UAVS 10-K & 10-Q changes, risk factors and insider trading
AgEagle Aerial Systems Inc. · NYSE · Aircraft · CIK 8504 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Removed heading “Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.””
Removed heading “Risks Related to Our Business and the Industries We Serve”
Largest changes
“As of December 31, 2024, the Company had $3.6 million cash on hand and a working capital of $3.1 million. During the year ended December 31, 2024, the Company incurred a net loss of approximately $35.0 million and used cash in operating activities of approximately $6.6 million. While the Company has historically been successful in raising capital to meet its working capital needs, the ability to continue raising such capital to enable the Company to continue its growth is not guaranteed. …”see in full comparison
“If the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company could default on obligations; and could be required to discontinue or significantly reduce the scope of its operations if no other means of financing options are available. …”see in full comparison
“Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.””see in full comparison
“In addition to sales of Series F Convertible Preferred Stock and Series G Convertible Preferred in 2025,we believe our current cash balance, and working capital, help to alleviate previous doubt regarding our ability to continue as a going concern. …”see in full comparison
On June 26, 2022, the Company entered into a Securities Purchase Agreement (the “Series F Agreement”) with Alpha (as defined below). Pursuant to the terms of the Series F Agreement, the Board of Directors of the Company (the “Board” or the “Board of Directors”) designated a new series of Preferred Stock, the Series F 5% Preferred Convertible Stock (“Series F Convertible Preferred”), and authorized the sale and issuance of up to 35,000 shares of Series F Convertible Preferred. On June 5, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accreditedsee in full comparisoninvestors,which included Alpha,investors (the “Investors”), which included Alpha Capital Anstalt (“Alpha”). Pursuant to the terms of the Purchase Agreement, the Company has agreed to issue and sell to Investors (i) 16,720 shares ofCommoncommonStock (the “Offering Shares”)stock at $250.00 per share and (ii) warrants to purchase up to 25,080 shares of common stock (the “Warrants”), exercisable at $380.00 per share(the “Warrant Shares” together with the Warrants and Offering Shares, the “Securities”)and raised gross sales proceeds of $4,180,000. The Warrant is for a term of 5.5 years commencing on the closing date but is not exercisable for the first six months after closing. As a result, pursuant to the Purchase Agreement the Company issued 16,720 shares ofCommoncommonStockstock for proceeds of $3,817,400, net of issuance costs from the offering and warrants to purchase up to 25,080 shares of common stock exercisable at $380.00 per share.
Full comparison: every changed paragraph (39)
We have been operating through
our wholly-owned subsidiary, AgEagle Aerial, Inc. for over ten years. It was not until 2021 that we acquired
the latest go-to-market airframes, sensors and software technologies of our products. As of December 31, 2024,2025, we had an accumulated
deficit of approximately $218.4$231.2 million which included a net lossesloss of approximately $35.0$5.3 million and $42.4a net loss of $35.0 million for the years ended
December 31, 20242025 and 2023,2024, respectively. We are currently still incurring significant net losses as we continue to invest in our business
strategy and grow our business as a result, we cannot guarantee that when we expect to generate sufficient cash flows from operations
to be adequate to cover our operating business. Moreover, even if we achieve profitability, given the competitive and evolving nature
of the industries in which we operate, we may be unable to sustain or increase profitability and failure to do so would adversely affect
our business, including our ability to raise additional funds.
Our
operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts on product and
software development. We will require additional funds to support our continued research and development activities, as well as the costs
of commercializing, marketing and selling any existing and new products and/or services resulting from those activities. Until such time,
that we can generate sufficient revenue and achieve profitability, we will need to meet our future cash needs through equity or debt
financings. financing. There can be no assurance that we will be successful in our capital raising efforts.
On
March 10, 2023, the Company issued and sold to the Alpha Capital Anstalt (“Alpha” or “Investor”) an
additional 3,000 shares of Series F convertible into 2,381 shares of the Company’s common stock, per $1,000 Stated Value per
share of Preferred Stock, at a conversion price of $420.00 per share and associated common stock warrant to purchase up to 7,143
shares of common stock at the exercise price of $420.00 per share warrant (the “Additional Warrant”) in a private
placement and raised $3,000,000 in gross proceeds. The Additional Warrant is exercisable upon issuance and has a three-year
term.
On
June 26, 2022, the Company entered into a Securities Purchase Agreement (the “Series F Agreement”) with Alpha (as defined below). Pursuant to the terms of the Series F Agreement, the Board of Directors of the Company (the “Board” or the “Board of Directors”) designated a new series of Preferred Stock, the Series F 5% Preferred Convertible Stock (“Series F Convertible Preferred”), and authorized the sale and issuance of up to 35,000 shares of Series F Convertible Preferred. On June 5, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited
investors, which included Alpha,investors (the “Investors”), which included Alpha Capital Anstalt (“Alpha”). Pursuant to the terms of the Purchase Agreement, the Company has agreed to issue and sell to
Investors (i) 16,720 shares of Commoncommon Stock (the “Offering Shares”)stock at $250.00 per share and (ii) warrants to purchase up
to 25,080 shares of common stock (the “Warrants”), exercisable at $380.00 per share (the “Warrant Shares” together
with the Warrants and Offering Shares, the “Securities”) and raised gross sales proceeds of $4,180,000. The Warrant is for
a term of 5.5 years commencing on the closing date but is not exercisable for the first six months after closing. As a result, pursuant
to the Purchase Agreement the Company issued 16,720 shares of Commoncommon Stockstock for proceeds of $3,817,400, net of issuance costs from the
offering and warrants to purchase up to 25,080 shares of common stock exercisable at $380.00 per share.
On
November 15, 2023, the Company and Investors,the which included Alpha,Investors entered into thean Assignmentassignment Agreement,agreement, pursuant to which, among other
things, (i) Alpha transferred and assigned to certain institutional and accredited investorsInvestors (the “Assignees”), the rights
and obligations to purchase up to $1,850,000$1,850,000, or 1,850 shares at a price of $1,000 per shareshare, of Series F Convertible Preferred pursuant to the Additional
Investmentadditional Rightinvestment right provided in the Series F Agreement (the “Assigned Rights”), (ii) the Series F Agreement was amended so that
the Assignees are party thereto and have the same rights and obligations thereunder as the investor to the extent of the Assigned Rights,
(iii) the time period during which the investor can provide an investor notice was extended from August 3, 2024 until February 3, 2025;
and (iv) Alpha and the Company agreed to a one-time waiver of the Minimum Subscription Requirement to allow exercise of the Assigned
Rights..
Pursuant
to the investor notices received by the Company from Alpha and the Assignees on November 15, 2023, delivered in connection with
the Assignment, the Investor and the Assignees have provided notices of their desire to purchase 1,850 shares of Preferred Stock (the
“November Additional Series F Preferred”) convertible into 14,836 shares of Common Stock (the “November Conversion
Shares”) at a conversion price of $124.70 per share and warrants (the “November Additional Warrants”) to purchase up
to 14,836 shares of our Common Stock an exercise price of $124.70 per share for an aggregate purchase price of $1,850,000. The November
Additional Warrants will be exercisable upon issuance and have a three-year term.
