the Three Months

Ended March 31,

For the Six Months Ended June 30,

Expected stock price volatility

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stock prices were publicly available.

The Company’s calculation of estimated volatility is based on historical stock prices of

these peer entities over a period equal to the expected life of the awards.

The Company’s calculation of estimated volatility is based on the historical stock prices

of these peer entities over a period equal to the expected life of the awards.

The Company uses the historical volatility of peer entities

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appropriate for the term of the options.

The dividend yield of zero 0

is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends.

calculates the expected life of the options using the Simplified Method for the employee stock options as the Company does not have

sufficient historical exercise data.

option expense was $ 387 and $ 484 for the three months ended March 31, 2025 and 2024, respectively.

The dividend yield of zero 0 is based on the fact that the Company has never paid cash dividends

and has no present intention of paying cash dividends.

The Company calculates the expected life of the options using the Simplified Method

for the employee stock options as the Company does not have sufficient historical exercise data.

option expense was $ 477 and ($ 33 ) for the three months ended June 30, 2025 and 2024, respectively.

Stock option expense was $ 864 and $ 434

for the six months ended June 30, 2025 and 2024, respectively.

Plan provides for the grant of restricted stock units (“RSUs”).

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Stock as the RSUs vest.

The following table summarizes RSU activity for the three months ended March 31, 2025:

The following table summarizes RSU activity for the six months ended June 30, 2025:

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY

Service-Based

Date Fair Value

Unvested at January 1, 2025

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Forfeited and cancelled

Unvested at March 31, 2025

Unvested at June 30, 2025

Company used the Monte Carlo Simulation Model to value at the grant date the aggregate of 632,911 market condition performance RSUs granted

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is based on sustained market capitalization of $ 1 billion, and the derived service period is 4.3 years.

expense was $ 1,278 and $ 191 for the three months ended March 31, 2025 and 2024, respectively.

expense was $ 293 and $ 275 for the three months ended June 30, 2025 and 2024, respectively.

RSU expense was $ 1,571 and $ 484 for the six

months ended June 30, 2025 and 2024, respectively

Compensation Expense

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SCHEDULE OF SHARE-BASED COMPENSATION FOR OPTIONS AND RESTRICTED STOCK UNITS

Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Selling, general and administrative

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Total share-based expense

of March 31, 2025, total estimated compensation cost of stock options granted and outstanding but not yet vested was $ 5,304 which is

expected to be recognized over the weighted average period of 3.03 years.

of March 31, 2025, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $ 1,540 , which is expected

of June 30, 2025, total estimated compensation cost of stock options granted and outstanding but not yet vested was $ 5,591 which is expected

to be recognized over the weighted average period of 3.03 years.

of June 30, 2025, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $ 1,368 , which is expected

to be recognized over the weighted average period of 2.56 years.

DEFINED CONTRIBUTION PLAN

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to certain limitations.

The Company’s contributions for each of the three months ended March 31, 2025 and 2024 was $ 0 .

The Company’s contributions for each of the six months ended June 30, 2025 and 2024 was $ 23 and $ 0 , respectively.

COMMITMENTS AND CONTINGENCIES

Party Technology License Agreement

Company is obligated to pay royalties and development and patent costs pursuant to the License Agreement dated as of September 30, 2016,

with Syzygy, a company owned and controlled by stockholder and consultant to the Company, Mr.

Elwood Norris, and Mr.

James Barnes, a

stockholder of the Company and consultant to the Company.

The agreement provides for royalty payments of 4 % of revenue from products

employing the licensed ensnarement device technology up to an aggregate of $ 1,000 in royalties or until September 30, 2026 , whichever

occurs earlier.

The Company recorded $ 0 and $ 46 for the three months ended March 31, 2025 and 2024, respectively, related to such royalties.

The maximum payout was satisfied as of June 30, 2024.

of March 31, 2025, the Company was committed for approximately $ 509 for future component deliveries that are generally subject to modification

or rescheduling in the normal course of business.

of June 30, 2025, the Company was committed for approximately $ 508

for future component deliveries that are generally subject

to modification or rescheduling in the normal course of business.

