MLRT 10-Q
Metalert, Inc. (MLRT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
For
the quarterly period ended
OR
For the transition period from __________ to __________
Commission
file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Act:
| Title of each class registered: | Trading Symbol(s) | Name of each exchange on which registered: | ||
| None |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common shares issued and outstanding as of December 11, 2025.
METALERT INC. AND SUBSIDIARIES
For the quarter ended June 30, 2025
FORM 10-Q
| 2 |
PART I
ITEM 1. FINANCIAL STATEMENTS
METALERT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Investment in marketable securities | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued expenses, related parties | ||||||||
| Deferred revenues | ||||||||
| Short-term debt – line of credit | ||||||||
| Short-term debt - CARE loans | ||||||||
| Convertible promissory notes, net of discount | ||||||||
| Convertible notes, related parties, net of discount | ||||||||
| Notes payable | ||||||||
| Notes payable – related parties | ||||||||
| Total current liabilities | ||||||||
| Long-term convertible debt | ||||||||
| Long-term debt - CARE loan | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock series A, $ par value; shares authorized; shares issued and outstanding at June 30, 2025 and December 31, 2024 | ||||||||
| Preferred stock series B, $ par value; shares authorized, and issued and outstanding at June 30, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock series C, $ par value; shares authorized, and issued and outstanding at June 30, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock series D, $ par value; shares authorized, and issued and outstanding at June 30, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock series E, $ par value; shares authorized, and issued and outstanding at June 30, 2025 and December 31, 2024, respectively | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 3 |
METALERT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Service income | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of products sold | ||||||||||||||||
| Cost of other revenue | ||||||||||||||||
| Total cost of goods sold | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Wages and benefits | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income/(expenses): | ||||||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense and financing costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income/(expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||||||||||
| Net income/(loss) per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 4 |
METALERT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
Three Months Ended June 30, 2025 and June 30, 2024 (Unaudited)
Series A Preferred | Series B Preferred | Series C Preferred | Series D Preferred | Series E Preferred | Common Shares | Additional | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Shares | Shares | Shares | Shares | Paid-In | Accumulated | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock for financing | - | - | - | - | | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred | Series B Preferred | Series C Preferred | Series D Preferred | Common Shares | Additional | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Shares | Shares | Shares | Paid-In | Accumulated | Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance March 31. 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net (loss) | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| 5 |
METALERT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
Six Months Ended June 30, 2025 and June 30, 2024 (Unaudited)
Series A Preferred | Series B Preferred | Series C Preferred | Series D Preferred | Series E Preferred | Common Shares | Additional | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Shares | Shares | Shares | Shares | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for conversion of debt | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock for financings | - | - | - | - | 55,000 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred | Series B Preferred | Series C Preferred | Series D Preferred | Common Shares | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Shares | Shares | Shares | Shares | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||
| Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Issued | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock for financings | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
METALERT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock based compensation | ||||||||
| Amortization of debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ||||||||
| Other current and non-current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued expenses - related parties | ||||||||
| Deferred revenues | ||||||||
| Accrued interest and financing costs | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Property and equipment purchases | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of convertible debt | ||||||||
| Proceeds from issuance of debt | ||||||||
| Proceeds from sale of preferred stock | ||||||||
| Payments on notes | ( | ) | ( | ) | ||||
| Payments on debt | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosure of noncash investing and financing activities: | ||||||||
| Issuance of common stock for conversion of debt and interest | $ | $ | ||||||
| Debt discount on convertible notes | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 7 |
METALERT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
During
the periods covered by these financial statements, MetAlert, Inc. and its subsidiaries (the “Company”, “MetAlert”,
“we”, “us”, and “our”) were engaged in business operations that design, manufacture and sell various
interrelated and complementary products and services in the wearable technology and Personal Location Services marketplace. MetAlert
owns
Global Trek Xploration, Inc. is a wearable technology company which designs, manufactures, sells, and distributes tracking and remote patient monitoring solutions for humans. Utilizing patent protected proprietary hardware, software, connectivity, Global Positioning System (“GPS”) and Bluetooth Low Energy (“BLE”) monitoring and tracking platform, which provides real-time tracking and monitoring of people. Utilizing a miniature quad-band GPRS transceiver, antenna, circuitry, battery and inductive charging pad our solutions can be customized and integrated into numerous products whose location and movement can be monitored in real time over the Internet through our 24x7 tracking portal or on a web enabled cellular telephone. Our core products and services are supported by an IP portfolio of patents, patents pending, registered trademarks, copyrights, URL’s and a library of software source code, all of which is managed by Global Trek.
Level 2 Security Products, Inc. is in the high value non-human asset monitoring and recovery business for items such as firearms, vehicles, bikes, boats, ATVs, and a host of other valuable mobile assets which require oversight monitoring and theft recovery. Since the launch of the GunAlert firearm safety and theft recovery solution, the Company has been building relationships with government and non-profit organizations in order to build out product brand recognition. The GunAlert product is being introduced to Law Enforcement, government agencies and non-profits as a solution that addresses firearm suicide prevention, and additionally to the direct to the gun owner community, which estimates there are over 400 million firearms in the U.S. with approximately 4 million new gun owners each year.
