AVEX 10-K & 10-Q changes, risk factors and insider trading

Information regarding our risk factors is disclosed under the section entitled “Risk Factors” in our prospectus filed with the Prospectus,Securities and Exchange Commission under Rule 424(b) on June 5, 2026, with such risk factors incorporated herein by reference. Please refer to that section for disclosures regarding the risks and uncertainties related to our business.

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of our financial condition and results of operations together with the sections entitled “Forward-Looking Statements” and “Risk Factors” and the unaudited condensed consolidated financial statements and related notes of AEVEX Corp. and Athena Technology Solutions Holdings, LLC included in this Quarterly Report on Form 10-Q, as well as the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and related notes thereto of AEVEX Corp. and Athena Technology Solutions Holdings, LLC (“Holdings LLC”) included in our final prospectus, dated April 16, 2026, filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 (the “IPO Prospectus”) in connection with our initial public offering (“IPO”).

This discussion and analysis contains forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Forward-Looking Statements” and in the “Risk Factors” sectionsections of our Prospectus.most recent filings with the Securities and Exchange Commission. Our actual results may differ materially from those contained in or implied by these forward-looking statements.

•Tactical Systems: Designs and manufactures battle-tested, autonomous, modular, and attritable UxS, including UAS and USV, along with other mission critical products. Tactical Systems segment revenue represented approximately 88.0%86.3% and 55.3%71.3% of our revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately 87.2% and 65.8% of our revenue for the six months ended June 30, 2026 and 2025, respectively.

•Global Solutions: Provides bespoke mission solutions, including AI-enabled full-spectrum airborne ISR, C-UAS, additive manufacturing, and specialized mission aircraft engineering, modification, and testing. Global Solutions segment revenue represented approximately 12.0%13.7% and 44.7%28.7% of our revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately 12.8% and 34.2% of our revenue for the six months ended June 30, 2026 and 2025, respectively.

On April 20, 2026, the Company consummated its IPO of 18,400,000 shares of its Class A common stock, which includes the exercise in full by the underwriters of their option to purchase an additional 2,400,000 shares of Class A common stock from us. The 18,400,000 shares were issued at a public offering price of $20.00 per share, resulting in net proceeds to the Company of $345.9 million, after deducting underwriting discounts and commissions of $22.1 million. In addition to the underwriting discounts,discounts and commissions, the Company incurred $13.3$13.8 million of total offering costs, which will bewere recorded toin additional paid-in capital during the three months ended June 30, 2026.

In connection with the IPO, the Company completed the Organizational Transactions described under Note 5,1, Subsequent Events,Organization, of the Company’s condensed consolidated financial statements and related notes of AEVEX Corp. and in Note 12. Subsequent Events, of the condensed consolidated financial statements and related notes of Athena Technology Solutions Holdings, LLC, each of which is included in this Quarterly Report on Form 10-Q. The following is a summary of the equity transactions consummated in connection with the Organizational Transactions and the IPO:

Our results have been affected, and are expected to be affected in the future, by a variety of factors. A discussion of key factors that have had, or may have, an effect on our results is set forth below. Information regarding the Company’s risk factors appears in the Prospectus under “Risk Factors.Factors” in our most recent filings with the Securities and Exchange Commission.

There is also uncertainty around the timing, extent, nature and effect of Congressional and other U.S. Government actions to address budgetary constraints and caps on the discretionary budget for defense and non-defense departments and agencies. In addition, there is uncertainty around the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. Government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt may increase pressure on the U.S. Government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. Government budgets could delay procurement of the federal government services that we provide. During the six months ended June 30, 2026, we experienced elongated award timelines in certain cases resulting from ongoing conflicts in the Middle East, changes to Department of Defense acquisition personnel and processes, and operational reprioritization. These dynamics may result in delays between opportunity identification and contract award, which could affect the timing of our revenue and backlog growth.

We have incurred, and expect to continue to incur, certain non-recurring professional fees and other expenses as part of our transition to becoming a public company. As a public company, we are implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. In particular, we expect our accounting, legal and personnel-related expenses and directors’ and officers’ insurance costs to increase as we establish more comprehensive compliance and governance functions, establish, maintain and review internal controls over financial reporting in accordance with the Sarbanes-Oxley Act and prepare and file periodic reports in accordance with SEC rules. Our financial statements following the IPO will reflect the impact of these expenses.

