Safe Pro Group Inc.

Previous wording

Through a layered approach to the development and integration of advanced technologies in artificial intelligence, drone-based remote sensing technologies and services, and personal protective gear, Safe Pro Group seeks to provide government, NGOs and enterprises with innovative solutions designed to respond to evolving threats.

Current wording

Through a layered approach to the development and integration of advanced technologies in artificial intelligence, drone-based remote sensing technologies, services, and personal protective gear, Safe Pro Group seeks to provide government, NGOs and enterprises with innovative solutions designed to respond to evolving threats.

Previous wording

During the six months ended June 30, 2025 and 2024, the Company operated in three reportable business segments which consisted of (1) the business of Safe-Pro USA, (2) the business of Airborne Response, and (3) the business of Safe Pro AI. The Company’s reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations and locations.

Current wording

During the nine months ended September 30, 2025 and 2024, the Company operated in three reportable business segments which consisted of (1) the business of Safe-Pro USA, (2) the business of Airborne Response, and (3) the business of Safe Pro AI. The Company’s reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations and locations.

Previous wording

Net Revenue. For the three months ended June 30, 2025 and 2024, revenues generated were $92,753 and $642,989, a decrease of $550,236 or 85.6%. Comparable sales for Safe-Pro USA were $48,748 for the three months ended June 30, 2025 as compared to $430,038 for the same period in 2024, a decrease of $381,290 or 88.7%. Comparable sales for Airborne Response were $14,673 for the three months ended June 30, 2025 as compared to $212,950 for the same period in 2024, a decrease of $198,278 or 93.1%. Comparable sales for Safe Pro AI were $29,333 for the three months ended June 30, 2025 as compared to $0 for the same period in 2024.

Current wording

Net Revenue. For the three months ended September 30, 2025 and 2024, revenues generated were $101,422 and $330,756, a decrease of $229,334 or 69.3%. Comparable sales for Safe-Pro USA were $81,141 for the three months ended September 30, 2025 as compared to $98,637 for the same period in 2024, a decrease of $17,496 or 17.7%. Comparable sales for Airborne Response were $20,280 for the three months ended September 30, 2025 as compared to $227,745 for the same period in 2024, a decrease of $207,465 or 91.1%. Comparable sales for Safe Pro AI were $0 for the three months ended September 30, 2025 as compared to $4,375 for the same period in 2024.

Previous wording

For the six months ended June 30, 2025 and 2024, revenues generated were $277,555 and $950,642, a decrease of $673,087 or 70.8 %. Comparable sales for Safe-Pro USA were $189,348 for the six months ended June 30, 2025 as compared to $651,829 for the same period in 2024, a decrease of $462,481 or 71.1%. Comparable sales for Airborne Response were $18,877 for the six months ended June 30, 2025 as compared to $298,248 for the same period in 2024, a decrease of $279,371 or 93.7%. Comparable sales for Safe Pro AI were $69,330 for the six months ended June 30, 2025 as compared to $0 for the same period in 2024.

Current wording

For the nine months ended September 30, 2025 and 2024, revenues generated were $378,977 and $1,281,399, a decrease of $902,422 or 70.4%. Comparable sales for Safe-Pro USA were $270,489 for the nine months ended September 30, 2025 as compared to $751,031 for the same period in 2024, a decrease of $480,542 or 64.0%. Comparable sales for Airborne Response were $39,157 for the nine months ended September 30, 2025 as compared to $525,992 for the same period in 2024, a decrease of $486,835 or 92.6%. Comparable sales for Safe Pro AI were $69,330 for the nine months ended September 30, 2025 as compared to $4,375 for the same period in 2024.