Pursuant
to the Investor Notice received by the Company from Alpha, the Company sold to Alpha 650 shares of November Additional Series F Preferred,
which are part of the 1,850 shares and are convertible into 5,213 shares of Common Stock at a conversion price of $124.70 per share (which
was adjusted to $100.00 per share as a result of the Common Stock Offering) and November Additional Warrants to purchase up to 5,213
shares of our Common Stock an initial exercise price of $124.70 per share (which was adjusted to $100.00 per warrant as a result of the
Common Stock Offering) for an aggregate purchase price of $650,000.
On February 7, 2025, the Company received investor notice from Alpha for the aggregate purchase of 1,000 shares of Series F Convertible Preferred convertible into 450,390 shares of Common Stock at a conversion price of $2.22 and warrants to purchase up to 450,390 shares of Common Stock at an exercise price of $2.22 per share for an aggregate purchase price of $1,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On March 17, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 415,420 shares of Common Stock at a conversion price of $1.20 and warrants to purchase up to 415,420 shares of Common Stock at an exercise price of $1.20 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On May 5, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 602,846 shares of Common Stock at a conversion price of $0.83 and warrants to purchase up to 602,846 shares of Common Stock at an exercise price of $0.83 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On June 6, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 418,831 shares of Common Stock at a conversion price of $1.19 and warrants to purchase up to 418,831 shares of Common Stock at an exercise price of $1.19 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On June 9, 2025, the Company received investor notice from Alpha for the aggregate purchase of 1,000 shares of Series F Convertible Preferred convertible into 838,364 shares of Common Stock at a conversion price of $1.19 and warrants to purchase up to 838,364 shares of Common Stock at an exercise price of $1.19 per share for an aggregate purchase price of $ 1,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On June 17, 2025, the Company received investor notice from Alpha for the aggregate purchase of 1,000 shares of Series F Convertible Preferred convertible into 797,067 shares of Common Stock at a conversion price of $1.26 and warrants to purchase up to 797,067 shares of Common Stock at an exercise price of $1.26 per share for an aggregate purchase price of $ 1,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On July 11, 2025, the Company received investor notice from Alpha for the aggregate purchase of 800 shares of Series F Convertible Preferred convertible into 671,818 shares of Common Stock at a conversion price of $1.19 and warrants to purchase up to 671,818 shares of Common Stock at an exercise price of $1.19 per share for an aggregate purchase price of $ 800,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On July 18, 2025, the Company received investor notice from Alpha for the aggregate purchase of 1,000 shares of Series F Convertible Preferred convertible into 714,286 shares of Common Stock at a conversion price of $1.40 and warrants to purchase up to 714,286 shares of Common Stock at an exercise price of $1.40 per share for an aggregate purchase price of $ 1,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On July 21, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 357,143 shares of Common Stock at a conversion price of $1.40 and warrants to purchase up to 357,143 shares of Common Stock at an exercise price of $1.40 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On July 24, 2025, the Company received investor notice from Alpha for the aggregate purchase of 1,000 shares of Series F Convertible Preferred convertible into 456,621 shares of Common Stock at a conversion price of $2.19 and warrants to purchase up to 456,621 shares of Common Stock at an exercise price of $2.19 per share for an aggregate purchase price of $ 1,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On August 22, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 275,497 shares of Common Stock at a conversion price of $1.82 and warrants to purchase up to 275,497 shares of Common Stock at an exercise price of $1.82 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On September 19, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 272,598 shares of Common Stock at a conversion price of $1.83 and warrants to purchase up to 272,598 shares of Common Stock at an exercise price of $1.832 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On October 3, 2025, the Company received investor notice from Alpha for the aggregate purchase of 2,000 shares of Series F Convertible Preferred convertible into 967,165 shares of Common Stock at a conversion price of $2.07 and warrants to purchase up to 967,165 shares of Common Stock at an exercise price of $2.07 per share for an aggregate purchase price of $ 2,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On October 6, 2025, the Company received investor notice from Alpha for the aggregate purchase of 1,000 shares of Series F Convertible Preferred convertible into 426,857 shares of Common Stock at a conversion price of $2.34 and warrants to purchase up to 426,857 shares of Common Stock at an exercise price of $2.34 per share for an aggregate purchase price of $ 1,000,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On November 24, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 440,645 shares of Common Stock at a conversion price of $1.14 and warrants to purchase up to 440,645 shares of Common Stock at an exercise price of $1.14 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On December 22, 2025, the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 520,021 shares of Common Stock at a conversion price of $0.96 and warrants to purchase up to 520,021 shares of Common Stock at an exercise price of $0.96 per share for an aggregate purchase price of $ 500,000. The Warrants were immediately exercisable upon issuance and have a three-year term.
On November 5, 2025, the Company executed a certificate of designation of preferences, rights and limitations of the Series G Convertible Preferred Stock (the “Certificate of Designation”), designating 100,000 shares of Series G Convertible Preferred Stock ("Series G"), with a par value of $0.001 and a stated value of $1,000.
On November 10, 2025, the Company received investor notice from Alpha for the aggregate purchase of 10,000 shares of Series G Convertible Preferred convertible into 8,130,081 shares of Common Stock at a conversion price of $1.23 for an aggregate purchase price of $ 10,000,000. Also, on this date, the Company received notice from another investor to buy 2,000 shares of Series G Convertible Preferred into 1,626,016 shares of Common Stock at the same conversion price for an aggregate purchase price of $2,000,000.
In addition to sales of Series F Convertible Preferred Stock and Series G Convertible Preferred in 2025,we believe our current cash balance, and working capital, help to alleviate previous doubt regarding our ability to continue as a going concern. As of December 31, 2025, our cash balance was expected to be sufficient enough to meet our financial obligations for at least the next twelve months from the date these consolidated financial statements are issued and we believe we have access to sufficient capital to implement our business strategy while meeting our financial obligations under the Purchase Agreement.
Despite
the foregoing, we will require additional financing in the future. If we are unable to raise additional capital, we may have to delay,
curtail, or eliminate commercializing, marketing and selling one or more of our solutions. Should the financing we require be unavailable
to us, or on terms unacceptable to us when we require it, the consequences could have a material adverse effect on our business, operating
results, financial condition, and prospects.
In
addition, if additional funds are obtained through arrangements with collaborative partners or other non-dilutive sources, we may have
to relinquish economic and/or proprietary rights to some of our technologies or products under development that we would otherwise seek
to develop or commercialize by ourselves. Such events may have a material adverse effect on our business, operating results, financial
condition and prospects.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about
our ability to continue as a “going concern.”
As
of December 31, 2024, the Company had $3.6 million cash on hand and a working capital of $3.1 million. During the year ended December
31, 2024, the Company incurred a net loss of approximately $35.0 million and used cash in operating activities of approximately $6.6
million. While the Company has historically been successful in raising capital to meet its working capital needs, the ability to continue
raising such capital to enable the Company to continue its growth is not guaranteed. As the Company will require additional liquidity
to continue its operations and meet its financial obligations over the next twelve months, there is substantial doubt about the Company’s
ability to continue as a going concern. The Company is evaluating strategies to obtain the required additional funding for future operations
and the restructuring of operations to grow revenues and reduce expenses.
