SOUNDTHINKING, INC.

Previous wording

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement, security teams and civic leadership. In April 2023, we changed the company name, ShotSpotter, Inc., to SoundThinking, Inc., reflecting our broader impact on public safety through a growing set of industry-leading law enforcement tools and community-focused solutions. As part of the rebranding, we introduced our SafetySmart TM platform that includes six data-driven tools consisting of: (i) our flagship product, ShotSpotter®, our leading outdoor gunshot detection, location and alerting system trusted by 179 cities and 22 universities and corporations as of June 30, 2025, (ii) CrimeTracer™, a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve cases, (iii) CaseBuilder™, a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter™, which directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, (v) PlateRanger™ powered by Rekor®, an ALPR and vehicle identification solution that leverages AI and machine learning to enhance investigative efficiency and provide real-time data sharing for law enforcement, introduced in July 2024 through a strategic partnership with Rekor Systems, Inc. and (vi) SafePointe™, an AI-based weapons detection system. We also offer other security solutions within our flagship product offering ShotSpotter, including ShotSpotter for Campus and ShotSpotter for Corporate that are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive. SoundThinking Labs supports innovative uses of our technology to help protect wildlife and the environment.

Current wording

We are a leading public safety technology company that combines data-driven solutions and strategic advisory services for law enforcement, security teams and civic leadership. In April 2023, we changed the company name, ShotSpotter, Inc., to SoundThinking, Inc., reflecting our broader impact on public safety through a growing set of industry-leading law enforcement tools and community-focused solutions. As part of the rebranding, we introduced our SafetySmart TM platform that includes six data-driven tools consisting of: (i) our flagship product, ShotSpotter®, our leading outdoor gunshot detection, location and alerting system trusted by 178 cities and 22 universities and corporations as of September 30, 2025, (ii) CrimeTracer™, a leading law enforcement search engine that enables investigators to search through more than one billion criminal justice records from across jurisdictions to generate tactical leads and quickly make intelligent connections to solve cases, (iii) CaseBuilder™, a one-stop investigative management system for tracking, reporting, and collaborating on cases, (iv) ResourceRouter™, which directs the deployment of patrol and community anti-violence resources in an objective way to help maximize the impact of limited resources and improve community safety, (v) PlateRanger™ powered by Rekor®, an ALPR and vehicle identification solution that leverages AI and machine learning to enhance investigative efficiency and provide real-time data sharing for law enforcement, introduced in July 2024 through a strategic partnership with Rekor Systems, Inc. and (vi) SafePointe™, an AI-based weapons detection system. We also offer other security solutions within our flagship product offering ShotSpotter, including ShotSpotter for Campus and ShotSpotter for Corporate that are typically smaller-scale deployments of ShotSpotter vertically marketed to universities, corporate campuses and key infrastructure centers to mitigate risk and enhance security by notifying authorities of outdoor gunfire incidents, saving critical minutes for first responders to arrive. SoundThinking Labs supports innovative uses of our technology to help protect wildlife and the environment.

Previous wording

We offer our solutions on a software-as-a-service subscription model to our customers. We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis. Our security solutions, ShotSpotter for Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. Our ResourceRouter solution, an offering of CaseBuilder focused on gun violence, and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city. We generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, with a lane being the detection area between two sensors. As of June 30, 2025, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract covered over 1,086 square miles, of which over 1,086 square miles had gone live. Coverage areas under contract for ShotSpotter included 179 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 22 campuses/sites across the United States, South Africa, Uruguay, Brazil and the Bahamas, and included some of the largest cities in the United States. As of June 30, 2025, we had 264 SafePointe lanes under contract. Most of our revenues are attributable to customers based in the United States.

Current wording

We offer our solutions on a software-as-a-service subscription model to our customers. We generate annual subscription revenues from the deployment of ShotSpotter on a per-square-mile basis. Our security solutions, ShotSpotter for Campus, and ShotSpotter for Corporate are typically sold on a subscription basis, each with a customized deployment plan. Our ResourceRouter solution, an offering of CaseBuilder focused on gun violence, and CrimeTracer are also sold on a subscription basis generally customized based on the number of sworn officers in a particular city. We generate annual subscription revenues from the deployment of SafePointe on a per-lane basis, with a lane being the detection area between two sensors. As of September 30, 2025, we had ShotSpotter, ShotSpotter for Campus, and ShotSpotter for Corporate coverage areas under contract covered over 1,088 square miles, of which over 1,075 square miles had gone live. Coverage areas under contract for ShotSpotter included 178 cities and coverage areas under contract for ShotSpotter for Campus and ShotSpotter for Corporate included 22 campuses/sites across the United States, South Africa, Uruguay, Brazil and the Bahamas, and included some of the largest cities in the United States. As of September 30, 2025, we had 281 SafePointe lanes under contract. Most of our revenues are attributable to customers based in the United States.