Funded backlog includes both single and multi-year awards, and fluctuations in backlog are driven primarily by the timing of large program wins. The decrease of $146.5$243.3 million in funded backlog for the threesix months ended MarchJune 31,30, 2026 was primarily due to revenue recognized for the EUCOM AOR Deep Strike program during the threesix months ended MarchJune 31,30, 2026. The decrease was also influenced by an increase in shorter-cycle customer orders. We are experiencing a shift in customer ordering patterns toward shorter-cycle procurement, with customers increasingly placing orders for near-term delivery rather than multi-year programs of record. This trend resulted in a greater proportion of our revenue during the six months ended June 30, 2026, being derived from orders received and shipped within the same fiscal year. We expect to convert approximately 93.0%95.1% of the total $356.6$259.8 million of funded backlog as of MarchJune 31,30, 2026 into revenue during the remaindernext of12 2026.months.

In addition, our funded backlog is subject to meaningful customer concentration risk. As of MarchJune 31,30, 2026, approximately 73.9%92.7% of the total dollar value of our funded backlog related to the U.S Government. For purposes of evaluating our funded backlog, we consider all U.S. Government entities to be one customer. Additionally, funded backlog that is originally funded through U.S. Government efforts is considered to be U.S. Government backlog even if the program is directly contracted through an intermediary.

Selling, General, and Administrative – consists primarily of personnel-related expenses for our sales, marketing, supply chain, finance, legal, human resources and administrative personnel, as well as the costs of customer service, information technology, risk management and related insurance, travel, allocated overhead and other marketing, communications and administrative expenses.expenses, as well as acquisition-related costs. We also expect to further invest in our corporate infrastructure and incur additional expenses associated with operating as a public company, including increased legal and accounting costs, investor relations and compliance costs. As a result, we expect that selling, general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time. In addition, as a result of becoming a public company, we will incur significant additional annual expenses including, among other things, additional directors’ and officers’ liability insurance, costs to administer a public company stock compensation plan, director fees, costs to comply with reporting requirements of the SEC, transfer agent fees, costs for additional accounting, legal and administrative personnel, increased auditing, tax and legal fees, stock exchange listing fees, additional stock-basedstock compensation expense and similar expenses.

Change in Contingent Consideration – As part of the acquisition of Tribe Aerospace, LLC in 2022, we agreed to pay contingent consideration to the sellers for any EBITDA (as defined in the earnout arrangement) recognized over certain thresholds during the earnout period from 2022-2024. The contingent consideration was settled using a combination of cash and Class A units based on converting a portion of each contingent payment to units at the fixed contractual price per unit. The change in fair value of the liability during the threesix months ended MarchJune 31,30, 2025 represents accretion of the discounted liability outstanding during the period. All earnout arrangement liabilities were settled as of December 31, 2025.

Interest Expense – consists primarily of interest expense incurred on borrowings under our Creditcredit Agreement.agreements.

Change in Derivative Liability – During December 2025 and the three months ended March 31, 2026, the Company issued Series A preferred units with conversion features that represent an embedded derivative that is accounted for separately from the Series A preferred units and remeasured at fair value at each reporting date, with the changes in fair value recorded through earnings. In connection with the IPO, the 115,342 of Holdings LLC’s Series A preferred units (and the related derivative liability) outstanding prior to the Organizational Transactions were, in accordance with their terms, converted into 7,208,876 shares of the Company’s Class A common stock at a conversion price based on 80% of the IPO price.

For the Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Products revenue increased to $191.8$168.7 million from $26.5$70.8 million, or by $165.4$97.9 million and 624.3%,138.1%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase is due to $161.0$99.6 million of higher revenue in our Tactical Systems segment. $72.2 million of the $99.6 million increase is from our EUCOM AOR Deep Strike program with the remainder of the increase being primarily from other UAS products. The $99.6 million of higher revenue in our Tactical Systems segment primarilywas fromoffset UASby products and $4.4$1.8 million of higherlower revenue in our Global Solutions segment primarily from aircraft modifications and testing products.

Services revenue decreasedincreased to $24.8$33.1 million from $26.8$30.3 million, or by $1.9$2.8 million and 7.2%,9.3%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease is primarily due to $2.2$2.5 million of lowerhigher revenue in our GlobalTactical SolutionsSystems segment primarily from missionUAS support, intelligence, surveillance, and reconnaissancesupport services.