Previous wording

The decrease in revenue was attributable to a one time contract for EOD gear completed in the prior period. As the Company begins to bring on SaaS and subscription customers related to its AI offerings, it is expected that revenue growth will have a more predictable trajectory, and decrease the volatility from one-time contracts

Current wording

We expect to begin realizing revenue from Safe Pro AI for its Safe Pro Object Threat Detection (SPOTD) technology ecosystem - Spotlight AI™, SpotlightAI™ OnSight and SPOTD NODE (Navigation, Observation and Detection Engine)- as a result of multiple completed demonstrations and evaluations in Ukraine, the Philippines and the United States during 2025, as well as planned demonstrations including events hosted by the U.S. Army in early 2026. As the Company begins to bring on SaaS and subscription customers related to its AI offerings, it is expected that revenue growth will have a more predictable trajectory, and decrease the volatility from one-time contracts.

Previous wording

Cost of Revenue During the three months ended June 30, 2025 and 2024, cost of revenues decreased to $61,196 compared to $458,374, a decrease of $397,178, or 86.6%. Gross profit margins were 34.0% and 28.7%, respectively. The decrease in cost of revenue is directly attributable to a decrease in revenue. For the six months ended June 30, 2025 and 2024, gross profit margins were 33.6% and 32.8%, respectively. The increase in margin was attributable to a decrease in sales for products which have a lower gross profit margin.

Current wording

Cost of Revenue During the three months ended September 30, 2025 and 2024, cost of revenues decreased to $67,828 compared to $196,523, a decrease of $128,695, or 65.5%. Gross profit margins were 33.1% and 40.7%, respectively. The decrease in cost of revenue is directly attributable to a decrease in revenue. For the nine months ended September 30, 2025 and 2024, gross profit margins were 33.4% and 34.5%, respectively. The decrease in margin was attributable to an increase in sales for products which have a lower gross profit margin.

Previous wording

*Operating Expenses.*Total operating expenses for the three months ended June 30, 2025 and 2024 were $1,954,903 and $1,307,421, an increase of $647,482 or 49.5%. Total operating expenses for the six months ended June 30, 2025 and 2024 were $6,022,159 and $2,519,521, an increase of $3,502,638 or 139.0 %. Factors resulting in the increase are described more fully below. For the year ending December 31, 2025, we expect selling, general and administrative expenses to increase, as we ramp up our sales and marketing expansion efforts to correspond with our increased production efforts, relating to our personal protective gear, the availability of additional AI-powered image processing solutions and new drone-based services such as Drone as a First Responder (DFR).

Current wording

*Operating Expenses.*Total operating expenses for the three months ended September 30, 2025 and 2024 were $4,241,228 and $3,676,307, an increase of $564,922 or 15.4%. Total operating expenses for the nine months ended September 30, 2025 and 2024 were $10,263,387 and $6,192,066, an increase of $4,071,321 or 65.8%. Factors resulting in the increase are described more fully below. For the year ending December 31, 2025, we expect selling, general and administrative expenses to increase, as we ramp up our sales and marketing expansion efforts to correspond with our increased production efforts, relating to our personal protective gear, the availability of additional AI-powered image processing solutions and new drone-based services such as Drone as a First Responder (DFR).

Previous wording

Research and Developmentexpenses were $17,875 and $0, for the three months ended June 30, 2025 and 2024, respectively, an increase of $17,875. Research and Development expenses were $17,875 and $85,937, for the six months ended June 30, 2025 and 2024, respectively, a decrease of $68,062 or 79.2%. The decrease is primarily attributable to the development costs for advanced artificial intelligence (“AI”) powered object detection and data analysis and reporting tools for hyper-scalable, cloud-based processing of drone imagery, which was put in service on July 1, 2024.

Current wording

Research and Developmentexpenses were $109,763 and $0, for the three months ended September 30, 2025 and 2024, respectively, an increase of $109,763. Research and Development expenses were $127,638 and $85,937, for the nine months ended September 30, 2025 and 2024, respectively, an increase of $41,701 or 48.5%. The increase is primarily attributable to expanded development efforts and the engagement of external contractors to support enhancements to the artificial intelligence business.

