ParaZero Technologies .(PRZO) - 2024 Q4 - Annual Report

Financial Performance - Sales increased by $311,646, or 50.2$932,154 for the year ended December 31, 2024, compared to $620,508 for the year ended December 31, 2023, primarily due to a shift towards OEM integrations [298]. - Cost of sales rose by$397,251, or 83.3%, to $873,861 for the year ended December 31, 2024, compared to$476,610 for the year ended December 31, 2023, driven by increased sales volume and an inventory write-off of approximately $114,680 [299]. - The net loss and comprehensive loss for the year ended December 31, 2024, was$11,054,230, compared to a loss of $3,771,379 for the year ended December 31, 2023 [296]. - Basic and diluted loss per share increased to$(0.99) for the year ended December 31, 2024, from $(0.77) for the year ended December 31, 2023 [297]. - Net loss and comprehensive loss increased by$7,282,851, or 193%, to $11,054,230 for the year ended December 31, 2024, compared to a net loss of$3,771,379 for the year ended December 31, 2023 [309]. Expenses - Research and development expenses surged by $1,506,552, or 237$2,143,353 for the year ended December 31, 2024, compared to $636,801 for the year ended December 31, 2023, mainly due to increased labor and material costs [300]. - Sales and marketing expenses increased by$593,099, or 121.6%, to $1,081,003 for the year ended December 31, 2024, compared to$487,904 for the year ended December 31, 2023, attributed to higher labor and professional service costs [301]. - General and administrative expenses rose by $927,128, or 62.9$2,400,000 for the year ended December 31, 2024, compared to $1,472,872 for the year ended December 31, 2023, largely due to costs associated with being a public company [302]. Cash Flow and Financing - Net cash used in operating activities was$4,889,222 for the year ended December 31, 2024, compared to $2,938,300 for the year ended December 31, 2023, indicating an increase in operating losses [316]. - Net cash provided by financing activities was$1,820,001 for the year ended December 31, 2024, a significant decrease from $10,302,656 for the year ended December 31, 2023 [318]. - As of December 31, 2024, the company had approximately$4.2 million in cash and cash equivalents, which is expected to fund operations through the end of the first quarter of 2026 [310][311]. - The company expects to require additional capital to develop its next generation flight computer and to commercialize new products [313]. - Net cash used in investing activities increased by $122,982 to$148,739 for the year ended December 31, 2024, compared to $25,757 for the year ended December 31, 2023 [317]. Risks and Future Outlook - The company has suffered recurring losses from operations and negative cash flows since inception, primarily funded through equity securities and loans [310]. - The company anticipates that future capital requirements will depend on various factors, including the ability to generate revenues and the costs of research and development activities [314]. - The company is exposed to credit risk and currency risk, with the majority of expenses denominated in NIS while revenues are primarily USD derived [530][531]. - The company faces liquidity risks, monitoring cash flow forecasts to ensure sufficient cash for operational needs [532]. Compliance and Reporting - The company identified control deficiencies in its financial reporting process, constituting a material weakness, and is implementing corrective actions [335][337]. - The company qualifies as an "emerging growth company" under the JOBS Act, allowing for reduced reporting burdens [533]. - The company is exempt from certain auditor attestation requirements under the Sarbanes-Oxley Act of 2002 [536].