ParaZero Technologies .(PRZO) - 2025 Q2 - Quarterly Report

Financial Performance - The company reported a net loss of $2.30 million for the six months ended June 30, 2025, compared to a net loss of $2.03 million for the same period in 2024, reflecting a 13.3% increase in losses [7]. - The operating loss for the six months ended June 30, 2025, was $3.65 million, compared to $2.23 million for the same period in 2024, indicating a 64.1% increase in operating losses [7]. - The company reported sales of $357,979 for the six months ended June 30, 2025, compared to $282,693 for the same period in 2024, representing a year-over-year increase of approximately 27% [64]. - The net loss for the six months ended June 30, 2025, was $2,295,955, compared to a net loss of $2,026,094 for the same period in 2024 [64]. Assets and Liabilities - As of June 30, 2025, total assets increased to $6.33 million from $5.74 million as of December 31, 2024, representing a 10.4% increase [3]. - Cash and cash equivalents decreased to $2.37 million from $4.18 million, a decline of 43.3% [11]. - Total current liabilities decreased to $1.24 million from $1.32 million, a reduction of 6.3% [5]. - The company had $4.8 million in cash, cash equivalents, and short-term deposits as of June 30, 2025 [13]. Research and Development - Research and development expenses rose to $1.16 million, up 74.5% from $662,440 in the prior year [7]. - Research and development expenses for the six months ended June 30, 2025, totaled $1,117,206, up from $656,775 in the same period in 2024, indicating a significant investment in R&D [64]. - The company received a total of $748,000 in grants from the Israel Innovation Authority (IIA) for research and development projects, with a maximum obligation of $587,000 as of June 30, 2025 [57][58][59]. - During the six months ended June 30, 2025, the company paid approximately $8,000 in royalties to the IIA related to revenues from products developed with IIA funds [59]. Share Issuance and Capital Raising - The company issued 2,818,182 ordinary shares, raising $2.53 million net of issuance costs during the six months ended June 30, 2025 [9]. - The Company raised gross proceeds of approximately $7.8 million from its initial public offering (IPO) on July 31, 2023, by issuing 1,950,000 ordinary shares [39]. - On October 30, 2023, the Company raised approximately $5.1 million in a private investment in public equity (PIPE) transaction, issuing 1,136,364 ordinary shares and 3,500,000 pre-funded warrants [40]. - The Company completed a registered direct offering on February 13, 2025, raising approximately $3.1 million by issuing 2,518,182 ordinary shares and 300,000 pre-funded warrants [47]. - The company closed a registered direct offering on August 4, 2025, raising approximately $2.2 million by issuing 1,700,001 ordinary shares and 300,000 pre-funded warrants [66]. Employee Compensation and Stock Options - The Company had accrued employee compensation of $374,883 as of June 30, 2025, down from $447,161 as of December 31, 2024 [32]. - The average exercise price of stock options granted during the six months ended June 30, 2025, was $1.738 per ordinary share, with a total of 102,892 options granted [52]. - The company granted a total of 1,560,165 Restricted Share Units (RSUs) with a fair value of $1,631,411, of which 587,286 RSUs were approved for the CEO and directors [54][56]. - As of June 30, 2025, there were 1,276,166 unvested RSUs outstanding, with a weighted average fair value of $1.25 per share [56]. Future Outlook - The company anticipates that its cash position, along with expected revenue from existing customers, will be sufficient to fund operations for at least the next 12 months [15]. - As of June 30, 2025, the total Remaining Performance Obligations (RPO) amounted to $432,920, which the Company expects to recognize in future periods [33]. Lease and Other Expenses - The Company reported lease expenses of $45,736 for the six months ended June 30, 2025, compared to $123,422 for the same period in 2024 [29]. - The total undiscounted cash flows for operating lease payments as of June 30, 2025, amounted to $332,997 [31]. - The company reported a decrease in deferred revenue from $142,340 as of December 31, 2024, to $115,690 as of June 30, 2025 [33]. Corporate Structure - The company has one reportable segment focused on the development and sale of autonomous parachute safety systems for commercial and military applications [62]. - A reverse share split was approved by shareholders, with a ratio between 1:5 and 1:20, to be determined by the Board within 18 months [65].