Previous wording

Professional fees were $1,041,362 and $617,438 for the three months ended June 30, 2025 and 2024, respectively, an increase of $423,924 or 68.7%. Professional fees were $2,643,510 and $1,078,210 for the six months ended June 30, 2025 and 2024, respectively, an increase of $1,565,300 or 145.2% %. The increases for six months ended June 30, 2025 as compared to the same period in 2024, were attributable to non-cash expenses for share-based professional fees of $1,753,695, offset by the reduction of reclassification of contractor expenses from professional fees to selling, general and administrative expenses in 2025.

Current wording

Professional fees were $2,168,082 and $430,698 for the three months ended September 30, 2025 and 2024, respectively, an increase of $1,737,384 or 403.4%. Professional fees were $4,811,591 and $1,508,908 for the nine months ended September 30, 2025 and 2024, respectively, an increase of $3,302,683 or 218.9%. The increases for nine months ended September 30, 2025 as compared to the same period in 2024, were attributable to non-cash expenses for share-based professional fees of $2,862,955 recognized pursuant to contractual agreements, additional public company expenses of $344,518 including legal and investor relations fees, and additional director fees of $95,210. The increase is partially offset by the reduction of reclassification of contractor expenses from professional fees to selling, general and administrative expenses in 2025.

Previous wording

Selling, general and administrative expenses were $370,796 and $249,499 for the three months ended June 30, 2025 and 2024, respectively, an increase of $121,297 or 48.6%. Selling, general and administrative expenses were $726,660 and $434,712 for the six months ended June 30, 2025 and 2024, respectively, an increase of $291,948 or 67.2%. The increases for the six months ended June 30, 2025 as compared to the same period in 2024, are primarily attributable to increases in advertising and the reclassification of contractor fees from professional fees to selling, general and administrative expenses.

Current wording

Selling, general and administrative expenses were $602,715 and $418,366 for the three months ended September 30, 2025 and 2024, respectively, an increase of $184,349 or 44.1%. Selling, general and administrative expenses were $1,329,374 and $853,077 for the nine months ended September 30, 2025 and 2024, respectively, an increase of $476,297 or 55.8%. The increases for the nine months ended September 30, 2025 as compared to the same period in 2024, are primarily attributable to increases in advertising and D&O insurance premiums and the reclassification of contractor fees from professional fees to selling, general and administrative expenses.

Previous wording

Depreciation and amortization expenses were $90,400 and $45,586 for the three months ended June 30, 2025 and 2024, respectively, an increase of $44,814, or 98.3%. For the six months ended June 30, 2025 and 2024, depreciation and amortization costs were $175,101 and $91,186 respectively, an increase of $83,915, or 92.0%.

Current wording

Depreciation and amortization expenses were $74,855 and $81,718 for the three months ended September 30, 2025 and 2024, respectively, a decrease of $6,863, or 8.4%. For the nine months ended September 30, 2025 and 2024, depreciation and amortization costs were $249,957 and $172,834 respectively, an increase of $77,123, or 44.6%.

Previous wording

Net Loss. We recorded a net loss of $1,914,559 for the three months ended June 30, 2025 as compared to a net loss of $1,214,923 an increase of $699,636, or 57.6%, for the three months ended June 30, 2024. We recorded a net loss of $5,879,576 for the six months ended June 30, 2025 as compared to a net loss of $2,358,783 for the six months ended June 30, 2024, an increase of $3,520,793, or 149.3%. The increase is a result of the factors as described above.

Current wording

Net Loss. We recorded a net loss of $5,010,358 for the three months ended September 30, 2025 as compared to a net loss of $3,685,456 an increase of $1,324,902, or 36.0%, for the three months ended September 30, 2024. We recorded a net loss of $10,889,934 for the nine months ended September 30, 2025 as compared to a net loss of $6,044,239 for the nine months ended September 30, 2024, an increase of $4,845,695, or 80.2%. The increase is a result of the factors as described above.