If
the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company
could default on obligations; and could be required to discontinue or significantly reduce the scope of its operations if no other means
of financing options are available. The consolidated financial statements contained in this Annual Report do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other
adjustment that might be necessary should the Company be unable to continue as a going concern.
Risks
Related to Our Business and the Industries We Serve
AgEagle’s
drone, sensorsensors and software technologies are and will be sold in new and rapidly evolving markets. The commercial UAV industry is in the
early stages of customer adoption and the FAA’s definition of regulations relating to the integration of commercial drones into
the U.S. National Airspace System is rapidly evolving. Accordingly, our business and future prospects may be difficult to evaluate. We
cannot accurately predict the extent to which demand for our drone systems and solutions will increase, if at all. The challenges, risks
and uncertainties frequently encountered by companies in rapidly evolving markets could impact our ability to do the following:
The
markets in which we compete are subject to technological changes, introduction of new products, changechanges in customer demands and evolving
industry standards. Our future success will depend upon our ability to keep pace with technological developments and to timely address
the increasingly sophisticated needs of our customers by supporting existing and new technologies and by developing and introducing enhancements
to our current products and services and new products and services. We may not be successful in developing and marketing enhancements
to our products that will respond to technological change, evolving industry standards or customer requirements. In addition, we may
experience difficulties internally or in conjunction with key vendors and partners that could delay or prevent the successful development,
introduction and sale of such enhancements and such enhancements may not adequately meet the requirements of the market and may not achieve
any significant degree of market acceptance. If the release dates of our new products or enhancements are delayed or, if when released,
they fail to achieve market acceptance, our business, operating results, and financial condition may be adversely affected.
Significant
portions of our business are conducted in Europe, Asia, and other international geographies. Interruptions in international relationships
such as the exit by the U.K., commonly referred to as “Brexit” from the EU, or the rapidly evolving conflictconflicts between Russia
and Ukraine, IsaraelIsrael and HamasHamas, Isreal, the United States and Iran and trade disputes such as the current trade negotiations between the U.S. and China, could result in
changes to regulations governing our products and our intellectual property, disruption of our manufacturing or commercial operations,
our inability to timely engage with and collect payment from customers in Russia and other affected regions, or otherwise affect our
ability to do business. Although these global problems transcend our company and afflict companies across industries and borders, these
and similar events could adversely affect us, or our business partners or customers.
There
has been volatility in financial markets as a result of a number of factors, including, but not limited to, banking instability, global
conflict, including the warwars in UkraineIran, Ukraine, and the Israel-Hamas war, inflation, changes in interest rates, and volatile markets. There is
a risk that as a result of these macroeconomic factors, we could experience declines in all, or in portions,portions of our business. Economic
uncertainty may cause some of our current or potential customers to curtail spending in our marketplace and may ultimately result in
cost challenges to our operations. Any resulting adverse effects to our customers’ liquidity or financial performance could reduce
the demand for our products or affect our allowance for collectability of accounts receivable. These adverse conditions could result
in reductions in revenue, increased operating expenses, longer sales cycles, slower adoption of new technologies, and increased competition.
We cannot predict the timing, strength, or duration of any economic slowdown or any subsequent recovery generally. If general economic
conditions significantly deviate from present levels, our business, financial condition, and operating results could be adversely affected.
Our
products are subject to export control and import laws, tariffs, and regulations, including the U.S. Export Administration Regulations,
U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office
of Foreign Assets Controls. Exports of our products must be made in compliance with these laws, tariffs, and regulations. If we fail
to comply with these laws, tariffs, and regulations, we and certain of our employees could be subject to substantial civil or criminal
penalties, including the possible loss of export or import privileges; fines, which may be imposed on us and responsible employees or
managers; and, in extreme cases, the incarceration of responsible employees or managers. In addition, changes in our products or changes
in applicable export or import laws, tariffs, and regulations may create delays in the introduction and sale of our products in international
markets or, in some cases, prevent the export or import of our products to certain countries, governments or persons altogether. Any
change in export or import laws and regulations, shift in the enforcement or scope of existing laws, tariffs, and regulations, or change
in the countries, governments, persons, products, or technologies targeted by such laws, tariffs, and regulations, could also result
in decreased use of our products, or in our decreased ability to export or sell our products to existing or potential customers. Any
decreased use of our products or limitationlimitations on our ability to export or sell our products would likely adversely affect our business,
financial condition and results of operations.
Our
Common Stock closed as high as $112.40$3.40 and as low as $1.61$0.75 per share between January 1, 20242025 and December 31, 20242025 on NYSE American,
post-split.American.
Financial Industry Regulatory Authority, Inc. ("FINRA ") sales practice requirements may limit a stockholder’s ability to buy and sell our securities.
Management's Discussion & Analysis (MD&A)
New heading “Environmental Regulations”
Largest changes
“If the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company could default on additional obligations; and could be required to discontinue or significantly reduce the scope of its operations if no other means of financing operations are available. …”see in full comparison
“The drone industry is subject to many forms of environmental regulation, including but not limited to regulation of hazardous substances, and other risks associated with climate change. The cost of compliance with more stringent environmental regulations, failure to comply with existing or future regulations or failure to otherwise manage the risks of climate change effectively could have a material adverse effect on our business. Many aspects of our operations are subject to evolving and increasingly stringent federal, state, local and international laws governing environmental protection. …”see in full comparison
“AgEagle is subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We could also be affected by future laws and regulations relating to the Earth’s climate, including laws related to greenhouse gas emissions and regulating energy efficiency. …”see in full comparison
“For the year ended December 31, 2025, goodwill impairment was $4.5 million. The impairment was attributable to the goodwill related to our sensor reporting unit, specifically due to lower sales compared to forecasted sales along with the declining market conditions. The goodwill on the sensor's reporting unit was deemed fully impaired. For the year ending December 31, 2024, the Company recorded a partial goodwill impairment of $2.9 million. …”see in full comparison
“For the year ended December 31, 2024, goodwill impairment was $2.9 million. The impairment was attributable to the goodwill related to our sensor reporting unit, specifically due to lower sales compared to forecasted sales along with the declining market conditions. For the year ending December 31, 2023, the company recorded a goodwill impairment of $15.8 million. The impairment was attributable to the goodwill related to our SaaS and sensor reporting units, specifically due to lower sales compared to forecasted sales along with the declining market conditions.”see in full comparison
For the year ended December 31,see in full comparison2024,2025, the Company incurred a net loss of$35.0$5.3 million as compared to a net loss of$42.4$35.0 million for the year ended December 31,2023,2024, a decrease in loss of$7.4$29.8 million or17.4%.84.9%. Overall, the net loss decrease is primarily a result of a$25.7 million decrease in operating expenses from 2023 to 2024. This was offset with an increase of$15.3 milliononlossofon equity financing that was notrecognizedrecorded in2023.2025 along with 2025 gain on fair value or warrant liabilities of $8.6 million. The Company also incurred impairment of goodwill and intangible assets of $5.8 million related to the sensor reporting until offset by $1.4 million credit for the employee retention credit.
