AgEagle Aerial Systems Inc.

Previous wording

AgEagle™ Aerial Systems Inc. (“AgEagle” or the “Company”, “we”, “our” or “us”), 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 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 military/defense, public safety, surveying/mapping, agriculture, and utilities/engineering, among others. AgEagle has also achieved numerous regulatory firsts, 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, Brazil and the European Union and being awarded Blue UAS certification from the Defense Innovation Unit of the U.S. Department of War ("DoW").

Current wording

AgEagle™ Aerial Systems Inc. (“AgEagle”, the “Company”, “we”, “our”, “us” or “EagleNXT”), 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. In 2010, AgEagle began by pioneering professional-grade fixed-wing drones and aerial imagery-based data collection and analytics imagery solutions for agriculture. 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 the commercial, public safety, and defense markets. AgEagle also recently established ThirdEye USA, a joint venture dedicated to counter–UAS systems that provide detection, identification, and tracking capabilities for defense and critical infrastructure customers. The Company has achieved multiple regulatory milestones, including approvals for Beyond Visual Line of Sight and/or Operations Over People in the United States, Canada, Brazil, and the European Union, and inclusion on the Blue UAS the Defense Innovation Unit of the U.S. Department of War (“DoW”).

Previous wording

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.

Current wording

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.

Previous wording

The Company is currently headquartered in Allen, Texas where we house our sensor manufacturing operations, and we manufacture drones in Lausanne, Switzerland. We also operate a distribution and service center for our drone products in Raleigh, North Carolina. which supports our international business activities.

Current wording

The Company is currently headquartered in Allen, Texas where we house our sensor and drone manufacturing operations. We also design and manufacture drones in Lausanne, Switzerland. We operate a distribution and service center for certain drone products in Raleigh, North Carolina.

Previous wording

Three Months Ended March 31, 2026 as Compared to Three Months Ended March 31, 2025

Current wording

Three and Six Months Ended June 30, 2026 as Compared to Three and Six Months Ended June 30, 2025

Previous wording

For the three months ended March 31, 2026, revenues were $1,401,207 as compared to $3,649,410 for the three months ended March 31, 2025, a decrease of $2,248,203, or 61.6%. The decreaseof $2,248,203 was attributable to a decrease of $1,591,882 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 States along with delayed approved defense funding bills, also contributed to the decrease in drone revenue. A decrease of $656,321 in the sensor revenues was due to sales mix, product repricing, and international growing seasons.

Current wording

For the three months ended June 30, 2026, revenues were $2,685,971 as compared to $4,197,561 for the three months ended June 30, 2025, a decrease of $1,511,590, or 36.0%. The decreaseof $1,511,590 was attributable to a decrease of $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 States, along with delayed approved defense funding bills, also contributed to the decrease in drone revenue. An increase of $151,515 in sensor revenues was due to sales mix, product repricing, and international growing seasons.

Previous wording

For the three months ended March 31, 2026, cost of sales was $816,278 as compared to $1,515,592 for the three months ended March 31, 2025, a decrease of $699,314 or 46.1%. For the three months ended March 31, 2026, gross profit was $584,929 as compared to $2,133,818 for the three months ended March 31, 2025, a decrease of $1,548,889, or 72.6%. The primary factors contributing to the decrease in our cost of sales and gross profit margin were reduced revenue and fixed costs, salaries and rent that were not offset by revenue.

Current wording

For the three months ended June 30, 2026, cost of sales was $1,326,018 as compared to $1,857,682 for the three months ended June 30, 2025, a decrease of $531,664 or 28.6%. For the three months ended June 30, 2026, gross profit was $1,359,953 as compared to $2,339,879 for the three months ended June 30, 2025, a decrease of $979,926, or 41.9%. The primary factors contributing to the decrease in our cost of sales and gross profit margin were reduced revenue resulitng in less cost of sales, offset by fixed costs, salaries and rent that were not offset by revenue.

Previous wording

For the three months ended March 31, 2026, general and administrative expenses were $2,754,030 as compared to $1,972,811 for the three months ended March 31, 2025, representing an increase of $781,219, or 39.6%. 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 accounting 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.

Current wording

For the three months ended June 30, 2026, general and administrative expenses were $3,899,548 as compared to $2,534,170 for the three months ended June 30, 2025, representing an increase of $1,365,378, or 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 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.

Previous wording

For the three months ended March 31, 2026, research and development expenses were $1,763,142 as compared to $736,411 for the three months ended March 31, 2025, an increase of $1,026,731, or 139.4%. 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.

Current wording

For the three months ended June 30, 2026, research and development expenses were $1,983,084 as compared to $810,990 for the three months ended June 30, 2025, an increase of $1,172,094, or 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.

