ParaZero Technologies .(PRZO) - 2025 Q4 - Annual Report

Financial Performance - Sales increased by $114,510, or 12.3%, to $1,046,664 for the year ended December 31, 2025, compared to $932,154 for the year ended December 31, 2024, attributed to a shift towards newly developed products in the defense sector [378]. - Net loss decreased by $5,642,067, or 51%, to $5,412,163 for the year ended December 31, 2025, compared to a net loss of $11,054,230 for 2024 [384]. - Cash and cash equivalents as of December 31, 2025, were approximately $4.2 million, with expectations to fund operations for the next twelve months through existing purchase orders and projected revenue from new customers [386]. Expenses - Cost of sales increased by $122,840, or 14.1%, to $996,701 for the year ended December 31, 2025, primarily due to an inventory write-off of $194,344 [379]. - Research and development expenses rose by $194,868, or 9.1%, to $2,338,221 for the year ended December 31, 2025, mainly due to increased labor costs and consultant expenses [379]. - Sales and marketing expenses surged by $537,184, or 49.7%, to $1,618,187 for the year ended December 31, 2025, driven by increased labor costs and marketing services [380]. - General and administrative expenses increased by $1,240,967, or 51.7%, to $3,640,967 for the year ended December 31, 2025, largely due to non-cash expenses related to equity incentive grants [381]. Cash Flow - Net cash used in operating activities increased to $5,804,052 for the year ended December 31, 2025, compared to $4,889,222 for 2024 [392]. - Net cash used in investing activities rose by $1,891,785 to $2,040,524 for the year ended December 31, 2025, primarily due to a $2,000,000 investment in short-term bank deposits [392]. - Net cash provided by financing activities was $5,812,785 for the year ended December 31, 2025, compared to $1,820,001 for 2024, driven by funds from share issuances and warrant exercises [393]. Future Outlook - The company anticipates an increase in research and development expenses in the future to support ongoing development programs and potential product commercialization [371]. - The company expects to require additional capital to develop its next-generation flight computer and commercialize new products [388]. - Future capital requirements will depend on the ability to market products, progress in R&D, and manufacturing costs [390]. Grants and Liabilities - The company received approximately $738,000 in grants from the IIA for research and development, with contingent liabilities of approximately $572,000 related to these grants [368]. - The company has net operating loss carryforwards of approximately $27.6 million as of December 31, 2025, and does not expect to pay taxes in Israel until it generates taxable income [375]. Currency Impact - The NIS appreciated by 12.5% against the USD in 2025, impacting the U.S. dollar cost of NIS-denominated expenses [605]. Company Classification - The company is classified as an "emerging growth company," allowing for reduced reporting requirements [607]. Financial Challenges - The company has suffered recurring losses and negative cash flows since inception, relying on equity securities issuances and government grants for funding [385].