LOCiMOBILE, Inc’s, digital assets are now under the management of the parent company MetAlert and remain there, post dissolution, of the corporate entity (LOCiMobile, Inc.). The Company’s digital platform which has been at the forefront of Smartphone application (“App”) development since 2008 designs mobile applications that turn the iPhone, iPad, Android and other GPS enabled handsets into a tracking device which can then be tracked from any mobile device or through our proprietary tracking portal or on any connected device with internet access.
Basis of Presentation
The accompanying unaudited consolidated financial statements of MetAlert have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and applicable regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position and results of operations have been included. Our operating results for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The accompanying unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2024, which are included in our Annual Report on Form 10-K.
The accompanying consolidated financial statements reflect the accounts of MetAlert, Inc. and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated.
| 8 |
Going Concern
The
consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for the foreseeable future. The Company has a stockholders’ deficit
of $
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to raise additional capital through the future issuances of debt or equity is unknown. The ability to obtain additional financing, the successful development of the Company’s contemplated plan of operations, or its ability to achieve profitable operations are necessary for the Company to continue operations, and there is no assurance that these can be achieved. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
2. SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.
We derive our revenues primarily from hardware sales, subscription services fees, IP licensing and professional services fees. Hardware includes our SmartSole, GunTracker, Military and other Stand-Alone Devices. Subscription services revenues consist of fees from customers accessing our Geo-Location cloud-based platform through subscription or license fee, that are billed monthly, quarterly, semi-annual or annually.
Product sales
At the inception of each customer sale, either online or through a purchase order, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The Company recognizes revenue upon the transfer of control of promised products or services to the customer in an amount that depicts the consideration the Company expects to be entitled to for the related products or services. For the large majority of the Company’s sales, transfer of control occurs once the product has shipped and title and risk of loss have transferred to the customer.
Services Income
The Company’s software solutions are available for use as hosted application arrangements under subscription fee agreements without licensing perpetual rights to the software. Subscription fees from these applications are recognized over time on a ratable basis over the customer agreement term beginning on the date the Company’s solution is made available to the customer. Our subscription contracts are generally one to three months in length. Amounts that have been invoiced are recorded in accounts receivable and deferred revenues or revenues, depending on whether the revenue recognition criteria have been met.
| 9 |
Other revenue can include various items, such as our professional services arrangements that are recognized on a time and materials basis. Professional services revenues recognized on a time and materials basis are measured monthly based on time incurred and contractually agreed upon rates. Certain professional services revenues are based on fixed fee arrangements and revenues are recognized based on the proportional performance method. In some cases, the terms of our time and materials and fixed fee arrangements may require that we defer the recognition of revenue until contractual conditions are met. Data services and training revenues are generally recognized as the services are performed. Additionally, we have had non-compete revenue from the sale of assets, engineering, and design work, all of which are recognized over the term of the agreed contracts.
Allowance for Doubtful Accounts
We
extend credit based on our evaluation of the customer’s financial condition. We carry our accounts receivable at net realizable
value. We monitor our exposure to losses on receivables and maintain allowances for potential losses or adjustments. We determine these
allowances by (1) evaluating the aging of our receivables; and (2) reviewing high-risk customers financial condition. Past due receivable
balances are written off when our internal collection efforts have been unsuccessful in collecting the amount due. Our allowance for
doubtful accounts was $
Shipping and Handling Costs
Shipping and handling costs are included in cost of goods sold in the accompanying consolidated statements of operations.
Product Warranty
Use of Estimates
The preparation of the accompanying unaudited financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include, but are not limited to, estimates related to revenue recognition, allowance for doubtful accounts, inventory valuation, tangible and intangible long-term asset valuation, warranty and other obligations and commitments. Estimates are updated on an ongoing basis and are evaluated based on historical experience and current circumstances. Changes in facts and circumstances in the future may give rise to changes in these estimates which may cause actual results to differ from current estimates.
Fair Value Estimates
Pursuant to the Accounting Standards Codification (“ASC”) No. 820, “Disclosures About Fair Value of Financial Instruments”, the Company records its financial assets and liabilities at fair value. ASC No. 820 provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. ASC No. 820 establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
| Level 1 - | Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. |
| 10 |
| Level 2 - | Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the asset/liability’s anticipated life. | |
| Level 3 - | Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. |
The carrying values for cash and cash equivalents, accounts receivable, investment in marketable securities, other current assets, accounts payable and accrued liabilities approximate their fair value due to their short maturities. The carrying values of notes payable and other financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.
Principles of Consolidation
The accompanying condensed consolidated financial statements at June 30, 2025 and December 31, 2024 and for the years then ended include the accounts of MetAlert, Inc. and the following wholly-owned subsidiaries Global Trek Xploration and Level 2 Security Products, Inc.