Indemnifications

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counsel, and other information and events pertaining to a particular matter.

As of March 31, 2025, the Company had no provision for liability

As of June 30, 2025, the Company had no provision for liability

under existing litigation.

Company entered into a facility lease agreement for its new production facility based in Norton, Virginia.

initial term of the agreement is for five years and commences on October 1, 2025.

total cash payments to the lessor during the term are $ 600 .

RELATED PARTY TRANSACTIONS

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shares of Common Stock for aggregate gross proceeds of $ 3,000 .

For the three months ended March 31, 2025, Mr.

Cohen earned dividends

totaling $ 60 on his Series A Preferred Stock.

in October 2017, the Company began reimbursing Mr.

Elwood Norris, a former officer, current 5% or more stockholder and consultant of

the Company, $ 1.5 per month on a month-to-month basis for laboratory facility costs, which was terminated in January 2024 and $ 7.5 per

month on a month-to month basis for invention consulting services, which was terminated in February 2024 for an aggregate of $ 0 and $ 15

during each of the three months ended March 31, 2025 and 2024, respectively.

Company is obligated to pay royalties and development and patent costs pursuant to the License Agreement dated September 30, 2016, with

Syzygy, a company owned and controlled by a 5% stockholder of the Company, Mr.

Elwood Norris, and a former officer of the Company, Mr.

James Barnes.

The agreement provides for royalty payments of 4 % of revenue from products employing the licensed ensnarement device technology

up to an aggregate of $ 1,000 in royalties or until September 30, 2026, whichever occurs earlier.

During the three months ended March

31, 2025 and 2024, the Company incurred royalties to Syzygy of $ 0 and $ 46 respectively.

For the six months ended June 30, 2025, Mr.

Cohen earned dividends totaling

$ 60 on his Series A Preferred Stock.

February 24, 2025, the Company entered into the PIPE Purchase Agreement with certain accredited including:

V4 Global, LLC

(“V4”), an entity controlled by Mr.

V4 Global, LLC (“V4”),

an entity controlled by Mr.

Cohen, the Company’s Chief Executive Officer;

Continuum Ventures, LLC

(“Continuum”), an entity controlled by Jared Novick, the Company’s President and Chief Operating Officer;

Savbo Investments LLC (“Savbo”), an entity controlled by Marc Savas, a member of the Company’s Board, pursuant to

which, the Company issued and sold in a private placement an aggregate of 3,216,666 shares

of common stock and PIPE Warrants with an exercise price of $ 1.80 per

share, to purchase up to 3,216,666

shares of Common Stock (the “Private Placement”).

Pursuant to the Private Placement, the Company sold to (i) V4 1,100,000

shares of Common Stock and PIPE Warrants to purchase up to an aggregate of 1,100,000

shares of Common Stock, for aggregate gross proceeds of $ 1,980 ,

(ii) Continuum an aggregate of 275,000

shares of Common stock and PIPE Warrants to purchase up to an aggregate of 275,000

shares of Common Stock for aggregate gross proceeds of $ 495

and (iii) Savbo an aggregate of 50,000

shares of Common stock and PIPE Warrants to purchase up to an aggregate of 50,000

shares of Common Stock for aggregate gross proceeds of $ 90 .

Notes 1, 7 and 13 for additional information on related party transactions and obligations.

Continuum Ventures, LLC (“Continuum”), an

entity controlled by Jared Novick, the Company’s President and Chief Operating Officer;

and Savbo Investments LLC (“Savbo”),

an entity controlled by Marc Savas, a member of the Company’s Board, pursuant to which, the Company issued and sold in a private

placement an aggregate of 3,216,666 shares of Common Stock and PIPE Warrants with an exercise price of $ 1.80 per share, to purchase up

to 3,216,666 shares of Common Stock (the “Private Placement”).