Full comparison: every changed paragraph (36)
The
following discussion highlights the principal factors that have affected our financial condition and results of operations as well as
our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our Consolidated Financial
Statements and the related notes included in Item 8 "Financial Statements and Supplementary Data" of this FormAnnual 10-K.Report. This discussion contains forward-looking statements. Please see
the explanatory note concerning “"Cautionary Note Regarding Forward-Looking Statements” in Part I of this Annual Report on Form 10-K and Item 1A. Risk
Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.
AgEagle™
Aerial Systems Inc. (“AgEagle” or the “Company”),AgEagle, through its wholly owned subsidiaries, is actively engaged
in designing and delivering best-in-class drones, sensors and software that solve important problems for our customers. Founded in 2010,
AgEagle was originally formed to pioneer proprietary, professional-grade, fixed-winged drones and aerial imagery-based data collection
and analytics solutions for the agriculture industry. Today, the Company is earning distinction as a globally respected market leader
offering customer-centric, advanced, autonomous uncrewed aerial systems (“UAS”) which drive revenue at the intersection of
flight hardware, sensors and software for industries that include agriculture, military/defense, public safety, surveying/mapping and
utilities/engineering, among others. AgEagle has also achieved numerous regulatory firsts, earning governmental approvals for its commercial
and tactical drones to fly Beyond Visual Line of Sight (“BVLOS”) and/or Operations Over People (“OOP”) in the
United States, Canada, Brazil and the European Union and being awarded Blue UAS certification from the Defense Innovation Unit of the
U.S. Department of Defense.War.
Our
core technological capabilities include robotics and robotics systems autonomy; advanced thermal and multispectral sensor design and
development; embedded software and firmware; secure wireless digital communications and networks; lightweight airframes; small UAS (“sUAS”)
design, integration and operations; power electronics and propulsion systems; controls and systems integration; fixed wing flight; flight
management software; data capture and analytics; human-machine interface development and integrated mission solutions.
As
of December 31, 2024 and 2023,2025 our goodwill balance was fully impaired compared to the December 31, 2024 balance of $4.5 million and $7.4 million, respectively, after goodwill impairment charges
recognized during the years ended December 31, 20242025 and 20232024 of $2.9$4.5 million and $15.8$2.9 million, respectively. We perform an annual impairment
test of our goodwill at least annually in the fourth quarter or more frequently whenever events or changes in circumstances indicate
the carrying value of goodwill may be impaired. Such events or changes in circumstances may include a significant deterioration in overall
economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators,
competition, and reorganizations of our business. Our goodwill has been allocated to and is tested for impairment at a level referred to
as the business segment. The level at which we test goodwill for impairment requires us to determine whether the operations below the
business segment constitute a self-sustaining business for which discrete financial information is available, and segment management regularly
reviews the operating results which is referred to as a reporting unit.
As
of December 31, 2024,2025, we performed our annual goodwill impairment tests for our Sensor reporting unit. The results of our annual impairment
test indicated that the fair value of the sensors reporting unit was less than their carrying amount, indicating an impairment. As of
December 31, 2024,2025, the Company recorded an aggregate goodwill impairment charge of $2.9$4.5 million. This impairment charge is based on the
excess carrying value of the reporting unitsunit over theirits fair values.value which resulted in a full impairment charge of the goodwill balance.
Finite-lived
intangibles are amortized to expense over the applicable useful lives, ranging from three to ten years, based on the nature of the asset
and the underlying pattern of economic benefit as reflected by future net cash inflows. We perform an impairment test of finite-lived
intangibles whenever events or changes in circumstances indicate their carrying value may be impaired. If events or changes in circumstances
indicate the carrying value of a finite-lived intangible may be impaired, the sum of the undiscounted future cash flows expected to result
from the use of the asset group would beis compared to the asset group’s carrying value. If the asset group’s carrying amount
exceeds the sum of the undiscounted future cash flows, we would determine the fair value of the asset group and record an impairment
loss in net earnings. IntangibleThe intangible assets balancerelated to the historical acquisitions were fully impaired as of December 31, 20242025, andleaving 2023a wasbalance of $56,850 for internal use software, compared to the balance of $2.0 million and $2.6 million, respectively. Additionally,
as of December 31, 2023 the Company recorded an aggregate intangible assets impairment of $5.9 million, no intangible impairment was
recorded for the same period during the year ended December 31, 2024.31,2024.
Revenues
For
the year ended December 31, 2024,2025, revenues were $13.4$12.8 million as compared to $13.7$13.4 million during the year ended December 31, 2023,2024, a
decrease of $0.3$0.6 million, or 2.2%.4.3%. The decline in revenues is mainly due to the,the RedEdge-P and Altum-PT™ panchromatic sensors
of $0.4$1.7 million, $0.1$0.3 million of our SaaS subscription services related to our HempOverview and Ground Control platforms, offsetting
with the increase of the eBee drone products of $0.2$1.6 million. For the sensors, the declines are attributed to thestaffing challengechallenges to
secureand financingrebuilding fora thebest componentin partsclass sales team along with delayed R&D activity which impeded our ability to meetmarket demandnew whileversions atof theour same time utilizing the operating capital to expedite the eBee VISION
completion.sensors.
For
the year ended December 31, 2024,2025, cost of sales was $7.1$6.2 million as compared to $8.3$7.1 million during 2023,2024, a decrease of $1.2$0.9 million,
or 14.5%.13.1%. The primary factors contributing to the decrease in our cost of sales and
the increase gross profit margin were due to the historicalbetter inventory adjustmentsmanagement sourcing and having a full year of automated processes in the new bill of material system implementation.system.
For
the year ended December 31, 2025, gross profit was $6.6 million as compared to $6.3 million for the year ended December 31, 2024, gross profit was $6.3 million as compared to $5.5 million for the year ended December
31, 2023, an increase of $0.8$0.4 million or 14.5%.5.6%. For the year ended December 31, 2024,2025, gross profit margin was 47.0%51.8% as compared
to 39.8%47.0% for the year ended December 31, 2023.2024. The increase in gross profit margin was a result of ourcost droneof products
alongsales withdecreasing, significantduring price2025 reductionresale inagreements thewere secondrenegotiated to limit discounts on product sales and thirdencourage quarter of 2023resellers to stimulateachieve markethit demandcertain andsales bringtargets usto inachieve linelarger specifically
with competitive products manufactured in China.discounts. During the 20242025 calendar year pricing of products stabilized increasing gross profit.
For
the year ended December 31, 2025, general and administrative expenses were $9.0 million as compared to $9.6 million for the prior year ended December 31, 2024, general and administrative expenses were $9.6 million as compared to $13.6 million for the prior year
ended December 31, 2023, resulting in a decrease of $4.0$0.6 million, or 29.4%.6.4%. The decrease was driven by reductionreductions in employeelegal payroll related costs due to integration of roles, ERPfees, consulting integration costs,
lessfees, stock compensation costs offsetand bythe increaseddecrease in shareholder annualspecial meeting costs.
For
the year ended December 31, 2024,2025, research and development expenses were $4.0$3.6 million as compared to $5.5$4.0 million for the year ended December 31, 2023,2024, a decrease of $1.5$0.4 million or 27.3%.9.0%. The decrease was primarily due to the integrationreduction of researchstaff and
developmentrelated teamsto the Measure business unit that provideceased development of our new airframe, sensor and software technologies resultingoperations in aDecember reduction in our consultants
and internal headcounts.2024.
For
the year ended December 31, 2024,2025, sales and marketing expenses were $2.4$3.1 million as compared to $3.7$2.4 million for the year ended December 31, 2023,2024, aan decreaseincrease of $1.3$0.6 million, or 35.1%.25.5%. The decreaseincrease was primarily due to a reductionincreased in headcount, travel,
tradeshows, general marketing activities, along with a decrease in consulting expenses offset by an increase with in-person demos, particularly
for the new ebeeeBee VISON.
Impairment
For the year ended December 31, 2025, goodwill impairment was $4.5 million. The impairment was attributable to the goodwill related to our sensor reporting unit, specifically due to lower sales compared to forecasted sales along with the declining market conditions. The goodwill on the sensor's reporting unit was deemed fully impaired. For the year ending December 31, 2024, the Company recorded a partial goodwill impairment of $2.9 million. The impairment was attributable to the goodwill related to our sensor reporting unit, specifically due to lower sales compared to forecasted sales along with the declining market conditions.
For
the year ended December 31, 2024, goodwill impairment was $2.9 million. The impairment was attributable to the goodwill
related to our sensor reporting unit, specifically due to lower sales compared to forecasted sales along with the declining market conditions.
For the year ending December 31, 2023, the company recorded a goodwill impairment of $15.8 million. The impairment was attributable to the goodwill related to our SaaS and sensor reporting units, specifically due to lower sales compared to forecasted
sales along with the declining market conditions.
The
annual intangible impairment conducted during the fourth quarter of 20242025 indicated no impairment. The annual intangiblean impairment conducted
duringof $1.3 million related to the fourth quarter of 2023 indicated that the fair value of the SaaS and the Company’s Dronessensor reporting units were less
than carrying value.unit. Accordingly, the Company recorded ana full impairment charge to SaaS and Dronessensor units of $2.4 million and $3.5$1.3 million,
respectively, which is included in “Impairment” on the accompanying consolidated statements of operations and comprehensive
loss.
The goodwill and intangible impairment recorded on the sensor reporting unit resulted in a full impairment charges. As of December 31, 2025, the carrying value of goodwill and intangible assets, after the impairment charges, is zero for the sensor's reporting unit.
For
the year ended December 31, 2024,2025, other expenses,income, net for the Company reported a lossgain of $22.4$9.5 million as compared to a $3.3loss of $22.4 million
loss for the year ended December 31, 2023.2024. The fluctuation of $19.1$31.9 million was primarily due to the 2024 $15.3 million on loss on
equity financing, $1.6 million of loss on debt extinguishment, and $8.4 million interest on thepromissory Promissory Note and Note
Payable,note, offset by the 2024 $3.1 million gain and the 2025 gain of $8.6 million on change in fair value of warrant liabilities.
For
the year ended December 31, 2024,2025, the Company incurred a net loss of $35.0$5.3 million as compared to a net loss of $42.4$35.0 million for the
year ended December 31, 2023,2024, a decrease in loss of $7.4$29.8 million or 17.4%.84.9%. Overall, the net loss decrease is primarily a result of a
$25.7 million decrease in operating expenses from 2023 to 2024. This was offset with an increase of $15.3 million on loss ofon equity financing
that was not recognizedrecorded in 2023.2025 along with 2025 gain on fair value or warrant liabilities of $8.6 million. The Company also incurred impairment of goodwill and intangible assets of $5.8 million related to the sensor reporting until offset by $1.4 million credit for the employee retention credit.
As
of December 31, 2024,2025, cash on hand was $3.6$29.9 million, an increase of $2.8$26.2 million or 350%,726.2%, as compared to $0.8$3.6 million as of December
31, 2023.2024. For the year ended December 31, 2024,2025, cash used in operations was $6.6$9.9 million, aan decreaseincrease of $4.4$3.3 million, as compared to
$11.0 $6.6 million for the year ended December 31, 2023.2024. The decreaseincrease in cash used in operating activities was principally driven by lower$8.6 operatingmillion expenseswarrant whichliability includedchange significantlyoffset lowerby inventory$5.8 purchases,million prepaids,impairment expense and paydown of accounts payable,payable accruedof expenses$1.3 and
contract liabilities.million.
For
the year ended December 31, 2024,2025, cash used in investing activities was $0.1 million, a decrease of $0.7 million as compared to $0.8
$0.1 million for the year ended December 31, 2023.2024. The decrease in cash used in our investing activities resulted mainly from a decrease in platform and internal-use softwareThese costs
along withare purchasesrelated ofto property and equipment.
For the year ended December 31,
2024, 2025, cash provided by financing activities was $9.5$36.2 million an increase of $0.9$26.7 million, or 10.5%279.4% as compared to cash provided of $8.6
$9.5 million for the year ended December 31, 2023.2024. The increase in cash provided by our financing activities was due to exercise of Series
B warrants,Warrants, sale and conversion of warrants issued with Series F Convertible Preferred shares, sale of CommonSeries stockF andPreferred warrant liabilitiesstock, and the sale of Series F
G Preferred stock.
As
of December 31, 2024,2025, we had a working capital of $3.1$34.5 million. For the year ended December 31, 2024,2025, we incurred a loss from operations
of $12.6$14.8 million, a decreaseincrease of $26.5$2.2 million, as compared to $39.2$12.6 million for the year ended December 31, 2023.2024. Further, we utilized
our cash in our operating activities of $6.6$9.9 million, aan decreaseincrease of $4.4$3.3 million as compared to $11.0$6.6 million for the year ended December
31, 2023.2024.
During
the year ended December 31, 2024, we raised $15.7 million in equity from the additional sale of Series F Preferred Stock and
The Offering of our Common Stock, sales of common stock offering, and for the conversion of warrants of Series B.
During
the year ended December 31, 2023,2025, we raised $8.6$36.8 million in equity from the additional sale of Series F and Series G Preferred Stock and
Offering of our Common StockStock, and for the conversion of warrants.warrants of Series B and Series F.
During the year ended December 31, 2024, we raised $15.7 million in equity from the additional sale of Series F Preferred Stock and Offering of our Common Stock and for the conversion of warrants.
In addition to sales of Series F Preferred and Series F Preferred in 2025, we believe our current cash balance, and working capital, help alleviate previous doubt regarding our ability to continue as a going concern. As of December 31, 2025, our cash balance was sufficient enough to meet our financial obligations for at least the next twelve months from the date the consolidated financial statements are issued, and we believe we have access to sufficient capital to implement our business strategy while meeting our financial obligations under the Purchase Agreement.
If
the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company
could default on additional obligations; and could be required to discontinue or significantly reduce the scope of its operations if
no other means of financing operations are available. The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustment
that might be necessary should the Company be unable to continue as a going concern. The Company is evaluating strategies to obtain the
required additional funding for future operations and the restructuring of operations to grow revenues and reduce expenses.
Environmental Regulations
AgEagle is subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We could also be affected by future laws and regulations relating to the Earth’s climate, including laws related to greenhouse gas emissions and regulating energy efficiency. These laws and regulations could lead to increased environmental compliance expenditures, increased energy and raw materials costs and new and/or additional investment in designs and technologies. We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations. Investigation, remediation and operation and maintenance costs associated with environmental compliance and management of sites are a normal, recurring part of our operations. These costs often are allowable costs under our contracts with the U.S. government. While environmental protection regulations have not had a significant adverse effect on our overall operations historically, it is reasonably possible that costs incurred to ensure continued environmental compliance in the future could have a material impact on our results of operations, financial condition or cash flows if additional work requirements or more stringent clean-up standards are imposed by regulators, or if new areas of soil, air and groundwater contamination are discovered and/or expansions of work scope are prompted by the results of investigations.
Recent Events
On March 4, 2026, the Company entered into a private placement subscription (the “Aerodrome Agreement”) with Aerodrome Group Ltd. (“Aerodrome”). Pursuant to the Aerodrome Agreement, the Company purchased 11,523,750 ordinary shares of Aerodrome at a price of 0.80 new Israeli shekels (“NIS”) per share for an aggregate of 9,219,000 NIS. The Aerodrome Agreement also outlined the framework for the creation of a joint venture between EagleNXT and Aerodrome that would distribute advanced autonomous uncrewed systems in the United States and Canada. The formation of the joint venture is subject to the execution of mutually acceptable definitive documents setting forth the terms and conditions governing the joint venture and applicable regulatory approvals. The Aerodrome Agreement is subject to customary closing conditions.
[1] Note to AgEagle: Language duplicated from the Business section.
Climate
Change
The
drone industry is subject to many forms of environmental regulation, including but not limited to regulation of hazardous substances,
and other risks associated with climate change. The cost of compliance with more stringent environmental regulations, failure to comply
with existing or future regulations or failure to otherwise manage the risks of climate change effectively could have a material adverse
effect on our business. Many aspects of our operations are subject to evolving and increasingly stringent federal, state, local and international
laws governing environmental protection. Compliance with existing and future environmental laws and regulations could require capital
investment and increase operational costs, and violations can lead to significant fines and penalties and reputational harm. The ultimate
impact and associated cost to our Company of these legislative and regulatory developments cannot be predicted at this time.
What changed in the latest 10-Q
Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, and are not required to provide the information under this item.
Not applicable.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“For the six months ended June 30, 2026, general and administrative expenses were $6,653,575 as compared to $4,506,980for the six months ended June 30, 2025, representing an increase of $2,146,595, or 47.6%. The increase was primarily attributable to higher compensation expenses related to the hiring of additional employees, relocation costs, and increased professional fees, including legal and consulting expenses. These increases were partially offset by lower amortization expense in 2026, primarily due to impairment charges recorded during the year ended December 31, 2025.”see in full comparison
Three and Six Months Endedsee in full comparisonMarchJune31,30, 2026 as Compared to Three and Six Months EndedMarchJune31,30, 2025
see in full comparisonThreeSix Months EndedMarchJune31,30, 2026 as Compared to theThreeSix Months EndedMarchJune31,30, 2025
“For the six months ended June 30, 2026, other loss was $3,262,665 as compared to the other income of $8,849,835 for the six months ended June 30, 2025, a decrease of $ 12,112,500.The decrease was primarily attributable to the recognition of an 8,506,000 gain from changes in the fair value of outstanding warrant liabilities, $250,000 from the sale of the Measure domain name, and approximately $236,251 from an employee retention tax credit refund, all of which were recorded during the six months ended June 30, 2025. …”see in full comparison
“For the six months ended June 30, 2026, revenues were $4,087,177 as compared to $7,846,970 for the six months ended June 30, 2025, a decrease of $3,759,793, or 47.9%. The decrease of $3,759,793 was attributable to a decrease of $3,254,988 in revenues from our drone products related to the timing of national contracts and additional time each contract takes to close, reduced sales in Europe related to the sentiment of US defense company's and shifting the market to local producers. …”see in full comparison
AgEagle™ Aerial Systems Inc. (“AgEagle”see in full comparisonor, the “Company”, “we”, “our”, “us” or “usEagleNXT”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones and sensors that solve important problems for our customers.Founded inIn 2010, AgEaglewasbeganoriginallybyformedpioneeringtoprofessional-gradepioneer proprietary, professional-grade, fixed-wingedfixed-wing drones and aerial imagery-based data collection and analytics imagery solutions forthe agriculture industry.agriculture. Today, the Company is earning distinction as a globally respected market leader offering customer-centric,advanced,advanced autonomous uncrewed aerial systems (“UAS”) which drive revenue at the intersection of flight hardware,sensorssensors, and software forindustriesthethat include military/defense,commercial, public safety,surveying/mapping,andagriculture,defense markets. AgEagle also recently established ThirdEye USA, a joint venture dedicated to counter–UAS systems that provide detection, identification, andutilities/engineering,trackingamongcapabilitiesothers.forAgEagledefense and critical infrastructure customers. The Company hasalsoachievednumerousmultiple regulatoryfirsts,milestones, includingearning governmentalapprovals forits commercial and tactical drones to flyBeyond Visual Line of Sight(“BVLOS”)and/or Operations Over People(“OOP”)in the United States, Canada,BrazilBrazil, and the EuropeanUnionUnion, andbeinginclusionawardedon the Blue UAScertification fromthe Defense Innovation Unit of the U.S. Department of War ("“DoW"”).
Full comparison: every changed paragraph (25)
AgEagle™ Aerial Systems Inc. (“AgEagle” or, the “Company”, “we”, “our”, “us” or “usEagleNXT”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones and sensors that solve important problems for our customers. Founded inIn 2010, AgEagle wasbegan originallyby formedpioneering toprofessional-grade pioneer proprietary, professional-grade, fixed-wingedfixed-wing drones and aerial imagery-based data collection and analytics imagery solutions for the agriculture industry.agriculture. Today, the Company is earning distinction as a globally respected market leader offering customer-centric, advanced,advanced autonomous uncrewed aerial systems (“UAS”) which drive revenue at the intersection of flight hardware, sensorssensors, and software for industriesthe that include military/defense,commercial, public safety, surveying/mapping,and agriculture,defense markets. AgEagle also recently established ThirdEye USA, a joint venture dedicated to counter–UAS systems that provide detection, identification, and utilities/engineering,tracking amongcapabilities others.for AgEagledefense and critical infrastructure customers. The Company has also achieved numerousmultiple regulatory firsts,milestones, including earning governmental approvals for its commercial and tactical drones to fly Beyond Visual Line of Sight (“BVLOS”) and/or Operations Over People (“OOP”) in the United States, Canada, BrazilBrazil, and the European UnionUnion, and beinginclusion awardedon the Blue UAS certification from the Defense Innovation Unit of the U.S. Department of War ("“DoW"”).
AgEagle’s shift and expansion from solely manufacturing fixed-wing farm drones in 2018, to offering what the Company believes is one of the industry’s best fixed-wing, full-stack drone solutions, culminated in 2021 when the Company acquired three market-leading companies engaged in producing UAS airframes, sensors and software for commercial and government use. In addition to a robust portfolio of proprietary, connected hardware and software products; an established global network of over 165 UAS resellers; and enterprise customers worldwide; these acquisitions also brought AgEagle a highly valuable workforce comprised largely of experienced engineers and technologists with deep expertise in the fields of robotics, automation, manufacturing and data science. In 2022, the Company succeeded in integrating all three acquired companies with AgEagle to form one global company focused on taking autonomous flight performance to a higher level. The company is implementing a strategy of expansion into closely related markets of VTOL drones, precision guided loitering munitions, and counter-drone systems through select investments and international joint ventures.
The Company is currently headquartered in Allen, Texas where we house our sensor and drone manufacturing operations,operations. We also design and we manufacture drones in Lausanne, Switzerland. We also operate a distribution and service center for ourcertain drone products in Raleigh, North Carolina. which supports our international business activities.
Three and Six Months Ended MarchJune 31,30, 2026 as Compared to Three and Six Months Ended MarchJune 31,30, 2025
For the three months ended MarchJune 31,30, 2026, revenues were $1,401,207$2,685,971 as compared to $3,649,410$4,197,561 for the three months ended MarchJune 31,30, 2025, a decrease of $2,248,203,$1,511,590, or 61.6%.36.0%. The decrease of $2,248,203$1,511,590 was attributable to a decrease of $1,591,882$1,663,105 in revenues from our drone products related to the timing of national contracts and additional time each contract takes to close. The federal government shutdown in the United StatesStates, along with delayed approved defense funding bills, also contributed to the decrease in drone revenue. AAn decreaseincrease of $656,321$151,515 in the sensor revenues was due to sales mix, product repricing, and international growing seasons.
For the six months ended June 30, 2026, revenues were $4,087,177 as compared to $7,846,970 for the six months ended June 30, 2025, a decrease of $3,759,793, or 47.9%. The decrease of $3,759,793 was attributable to a decrease of $3,254,988 in revenues from our drone products related to the timing of national contracts and additional time each contract takes to close, reduced sales in Europe related to the sentiment of US defense company's and shifting the market to local producers. The federal government shutdown in the United States, along with delayed approved defense funding bills, also contributed to the decrease in drone revenue. A decrease in the sensor revenues was due to sales mix, product repricing, and international growing seasons.
For the three months ended MarchJune 31,30, 2026, cost of sales was $816,278$1,326,018 as compared to $1,515,592$1,857,682 for the three months ended MarchJune 31,30, 2025, a decrease of $699,314$531,664 or 46.1%.28.6%. For the three months ended MarchJune 31,30, 2026, gross profit was $584,929$1,359,953 as compared to $2,133,818$2,339,879 for the three months ended MarchJune 31,30, 2025, a decrease of $1,548,889,$979,926, or 72.6%.41.9%. The primary factors contributing to the decrease in our cost of sales and gross profit margin were reduced revenue andresulitng in less cost of sales, offset by fixed costs, salaries and rent that were not offset by revenue.
For the six months ended June 30, 2026, cost of sales was $2,142,297as compared to $3,373,275 for the six months ended June 30, 2025, a decrease of $1,230,978 or 36.5%. For the six months ended June 30, 2026, gross profit was $1,944,880 as compared to $4,473,695 for the six months ended June 30, 2025, a decrease of $2,528,815, or 56.5%. The primary factors contributing to the decrease in our cost of sales and gross profit margin were reduced revenue and higher fixed costs, salaries and rent that were not offset by revenue.
For the three months ended MarchJune 31,30, 2026, general and administrative expenses were $2,754,030$3,899,548 as compared to $1,972,811$2,534,170 for the three months ended MarchJune 31,30, 2025, representing an increase of $781,219,$1,365,378, or 39.6%.53.9%. The increase was primarily attributable to higher compensation expenses related to the hiring of additional employees, relocation costs, and increased professional fees, including legal and accountingconsulting expenses. These increases were partially offset by lower amortization expense in 2026, primarily due to impairment charges recorded during the year ended December 31, 2025.
For the six months ended June 30, 2026, general and administrative expenses were $6,653,575 as compared to $4,506,980for the six months ended June 30, 2025, representing an increase of $2,146,595, or 47.6%. The increase was primarily attributable to higher compensation expenses related to the hiring of additional employees, relocation costs, and increased professional fees, including legal and consulting expenses. These increases were partially offset by lower amortization expense in 2026, primarily due to impairment charges recorded during the year ended December 31, 2025.
For the three months ended MarchJune 31,30, 2026, research and development expenses were $1,763,142$1,983,084 as compared to $736,411$810,990 for the three months ended MarchJune 31,30, 2025, an increase of $1,026,731,$1,172,094, or 139.4%.144.5%. The increase was primarily attributable to the engagement of consultants to improve our sensors and release new products. The Company also hired additional employees for its engineering team for the further development of its drone products, resulting in higher salary expenses.
For the six months ended June 30, 2026, research and development expenses were $3,746,226 as compared to $1,547,401 for the six months ended June 30, 2025, an increase of $2,198,825, or 142.1%. The increase was primarily attributable to the engagement of consultants to improve our sensors and release new products. The Company also hired additional employees for its engineering team for the further development of its drone products, resulting in higher salary expenses.
For the three months ended MarchJune 31,30, 2026, sales and marketing expenses were $1,165,829$1,082,952 as compared to $427,141$1,062,345 for the three months ended MarchJune 31,30, 2025, an increase of $738,688,$20,607, or 172.9%.1.9%. The increase was primarily attributable to higher department headcount, increased public relations expenses, and greater travel activity by our sales and marketing team.
For the six months ended June 30, 2026, sales and marketing expenses were $2,248,781 as compared to $1,489,486 for the six months ended June 30, 2025, an increase of $759,295, or 51.0%. The increase was primarily attributable to higher department headcount, increased public relations expenses, and greater travel activity by our sales and marketing team.
For the three months ended MarchJune 31,30, 2026, other incomeexpense was $6,518,434$9,781,098 as compared to $8,062,584the other income of $787,250 for the three months ended MarchJune 31,30, 2025, a decrease of $1,544,150.$10,568,348. The decrease was primarily attributable to the recognition of a $7,780,000726,000 gain from changes in the fair value of outstanding warrant liabilities, $250,000 from the sale of the Measure domain name, and approximately $93,000 from an employee retention tax credit refund, all of which were recorded during the three months ended MarchJune 31,30, 2025. These items were partially offset by an unrealized gainloss on investmentthe fair value of the short and long term investments in marketableequity securities of $6,477,682$9,837,228 recognized during the three months ended MarchJune 31,30, 2026.