All Intercompany transactions have been eliminated upon consolidation.
Concentrations
We rely on one German manufacturer to supply us with our GPS SmartSole and one supplier for the Gun Tracker in China. However, the Company constantly looks to have redundances in sourcing, etc. and are looking for additional sources in the US and Mexico for manufacturing. However, the loss of any of these manufacturers could severely impede our ability to manufacture the GPS SmartSole and Gun Tracker, and thus as we increase production we are looking to augment and grow our vendors and supply chains accordingly.
As
of June 30, 2025, the Company had three customers representing approximately
The Company accounts for share-based awards to employees and nonemployees directors and consultants in accordance with the provisions of ASC 718, Compensation—Stock Compensation., and under the recently issued guidance following FASB’s pronouncement, ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under ASC 718, and applicable updates adopted, share-based awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service, or vesting, period. The Company values its equity awards using the Black-Scholes option pricing model, and accounts for forfeitures when they occur.
Marketable Securities
The Company’s securities investments that are acquired and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value based on quoted market price (level 1) on the balance sheet in current assets, with the change in fair value during the period included in earnings.
| 11 |
Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Shares of restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are granted unless they are antidilutive. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Warrants | ||||||||
| Preferred B shares | ||||||||
| Preferred C shares | ||||||||
| Preferred D shares | ||||||||
| Preferred E shares | ||||||||
| Conversion shares upon conversion of notes | ||||||||
| Total | ||||||||
Segments
The
Company operates in
Recently Issued Accounting Pronouncements
Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
3. INVESTMENT IN MARKETABLE SECURITIES
The
company owns common stock shares in two entities that previously had readily determinable values based on observable market prices. As
of June 30, 2025 and December 31, 2024 the value was $
4. INVENTORY
Inventories consist of the following:
June 30, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Total Inventories | $ | $ | ||||||
| 12 |
5. PROPERTY AND EQUIPMENT
Property and equipment, net, consists of the following:
June 30, 2025 | December 31, 2024 | |||||||
| Software | $ | $ | ||||||
| Website development | ||||||||
| Software development | ||||||||
| Equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expense for the period ended June 30, 2025 and 2024 was $
6. INTANGIBLE ASSETS
Intangible assets, net, consists of the following:
June 30, 2025 | December 31, 2024 | |||||||
| Trademarks | $ | $ | ||||||
| Acquired intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
Amortization
expense for the period ended June 30, 2025, and 2024 was $
7. NOTES AND LOANS PAYABLE
The following table summarizes the components of our short-term borrowings:
June 30, 2025 | December 31, 2024 | |||||||
| (a) Term loan | $ | $ | ||||||
| (a) Term loan | $ | |||||||
| (b) Revolving line of credit | ||||||||
| (c) Revolving line of credit - converted to term loan | ||||||||
| Total | $ | $ | ||||||
(a) Term loans
Prior
to 2023, the Company entered into term loans with third parties at an interest rate of
During
the first quarter ended March 31, 2025, the Company entered into a term loan agreement with a third party for $
(b) Line of Credit
The
Company had a revolving line of credit with an accredited investor for up to $
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The
line boar interest of
(c) Line of Credit – Converted to Term Loan
8. CONVERTIBLE PROMISSORY NOTES
As
of June 30, 2025 and December 31, 2024, the Company had a total of $
June 30, 2025 | December 31, 2024 | |||||||
| a) Convertible Notes – with fixed conversion, legacy debt | $ | $ | ||||||
| b) Convertible Notes – with fixed conversion | ||||||||
| c) Convertible Notes – with fixed conversion and OID | ||||||||
| d) Convertible Note – with variable conversion | ||||||||
| e) Notes issued in relation to acquisition – with fixed conversion | ||||||||
| Less: Debt discount | ( | ) | ( | ) | ||||
| Total convertible notes, net of debt discount | $ | $ | ||||||
| a) | ||
| b) | ||
| c) | ||
| d) | ||
| e) |
9. CARE Loans
June 30, 2025 | December 31, 2024 | |||||||
| a) EIDL loan – short term | $ | $ | ||||||
| a) EIDL loan – long term | ||||||||
| Total CARE loans | $ | $ | ||||||
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(a) Economic Injury Disaster Loan
On
June 10, 2020, the Company executed a secured loan with the U.S. Small Business Administration (SBA) under the Economic Injury Disaster
Loan program in the amount of $
A minimum installment interest payment plan was offered by the SBA, and we are making those payments while we are waiting for confirmation of an adjustment or the forgiveness of the loan. As of June 30, 2025, short term amounts due under the loan include planned principal payments in the next twelve months and any payments considered past due.