Pursuant to the Private Placement, the Company sold to (i)

V4 1,100,000 shares of Common Stock and PIPE Warrants to purchase up to an aggregate of 1,100,000 shares of Common Stock, for aggregate

gross proceeds of $ 1,980 , (ii) Continuum an aggregate of 275,000 shares of Common stock and PIPE Warrants to purchase up to an aggregate

of 275,000 shares of Common Stock for aggregate gross proceeds of $ 495 and (iii) Savbo an aggregate of 50,000 shares of Common stock

and PIPE Warrants to purchase up to an aggregate of 50,000 shares of Common Stock for aggregate gross proceeds of $ 90 .

MAJOR CUSTOMERS AND RELATED INFORMATION

the three months ended March 31, 2025, revenue from three customers accounted for approximately 13 %, 13 % and 11 % of revenue, respectively,

with no other single customer accounting for more than 10% of total revenue.

For the three months ended March 31, 2024, revenue from

one distributor accounted for approximately 68 % of revenues, with no other single customer accounting for more than 10 % of total revenue.

March 31, 2025, accounts receivable from two

customers accounted for 15 %

and 15 % of net accounts receivable with no other single customer accounting for more than 10 %

of the accounts receivable balance.

At December 31, 2024, accounts receivable from one

distributor accounted for 68 %

the three months ended June 30, 2025, revenue from three

customers accounted for approximately 32 % , 23 %

of revenue, respectively, with no other single customer accounting for more than 10% of total revenue.

For the three months ended June

30, 2024, revenue from one

distributor accounted for approximately 39 %

of revenue, with no other single customer accounting for more than 10 %

of total revenue.

For the three months

ended June 30, 2025, revenue from one

customer accounted for approximately 16 %

of revenue, with no other single customer accounting for more than 10% of total revenue.

For the six months ended June

30, 2024, revenue from two

distributors accounted for approximately 33 %

of revenue, respectively, with no other single customer accounting for more than 10 %

of total revenue.

June 30, 2025, accounts receivable from four customers

accounted for 15 %, 13 %, 11 %, 10 %, respectively,

of net accounts receivable with no other single customer accounting for more than 10 %

of the accounts receivable balance.

At December 31, 2024, accounts receivable from two distributors

accounted for 11 %

respectively, of net accounts receivable, with no other single customer accounting for more than 10 %

of the accounts receivable balance.

following table summarizes revenue by geographic region.

2 unchanged sentences

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

Europe, Middle East and Africa

1 unchanged sentence

W1 ACQUISITION

February 18, 2025, the Company and W1, entered into an Asset Purchase Agreement, dated as of February 18, 2025 (the “W1 Purchase

Agreement”), pursuant which, subject to the terms and conditions set forth therein, the Company agreed to acquire substantially

all the assets of W1 used in, held for use in or relating to the business of advisory and investigative professional services which were

specific identified customer contracts.

The Company recorded the transaction as an Asset Acquisition in accordance with ASC 805 and recorded

as intangible assets included in Customer Relationships (See

Note 6 “Intangible Assets” above).

The Company has preliminarily assigned a three-year life to such Customer Relationships

included as part of the W1 asset acquisition.

February 18, 2025, the Company and W1, entered into an Asset Purchase Agreement, dated as of February 18, 2025 pursuant which, subject to the terms and conditions set forth therein, the Company agreed to acquire substantially

all the assets of W1 used in, held for use in or relating to the business of advisory and investigative professional services which related

to specific identified customer contracts.

The Company recorded the transaction as an Asset Acquisition in accordance with ASC 805 and

recorded $ 54 as intangible assets included in Customer Relationships (See Note 6 “Intangible Assets” above).

has preliminarily assigned a three-year life to such Customer Relationships.

SUBSEQUENT EVENTS

Company has reviewed activities through May 15, 2025, and determined that there are no subsequent events that require disclosure in accordance

with ASC 855-10-25-1.

Company has reviewed activities through August 14, 2025, and determined that there are no subsequent events that require disclosure in

accordance with ASC 855-10-25-1.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements