Swarmer, Inc

Current report

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors described in Part II, Item 1A, "Risk Factors," of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (the "Q1 2026 Form 10-Q"), filed with the SEC on May 14, 2026, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially and adversely affect our business, financial condition or future results. Except as set forth below, there have been no material changes from the risk factors described in our Q1 2026 Form 10-Q.

Current report

It is not possible to predict the actual number of shares of our common stock we will sell under the Purchase Agreement, or the actual gross proceeds resulting from those sales or the dilution to stockholders from those sales. Further, our inability to access a part or all of the amount available under the Purchase Agreement, in the absence of any other financing sources, could have a material adverse effect on our business.

Current report

Pursuant to the Purchase Agreement, Lucid has committed to purchase up to 3,000,000 shares of common stock from us, subject to certain limitations and conditions set forth in the Purchase Agreement. The shares of our common stock that may be issued under the Purchase Agreement may be sold by us to Lucid at our discretion from time to time over a 24- month period from the date of the Purchase Agreement. The facility commenced on June 15, 2026 upon effectiveness of the related resale registration statement. During the period from commencement through June 30, 2026, we sold 313,996 shares of common stock under the facility, recorded at their issuance-date fair value, for aggregate gross proceeds of approximately $13.5 million, of which approximately $8.8 million had been received at June 30, 2026 and approximately $4.6 million was recorded as a receivable from the sale of common stock and collected in July of 2026.

Current report

We generally have the right to control the timing and amount of any sales of our common stock to Lucid under the Purchase Agreement. Sales of our common stock to Lucid under the Purchase Agreement will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Lucid all or some of the common stock that may be available for us to sell pursuant to the Purchase Agreement.

Current report

Because the purchase price per share of common stock to be paid by Lucid for additional common stock that we may elect to sell to Lucid under the Purchase Agreement, if any, will fluctuate based on the market prices of our common stock at the time we make such election, it is not possible for us to predict, as of the date of this quarterly report and prior to any such future sales, the number of additional shares of common stock that we will sell to Lucid under the Purchase Agreement, the purchase price per share that Lucid will pay for such additional shares of common stock purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from such future purchases by Lucid under the Purchase Agreement, if any.

Current report

Even if we elect to sell to Lucid all of the 3,000,000 shares of common stock pursuant to the Purchase Agreement, depending on the market price of our common stock at the time we elect to sell such shares to Lucid, the actual gross proceeds from the sale of all such shares may be substantially less than the amount available to us under the Purchase Agreement, which could materially and adversely affect our liquidity position. Further, if we are unable to access all or a portion of the amount available under the Purchase Agreement to meet our liquidity needs, we may be required to seek other financing sources and utilize more costly and time-consuming means of accessing the capital markets, which could have a material adverse effect on our business, liquidity and cash position.

Current report

None.

Previous report

The following risk factors and other information included in this Quarterly Report on Form 10-Q should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. Please see page i of this Quarterly Report on Form 10-Q for a discussion of some of the forward-looking statements that are qualified by these risk factors. If any of the following risks occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected.

Previous report

Risks Related to Our Business and Industry

Previous report

Since our inception, we have incurred significant net losses. Our net losses were $4.5 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of approximately $15.1 million. To date, we have financed our operations primarily through sales of our equity securities.

Previous report

We expect our operating expenses to increase significantly as we pursue our growth strategy, including expending substantial resources for research, development and marketing. The extent of our future operating losses and the timing of profitability are highly uncertain, and we expect to continue incurring significant expenses and operating losses over the next several years. Any additional operating losses may have an adverse effect on our stockholders’ equity and the price of our common stock, and we cannot assure you that we will ever be able to achieve profitability.

Previous report

Even if we achieve profitability, we may not be able to sustain or increase such profitability. Additionally, our costs may increase in future periods and we may expend substantial financial and other resources on, among things, sales and marketing, the hiring of additional officers, employees, contractors and other service providers, and general administration, which may include a significant increase in legal and accounting expenses related to public company compliance, continued compliance and various regulations applicable to our business or arising from the growth and maturity of our company. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our development efforts, obtain regulatory approvals, diversify our product and service offerings or continue our operations, and may cause the price of our common stock to decline.