10. RELATED PARTY TRANSACTIONS
Convertible Notes Due to Related Parties
During
the period ended June 30, 2025 and December 31, 2024, there was
The
holders of the related party convertible notes can convert the notes into common shares at any time, into the Company’s common
shares at $ to $ per share; however, they are limited to convert
Accrued
wages and costs - In order to preserve cash for other working capital needs, various officers, members of management, employees and directors
agreed to defer portions of their wages and sometimes various out-of-pocket expenses since 2011. As of June 30, 2025, and December 31,
2024, the Company owed $
Officer Loans
From
time-to-time our officers have loaned funds on a short-term basis for operational needs. These loans bear interest at
11. EQUITY
The Company has shares of preferred stock authorized. From this pool the following preferred shares have been classified as:
Preferred Stock – Series A
The Company is authorized to issue of Series A preferred shares, which shares have voting rights equal to two-thirds of all the issued and outstanding shares of common stock. Holders of Series A preferred shares, shall be entitled to vote on all matters of the corporation, and shall have the majority vote of the board of directors.
Preferred Stock – Series B
The Company is authorized to issue shares of preferred stock to be designated available for Series B preferred shares that have a stated value of $ each and are convertible into common shares at fixed price of $. Holders shall be entitled to receive, and the Company shall pay, dividends on shares of Series B Preferred Stock equal (on an as converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Company’s Common Stock. No other dividends shall be paid on shares of Series B Preferred Stock, and they shall have no voting rights and have liquidation preference.
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Preferred Stock – Series C
The
Company authorized to issue shares of preferred stock to be designated available for Series C preferred shares that have a stated
value of $ each and are convertible into common shares at fixed price of $
Preferred Stock – Series D
The Company is authorized to issue shares of preferred stock to be designated available for Series D preferred shares that have a convertible value into shares of the Company’s common stock. The holder(s) of the shares of Series D Preferred Stock shall have no other rights, privileges or preferences with respect to the Series D Preferred Stock. The Series D preferred shares shall have a fixed conversion price equal to shares of common stock, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock.
During the period ended June 30, 2025, the Company did not issue any Series D preferred shares.
During
the period ended March 31, 2024, the Company issued Series D preferred shares and to an accredited investor for their $
Preferred Stock – Series E
The Company is authorized to issue shares of preferred stock to be designated available for Series E Preferred shares. The Series E Preferred shares shall have a fixed conversion price equal to shares of common stock for each Series E Preferred share, at the holders’ option, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock. In addition, Series E Preferred stock shall be redeemable by and at the sole discretion of the Company at the stated value, initially set to $ per share, after 20 business days’ written notice, if the price of the Company’s Common Stock closes above $ per share for ten (10) consecutive trading days. Each share of Series E Preferred stock shall be entitled to 1 (1) vote on all matter voted upon by the shareholders of the Company.
During
the period ended June 30, 2025, the Company issued Series E preferred shares and to an accredited investor for their $
Common Stock
Shares issued for services rendered are expensed as stock-based compensation in the accompanying consolidated statement of operations under professional fees.
During
the period ending June 30, 2025, the Company issued shares of its common stock to a consultant for services valued at $
During
the period ending June 30, 2024, the Company issued shares of its common stock to consultant for services valued at $
Common Stock Warrants
Since
inception, the Company has issued numerous warrants to purchase shares of the Company’s common stock to shareholders, consultants
and employees as compensation for services rendered. As of June 30, 2025, the number of warrants outstanding was
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A summary of the Company’s warrant activity and related information is provided:
Exercise Price $ | Number of Warrants | |||||||
| Outstanding and exercisable at December 31, 2024 | – | |||||||
| Warrants exercised | ||||||||
| Warrants granted | ||||||||
| Warrants expired | ||||||||
| Outstanding and exercisable at June 30, 2025 | – | |||||||
Stock Warrants as of June 30, 2025 | ||||||||||||||
| Exercise | Warrants | Remaining | Warrants | |||||||||||
| Price | Outstanding | Life (Years) | Exercisable | |||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
During the period ended June 30, 2025, the Company had no warrant activity.
Common Stock Options
Under the Company’s 2008 Equity Compensation Plan (the “2008 Plan”), we are authorized to grant stock options intended to qualify as Incentive Stock Options, “ISO”, under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified options, restricted and unrestricted stock awards and stock appreciation rights to purchase up to shares of common stock to our employees, officers, directors and consultants, with the exception that ISOs may only be granted to employees of the Company and its subsidiaries, as defined in the 2008 Plan.
The 2008 Plan provides for the issuance of a maximum of shares, of which, after adjusting for estimated pre-vesting forfeitures and expired options, approximately were available for issuance as of June 30, 2025.
options were granted during the period ending June 30, 2025.
12. COMMITMENTS & CONTINGENCIES
Contingencies
From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. As of June 30, 2025, there was no pending or threatened litigation against the Company.
13. SUBSEQUENT EVENTS
Subsequent to June 30, 2025, the
Company issued an aggregate of
shares of common stock for the conversion of convertible debt with principal value of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements. These forward looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including but not limited to: variability of our revenues and financial performance; risks associated with product development and technological changes; the acceptance our products in the marketplace by existing and potential future customers; general economic conditions. You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
Introduction
Unless otherwise noted, the terms “MetAlert, Inc.”, the “Company”, “we”, “us”, and “our” refer to the ongoing business operations of MetAlert, Inc. and our wholly owned subsidiaries, Global Trek Xploration, and Level 2 Security Products, Inc.
