AgEagle Aerial Systems Inc.

Previous wording

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 (“UAS”) 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.

Current wording

Our core technological capabilities include robotics and robotics systems autonomy; advanced thermal and multispectral sensor design and development; embedded software and firmware; lightweight airframes; small UAS (“UAS”) design, integration and operations; power electronics, controls and systems integration; fixed wing flight; flight management software; data capture and analytics; human-machine interface development and integrated mission solutions.

Previous wording

Three and Six Months Ended June 30, 2025 as Compared to Three and Six Months Ended June 30, 2024

Current wording

Three and Nine Months Ended September 30, 2025 as Compared to Three and Nine Months Ended September 30, 2024

Previous wording

For the three months ended June 30, 2025, revenues were $4,197,561 as compared to $3,392,538 for the three months ended June 30, 2024, an increase of $805,023, or 23.7%. The increase of $805,023 was attributable to an increase of $1,386,084 in revenues from our drone product, offset by a decrease of $492,471 revenues due to decreased sensor sales primarily related to expected seasonality, $88,590 decrease on our SaaS revenue due to us not renewing software subscriptions and ceasing the operations of this segment.

Current wording

For the three months ended September 30, 2025, revenues were $1,970,209 as compared to $3,284,984 for the three months ended September 30, 2024, a decrease of $1,314,775, or 40.0%. The decreaseof $1,314,775 was attributable to a decrease of $1,088,434 in revenues from our drone product related to the timing of national contracts and additional time each contract takes to close, a decrease of $157,904 in the sensor revenues due to sales mix and product repricing and$68,437 decrease in our SaaS revenue due to us not renewing software subscriptions and ceasing the operations of this segment.

Previous wording

For the six months ended June 30, 2025, revenues were $7,846,970 as compared to $7,286,985 for the six months ended June 30, 2024, an increase of $559,985, or 7.7%. The increase of $559,985 was attributable to an increase of approximately $2,472,881 in revenues from our drone products off set by a decrease of $1,710,011 revenues due to decreased sensor sales related to expected seasonality and less investment in sales and marketing in this operating segment in 2025, additionally revenues decreased in 2025 due to us not renewing SaaS software subscriptions and ceasing operations of this segment resulting in a decrease of $202,885.

Current wording

For the nine months ended September 30, 2025, revenues were $9,817,180 as compared to $10,571,969 for the nine months ended September 30, 2024, a decrease of $754,789, or 7.1%. The decrease of $754,789 was offset by an increase of $1,384,448 in revenues from our drone products offset by a decrease of $1,867,916 revenues due to declining sensor sales related to expected seasonality and reduced investment in sales and marketing in this operating segment in 2025, additionally revenues decreased in 2025 due to the Company ceasing operations for the SaaS software subscriptions for this segment resulting in a decrease of $271,321.

Previous wording

For the three months ended June 30, 2025, cost of sales was $1,857,682 as compared to $1,837,963 for the three months ended June 30, 2024, an increase of $19,719 or 1.1%. For the three months ended June 30, 2025, gross profit was $2,339,879 as compared to $1,554,575 for the three months ended June 30, 2024, an increase of $$785,304, or 50.5%. The primary factors contributing to the decrease in our cost of sales and the increase in gross profit margin was due to the total mix of our product sales during the current period which had higher margin drone sales than the previous period.

Current wording

For the three months ended September 30, 2025, cost of sales was $1,211,232 as compared to $1,650,717 for the three months ended September 30, 2024, a decrease of $439,485 or 26.6%. For the three months ended September 30, 2025, gross profit was $758,977 as compared to $1,634,267 for the three months ended September 30, 2024, a decrease of $$875,290, or 53.6%. The primary factors contributing to the decrease in our cost of sales and gross profit margin was due to the total mix of our product sales during the current period which had higher margin drone sales than the previous period.

Previous wording

For the six months ended June 30, 2025, cost of sales was $3,373,275 compared to $3,777,988 the six months ended June 30, 2024, a decrease of $404,713 or 10.7%. For the six months ended June 30, 2025, gross profit was $4,473,695 as compared to $3,508,997 for the six months ended June 30, 2024, an increase of $964,698, or 27.5%. The primary factors contributing to the decrease in our cost of sales and the increase in gross profit margin was due to the total mix of our product sales during the current period which had higher margin drone sales than the previous period.