Previous report

We have significant dependence on a small number of customers, and the loss of such customers or a decrease in business conducted with such customers could materially harm our business, financial condition or results of operations. While one customer accounted for substantially all of our revenue during the three months ended March 31, 2026 and 2025, we have not received new orders from such customer and do not expect to receive new orders from such customer in the future.

Previous report

Because we have only recently launched our products, a small number of customers have accounted for a substantial amount of our revenue. During the three months ended March 31, 2026 and 2025, one customer accounted for substantially all of our revenue. While we continue to provide ongoing service in accordance with our obligations under the existing licensing agreement with such customer, we have not received new orders from such customer and we do not expect to receive new orders from such customer in the future. Accordingly, there can be no assurance that we will continue to conduct business with this customer in the future. We may be unable to replace this key customer with a similar relationship in a timely manner or at all, and the inability to replace this key customer could have a material adverse impact on our business, financial condition or results of operations.

Previous report

Failure to establish and maintain effective internal control over financial reporting could have a material adverse effect on our business, operating results and stock value.

Previous report

Public companies are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which requires our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. To comply with the requirements of being a public company, we will need to upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional accounting, finance, and legal staff.

Previous report

We have identified the following material weaknesses in the design of our internal controls:

Previous report

We have not designed and implemented controls to ensure we can record, process, summarize, and report financial data.

Previous report

We have not yet designed and implemented user access controls to ensure appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel.

Previous report

We did not design and maintain effective controls associated with the timing of when we recognized revenue, and controls related to the timing of when we accrue and recognize expenses.

Previous report

We also do not have a properly designed internal control system that identifies critical processes and key controls.

Previous report

We are in the process of remediating such material weaknesses and there can be no assurance as to when or if we will fully remediate such material weaknesses.

Previous report

Our efforts to develop and maintain our internal controls may not be successful, and we may be unable to maintain effective controls over our financial processes and reporting in the future and comply with the certification and reporting obligations under Sections 302 and 404 of the Sarbanes-Oxley Act. Any failure to maintain effective controls or any difficulties encountered in our implementation or improvement of our internal controls over financial reporting could result in material misstatements that are not prevented or detected on a timely basis, which could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. Ineffective internal controls could also cause investors to lose confidence in our reported financial information.

Previous report

We have incurred recurring losses and may require additional capital to support our operations and growth initiatives.

Previous report

We have prepared cash flow forecasts which indicate that we expect to continue to incur operating losses and negative cash flows for the foreseeable future as we continue to invest in our business, expand our operations and operate as a public company. Based on our current operating plan and existing cash and cash equivalents, management believes that our current capital resources will be sufficient to fund operations for at least the next twelve months from the issuance date of the financial statements included in this Quarterly Report on Form 10-Q. However, our future viability as an ongoing business will depend, in part, on our ability to generate cash from operating activities and, over the longer term, raise additional capital to finance our operations and growth initiatives.

Previous report

There can be no assurance that we will succeed in obtaining additional funding on terms acceptable to us, if at all. Market perceptions regarding our financial condition and capital requirements may make it more difficult or costly to obtain financing. If we are unable to obtain sufficient capital in the future, we may need to delay, reduce or eliminate certain research and development programs, commercialization efforts or other operations, which could materially adversely affect our business, financial condition and results of operations.

Previous report

Our growth depends in part on the success of our strategic partnerships with third parties, who may also be customers, as well as on our ability to establish a broad range of additional ecosystem partners and customer relationships with leading global defense industrial vendors.

Previous report

In order to grow our business, we depend on partnerships with market leading technology and defense industrial companies, who may also be our customers, in order to accelerate the adoption of our solutions.

Previous report

If we are unsuccessful in maintaining our partnership and customer relationships with third parties, or if our partnerships do not provide us with the anticipated benefits, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer. In addition, adoption of our Trident OS, MINAS Autonomy and Collaboration AI (“MINAS”) and STYX AI Command & Control System (“STYX”) solutions requires us to establish additional ecosystem relationships with leading global defense industrial vendors and customers. Even if we are successful in executing these partnerships and integrating with additional ecosystem vendors, we cannot assure you that these partnerships and relationships will result in increased adoption of our technology or increased revenue.

