Financial Analysis

Schedule of disaggregated revenue Three Months Ended March 31, (in thousands, unaudited) 2026 2025 Service offerings Subscription services (Ratable) $ 638 $ 220 Installation and other (Over time) 295 206 Product offerings Hardware sales (Point in time) 382 311 Total Revenue $ 1,315 $ 738

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Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, and requires single reporting entities to comply with the expanded reportable segment disclosures outlined in the ASU. The expanded reportable segment disclosures are intended to enhance certain disclosures surrounding significant segment expenses. This standard became effective for the Company for the annual reporting period ended December 31, 2024, using the retrospective method. The adoption of this standard resulted in additional disclosure but did not have a material impact on our financial position or results of operations. See Note 8, Segment Reporting , for our updated segment presentation. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure (ASU 2023-09). ASU 2023-09 is effective for public entities for fiscal years beginning after December 15, 2024, and interim periods in fiscal years beginning after December 15, 2025, and establishes new income tax requirements in addition to modifying and eliminating certain existing requirements. Under ASU 2023-09, entities must consistently categorize and provide greater disaggregation of information in the …

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Note 6 Related Party Transactions The following transactions occurred between related parties; therefore, there can be no guarantee that the terms, conditions, interest rates, or prices were transacted at an arms-length rate. Aircraft Lease On September 1, 2023, the Company and Cloud Transport Operations LLC (Cloud Transport) entered into a dry lease agreement (the Dry Lease) for a Cessna T210N Turbo Centurion plane. The Dry Lease allows the Company to lease the plane for $350 per hour plus insurance and maintenance costs. Rick Bentley (Bentley), the Companys Founder and its Chief Executive Officer at the time the Dry Lease was signed, has an indirect ownership interest in Cloud Transport. In addition, also effective September 1, 2023, the Company and Hydro Hash, Inc. (HH) entered into a side agreement related to the Dry Lease, pursuant to which HH agreed, in exchange for use of the plane, to cover 40% of the insurance and maintenance costs for the plane under the Dry Lease. Mr. Bentley is the Chairman and a significant stockholder of HH. On March 25, 2025, the Company exercised its right to cancel the Dry Lease by providing 120 days notification of termination. Issuance of Shares for Note Receivable On February 20, 2020, the Company issued 250,000 shares of Class A common stock to Mr. Bentley in exchange for a promissory note with a principal amount of $6,000. The note receivable bore interest at an annual rate of 1.86% and was scheduled to mature in February 2030. The note …

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Note 3 Revenue from Contracts with Customers The following table presents the Companys revenue disaggregated by the nature of the goods or services and the timing of revenue recognition for the three months ended March 31, 2026, and March 31, 2025, respectively: Schedule of disaggregated revenue Three Months Ended March 31, (in thousands, unaudited) 2026 2025 Service offerings Subscription services (Ratable) $ 638 $ 220 Installation and other (Over time) 295 206 Product offerings Hardware sales (Point in time) 382 311 Total Revenue $ 1,315 $ 738 …

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Note 8 Segment Reporting We operate as one operating segment focused on cloud-based AI video surveillance and remote guarding security services. Operating segments are defined as components of an enterprise for which separate financial information is available for evaluation by the CODM in deciding how to allocate resources and assess performance. Our CODM evaluates our financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information supplemental to the information disclosed in these financial statements that is regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on net income as shown in our statement of operations. The CODM considers net income in the annual forecasting process and reviews actual results when making decisions about allocating resources. Since we operate as one operating segment, financial segment information, including profit or loss and asset information, can be found in these financial statements. Schedule of segment information Surveillance Segment Three months ended March 31, (Unaudited) 2026 2025 Revenue $ 1,315 $ 738 Less: COGS 605 407 G&A 1,383 1,082 R&D 705 769 Sales & Marketing 913 812 Operations 312 103 Loss from operations (2,603 ) (2,436 ) Other (taxes, interest, etc.) (172 ) 422 Segment net income/(loss) (2,774 ) (2,015 ) Consolidated net income/(loss) $ (2,774 ) $ (2,015 ) …

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"Note 2 Summary of Significant Accounting Policies Basis of Presentation The accounting and reporting policies of the Company conform to generally accepted accounting principles in the United States of America (U.S. GAAP). The unaudited condensed consolidated interim financial statements included within this Report have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes for the year ended December 31, 2025 included in our Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements contain all the adjustments necessary to present fairly our financial condition as of March 31, 2026, and the results of operations for the three-month periods ended March 31, 2026 and 2025. The results of operations for the three-months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year. Revision of Previously Issued Financial Statements In connection with the preparation of these unaudi …

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Note 5 Share Capital Regulation A Equity Financings Between 2020 and 2023, the Company sold units consisting of two shares of Class A common stock and one warrant to purchase one share of Class A common stock pursuant to Regulation A under the Securities Act (Regulation A). The warrants were immediately exercisable and expired 18 months from the date of issuance. Pursuant to these Regulation A offerings, the Company issued a total of 12.1 million shares of Class A common stock and 5.3 million warrants and received cumulative net proceeds of approximately $ 33.1 million, after deducting issuance costs. All warrants issued pursuant to the Regulation A offerings expired on or before December 31, 2025. As of March 31, 2026, no warrants issued pursuant to the Regulation A offerings were still outstanding. Preferred Stock Financings The Company is authorized to issue 150,000,000 shares of preferred stock, par value $ 0.0001 per share. As of March 31, 2026, the Board of Directors has designated 30,000 shares as Series 1 Shares and 40,000 shares as Series 2 Shares. Series 1 Convertible Preferred Stock On November 25, 2024, the Company entered into the Series 1 Equity Financing with Streeterville for the issuance and sale of $ 6.3 million of Series 1 Shares, together with 720,000 shares of Class A common stock as pre-delivery shares. This Series 1 Equity Financing closed on January 29, 2025. All of these Series 1 Shares were subsequently converted into shares of the Companys Class A c …

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Note 9 Subsequent Events In light of the change in how the Series 2 Shares are accounted for, as described in Note 2 above, the Company and Streeterville have renegotiated the terms of the Series 2 Shares so they will no longer be considered mezzanine equity. On June 29, 2026, the Company amended and restated the original certificate of designations for the Series 2 Shares to address the accounting classification issues described in Note 2 above and to align the contractual terms of the Series 2 Shares with the Companys and Streetervilles original intent that such instrument be classified as permanent equity. On June 29, 2026, the Company filed an Amended and Restated Certificate of Designations of Preferences and Rights of Series 2 Convertible Preferred Stock (the Amended Certificate) with the Secretary of State of the State of Delaware, which was approved by the Board of Directors and by Streeterville, as the sole holder of all outstanding Series 2 Shares. The Amended Certificate eliminates the provisions that previously gave rise to the mezzanine (temporary) equity classification, including: (i) removal of the Deemed Liquidation Event provision that previously entitled holders to receive the Series 2 Preferred Liquidation Amount upon certain change-of-control transactions not solely within the Companys control; (ii) reduction of the Fixed Conversion Price from $10.00 to $0.40 per share, thereby eliminating the variable conversion price feature that required bifurcation of …

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