Previous wording

We generated revenues of $25.9 million and $27.0 million for the three months ended June 30, 2025 and 2024, respectively, representing a decrease of 4%. For the three months ended June 30, 2025 and 2024 revenues from ShotSpotter represented approximately 68% and 69% of total revenues, respectively. Our current largest customer, the City of New York accounted for 25% of our total revenues for the three months ended June 30, 2025. The City of New York and the City of Chicago each accounted for 25% and 10%, respectively, of our total revenues for the three months ended June 30, 2024. The City of Chicago did not renew our contract in November 2024. We submitted a proposal in response to a request for proposals from the City of Chicago for a new contract. At this time, we can provide no assurances that we will be successful in winning the new contract with Chicago.

Current wording

We generated revenues of $25.1 million and $26.3 million for the three months ended September 30, 2025 and 2024, respectively, representing a decrease of 4%. For each of the three months ended September 30, 2025 and 2024 revenues from ShotSpotter represented approximately 65% of total revenues. Our current largest customer, the City of New York accounted for 28% of our total revenues for the three months ended September 30, 2025. The City of New York and the City of Chicago accounted for 23% and 11%, respectively, of our total revenues for the three months ended September 30, 2024. The City of Chicago did not renew our contract in November 2024. We submitted a proposal in response to a request for proposals from the City of Chicago for a new contract. At this time, we can provide no assurances that we will be successful in winning the new contract with Chicago.

Previous wording

We generated revenues of $54.2 million and $52.4 million for the six months ended June 30, 2025 and 2024, respectively, representing an increase of 4%. For the six months ended June 30, 2025 and 2024, revenues from ShotSpotter represented approximately 63%, and 69% of total revenues, respectively. Our current largest customer, the City of New York accounted for 31% of our total revenues for the six months ended June 30, 2025. The City of New York and the City of Chicago each accounted for 26% and 10%, respectively, of our total revenues for the six months ended June 30, 2024.

Current wording

We generated revenues of $79.3 million and $78.6 million for the nine months ended September 30, 2025 and 2024, respectively, representing an increase of 1%. For the nine months ended September 30, 2025 and 2024, revenues from ShotSpotter represented approximately 63%, and 67% of total revenues, respectively. Our current largest customer, the City of New York accounted for 30% of our total revenues for the nine months ended September 30, 2025. The City of New York and the City of Chicago accounted for 25% and 11%, respectively, of our total revenues for the nine months ended September 30, 2024.

Previous wording

For the three months ended June 30, 2025 and 2024, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $25.1 million and $26.3 million, respectively, or 97% and 98% of total revenues, respectively.

Current wording

For the three months ended September 30, 2025 and 2024, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $24.3 million and $26.0 million, respectively, or 97% and 99% of total revenues, respectively.

Previous wording

For the six months ended June 30, 2025 and 2024, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $52.7 million and $51.1 million, respectively, or 97% and 98% of total revenues, respectively.

Current wording

For the nine months ended September 30, 2025 and 2024, revenues generated within the United States (including Puerto Rico and the U.S. Virgin Islands) accounted for $77.0 million and $77.8 million, respectively, or 97% and 99% of total revenues, respectively.

Previous wording

We had a net loss of $3.1 million and $0.8 million for the three months ended June 30, 2025 and 2024, respectively. We had a net loss of $4.6 million and $3.7 million for the six months ended June 30, 2025 and 2024, respectively. Our accumulated deficit was $108.9 million and $104.3 million at June 30, 2025 and December 31, 2024, respectively.

Current wording

We had a net loss of $2.0 million and $1.4 million for the three months ended September 30, 2025 and 2024, respectively. We had a net loss of $6.6 million and $5.1 million for the nine months ended September 30, 2025 and 2024, respectively. Our accumulated deficit was $110.9 million and $104.3 million at September 30, 2025 and December 31, 2024, respectively.