Overview
MetAlert Inc., a Nevada Corporation, headquartered in Los Angeles, has developed a suite of products and solutions, powered by a proprietary real time tracking technology platform, allowing remote monitoring, location-based tracking, health data collection of humans, and theft recovery for high value assets. Many of the products have a wide range of applications, focusing on addressing two pressing global problems: remote patient monitoring for people with cognitive decline, and the safety and recovery of firearms and other high value assets. Approximately 3% of the world’s population has a form of cognitive impairment, such as Alzheimer’s, dementia, autism and traumatic brain injury. And there are over 400 million firearms just in the United States alone. Each represents sizeable markets which Metalert has patent protected products and solutions for, that generate revenues both from product sales and ongoing high margin recurring subscription service fees. The Company sells both B2B and B2C, with international distributors supporting customers across North American, South America and Europe.
The Company was originally founded in 2002 as Global Trek Xploration, Inc. and, as part of a reverse merger, became publicly traded in 2008 as a 100% wholly owned subsidiary of GTX Corp, a Nevada corporation, under its former name “Deeas Resources Inc.” In September 2022, the public Company changed its name from GTX Corp to MetAlert, Inc. and effected a 1-for-65 reverse stock split of its issued and outstanding stock (OTC Pinks: MLRT). After the name change the Company maintained its ownership of its two wholly owned subsidiaries. During the periods covered by this report, MetAlert, Inc. and its subsidiaries were engaged in business operations that design, manufacture and sell various interrelated and complementary products and services in the wearable technology and Personal Location Services marketplace.
In September of 2023, we acquired Level 2 Security, LLC and merged it into a new 100% wholly owned subsidiary Level 2 Security Products, Inc. During that period, the operations of LOCiMobile, Inc., another 100% wholly owned subsidiary, was consolidated under Global Trek Xploration and the corporate entity was dissolved. MetAlert now owns 100% of the issued and outstanding capital stock of its two operating subsidiaries - Global Trek Xploration, Inc. and Level 2 Security Products, Inc. The LOCiMOBILE digital assets are now under the management of the parent company MetAlert and remain there, post dissolution, of the corporate entity (LOCiMobile, Inc.).
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In the first quarter of 2024, we launched the Gen 2 version of the GunAlert product, across multiples channels, with a high focus on government agencies. Level 2 Security Products, Inc. is in the high value non-human asset monitoring and recovery business for items such as firearms, vehicles, bikes, boats, ATVs, and a host of other valuable mobile assets which require oversight monitoring and theft recovery.
Global Trek Xploration, Inc. is a wearable technology company which designs, manufactures, sells, and distributes tracking and remote patient monitoring solutions for humans, by utilizing patent protected proprietary hardware, software, connectivity, Global Positioning System (“GPS”) and Bluetooth Low Energy (“BLE”) monitoring and tracking platform, which provides real-time tracking and monitoring of people. Utilizing a miniature quad-band GPRS transceiver, antenna, circuitry, battery and inductive charging pad our solutions can be customized and integrated into numerous products whose location and movement can be monitored in real time over the Internet through our 24x7 tracking portal or on a web enabled cellular telephone. Our core products and services are supported by an IP portfolio of patents, patents pending, registered trademarks, copyrights, URL’s and a library of software source code, all of which is managed by Global Trek.
Other technology that the Company has developed or resells includes health and safety monitoring products and wellness products that are complementary to our main product lines and general mission of providing life changing and saving technology.
We believe the steps we took in 2024 to launch the Gen 2 version of GunAlert will start to yield the results in the coming months that we have been stiving towards. We currently have hundreds of SmartSoles on back order and have multiple government contracts in the review process for GunAlert, however during the first quarter of 2025 due to a change in administration cuts, and the uncertainty caused from the tariff fluctuations from various countries we manufacture in, we saw a complete stall in both manufacturing and government sales. As both these situations (tariffs and government budgets) start to sort out, we expect our business to ramp back up. During the second quarter of 2025, we stopped manufacturing SmartSoles in the U.S. because many of our components were still coming from China and the fluctuation in tariffs created an untenable environment. As an offset, we have been ordering more finished product from our OEM partner in Germany, which has helped to stabilize inventory shortages and prevent significant cost hikes. We plan to continue sourcing finished products from our OEM German partner for the remainder of 2025 or until tariffs with China stabilize.