Current wording

For the nine months ended September 30, 2025, cost of sales was $4,584,507 compared to $5,428,705 the nine months ended September 30, 2024, a decrease of $844,198 or 15.6%. For the nine months ended September 30, 2025, gross profit was $5,232,673 as compared to $5,143,264 for the nine months ended September 30, 2024, an increase of $89,409, or 1.7%. The primary factors contributing to the decrease in our cost of sales and the increase in gross profit margin were due to the total mix of our product sales during the current period which had higher margin drone sales than the previous period.

Previous wording

For the three months ended June 30, 2025, general and administrative expenses were $2,534,170 as compared to $2,359,105 for the three months ended June 30, 2024, an increase of $175,065, or 7.4%. The increase was primarily related to, increased costs related to our annual shareholder meeting, legal fees, and accounting expenses, offset by decreases in compensation expense related to terminated employees, less amortization expense during 2025 due to impairment charges recorded during the year ended December 31, 2024

Current wording

For the three months ended September 30, 2025, general and administrative expenses were $2,229,820 as compared to $1,889,733 for the three months ended September 30, 2024, an increase of $340,087, or 18.0%. The increase was primarily related to professional fees, legal fees, and accounting expenses, offset by less amortization expense during 2025 due to impairment charges recorded during the year ended December 31, 2024

Previous wording

For the six months ended June 30, 2025, general and administrative expenses were $4,506,980 as compared to $5,041,763 for the six months ended June 30, 2024, a decrease of $534,783, or 10.6%. The decrease was primarily related to less compensation expense related to terminated employees, less intangible amortization during 2025 due to impairment charges recorded during the year ended December 31, 2024

Current wording

For the nine months ended September 30, 2025, general and administrative expenses were $6,736,799 as compared to $6,931,496 for the nine months ended September 30, 2024, a decrease of $194,697, or 2.8%. The decrease was primarily related to depreciation expense and less intangible amortization during 2025 due to impairment charges recorded during the year ended December 31, 2024

Previous wording

For the three months ended June 30, 2025, research and development expenses were $810,990 as compared to $1,082,007 for the three months ended June 30, 2024, a decrease of $271,017, or 25.0%. The decrease was primarily due to the integration of research and development teams that provide development of our new airframe, sensor and software technologies, resulting in a reduction in our consultants and internal headcounts.

Current wording

For the three months ended September 30, 2025, research and development expenses were $1,012,354 as compared to $969,402 for the three months ended September 30, 2024, an increase of $42,952, or 4.4%. The increase was primarily due to the Company reinvesting in research and development staff.

Previous wording

For the six months ended June 30, 2025, research and development expenses were $1,547,401 as compared to $2,212,236 for the six months ended June 30, 2024, a decrease of $664,835, or 30.1%. The decrease was primarily due to the integration of research and development teams for our new airframe, sensor, and software technologies, resulting in a reduction in our consultants and internal headcounts.

Current wording

For the nine months ended September 30, 2025, research and development expenses were $2,559,755 as compared to $3,181,638 for the nine months ended September 30, 2024, a decrease of $621,883, or 19.5%. The decrease was primarily due to the integration of research and development teams for our new airframe, sensor, and software technologies, resulting in a reduction in our consultants and internal headcounts.

Previous wording

For the three months ended June 30, 2025, sales and marketing expenses were $1,062,345 as compared to $653,931 for the three months ended June 30, 2024, an increase of $408,414, or 62.5%. The increase was primarily due to the increase in headcount in this department and increased travel of our sales and marketing team. Additional increases were related to trade show demos including, United States, Germany, and Indonesia.

Current wording

For the three months ended September 30, 2025, sales and marketing expenses were $671,579 as compared to $636,292 for the three months ended September 30, 2024, an increase of $35,287, or 5.5%. The increase was primarily due to the increase in headcount in this department and increased travel of our sales and marketing team.

Previous wording

For the six months ended June 30, 2025, sales and marketing expenses were $1,489,486 as compared to $1,189,354 for the six months ended June 30, 2024, an increase of $300,132, or 25.2%. The increase was primarily due to the increase in headcount in this department and increased travel of our sales and marketing team. Additional increases were related to trade show demonstrations including, United States, Germany, Indonesia, and elsewhere.