Previous wording

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At June 30, 2025, we had a cash balance of $805,596 and working capital of $521,927.

Current wording

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At September 30, 2025, we had a cash balance of $7,597,009 and working capital of $7,313,982.

Previous wording

Our current assets at June 30, 2025 decreased by $1,418,291, or 51.6%, to $1,331,838 from $2,750,129, from December 31, 2024. The decreases included cash of $1,165,123, accounts receivable of $85,127, inventory of $35,773 and prepaid expenses and other current assets of $132,268, which is primarily a result of the need to fund working capital due to the decrease in revenue.

Current wording

Our current assets at September 30, 2025 increased by $5,672,161, or 206.3%, to $8,422,290 from $2,750,129, from December 31, 2024. The increases included cash of $5,626,290 and inventory of $151,486, and are partially offset by decreases in accounts receivable of $83,292 and prepaid expenses and other current assets of $22,323, which is primarily a result of the proceeds from the private placement and the exercise of warrants during the three months ended September 30, 2025.

Previous wording

Our current liabilities at June 30, 2025 decreased to $809,911 from $893,926 or a decrease of $84,015, or 9.4% from December 31, 2024. The decrease is comprised of decreases in accrued compensation of $111,279, due to related parties of $36,745 and contract liabilities of $38,367, offset by increases in accounts payable of $48,881, accrued expenses of $39,050, and current portion of lease liabilities of $14,446.

Current wording

Our current liabilities at September 30, 2025 increased to $1,108,308 from $893,926 or an increase of $214,382, or 24.0% from December 31, 2024. The increase is comprised of increases in accounts payable of $141,301, accrued expenses of $170,210, due to related parties of $11,108, current portion of lease liabilities of $10,302 and are partially offset by decreases in accrued compensation of $107,778 and contract liabilities of $10,761.

Previous wording

Net cash flows used in operating activities for the six months ended June 30, 2025 amounted to $1,952,500 and were primarily attributable to our net loss of $5,879,576, offset by depreciation and amortization expense of $213,309 and stock-based compensation and professional fees of $3,457,765. Changes in operating assets and liabilities were reflected by increases in accounts payable of $48,881 and accrued expenses of $103,665, which were offset by decreases in accounts receivable of $85,127, inventory 35,773, prepaid and other current assets of 132,268, accrued compensation of $111,279 and contract liabilities of $38,367.

Current wording

Net cash flows used in operating activities for the nine months ended September 30, 2025 amounted to $3,549,597 and were primarily attributable to our net loss of $10,889,934, offset by depreciation and amortization expense of $305,760, impairment of goodwill of $684,687, impairment of other intangibles of $146,001, and stock-based compensation and professional fees of $6,048,410. Changes in operating assets and liabilities were reflected by increases in accounts receivable of $83,292, prepaid and other current assets of $22,323, accounts payable of $141,301, accrued expenses of $170,210 and lease liability of $122 which were offset by decreases in inventory of $151,486, contract liabilities of $10,761 and accrued compensation of $99,702.

Previous wording

Net cash flows used in operating activities for the six months ended June 30, 2024 amounted to $1,159,475 and were primarily attributable to our net loss of $2,358,783, offset by depreciation and amortization expense of $123,054, stock-based compensation and professional fees of $548,000, lease costs of $9,584, and amortization of debt discount of $89,006. Changes in operating assets and liabilities were reflected by increases in; inventory of $5,413, prepaid and other current assets of $146,449, accounts payable of $58,207, accrued expenses of $83,157, accrued compensation of $344,633; offset by decreases in accounts receivable of $121,954, and contract liabilities of $7,257.