Cost of products revenue increased to $140.2$130.3 million from $24.2$58.6 million, or by $115.9$71.7 million and 478.2%,122.3%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The higher cost of products revenueincrease is primarily due to $114.7higher millioncost of higher costsrevenue in our Tactical Systems segmentsegment. $57.6 million of the increase is from our EUCOM AOR Deep Strike program duringwith the threeremainder monthsof endedthe Marchincrease 31,being 2026primarily comparedfrom toother threeUAS months ended March 31, 2025.products. The $114.7$57.6 million of higher costs from our EUCOM AOR Deep Strike program is comprised of an approximately $109.3$50.6 million increase in materials related costs and an approximately $5.4$7.0 million increase in direct and indirect labor costs.

Cost of services revenue decreased to $20.0$23.8 million from $26.0$24.1 million, or by $6.0$0.3 million and 22.8%,1.2%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The lower costs of service revenue is primarily due to a $4.0 million decrease in labor and material costs in the Global Solutions segment.

Gross profit increased to $56.5$47.6 million from $3.1$18.4 million, or by $53.4$29.2 million and 1745.0%,159.3%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The gross profit percentage increased from 5.7%18.2% for the three months ended MarchJune 31,30, 2025 to 26.1%23.6% for the three months ended MarchJune 31,30, 2026. The increase was primarily due to $161.0$99.6 million of higher revenue in our Tactical Systems segment primarily from UAS products and $4.4 million of higher revenue in our Global Solutions segment primarily from aircraft modifications and testing products, which is offset by $114.7$73.6 million of higher costs in our Tactical Systems segment primarily from ourUAS EUCOM AOR Deep Strike program.products.

Selling, general, and administrative expenses increased to $19.4$22.5 million from $8.6$9.4 million, or by $10.8$13.1 million and 126.0%,139.5%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to a $3.8$5.8 million increase in audit and accountingprofessional fees related to our IPO process, secondary offering and business acquisition, a $3.0 million increase in incentive compensation expense, a $2.1 million increase in new employee-related costs, and a $1.1$1.6 million repurchaseincrease ofin Incentivenoncash Unitsstock duringcompensation the three months ended March 31, 2026.expense.

Research and development expenses decreased to $3.3$5.6 million from $9.5$7.2 million, or by $6.2$1.6 million and 64.8%,21.6%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily due to the $5.6$1.6 million decrease in development activities for UAS products and services.

Amortization of intangible assets increased to $4.1$4.2 million from $4.1 million, or by $42$0.1 thousandmillion and 1.0%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.

As part of the acquisition of Tribe Aerospace, LLC in 2022, the Company agreed to pay contingent consideration to the sellers for any EBITDA (as defined in the earnout arrangement) recognized over certain thresholds during the earnout period from 2022 to 2024. The contingent consideration was settled using a combination of cash and Class A units of theHoldings CompanyLLC based on converting a portion of each contingent payment to units at the fixed contractual price per unit. The change in fair value of the liability during the three months ended MarchJune 31,30, 2025 represents accretion of the discounted liability outstanding during the period. All earnout arrangement liabilities were settled as of December 31, 2025.

Interest expense decreased to $6.5$4.0 million from $7.2$8.4 million, or by $0.6$4.4 million and 8.8%,52.5%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily due to lower debt obligations outstanding and lower interest rates onunder the termNew loansCredit andFacilities $0.2as compared to the Prior Credit Facilities, which is partially offset by the $0.9 million ofloss lower amortization ofon debt issuanceextinguishment costsrecognized followingduring the modificationthree ofmonths theended CreditJune Agreement30, in September 2025.2026.

Interest income decreasedincreased to $0.1$1.1 million from $0.2$0.1 million, or by $0.1$1.0 million and 50.5%,750.8%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to interest earned on higher cash balances resulting from the net proceeds from the IPO.

During December 2025 and the three months ended March 31, 2026, the Company issued Series A preferred units with conversion features that represent an embedded derivative that is accounted for separately from the Series A preferred units and remeasured at fair value at each reporting date, with the changes in fair value recorded through earnings.earnings for the three months ended June 30, 2026.

Other (Expense) Income, Net

Other income,expense, net increaseddecreased to $0.2$(0.1) million from $0, or by $0.2$0.1 million, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.