For the six months ended June 30, 2026, other loss was $3,262,665 as compared to the other income of $8,849,835 for the six months ended June 30, 2025, a decrease of $ 12,112,500.The decrease was primarily attributable to the recognition of an 8,506,000 gain from changes in the fair value of outstanding warrant liabilities, $250,000 from the sale of the Measure domain name, and approximately $236,251 from an employee retention tax credit refund, all of which were recorded during the six months ended June 30, 2025. Additionally, an unrealized loss on the fair value of the short and long terms investments in equity securities of $3,359,546 offset by $234,941of the interest from our cash investment was recognized during the six months ended June 30, 2026.
For the three months ended MarchJune 31,30, 2026, we generated a net incomeloss of $1,420,362$15,386,729 as compared to a net incomeloss of $7,060,039$1,280,376 for the three months ended MarchJune 31,30, 2025, a decrease of $5,639,677$14,106,353 or 79.9%.1101.7%. The decreaseincrease in our net loss is primarily attributable to the above-mentioned changes in our cost of sales, general and administrative, research and development, sales and marketing, and other net income (expense).
For the six months ended June 30, 2026, we generated a net loss of $13,966,367 as compared to a net income of $5,779,663 for the six months ended June 30, 2025, increase of $19,746,030 or 341.6%. The increase in our net loss is primarily attributable to the above-mentioned changes in our cost of sales, general and administrative, research and development, sales and marketing, and other net income (expense).
ThreeSix Months Ended MarchJune 31,30, 2026 as Compared to the ThreeSix Months Ended MarchJune 31,30, 2025
As of MarchJune 31,30, 2026, cash on hand was $26,911,440,$15,910,228, as compared to $ 29,858,655 as of December 31, 2025, a decrease of $2,947,215$13,948,427 or 9.9%.46.7%.
For the threesix months ended MarchJune 31,30, 2026, cash used in operations was $2,360,255,$8,372,751, an increase of $1,065,699$4,333,066 or 82.3%,107.3%, as compared to cash used of $1,294,556$4,039,685 for the threesix months ended MarchJune 31,30, 2025. The increase in cash used in operating activities was principally driven by the reduction in our net income, after adjusting for non-cash operating activities, due to increases in operating expenses related to consulting, salary expense and the opening of the Texas facility, partially offset by an increase in operating cash flows from changes in operating assets and liabilities, primarily the reduction of outstanding accounts payable. All of which resulted in an increase in cash used in operating activities.
For the threesix months ended MarchJune 31,30, 2026, cash used in investing activities was $3,356,982,$13,612,909, an increase of $3,346,558,$13,589,027, or 32104.4%,56900.7%, as compared to cash used of $10,424$23,882 for the threesix months ended MarchJune 31,30, 2025. The increase is related to fewer$555,076 purchases of property and equipment and $3,000,000 used$13,000,000used in the purchase of the short and long term investment in marketableequity securities.
For the threesix months ended MarchJune 31,30, 2026, cash provided by financing activities was $2,690,596,$7,937,202, an increase of $1,255,693$1,991,456 or 87.5%,33.5%, as compared to cash provided of $1,434,903$5,945,746 for the threesix months ended MarchJune 31,30, 2025. The increase in cash provided by our financing activities was due to an increase in net proceeds from the exercise of Series F Warrants, issuance of Series F and Series F Warrants, sales of Series G offset by dividend payments.
As of MarchJune 31,30, 2026, we had a working capital of $39,104,590$23,720,063 and cash on hand of $26,911,440.$15,910,228. For the threesix months ended MarchJune 31,30, 2026, we incurred a loss from operations of $5,098,072,$10,703,702, an increase of $4,095,527,$ 7,633,530, or 408.5%,248.6%, as compared to $1,002,545$3,070,172 for the threesix months ended MarchJune 31,30, 2025. During the threesix months ended MarchJune 31,30, 2026, we used cash in our operating activities of $2,360,255.$8,372,751. As of MarchJune 31,30, 2026, we do not have sufficient cash on hand to meet our financial obligations for the next twelve months.
On MarchJune 31,30, 2026, we did not have any 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, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. We have 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 are material to stockholders.
UAVS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 1 trade date, 10,050 shares, about $9.9K) and open-market sales in 0 filings. Net open-market shares: 10,050 (purchases minus sales); net value about $9.9K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-11 | Begley Grant A |
Open-market purchase | 5,000 | $0.98 | $4.9K |
| 2026-09-11 | Klavon Brent |
Open-market purchase | 5,050 | $0.99 | $5.0K |
| 2026-09-09 | Irby William Gordon |
Grant/award | 10,000 | $1.03 | $10.3K |
| 2026-08-31 | Burgett Alison |
Grant/award | 22,321 | $1.08 | $24.1K |
| 2026-08-31 | Burgett Alison |
Shares withheld for tax | 11,195 | $1.08 | $12.1K |
| 2026-08-28 | Irby William Gordon |
Shares withheld for tax | 6,375 | $1.08 | $6.9K |
| 2026-08-28 | Pope Brent |
Shares withheld for tax | 2,669 | $1.08 | $2.9K |
| 2026-08-20 | Begley Grant A |
Grant/award | 5,000 | $0.90 | $4.5K |
| 2026-08-19 | Day L B |
Grant/award | 10,000 | $0.90 | $9.0K |
| 2026-08-19 | Irby William Gordon |
Grant/award | 20,000 | $0.88 | $17.6K |
| 2026-06-05 | Irby William Gordon |
Grant/award | 10,000 | $0.95 | $9.5K |
| 2026-06-05 | Burgett Alison |
Grant/award | 6,315 | $0.95 | $6.0K |
| 2026-06-03 | Begley Grant A |
Grant/award | 2,000 | $1.07 | $2.1K |
| 2026-05-29 | Klavon Brent |
Grant/award | 9,090 | $1.11 | $10.1K |
| 2026-05-26 | Day L B |
Grant/award | 15,000 | $1.07 | $16.1K |
| 2026-05-26 | Begley Grant A |
Grant/award | 750 | $1.05 | $788 |
| 2026-05-22 | Lowdermilk Kevin |
Grant/award | 10,000 | $0.96 | $9.6K |
| 2026-05-20 | Day L B |
Grant/award | 11,000 | $0.96 | $10.6K |
| 2026-05-20 | Begley Grant A |
Grant/award | 25,000 | $0.97 | $24.2K |
| 2026-05-20 | Irby William Gordon |
Grant/award | 25,000 | $0.97 | $24.2K |
| 2025-08-20 | Day L B |
Grant/award | 6,000 | $1.71 | $10.3K |
Well-known investors holding UAVS (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 52,280 | $46.6K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 12,900 | $11.7K | — | Sold out |