Previous wording

For the three months ended March 31, 2026, sales and marketing expenses were $1,165,829 as compared to $427,141 for the three months ended March 31, 2025, an increase of $738,688, or 172.9%. The increase was primarily attributable to higher department headcount, increased public relations expenses, and greater travel activity by our sales and marketing team.

Current wording

For the three months ended June 30, 2026, sales and marketing expenses were $1,082,952 as compared to $1,062,345 for the three months ended June 30, 2025, an increase of $20,607, or 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.

Previous wording

For the three months ended March 31, 2026, other income was $6,518,434 as compared to $8,062,584 for the three months ended March 31, 2025, a decrease of $1,544,150. The decrease was primarily attributable to the recognition of a $7,780,000 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 March 31, 2025. These items were partially offset by an unrealized gain on investment in marketable securities of $6,477,682 recognized during the three months ended March 31, 2026.

Current wording

For the three months ended June 30, 2026, other expense was $9,781,098 as compared to the other income of $787,250 for the three months ended June 30, 2025, a decrease of $10,568,348. The decrease was primarily attributable to the recognition of a 726,000 gain from changes in the fair value of outstanding warrant liabilities, which were recorded during the three months ended June 30, 2025. These items were offset by an unrealized loss on the fair value of the short and long term investments in equity securities of $9,837,228 recognized during the three months ended June 30, 2026.

Previous wording

For the three months ended March 31, 2026, we generated a net income of $1,420,362 as compared to a net income of $7,060,039 for the three months ended March 31, 2025, a decrease of $5,639,677 or 79.9%. 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).

Current wording

For the three months ended June 30, 2026, we generated a net loss of $15,386,729 as compared to a net loss of $1,280,376 for the three months ended June 30, 2025, a decrease of $14,106,353 or 1101.7%. 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).

Previous wording

Three Months Ended March 31, 2026 as Compared to the Three Months Ended March 31, 2025

Current wording

Six Months Ended June 30, 2026 as Compared to the Six Months Ended June 30, 2025

Previous wording

As of March 31, 2026, cash on hand was $26,911,440, as compared to $ 29,858,655 as of December 31, 2025, a decrease of $2,947,215 or 9.9%.

Current wording

As of June 30, 2026, cash on hand was $15,910,228, as compared to $ 29,858,655 as of December 31, 2025, a decrease of $13,948,427 or 46.7%.

Previous wording

For the three months ended March 31, 2026, cash used in operations was $2,360,255, an increase of $1,065,699 or 82.3%, as compared to cash used of $1,294,556 for the three months ended March 31, 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.

Current wording

For the six months ended June 30, 2026, cash used in operations was $8,372,751, an increase of $4,333,066 or 107.3%, as compared to cash used of $4,039,685 for the six months ended June 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.

Previous wording

For the three months ended March 31, 2026, cash used in investing activities was $3,356,982, an increase of $3,346,558, or 32104.4%, as compared to cash used of $10,424 for the three months ended March 31, 2025. The increase is related to fewer purchases of property and equipment and $3,000,000 used in the investment in marketable securities.

Current wording

For the six months ended June 30, 2026, cash used in investing activities was $13,612,909, an increase of $13,589,027, or 56900.7%, as compared to cash used of $23,882 for the six months ended June 30, 2025. The increase is related to $555,076 purchases of property and equipment and $13,000,000used in the purchase of the short and long term investment in equity securities.

Previous wording

For the three months ended March 31, 2026, cash provided by financing activities was $2,690,596, an increase of $1,255,693 or 87.5%, as compared to cash provided of $1,434,903 for the three months ended March 31, 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.

Current wording

For the six months ended June 30, 2026, cash provided by financing activities was $7,937,202, an increase of $1,991,456 or 33.5%, as compared to cash provided of $5,945,746 for the six months ended June 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.

Previous wording

As of March 31, 2026, we had a working capital of $39,104,590 and cash on hand of $26,911,440. For the three months ended March 31, 2026, we incurred a loss from operations of $5,098,072, an increase of $4,095,527, or 408.5%, as compared to $1,002,545 for the three months ended March 31, 2025. During the three months ended March 31, 2026, we used cash in our operating activities of $2,360,255. As of March 31, 2026, we have sufficient cash on hand to meet our financial obligations for the next twelve months.

Current wording

As of June 30, 2026, we had a working capital of $23,720,063 and cash on hand of $15,910,228. For the six months ended June 30, 2026, we incurred a loss from operations of $10,703,702, an increase of $ 7,633,530, or 248.6%, as compared to $3,070,172 for the six months ended June 30, 2025. During the six months ended June 30, 2026, we used cash in our operating activities of $8,372,751. As of June 30, 2026, we do not have sufficient cash on hand to meet our financial obligations for the next twelve months.