Current wording

For the nine months ended September 30, 2025, sales and marketing expenses were $2,161,066 as compared to $1,825,645 for the nine months ended September 30, 2024, an increase of $335,421, or 18.4%. The increase was primarily due to the increase in headcount in this department and increased travel of our sales and marketing team associated with anticipated growing demand in the defense space, as we anticipate, consistent with plans announced by the U.S. government accelerated purchases of Group 1 drones.

Previous wording

For the three months ended June 30, 2025, other income, net was $787,250 as compared to other expense, net of $389,240 for the three months ended June 30, 2024, a decrease of other expenses of $1,176,490. The decrease was primarily attributable to a gain on change in fair value of our outstanding warrant liabilities of $726,000 that were issued in October 2024 in an offering and a decrease in interest expense due to a reduction in our principal balance on our outstanding convertible note. Lastly, $236,351 for an employee retention tax credit refund we received, offset by a loss on debt extinguishment of $125,242 due to substantial modification to the conversion price on our outstanding convertible note during the period.

Current wording

For the three months ended September 30, 2025, other income, was $539,613 as compared to other expenses, of $1,598,594 for the three months ended September 30, 2024, a decrease of other expenses of $2,138,207. The decrease was primarily attributable to a decrease in interest expense and debt discount due to a reduction in our principal balance on our outstanding convertible note of $1,560,736. Lastly, $744,357 for an employee retention tax credit refund we received.

Previous wording

For the six months ended June 30, 2025, other income, net was $8,849,835 as compared to other expense, net of $4,310,939 for the six months ended June 30, 2024 of a decrease in other expenses of $ 13,160,774. The a decrease is primarily attributable to a gain on change in fair value of our outstanding warrant liabilities of $8,506,000 that were issued in October 2024 in an offering, decrease in interest expense due to reduction in our principal balance on our outstanding convertible note and interest expense for the six months ended June 30, 2024 included $3.7 million due a substantial modification to the conversion price on a convertible debt note. Lastly, other income of $576,465 of other income was from the sale of our Measure domain name for $250,000 and $236,351 for an employee retention tax credit refund received for the six months ended June 30, 2025 compared to other expenses of $162,500 for the six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, other income, net was $9,389,447 as compared to other expenses, net of $5,909,534 for the nine months ended September 30, 2024 of a decrease in other expenses of $ 15,298,981. The decrease is primarily attributable to a gain on change in fair value of our outstanding warrant liabilities of $8,511,000 that were issued in October 2024 in an offering, decrease in interest expense due to reduction in our principal balance on our outstanding convertible note and interest expense for the nine months ended September 30, 2024 included $3.7 million due a substantial modification to the conversion price on a convertible debt note. Lastly, other income increased due to the sale of our Measure domain name for $250,000 and $1,197,734 for an employee retention tax credit refund received for the nine months ended September 30, 2025 compared to other expenses of $5,909,534 for the nine months ended September 30, 2024.

Previous wording

For the three months ended June 30, 2025, we generated a net loss of $1,280,376 as compared to a net loss of $2,929,708 for the three months ended June 30, 2024, a decrease of $1,649,332 or 56.3%. The decrease in our net loss is primarily attributable to the gain on change in fair value of our outstanding warrant liabilities and the above-mentioned changes in our cost of sales, general and administrative, research and development, and sales and marketing.

Current wording

For the three months ended September 30, 2025, we generated a net loss of $2,615,163 as compared to a net loss of $3,459,754 for the three months ended September 30, 2024, a decrease of $844,591 or 24.4%. The decrease 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).

Previous wording

For the six months ended June 30, 2025, we generated net income of $5,779,663 as compared to a net loss of $9,245,295 for the six months ended June 30, 2024, an increase in net income of $15,024,958 or 162.5%. The increase in our net income is primarily attributable to the gain on change in fair value of our outstanding warrant liabilities and the above-mentioned changes in our cost of sales, general and administrative, research and development, and sales and marketing.