Operations
The Company designs, develops, manufactures, sells, and distributes health and safety monitoring products and services, along with other related medical supplies and equipment, and asset theft and recovery products and services, all through a global business to business (“B2B”) and business to consumer (“B2C”) network of resellers, affiliates, distributors, nonprofit organizations, local, state, and federal government agencies, police departments, manufacturers reps, retailers and direct to consumer. Offering a variety of electronic and non-electronic devices and equipment, a proprietary Internet of things (“IoT”) enterprise monitoring platform and a licensing subscription business model. The Company provides a complete end to end solution of hardware, middleware, apps, connectivity, licensing, and professional services, letting our customers know where or how someone, or something, is at the touch of a button, delivering safety, security, and peace of mind in real-time. Except for our military products and recently acquired Level 2 Security devices, all of our consumer and enterprise tracking products funnel into the MetAlert IoT monitoring platform which supports end user customers in over 35 countries. The Company is also in the business of licensing intellectual property, monetizing its patent portfolio, and providing backend infrastructure logistic and subscription management services.
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Results of Operations
The following discussion should be read in conjunction with our interim consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report.
Three Months Ended June 30, 2025 (“Q21 2025”) Compared to the Three Months Ended June 30, 2024 (“Q21 2024”)
| Three Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % of Revenues | $ | % of Revenues | |||||||||||||
| Product sales | 8,132 | 25 | % | 16,607 | 39 | % | ||||||||||
| Service income | 23,885 | 75 | % | 27,556 | 61 | % | ||||||||||
| Total revenues | 32,017 | 100 | % | 44,163 | 100 | % | ||||||||||
| Cost of products sold | 7,105 | 22 | % | 11,851 | 26 | % | ||||||||||
| Cost of service revenue | 3,965 | 12 | % | 3,082 | 7 | % | ||||||||||
| Cost of goods sold | 11,070 | 35 | % | 14,933 | 33 | % | ||||||||||
| Gross profit | 20,947 | 65 | % | 29,230 | 67 | % | ||||||||||
| Operating expenses: | ||||||||||||||||
| Wages and benefits | 38,752 | 121 | % | 48,918 | 109 | % | ||||||||||
| Professional fees | 25,000 | 78 | % | 11,138 | 25 | % | ||||||||||
| Sales and marketing expenses | 1,246 | 4 | % | 3,075 | 7 | % | ||||||||||
| General and administrative | 49,991 | 156 | % | 53,693 | 120 | % | ||||||||||
| Total operating expenses | 114,989 | 359 | % | 116,824 | 260 | % | ||||||||||
| Loss from operations | (94,042 | ) | -294 | % | (87,594 | ) | -194 | % | ||||||||
| Other expense, net | (75,139 | ) | -235 | % | (66,264 | ) | -194 | % | ||||||||
| Net loss | (169,181 | ) | -528 | % | (153,858 | ) | -342 | % | ||||||||
Revenues
Revenues were $32,017 for the three months ended June 30, 2025, compared to $44,163 for the three months ended June 30, 2024, representing a decrease of 28%. We currently have numerous SmartSole orders that cannot be fulfilled and have multiple government contracts in the review process for GunAlert; however during the first and second quarter of 2025 due to a change in administration cuts, and the uncertainty caused from the tariff fluctuations from various countries we manufacture in, we saw a complete stall in both manufacturing and government sales. As both these situations (tariffs and government budgets) start to sort out, we expect our business to ramp back up.
As a result, during the 2nd quarter ended June 30, 2025, we did not meet our overall revenue goals. We did however see some positive trends with international subscriptions increasing their growth by 22% for the period ended Q2 2025 as compared to Q2 2024 indicating that the international distributors are selling their inventory into the marketplace in their respective countries.
During the quarter ended June 30, 2025, the Company’s customer base and revenue streams were comprised of approximately 46% B2B (Wholesale Distributors and Enterprise Institutions), 54% B2C (consumers and government agencies who bought on the behalf of consumers, through our online ecommerce platform and through Amazon and Google).
During the quarter ended June 30, 2024, the Company’s customer base and revenue streams were comprised of approximately 51% B2B (Wholesale Distributors and Enterprise Institutions), 49% B2C (consumers and government agencies who bought on the behalf of consumers, through our online ecommerce platform and through Amazon and Google).
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Cost of goods sold
Cost of goods sold were $11,069 for the three months ended June 30, 2025, compared to $14,934 for the three months ended June 30, 2024, representing an decrease of 26%. This decrease was primarily due to the lower revenue product sales, which led to less related cost of goods sold. We expect our margins to normalize with greater volume of products sold.
We continue to work with all our suppliers to reduce unnecessary expenses related to production inefficiencies in order to position ourselves to maximize profits as we scale back up.
Wages and benefits
Wages and benefits decreased by 21% or $10,166 for the three months ended June 30, 2025, as compared to three months ended June 30, 2024, because of cost cutting and time saving initiatives, including the entire senior management team deferring or forgoing salaries.
Professional fees
Professional fees consist of costs attributable to consultants and contractors who primarily spend their time on legal, accounting, product development, business development, corporate advisory services and shareholder communications. Such costs increased $13,862 or 124% in the three months ended June 30, 2025, as compared to in the three months ended June 30, 2024. The increase was primarily related to accounting fees for filings.
Sales and marketing expenses
Sales and marketing expenses decreased by 59% or $1,829 in three months ended June 30, 2025, in comparison to the three months ended June 30, 2024. The decrease was primarily due to the delays from tariffs and government budgeting affecting the closing and timing of sales and marketing plans.
