Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

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.).

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.

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.

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 March 31, 2025 ("Q1 2025") Compared to the Three Months Ended March 31, 2024 ("Q1 2024")

		Three Months Ended March 31,
		2025								2024
		$				% of Revenues				$				% of Revenues
Product sales			14,369				35	%			24,942				50	%
Service income			26,399				65	%			23,376				48	%
Total revenues			40,768				100	%			48,318				100	%
Cost of products sold			18,092				44	%			4,474				10	%
Cost of service revenue			4,285				11	%			655				1	%
Cost of goods sold			22,377				55	%			5,129				11	%
Gross profit			18,391				45	%			43,189				89	%
Operating expenses:
Wages and benefits			78,066				191	%			82,883				172	%
Professional fees			21,974				54	%			56,282				116	%
Sales and marketing expenses			3,838				9	%			7,785				16	%
General and administrative			54,050				133	%			72,246				150	%
Total operating expenses			157,928				387	%			219,196				4542	%
Loss from operations			(139,537	)			342	%			(176,007	)			-364	%
Other expense, net			(95,827	)			-235	%			(75,138	)			-156	%
Net loss			(235,364	)			-577	%			(251,145	)			-520	%

Revenues

Revenues were $40,768 for the three months ended March 31, 2025, compared to $48,318 for the three months ended March 31, 2024, representing a decrease of 16%. 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 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 1st quarter ended March 31, 2025, we did not meet our overall revenue goals. We did however see some positive trends with international subscriptions increasing their growth by 27% for the period ended Q1 2025 as compared to Q1 2024 indicating that the international distributors are selling their inventory into the marketplace in their respective countries.

During the period ended March 31, 2025, the Company's customer base and revenue streams were comprised of approximately 69% B2B (Wholesale Distributors and Enterprise Institutions), 31% B2C (consumers and government agencies who bought on the behalf of consumers, through our online ecommerce platform and through Amazon and Google).

During the period ended March 31, 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 and Google).

Cost of goods sold

Cost of goods sold were $22,377 for the three months ended March 31, 2025, compared to $5,129 for the three months ended March 31, 2024, representing an increase of 336%. This increase was primarily due to the adjustments made to the mix of revenue and certain adjustments to inventory made in the first quarter of 2025.

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 6% or $4,817 for the three months ended March 31, 2025, as compared to three months ended March 31, 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 decreased $34,308 or 61% in the three months ended March 31, 2025, as compared to in the three months ended March 31, 2024. The decrease was primarily related to reduction in stock-based compensation during the periods.

Sales and marketing expenses

Sales and marketing expenses decreased by 51% or $3,947 in three months ended March 31, 2025, in comparison to the three months ended March 31, 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 March 31, 2025, decreased by $18,196 or 25% in comparison to the three months ended March 31, 2024, mostly due to decreases in investor and public relations expense.

Other expense

Other expense, net increased 28% or $20,689 in the three months ended March 31, 2025, compared to the three months ended March 31, 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 decreased by 6% or $15,781 from in the three months ended March 31, 2025, compared to the three months ended March 31, 2024. This decrease, primarily due to the factors described above.

Liquidity and Capital Resources

As of March 31, 2025, we had $40,641 of cash and cash equivalents, and a working capital deficit of $4,526,032, 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 three months ended March 31, 2025, our net loss was $235,364 compared to a net loss of $251,145 for the three months ended March 31, 2024. Net cash used in operating activities in the three months ended March 31, 2025 and in the three months ended March 31, 2024, was $97,069 and $160,439, respectively.

Net cash used in investing activities during the three months ended March 31, 2025 and March 31, 2024 was $984 and $3,000, respectively.

Net cash provided by financing activities during the three months ended March 31, 2025, was $85,193 and consisted of $43,875 received for the issuance of a notes payable and $50,000 for a convertible note and payments to the line of credit of $4,352 and debt of $4,330. Net cash provided by financing activities during the three months ended March 31, 2024, was $181,094 and consisted of $200,000 received for the issuance of preferred shares, and payments to the line of credit of $3,976 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.

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 $4,648,681 and negative working capital of $4,526,032 as of March 31, 2025 and used cash in operations of $97,069 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.