Current wording

For the nine months ended September 30, 2025, we generated net income of $3,164,500 as compared to a net loss of $12,705,049 for the nine months ended September 30, 2024, an increase in net income of $15,869,549 or 124.9%. The increase in our net income is primarily attributable to the gain on change in fair value of our outstanding warrant liabilities and the above-mentioned changes in our cost of sales, general and administrative, research and development, and sales and marketing.

Previous wording

Six Months Ended June 30, 2025 as Compared to the Six Months Ended June 30, 2024

Current wording

Nine Months Ended September 30, 2025 as Compared to the Nine Months Ended September 30, 2024

Previous wording

As of June 30, 2025, cash on hand was $5,502,584, as compared to $3,613,996 as of December 31, 2024, an increase of $1,888,588 or 52.3%.

Current wording

As of September 30, 2025, cash on hand was $16,628,558, as compared to $3,613,996 as of December 31, 2024, an increase of $13,014,562 or 360.0%.

Previous wording

For the six months ended June 30, 2025, cash used in operations was $4,039,685, an increase of $1,056,255 or 35.4%, as compared to cash used of $2,983,430 for the six months ended June 30, 2024. The increase in cash used in operating activities was principally driven by the reduction in our net loss, after adjusting for non-cash operating activities, due to reductions in operating expenses and increase gross profit margins, as discussed above, offset by an increase in operating cash flows from changes in operating assets and liabilities, primarily the reduction of outstanding accountings payable. All of which resulted in an increase in cash used in operating activities.

Current wording

For the nine months ended September 30, 2025, cash used in operations was $7,335,102, an increase of $3,278,402 or 80.8%, as compared to cash used of $4,056,700 for the nine months ended September 30, 2024. The increase in cash used in operating activities was principally driven by the reduction in our net loss, after adjusting for non-cash operating activities, due to reductions in operating expenses and an increase in gross profit margins, as discussed above, 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.

Previous wording

For the six months ended June 30, 2025, cash used in investing activities was $23,882, a decrease of $69,113, or 74.3%, as compared to cash used of $69,113 for the six months ended June 30, 2024. The decrease is related to fewer purchases of property and equipment and internal software and platform costs in 2025 compared to 2024.

Current wording

For the nine months ended September 30, 2025, cash used in investing activities was $38,338, a decrease of $57,749, or 60.1%, as compared to cash used of $96,087 for the nine months ended September 30, 2024. The decrease is related to fewer purchases of property and equipment and internal software and platform costs in 2025 compared to 2024.

Previous wording

For the six months ended June 30, 2025, cash provided by financing activities was $5,945,746, an increase of $2,656,488 or 80.8%, as compared to cash provided of $3,289,258 for the six months ended June 30, 2024. The increase in cash provided by our financing activities was due to an increase in net proceeds from the exercise of Series B warrants and issuance of Series F preferred stock and warrants, offset by less net proceeds from short-term loans s and other short-term loans during 2025 as compared to 2024.

Current wording

For the nine months ended September 30, 2025, cash provided by financing activities was $20,384,464, an increase of $16,776,982 or 465.1%, as compared to cash provided of $3,607,482 for the nine months ended September 30, 2024. The increase in cash provided by our financing activities was due to an increase in net proceeds from the exercise of Series B warrants and issuance of Series F preferred stock and warrants, offset by less net proceeds from short-term loans and other short-term loans during 2025 as compared to 2024.

Previous wording

As of June 30, 2025, we had a working capital of $9,105,278 and cash on hand of $5,502,584. For the six months ended June 30, 2025, we incurred a loss from operations of $3,070,172, a decrease of $ 1,864,184, or 37.8%, as compared to $4,934,356 for the six months ended June 30, 2024. During the three months ended June 30, 2025, we used cash in our operating activities of $4,039,685. As of June 30, 2025, we do not have sufficient cash on hand to meet our financial obligations for the next twelve months and will require additional working capital.

Current wording

As of September 30, 2025, we had a working capital of $21,321,682 and cash on hand of $16,628,558. For the nine months ended September 30, 2025, we incurred a loss from operations of $6,224,947, a decrease of $ 570,568, or 8.4%, as compared to $6,795,515 for the nine months ended September 30, 2024. During the nine months ended September 30, 2025, we used cash in our operating activities of $7,335,102. As of September 30, 2025, we have sufficient cash on hand to meet our financial obligations for the next twelve months.