Previous wording

We have focused on rapidly growing our business and believe that our future growth is dependent on many factors, including our ability to increase our customer base, expand the coverage of our solutions among our existing customers, expand our international presence, increase sales of our security solutions and retain our customers. Our future growth will primarily depend on the market acceptance for outdoor gunshot detection solutions, and expanding into new markets for our other security solutions. Challenges we face in this regard include our target customers not having access to adequate funding sources, the fact that contracting with government entities can be complex, expensive and time-consuming, the fact that our typical sales cycle is often very long and difficult to estimate accurately and the fact that negative publicity about our company can and has caused current and potential future customers to evaluate the sales of our solutions more than in the past. We expect international sales cycles to be even longer than our domestic sales cycles. To combat these challenges, we invest in research and development, increase awareness of our solutions, invest in new sales and marketing campaigns, often in different languages for international sales, and hire additional sales representatives to drive sales to continue to maintain our position as a market leader. In addition, we believe that entering into strategic partnerships with other service providers to cities and municipalities offers another potential avenue for expansion.

Current wording

We have focused on growing our business and believe that our future growth is dependent on many factors, including our ability to increase our customer base, expand the coverage of our solutions among our existing customers, expand our international presence, increase sales of our security solutions and retain our customers. Our future growth will primarily depend on the market acceptance for outdoor gunshot detection solutions, and expanding into new markets for our other security solutions. Challenges we face in this regard include our target customers not having access to adequate funding sources, the fact that contracting with government entities can be complex, expensive and time-consuming, the fact that our typical sales cycle is often very long and difficult to estimate accurately and the fact that negative publicity about our company can and has caused current and potential future customers to evaluate the sales of our solutions more than in the past. We expect international sales cycles to be even longer than our domestic sales cycles. To combat these challenges, we invest in research and development, increase awareness of our solutions, invest in new sales and marketing campaigns, often in different languages for international sales, and hire additional sales representatives to drive sales to continue to maintain our position as a market leader. In addition, we believe that entering into strategic partnerships with other service providers to cities and municipalities offers another potential avenue for expansion.

Previous wording

We will also focus on expanding our business by introducing new products and services to existing customers, such as ResourceRouter, CrimeTracer and as a result of our acquisition of SafePointe, an AI-driven weapon detection system, and acquiring intellectual property assets. We believe that developing and acquiring products for law enforcement in adjacent categories is a path for additional growth. We believe our large and growing installed base of police departments who trust SoundThinking’s products, support, and way of doing business provide revenue growth opportunities. The ability to cross-sell new products provides an opportunity to grow revenues per customer and lifetime value. We will also focus on expanding into new markets in conjunction with new regulations in California requiring weapons detection systems in hospitals and exploring other new markets such as casinos. Challenges we face in this area include ensuring our new products are reliable, integrated well with other SoundThinking solutions, and priced and serviced appropriately. In some cases, we will need to bring in new skill sets to properly develop, market, sell or service these new products depending on the categories they represent. Consistent with this strategy, we expanded our suite of solutions with the acquisitions of Technologic, Forensic Logic and SafePointe.

Current wording

We will also focus on expanding our business by introducing new products and services to existing customers, such as ResourceRouter, CrimeTracer and as a result of our acquisition of SafePointe, an AI-driven weapon detection system, and acquiring intellectual property assets. For instance, we have an opportunity to grow in the healthcare vertical with California’s AB 2975 mandate, which requires automated weapons detection systems in all general acute care and psychiatric hospitals by March 1, 2027. This legislation has created a substantial addressable market opportunity for us. We believe that developing and acquiring products for law enforcement in adjacent categories is a path for additional growth. We believe our large and growing installed base of police departments who trust SoundThinking’s products, support, and way of doing business provide revenue growth opportunities. The ability to cross-sell new products provides an opportunity to grow revenues per customer and lifetime value. We will also focus on expanding into new markets in conjunction with new regulations in California requiring weapons detection systems in hospitals and exploring other new markets such as casinos. Challenges we face in this area include ensuring our new products are reliable, integrated well with other SoundThinking solutions, and priced and serviced appropriately. In some cases, we will need to bring in new skill sets to properly develop, market, sell or service these new products depending on the categories they represent. Consistent with this strategy, we expanded our suite of solutions with the acquisitions of Technologic, Forensic Logic and SafePointe.

