NOTE 3—LIQUIDITY

The Company expects that its existing cash as of March 31, 2026 of $4,257,000 will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these financial statements.

At March 31, 2026, the Company had working capital of $3,115,000. Its working capital includes $4,257,000 of cash and deferred revenue of $2,934,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Total deferred revenue decreased by $140,000, from $3,409,000 at December 31, 2025 to $3,269,000 at March 31, 2026, as a result of the sales mix of products sold. Based on the current products being sold, the Company expects continued decreases in the deferred revenue balance in the foreseeable future (see Note 12, Revenue). The balance of deferred hardware revenue at March 31, 2026 will continue to be amortized over the months remaining in the three-year period since the hardware’s original date of shipment. Net cash decreased during the three-month period ended March 31, 2026 by $197,000, with $53,000 provided by operating activities, $260,000 used in investing activities of which $250,000 was the payment pursuant to the technology partnership agreement executed January 1, 2026, and $10,000 provided by financing activities.