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Note S - Quarterly Financial Data (Unaudited and Restated)

12 Months Ended

Dec. 31, 2024

NOTE S—QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED)

The Company is providing restated quarterly unaudited consolidated financial information for interim periods occurring within the year ended December 31, 2023.

The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its year-end 2023 consolidated financial statements. In the course of the audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2023, the Company determined that certain errors were made which require the restatement of the Company’s previously issued financial statements for the interim periods occurring within the year ended December 31, 2023. These errors resulted in the overstatement of accounts receivable and revenue, understatements in certain allowances for accounts receivable and certain reserves for inventory, and an understatement of net loss and total stockholders’ equity which errors may also impact other amounts included in the financial statements. The Company attributes the errors principally to a material weakness in internal controls over the recording and processing of revenues, allowances for accounts receivable and certain reserves for inventory, which the Company worked to remediate in 2024. We have put newly trained management in control of our EMEA invoice processing and revenue recognition process. Additionally, we have added more inventory analysis in our quarterly closing process.

The restated consolidated balance sheet line items for the first, second and third fiscal quarters of 2023 are as follows:

				*Originally Reported*									*Adjustment*									*Restated*
	Three Months Ended			Six Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended			Nine Months Ended
	*March 31, 2023*			*June 30, 2023*			*September 30, 2023*			*March 31, 2023*			*June 30, 2023*			*September 30, 2023*			*March 31, 2023*			*June 30, 2023*			*September 30, 2023*


Accounts receivable, net	$	3,362,203		$	3,178,785		$	2,799,218		$	(900,000	)	$	(1,100,000	)	$	(1,300,000	)	$	2,462,203		$	2,078,785		$	1,499,218
Inventory		4,427,815			4,384,098			4,289,213			(500,000	)		(1,500,000	)		(2,500,000	)		3,927,815			2,884,098			1,789,213
Total current assets		8,936,084			8,531,330			7,820,339			(1,400,000	)		(2,600,000	)		(3,800,000	)		7,536,084			5,931,330			4,020,339
Accumulated deficit		(116,773,695	)		(118,196,573	)		(118,834,397	)		(1,400,000	)		(2,600,000	)		(3,800,000	)		(118,173,695	)		(120,796,573	)		(122,634,397	)
Total Stockholders' Equity		5,156,755			3,845,091			3,314,451			(1,400,000	)		(2,600,000	)		(3,800,000	)		3,756,755			1,245,091			(485,549	)
Total Liabilities and Stockholders' Equity		11,106,057			10,583,245			9,749,380			(1,400,000	)		(2,600,000	)		(3,800,000	)		9,706,057			7,983,245			5,949,380

The restated line items of the consolidated statements of comprehensive income for the three-month periods ended March 31, 2023, June 30, 2023, and September 30, 2023 are as follow:

				*Originally Reported*									*Adjustment*									*Restated*

	Q1			Q2			Q3			Q1			Q2			Q3			Q1			Q2			Q3

License fees	$	2,478,556		$	1,235,771		$	950,015		$	(900,000	)	$	1,578,556		$	1,235,771		$	950,015
Total revenues		3,083,767			1,928,929			1,817,108			(900,000	)		-			-			2,183,767			1,928,929			1,817,108
Cost of hardware - Reserve		-			-			-			500,000			1,000,000			1,000,000			500,000			1,000,000			1,000,000
Total costs and other expenses		820,274			606,111			476,604			500,000			1,000,000			1,000,000			1,320,274			1,606,111			1,476,604
Gross profit		2,263,493			1,322,818			1,340,504			(1,400,000	)		(1,000,000	)		(1,000,000	)		863,493			322,818			340,504
Selling, general and administrative		1,931,732			1,943,164			1,547,376			200,000			200,000			1,931,732			2,143,164			1,747,376
Total Operating Expenses		2,621,891			2,501,345			2,106,062			-			200,000			200,000			2,621,891			2,701,345			2,306,062
Operating loss		(358,398	)		(1,178,527	)		(765,558	)		(1,400,000	)		(1,200,000	)		(1,200,000	)		(1,758,398	)		(2,378,527	)		(1,965,558	)
Loss before provision for income tax		(288,322	)		(1,279,878	)		(638,013	)		(1,400,000	)		(1,200,000	)		(1,200,000	)		(1,688,322	)		(2,479,878	)		(1,838,013	)
Net loss		(288,322	)		(1,422,878	)		(637,824	)		(1,400,000	)		(1,200,000	)		(1,200,000	)		(1,688,322	)		(2,479,878	)		(1,838,013	)
Comprehensive Net loss		(288,322	)		(1,422,878	)		(637,824	)		(1,400,000	)		(1,200,000	)		(1,200,000	)		(1,688,322	)		(2,479,878	)		(1,838,013	)
Comprehensive loss		(216,176	)		(1,402,994	)		(602,460	)		(1,400,000	)		(1,200,000	)		(1,200,000	)		(1,616,176	)		(2,459,994	)		(1,802,649	)
Basic and Diluted Loss per Common Share		(0.52	)		(2.56	)		(1.12	)		(2.52	)		(2.16	)		(2.11	)		(3.04	)		(4.45	)		(3.22	)

The restated line items of the consolidated statements of comprehensive income for the six-month period ended June 30, 2023 and nine-month period ended September 30, 2023 are as follows:

	*Originally Reported*						*Adjustment*						*Restated*
	Six Months Ended			Nine Months Ended			Six Months Ended			Nine Months Ended			Six Months Ended			Nine Months Ended
	*June 30, 2023*			*September 30, 2023*			*June 30, 2023*			*September 30, 2023*			*June 30, 2023*			*September 30, 2023*

License fees	$	3,714,327		$	4,664,341		$	(900,000	)	$	(900,000	)	$	2,814,327		$	3,764,341
Total revenues		5,012,696			6,829,804			(900,000	)		(900,000	)		4,112,696			5,929,804
Cost of hardware - reserve		-			-			1,500,000			2,500,000			1,500,000			2,500,000
Total costs and other expenses		1,426,385			1,902,989			1,500,000			2,500,000			2,926,385			4,402,989
Gross profit		3,586,311			4,926,815			(2,400,000	)		(3,400,000	)		1,186,311			1,526,815
Selling, general and administrative		3,874,896			5,422,272			200,000			400,000			4,074,896			5,822,272
Total Operating Expenses		5,123,237			7,229,298			200,000			400,000			5,323,237			7,629,298
Operating loss		(1,536,926	)		(2,302,483	)		(2,600,000	)		(3,800,000	)		(4,136,926	)		(6,102,483	)
Loss before provision for income tax		(1,568,200	)		(2,206,212	)		(2,600,000	)		(3,800,000	)		(4,168,200	)		(6,006,212	)
Net loss		(1,711,200	)		(2,349,023	)		(2,600,000	)		(3,800,000	)		(4,311,200	)		(6,149,023	)
Comprehensive net loss		(1,711,200	)		(2,349,023	)		(2,600,000	)		(3,800,000	)		(4,311,200	)		(6,149,023	)
Comprehensive loss		(1,619,170	)		(2,221,629	)		(2,600,000	)		(3,800,000	)		(4,219,170	)		(6,021,629	)
Basic and Diluted Loss per Common Share		(3.07	)		(4.12	)		(4.67	)		(6.67	)		(7.74	)		(10.79	)