Previous wording

Net new “go-live” cities and universities represent the number of cities and universities covered by deployments of our gunshot detection solution, ShotSpotter, that were formally approved by customers during the period to be operational and ready to go live, both from initial and expanded customer deployments, net of cities and universities that ceased to be “live” during the period due to customer cancellations. New cities and universities include deployed coverage areas that may have been sold, or booked, in a prior period, but were formally approved during the period as noted above. We focus on net new “go-live” cities and universities as a key business metric to measure our operational performance and market penetration. Our net new “go-live” cities and universities in the three and six months ended June 30, 2025 and 2024 were as follows:

Current wording

Net new “go-live” cities and universities represent the number of cities and universities covered by deployments of our gunshot detection solution, ShotSpotter, that were formally approved by customers during the period to be operational and ready to go live, both from initial and expanded customer deployments, net of cities and universities that ceased to be “live” during the period due to customer cancellations. New cities and universities include deployed coverage areas that may have been sold, or booked, in a prior period, but were formally approved during the period as noted above. We focus on net new “go-live” cities and universities as a key business metric to measure our operational performance and market penetration. Our net new “go-live” cities and universities in the three and nine months ended September 30, 2025 and 2024 were as follows:

Previous wording

In the near term, we expect our cost of revenues to increase in absolute dollars as our installed base increases, although certain of our costs of revenues are fixed and do not need to increase commensurate with increases in revenues. In addition, depreciation expense associated with deployed equipment is recognized over the first five years from the go live date. We also expect cost of revenues to increase in absolute dollars as we continue to invest in our customer success capabilities to drive growth and value for our customers. In addition, many of our standardized components used broadly in our sensors are manufactured in significant quantities in concentrated geographic regions, particularly in Greater China. As a result, the recently increased tariffs placed on components exported from China by the U.S. government will increase our costs of revenues.

Current wording

In the near term, we expect our cost of revenues to increase in absolute dollars as our installed base increases, although certain of our costs of revenues are fixed and do not need to increase commensurate with increases in revenues. In addition, depreciation expense associated with deployed equipment is recognized over the first five years from the go live date. We also expect cost of revenues to increase in absolute dollars as we continue to invest in our customer success capabilities to drive growth and value for our customers. In addition, many of our standardized components used broadly in our sensors are manufactured in significant quantities in concentrated geographic regions, particularly in Greater China.

Previous wording

While our sales and marketing expenses have recently decreased due to our contract with the New York City Police Department, we expect sales and marketing expense will increase in the near-term in absolute dollars as we continue to grow our organization and may fluctuate from quarter to quarter based on the timing of commission expense, marketing campaigns and tradeshows.

Current wording

While our sales and marketing expenses have recently decreased due to higher commission expenses related to our contract with the New York City Police Department in 2024, we expect sales and marketing expense will increase in the near-term in absolute dollars as we continue to grow our organization and may fluctuate from quarter to quarter based on the timing of commission expense, marketing campaigns and tradeshows.

Previous wording

In the near term, we expect our general and administrative expenses to increase in both absolute dollars and as a percentage of revenues as we grow our business and comply with the requirement to include an auditor attestation report on the effectiveness of our internal control over financial reporting for the year ending December 31, 2025 as a result of becoming an accelerated filer for 2026.

Current wording

In the near term, we expect our general and administrative expenses to increase in both absolute dollars and as a percentage of revenues as we grow our business and comply with the requirement to include an auditor attestation report on the effectiveness of our internal control over financial reporting as a result of our expectation of becoming an accelerated filer.

Previous wording

The decrease in revenues of $1.1 million was primarily due to a reduction in revenue of approximately $2.8 million resulting from the non-renewal of our contract with the City of Chicago in 2024 and $0.2 million other reduction, which decrease was partially offset by $1.9 million in new bookings and expansions with existing customers.

Current wording

The decrease in revenues of $1.2 million was primarily due to the fact that the third quarter of 2024 included approximately $2.8 million from our contract with the City of Chicago, offset by $1.7 million in new bookings and expansions with existing customers during the third quarter of 2025.

Previous wording

Sales and marketing expense decreased by $0.7 million, primarily due to $0.8 million commission expense related to the contract with the NYPD in 2024 without a corresponding similar transaction in 2025.

Current wording

Sales and marketing expense decreased by $1.4 million, primarily due to $1.0 million commission expense related to the contract with the NYPD in 2024, without a corresponding similar transaction in 2025 and $0.4 million decrease in payroll and compensation related to a decrease in headcount.

Previous wording

Research and development expense increased by $0.3 million, primarily due to an increase of $0.1 million in headcount expense and $0.2 million in outside consulting expense related to our investments in enhancing our AI capabilities.

