REVENUE AND PRODUCT COSTS

9 Months Ended

Sep. 30, 2025

REVENUE AND PRODUCT COSTS [Abstract]

REVENUE AND PRODUCT COSTS

2. REVENUE AND PRODUCT COSTS

Revenue consists of product revenue, technology enabled services, and managed services. Product sales include BolaWrap products and accessories. Technology enabled services includes VR revenue, service, training and shipping revenue. Managed services revenue includes consulting services delivered to third parties and billed on an agreed hourly fee basis when enforceable right to payment exists.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced, and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. The Company recognizes an asset if there are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract. The Company may receive consideration, per the terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been completed. In such instances, a deferred revenue liability is recorded. The Company recognizes these contract liabilities as revenue after all revenue recognition criteria are met. Estimated costs for the Company’s standard warranty, generally one-year, are charged to cost of products sold when revenue is recorded for the related product. Royalties are also charged to the cost of products sold.

The table below details the activity in our contract liabilities during the nine months ended September 30, 2025.

		Customer		Deferred
		Deposits		Revenue
Balance at January 1, 2025	$	27	$	505
Additions, net		34		491
Transfer to revenue		-		(596	)
Balance at September 30, 2025	$	61	$	400
Current portion	$	61	$	382
Long-term portion	$	-	$	18

As of September 30, 2025, the Company’s deferred revenue of $400 consisted of $15 related to BolaWrap extended warranties and services, $20 related to WRAP Ready, $289 related to Intrensic extended warranties and services, $39 related to VR, and $37 related to training.