Previous report

If the unmanned systems markets do not experience significant growth, if we cannot expand our customer base or if our software and systems do not achieve broad acceptance, then we may not be able to achieve our anticipated level of growth.

Previous report

We cannot accurately predict the future growth rates or sizes of the markets for our software and systems. Demand for our software and systems may not increase, or may decrease, either generally or in specific markets, for particular types of software and systems or during particular time periods. We believe the market for commercial unmanned systems is nascent and the expansion of the market for our software and systems in particular, depends on a number of factors, including the following:

Previous report

obtaining timely regulatory approvals for new customer deployments; and

Previous report

marketing efforts and publicity regarding these types of systems and services.

Previous report

Even if commercial unmanned systems gain wide market acceptance, our software and systems may not adequately address market requirements and may not continue to gain market acceptance. If these types of systems generally, or our software and systems specifically, do not gain wide market acceptance, then we may not be able to achieve our anticipated level of growth and our revenue and results of operations would decline.

Previous report

Negative customer perception regarding the commercial unmanned systems industry could have a material adverse effect on the demand for our products and our business, results of operations, financial condition and cash flows.

Previous report

We believe the commercial unmanned systems industry is highly dependent upon customer perception regarding the safety, efficacy, and quality of the commercial unmanned systems deployed. Customer perception of these products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention, and other publicity. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention, or other research findings or publicity will be favorable to the unmanned systems market. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the demand for our products and the business, results of operations, financial condition and cash flows. The dependence upon customer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on the demand for our products, and the business, results of operations, financial condition and cash flows.

Previous report

There are difficult issues to navigate in the development and use of AI, which may result in reputational harm or liability, and failure to introduce new and innovative products that have AI capabilities could put us at a competitive disadvantage.

Previous report

We currently incorporate machine learning and AI capabilities into certain of our products and solutions and may seek to expand the use of AI in our offerings in the future. As with many innovations, AI presents risks, challenges, and unintended consequences that could affect our business. AI algorithms and training methodologies may be flawed. These deficiencies and other failures of AI systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm. Further, incorporating AI could give rise to litigation risk and risk of non-compliance and unknown cost of compliance, as AI is an emerging technology for which the legal and regulatory landscape is not fully developed (including potential liability for breaching intellectual property or privacy rights or laws). While new AI initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or entirely limit our ability to incorporate certain AI capabilities into our offerings.

Previous report

Additionally, leveraging AI capabilities to potentially improve internal functions and operations presents further risks and challenges. The use of AI to support business operations carries inherent risks related to data privacy and security, such as intended, unintended, or inadvertent transmission of proprietary, sensitive or export-controlled information, as well as challenges related to implementing and maintaining AI tools. Additionally, our competitors might move faster than us to gain efficiencies by incorporating AI into their design and development processes, and our products and/or cost structure could become less competitive as a result. The rapid evolution of AI will require the application of resources by us to develop, test and maintain our products, services and operations to help ensure that AI is implemented ethically in order to minimize unintended, harmful impact.

Previous report

Our competitors may be faster or more successful than we are in incorporating AI and other disruptive technology into their offerings, which would impair our ability to compete successfully.

Previous report

Failure to manage our planned growth could place a significant strain on our resources.

Previous report

Our ability to successfully implement our business plan requires an effective plan for managing our future growth. We plan to increase the scope of our operations. Current and future expansion efforts will be expensive and may significantly strain our managerial and other resources and ability to manage working capital. To manage future growth effectively, we must manage expanded operations, integrate new personnel and maintain and enhance our financial and accounting systems and controls. If we do not manage growth properly, it could harm our business, financial condition or results of operations and make it difficult for us to satisfy our debt obligations.

Previous report

We may be unsuccessful in achieving our organic growth strategies, which could limit our revenue growth or financial performance. Our ability to generate organic growth will be affected by our ability to, among other things:

Previous report

attract new customers;

Previous report

increase the number of products purchased from customers;

Previous report

maintain profitable gross margins in the sale and maintenance of our products;

Previous report

achieve the estimated revenue we announced from new customer contracts;