Current wording

Research and development expense increased by $0.7 million, primarily due to an increase of $0.3 million in outside consulting expense related to our investments in enhancing our AI capabilities and $0.4 million in other research and development expenses.

Previous wording

General and administrative expense increased by $0.2 million, primarily due to an increase of $0.5 million in equity expense and $0.5 million in accounting fees related to our efforts to comply with the requirement to include an auditor attestation report on the effectiveness of our internal control over financial reporting for the fiscal year ending December 31, 2025, offset by $0.8 million decrease in legal and IT expense.

Current wording

General and administrative expense increased by $0.1 million, primarily due to an increase of $0.1 million in accounting fees related to our efforts to comply with the requirement to include an auditor attestation report on the effectiveness of our internal control over financial reporting as a result of our expectation of becoming an accelerated filer and an increase $0.2 million public relations and legal expenses offset by $0.2 million decrease in payroll and compensation related to a decrease in headcount and stock-based compensation expense.

Previous wording

The other expense, net decreased by $0.4 million, primarily due to $0.3 million in restructuring expense in the second quarter of 2024 and no such expenses in 2025.

Current wording

The other expense, net decreased by less than $0.1 million compared to 2024.

Previous wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. For the six months ended June 30, 2025 and 2024, income taxes provision is $0.2 million and $0.3 million, respectively.

Current wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. For the three months ended September 30, 2025 the income tax benefit was $0.2 million and for the three months ended September 30, 2024, provision for income taxes was $0.3 million.

Previous wording

The following table sets forth selected condensed consolidated statements of operations data for the six months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following table sets forth selected condensed consolidated statements of operations data for the nine months ended September 30, 2025 and 2024 (in thousands):

Previous wording

The increase in revenues of $1.9 million was primarily attributable to approximately $4.1 million in new bookings and expansions and $2.8 million of catch-up revenue from two three-year contract renewals with the New York City Police Department which were renewed in the first quarter of 2025, which increases were partially offset by a reduction in revenue of approximately $5.2 million resulting from the non-renewal of our contract with the City of Chicago in 2024.

Current wording

The increase in revenues of $0.7 million was primarily attributable to approximately $4.4 million in new bookings and expansions, $1.6 million increase in revenue from New York City, $3.5 million of catch-up revenue from two three-year contract renewals with the New York City Police Department which were renewed in the first quarter of 2025 and $1.0 million increase from Puerto Rico, offset by a reduction in revenue due to the fact that the nine months ended September 30, 2024 included approximately $8.1 million resulting from our contract with the City of Chicago and other reductions of $1.7 million from various accounts.

Previous wording

The increase in cost of revenues of $2.7 million was due primarily to an increase of $1.0 million in Information Technology ("IT") costs related to our investments in enhancing our AI capabilities, $0.8 million in maintenance cost, $0.4 million in reimbursable product cost and $0.4 million in headcount and other expense. We incurred expenses related to licensing software for the NYPD and expect to enter into a new sublicensing contract approximately $1.0 million in the third quarter of 2025 and anticipate receiving catch-up revenue related to the additional costs of revenues incurred during the second quarter.

Current wording

The increase in cost of revenues of $2.9 million was due primarily to an increase of $1.0 million in Information Technology ("IT") costs related to our investments in enhancing our AI capabilities, $0.8 million in maintenance cost, $0.8 million in reimbursable product cost and $0.3 million in payroll and compensation related to headcount and other expense.

Previous wording

Sales and marketing expense decreased by $0.8 million, primarily due to $0.8 million commission expense related to the contract with the NYPD in 2024, without a corresponding similar transaction in 2025.

Current wording

Sales and marketing expense decreased by $2.0 million, primarily due to $1.8 million commission expense related to the contract with the NYPD in 2024 without a corresponding similar transaction in 2025 and a decrease of $0.2 million in other sales and marketing expenses.

Previous wording

Research and development expense increased by $0.8 million, primarily due to an increase of $0.5 million in consulting expense associated with SafePointe and a $0.4 million increase in IT expense related to our investments in enhancing our AI capabilities.

Current wording

Research and development expense increased by $1.5 million, primarily due to an increase of $0.9 million in consulting expense associated with SafePointe, a $0.8 million increase in IT expense related to our investments in enhancing our AI capabilities offset by $0.2 million in other expenses.