General and administrative
General and administrative costs in three months ended June 30, 2025, decreased by $3,702 or 7% in comparison to the three months ended June 30, 2024, mostly due to decreases in investor and public relations expense.
Other expense
Other expense, net increased 13% or $8,875 in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This increase was primarily as a result of the increase in interest expense, the amortization of debt discounts and financing costs.
Net loss
Net loss increased by 10% or $15,323 for in the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This increase, primarily due to the lower revenues and increase interest expense described above.
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Six Months Ended June 30, 2025 (“Q1 and Q2 20254”) Compared to the Six Months Ended June 30, 2024 (“Q1 and Q2 2024”)
| Six Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % of Revenues | $ | % of Revenues | |||||||||||||
| Product sales | 22,501 | 31 | % | 41,549 | 45 | % | ||||||||||
| Service income | 50,284 | 69 | % | 50,932 | 55 | % | ||||||||||
| Total revenues | 72,785 | 100 | % | 92,481 | 100 | % | ||||||||||
| Cost of products sold | 25,197 | 35 | % | 16,326 | 18 | % | ||||||||||
| Cost of service revenue | 8,249 | 11 | % | 3,737 | 4 | % | ||||||||||
| Cost of goods sold | 33,446 | 46 | % | 20,063 | 22 | % | ||||||||||
| Gross profit | 39,339 | 54 | % | 72,418 | 78 | % | ||||||||||
| Operating expenses: | ||||||||||||||||
| Wages and benefits | 116,818 | 160 | % | 131,801 | 143 | % | ||||||||||
| Professional fees | 46,974 | 65 | % | 67,420 | 73 | % | ||||||||||
| Sales and marketing expenses | 5,084 | 7 | % | 10,859 | 12 | % | ||||||||||
| General and administrative | 104,042 | 143 | % | 125,939 | 136 | % | ||||||||||
| Total operating expenses | 272,918 | 375 | % | 336,019 | 356 | % | ||||||||||
| Gain (loss) from operations | (233,579 | ) | -321 | % | (263,601 | ) | -278 | % | ||||||||
| Other income (expense), net | (170,966 | ) | -235 | % | (141,401 | ) | -153 | % | ||||||||
| Net income (loss) | (404,545 | ) | -556 | % | (405,002 | ) | -431 | % | ||||||||
Revenues
Revenues as a whole in Q1 and Q2 2025 decreased by 21% or $19,696 in comparison to Q1 and Q2 2024. We currently have numerous SmartSole orders that cannot be fulfilled and have multiple government contracts in the review process for GunAlert; however during the first and second quarter of 2025 due to a change in administration cuts, and the uncertainty caused from the tariff fluctuations from various countries we manufacture in, we saw a complete stall in both manufacturing and government sales. As both these situations (tariffs and government budgets) start to sort out, we expect our business to ramp back up.
During the period ended June 30, 2025, the Company’s customer base and revenue streams were comprised of approximately 59% B2B (Wholesale Distributors and Enterprise Institutions), 41% B2C (consumers and government agencies who bought on the behalf of consumers, through our online ecommerce platform and through Amazon, Google and iTunes).
During the period ended June 30, 2024, the Company’s customer base and revenue streams were comprised of approximately 56% B2B (Wholesale Distributors and Enterprise Institutions), 44% B2C (consumers and government agencies who bought on the behalf of consumers, through our online ecommerce platform and through Amazon, Google and iTunes).
Cost of goods sold
Cost of goods sold increased by 67% or $13,383 during Q1 and Q2 2025 in comparison to Q1 and Q2 2024. This increase was primarily due to the adjustments made to the mix of revenue and certain adjustments to inventory made in the first and second quarters of 2025.
We continue to work with all our suppliers to reduce unnecessary expenses related to production inefficiencies in order to position ourselves to maximize profits as we scale back up.
Wages and benefits
Wages and benefits during Q1 and Q2 2025 decreased by 11% or $14,983 in comparison to Q1 and Q2 2024, because of cost cutting and time saving initiatives.
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Professional fees
Professional fees consist of costs attributable to consultants and contractors who primarily spend their time on legal, accounting, product development, business development, corporate advisory services and investor relations. Such costs decreased $20,446 or 30% during Q1 and Q2 2025 as compared to Q1 and Q2 2024. The decrease was primarily related to reduction in stock-based compensation during the periods and decreases in our 10K audit fees from the prior year.
Sales and marketing expenses
Sales and marketing expenses decreased by 53% or $5,775 during Q1 and Q2 2025 in comparison to Q1 and Q2 2024.
The decrease was primarily due to the delays from tariffs and government budgeting affecting the closing and timing of sales and marketing plans.
General and administrative
General and administrative costs during Q1 and Q2 2025 decreased by $21,897 or 17% in comparison to Q1 and Q2 2024, mostly due to decreases in investor and public relations expense.
Other income/(expense), net
Other expense, net increased 21% or $29,565 from Q1 and Q2 2025 to Q1 and Q2 2024. This increase was primarily as a result of the increases in interest expense and the amortization of debt discounts.
Net income/(loss)
Net loss decreased by less than 1% or $457 from Q1 and Q2 2025 to Q1 and Q2 2024. This decrease, was primarily due to lower operating expenses as described above offsetting any revenue or other expense variances.
Liquidity and Capital Resources
As of June 30, 2025, we had $7,015 of cash and cash equivalents, and a working capital deficit of $4,569,040, compared to $53,501 of cash and cash equivalents and a working capital deficit of $4,280,987 as of December 31, 2024.
During the six months ended June 30, 2025, our net loss was $404,545 compared to a net loss of $405,002 for the six months ended June 30, 2024. Net cash used in operating activities in the six months ended June 30, 2025 and in the six months ended June 30, 2024, was $175,996 and $252,915, respectively.
Net cash used in investing activities during the three months ended June 30, 2025 and June 30, 2024 was $984 and $3,000, respectively.
Net cash provided by financing activities during the six months ended June 30, 2025, was $130,494 and consisted of $43,875 received for the issuance of a notes payable, $55,000 from the sale of preferred stock and $50,000 for a convertible note and payments to the line of credit of $8,761 and debt of $9,620. Net cash provided by financing activities during the six months ended June 30, 2024, was $217,051 and consisted of $40,000 received from the issuance of debt, $200,000 received for the issuance of preferred shares, and payments to the line of credit of $8,019 and debt of $14,930.
Because revenues from our operations have, to date, been insufficient to fund our working capital needs, we currently rely on the cash we receive from our financing activities to fund our growth, capital expenditures and to support our working capital requirements. The sale of our products and services is expected to enhance our liquidity in 2025, although the amount of revenues we receive in 2025 still cannot be estimated.
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Until such time as our products and services can support our working capital requirement, we expect to continue to generate revenues from our other licenses, subscriptions, international distributors, hardware sales, professional services and new customers in the pipeline. However, the amount of such revenues is unknown and is not expected to be sufficient to fund our working capital needs. For our internal budgeting purposes, we have assumed that such revenues will not be sufficient to fund all of our planned operating and other expenditures during 2025. In addition, our actual cash expenditures may exceed our planned expenditures, particularly if we invest in the development of improved versions of our existing products and technologies, and if we increase our marketing expenses. Accordingly, we anticipate that we will have to continue to raise additional capital in order to fund our operations in 2025. No assurance can be given that we will be able to obtain the additional funding we need to continue our operations.
In order to continue funding our growth, IP and working capital needs, as well as our new product development costs, during the first quarter of 2025, we continued to draw down on our credit line to fund purchase orders. However, no assurance can be given that the investor will provide the funding, if and when requested by us.
Going Concern
The consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has stockholders’ deficit of $4,762,861 and negative working capital of $4,569,040 as of June 30, 2025 and used cash in operations of $175,996 during the current period then ended. The Company anticipates further losses in the development of its business. Please see the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024, for more information regarding risks associated with our business.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Inflation
We do not believe our business and operations have been materially affected by inflation.
Critical Accounting Policies and Estimates
There are no material changes to the critical accounting policies and estimates described in the section entitled “Critical Accounting Policies and Estimates” under Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company”, we are not required to provide the information under this Item 3.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Based on the evaluation as of June 30, 2025, for the reasons set forth below, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 2.(a). UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On January 23, 2025, an investor converted part of a note into 895,522 shares of common stock with a value of $12,000.
On January 28, 2025, an investor converted part of a note into 895,522 shares of common stock with a value of $12,000.
On February 21, 2025, we issued 75,000 shares of common stock with a value of $1,200 to a consultant for services.
On March 20, 2025, an investor converted part of a note into 1,098,901 shares of common stock with a value of $10,000.
On July 11, 2025, the Company entered into a convertible promissory note in the amount of $25,000 with an investor. The convertible promissory note agreement bears interest at ten (10%) percent and has a one (1) year maturity date. The note may be repaid in whole or in part any time prior to maturity. The promissory note is convertible at the investor’s sole discretion into common stock shares at conversion prices at $0.01 each.
On July 17, 2025, the Company entered into an Addendum to the terms of a note with an investor, dated April 26, 2023, whereby the note’s conversion price was adjusted from $4.00 to a 30% discount to market.
The issuance of the above shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, in reliance on the exemptions provided by Regulation D and Section 4(a)(2), as applicable under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
(a) Exhibits
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition | |
| 101.LAB | Inline XBRL Taxonomy Extension Label | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| METALERT, INC. | ||
| Date: December 11, 2025 | By: | /s/ ALEX MCKEAN |
| Alex McKean, | ||
| Chief Financial Officer (Principal Financial Officer) | ||
| Date: December 11, 2025 | By: | /s/ PATRICK BERTAGNA |
| Patrick Bertagna, | ||
| Chief Executive Officer |
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