Previous wording

General and administrative expense increased by $0.6 million, primarily due to an increase of $0.3 million in equity expense and $0.5 million in accounting fees related to our efforts to comply with the requirement to include an auditor attestation report on the effectiveness of our internal control over financial reporting for the fiscal year ending December 31, 2025, offset by $0.2 million decrease of in headcount, legal and public relations expense.

Current wording

General and administrative expense increased by $0.4 million, primarily due to an increase of $0.6 million in accounting fees related to our efforts to comply with the requirement to include an auditor attestation report on the effectiveness of our internal control over financial reporting as a result of our expectation of becoming an accelerated filer and $0.3 million in other expenses, offset by $0.5 million decrease in legal and IT expense.

Previous wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. For the three months ended June 30, 2025 and 2024, provision income taxes was $0.1 million and $0.2 million, respectively.

Current wording

Our income taxes are based on the amount of our taxable income and enacted federal, state and foreign tax rates, adjusted for allowable credits, deductions and the valuations allowance against deferred tax assets, as applicable. For the nine months ended September 30, 2025 and 2024, income taxes provision is less than $0.1 million and $0.7 million, respectively.

Previous wording

Our operations have been financed primarily through net proceeds from the sale of equity, debt financing arrangements and cash from operating activities. Our principal source of liquidity is cash and cash equivalents totaling $9.0 million and accounts receivable of $30.7 million as of June 30, 2025. On June 30, 2025, our available credit facility was approximately $21.0 million and we had $4.0 million outstanding on our line of credit, which was primarily used to fund our acquisition of SafePointe.

Current wording

Our operations have been financed primarily through net proceeds from the sale of equity, debt financing arrangements and cash from operating activities. Our principal source of liquidity is cash and cash equivalents totaling $11.8 million and accounts receivable of $28.5 million as of September 30, 2025. On September 30, 2025, the available borrowing capacity under our credit facility was approximately $36.0 million and we had $4.0 million outstanding on our line of credit, which was primarily used to fund our acquisition of SafePointe.

Previous wording

We believe our existing cash and cash equivalent balances, our available borrowings under our credit facility and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. We believe that despite our negative working capital, the costs to perform the short-term deferred revenue is relatively low compared to the balance of $38.5 million. However, should additional working capital be needed, we can utilize the amount available under our credit facility. We believe that we will meet longer term expected future working capital and capital expenditure requirements through a combination of cash flows from operating activities, available cash balances and our available credit facility. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our products, further investments in our public safety solutions and overall economic conditions. We may also seek additional capital to fund our operations, including through the sale of equity or debt financings. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. Additionally, there is no guarantee that debt or equity financing will be available to us on terms that are favorable to us, or at all.

Current wording

We believe our existing cash and cash equivalent balances, our available borrowings under our credit facility and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. We believe that despite our negative working capital, the costs to perform the short-term deferred revenue is relatively low compared to the balance of $39.3 million. However, should additional working capital be needed, we can utilize the amount available under our credit facility. We believe that we will meet longer term expected future working capital and capital expenditure requirements through a combination of cash flows from operating activities, available cash balances and our available credit facility. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our products, further investments in our public safety solutions and overall economic conditions. We may also seek additional capital to fund our operations, including through the sale of equity or debt financings. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. Additionally, there is no guarantee that debt or equity financing will be available to us on terms that are favorable to us, or at all.

Previous wording

During the first half of 2024, we determined the contingent consideration related to the acquisition of SafePointe was not probable of being earned based on estimated SafePointe revenue resulting in the fair value of contingent consideration liabilities as of June 30, 2025 and 2024 being nil.

Current wording

During the nine months ended September 30, 2024, we determined the contingent consideration related to the acquisition of SafePointe was not probable of being earned based on estimated SafePointe revenue resulting in the fair value of contingent consideration liabilities as of September 30, 2025 and 2024 being nil.

Previous wording

During the six months ended June 30, 2025, we repurchased 65,063 shares of our common stock at an average price of $14.92 per share for approximately $1.0 million, under the 2022 Repurchase Program. The repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired. As of June 30, 2025, $12.5 million remains available under the 2022 Repurchase Program.

Current wording

During the nine months ended September 30, 2025, we repurchased 225,334 shares of our common stock at an average price of $13.15 per share for approximately $3.0 million, under the 2022 Repurchase Program. The repurchases were made in open market transactions using cash on hand, and all of the shares repurchased were retired. As of September 30, 2025, $10.5 million remains available under the 2022 Repurchase Program.

Previous wording

We have a revolving credit facility for available borrowings of up to $25.0 million under our Credit Agreement with Umpqua Bank (the “Umpqua Credit Agreement”). The credit facility matures on October 15, 2025. The revolving credit facility is for general working capital purposes. On June 30, 2025, we had $4.0 million outstanding on our line of credit, with an available borrowing capacity of $21.0 million.The Umpqua Credit Agreement subjects us to certain restrictive and financial covenants, see the risk entitled “The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions” in Part II, Item 1A, Risk Factors, included in this Quarterly Report on Form 10-Q. We are in compliance with all the covenants under the Umpqua Credit Agreement as of June 30, 2025.

Current wording

We have a revolving credit facility for available borrowings of up to $40.0 million under our Credit Agreement with Umpqua Bank (the “Umpqua Credit Agreement”). The credit facility matures on October 15, 2027. The revolving credit facility is for general working capital purposes. On September 30, 2025, we had $4.0 million outstanding on our line of credit, with an available borrowing capacity of $36.0 million. The Umpqua Credit Agreement subjects us to certain restrictive and financial covenants, see the risk entitled “The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions” in Part II, Item 1A, Risk Factors, included in this Quarterly Report on Form 10-Q. We are in compliance with all the covenants under the Umpqua Credit Agreement as of September 30, 2025.

Previous wording

The following table presents a summary of our cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following table presents a summary of our cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):

Previous wording

Our net loss and cash flows provided by (used in) operating activities are significantly influenced by our increase in headcount to support our growth, increase in legal expenses, outside services fees, sales and marketing expenses and our ability to bill and collect in a timely manner.

Current wording

Our net loss and cash flows provided by operating activities are significantly influenced by changes in headcount to support our growth, legal expenses, outside services fees, sales and marketing expenses and our ability to bill and collect in a timely manner.

Previous wording

Net cash provided by operating activities decreased by $10.8 million during the six months ended June 30, 2025 compared to six months ended June 30, 2024 resulting from net cash used by operating activities of $1.4 million compared to net cash provided by operating activities of $9.4 million during the same period of 2024. This was primarily due to a decrease of $8.1 million in deferred revenue caused by a reduction in new billings of $7.6 million and a decrease of $2.2 million in personnel-related accrual.

Current wording

Net cash provided by operating activities decreased by $18.3 million during the nine months ended September 30, 2025 compared to nine months ended September 30, 2024 resulting from net cash provided by operating activities of $4.8 million compared to net cash provided by operating activities of $23.1 million during the same period of 2024. This was primarily due to an increase of $8.2 million in account receivables related to slower collection from contracts with the New York Police Department, a decrease of $7.8 million in deferred revenue caused by a reduction in new billings of $7.6 million and a decrease of $3.4 million in personnel-related accrual related to lower accrual of bonus and commission.

Previous wording

Investing activities used cash of $2.3 million in the six months ended June 30, 2025. This was primarily driven by investments of $2.3 million in property and equipment installed for our solutions in customer coverage areas. Investing activities used cash of $3.8 million in the six months ended June 30, 2024. This was primarily driven by investments in property and equipment installed for our solutions in customer coverage areas.

Current wording

Investing activities used cash of $3.7 million in the nine months ended September 30, 2025. This was primarily driven by investments of $3.6 million in property and equipment installed for our solutions in customer coverage areas. Investing activities used cash of $5.1 million in the nine months ended September 30, 2024. This was primarily driven by investments in property and equipment installed for our solutions in customer coverage areas.

Previous wording

Financing activities used cash of $0.6 million in the six months ended June 30, 2025 which was payment of $1.0 million for repurchases of our common stock, offset by proceeds of $0.4 million from our employee stock purchase plan. Financing activities used cash of $1.6 million in the six months ended June 30, 2024, and reflect common stock repurchases of approximately $2.0 million, offset by proceeds of $0.4 million from our employee stock purchase plan.

Current wording

Financing activities used cash of $2.5 million in the nine months ended September 30, 2025 which was payment of $3.0 million for repurchases of our common stock, offset by proceeds of $0.4 million from our employee stock purchase plan. Financing activities used cash of $8.5 million in the nine months ended September 30, 2024, and reflect common stock repurchases of approximately $6.0 million and $3.0 million payments on line of credit, offset by proceeds of $0.4 million from our employee stock purchase plan.