Current wording

Net cash flows used in operating activities for the nine months ended September 30, 2024 amounted to $3,065,107 and were primarily attributable to our net loss of $6,044,239, offset by depreciation and amortization expense of $222,630, stock-based compensation and professional fees of $2,948,000, and amortization of debt discount of $208,006. Changes in operating assets and liabilities were reflected by increases in accounts payable of $64,661 and accrued expenses of $161,652 offset by decreases in accounts receivable of $58,141, inventory of $16,115, prepaid and other current assets of $370,124, contract liabilities of $14,382, lease liability of $9,110 and accrued compensation of $157,945.

Previous wording

Net cash flows used in investing activities were $225,877 and $223,509, for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, we purchased property and equipment of $21,034 and investment in intangible technologies of $204,843.

Current wording

Net cash flows used in investing activities were $233,580 and $266,397, for the nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025, we purchased property and equipment of $26,035 and investment in intangible technologies of $207,545.

Previous wording

Net cash flows provided by financing activities were $1,045,563 and $855,569 for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Net cash flows provided by financing activities were $9,409,467 and $4,922,851 for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

During the six months ended June 30, 2025, we had proceeds from the sale of common stock and warrants of $1,050,000, related party advances of $75,651 and offset by related party repayments of $80,888.

Current wording

During the nine months ended September 30, 2025, we had proceeds from the sale of common stock in private placement offering of $6,767,500, proceeds from exercise of warrants of $1,511,570, proceeds from sale of Preferred Series C shares and warrants of $1,050,000, proceeds from exercise of options of $12,750, and proceeds from related party advances of $129,051 and partially offset by related party repayments of $61,404.

Previous wording

During the six months ended June 30, 2024, we had proceeds from the sale of convertible notes payable of $275,001, proceeds from the sale of common stock and warrants of $489,002, and proceeds of notes payable of $110,000, offset by repayments due to related party for $18,434.

Current wording

During the nine months ended September 30, 2024, we had proceeds from the sale of convertible notes payable of $275,002, proceeds from the sale of common stock and warrants of $489,003, proceeds from our initial public offering of $4,179,500, proceeds from notes payable of $236,500, which were offset by repayments due to related party for $20,564 and repayments of notes payable of $236,500.

Previous wording

Safe Pro AI sells subscriptions and licenses to its customers for the use of its software under a software-as-a-service subscription model (“SaaS”), which will allow for the rapid, automated processing of aerial and ground-based imagery uploaded by customers, making it an ideal solution for a number of applications including defense, demining, in law enforcement and border security. Safe Pro AI’s, SaaS offerings are sold under a license or prepaid or postpaid, usage-based pricing system pursuant to a tiers model, allowing customers to choose the subscription level to be charged based upon their intended usage. The subscription tiers will utilize declining prices as the volume grows. Under this model, customers are charged an upfront fee based upon the number of gigapixels of aerial images uploaded into the system for processing. For customer convenience, Safe Pro AI will initially charges data processing fees on a per hectare basis (1 hectare = 1,000 square meters). Under prepaid pay-as-you-go plans, revenues related to contracts that do not include a specified contract period are recognized upon usage by the customer and satisfaction of the Company’s performance obligation. These usage-based revenues are constrained to the amount the Company expects to be entitled to and receive in exchange for providing access to its platform. If professional services are deemed to be distinct, revenue is recognized as services are performed. The Company does not view the signing of the contract or the provision of initial setup services as discrete earnings events that are distinct.

Current wording

Safe Pro AI sells subscriptions and licenses to its customers for the use of its software under a software-as-a-service subscription model (“SaaS”), which will allow for the rapid, automated processing of aerial and ground-based imagery uploaded by customers, making it an ideal solution for a number of applications including defense, demining, in law enforcement and border security. Safe Pro AI’s, SaaS offerings are sold under a license or prepaid or postpaid, usage-based pricing system pursuant to a tiers model, allowing customers to choose the subscription level to be charged based upon their intended usage. The subscription tiers will utilize declining prices as the volume grows. Under this model, customers are charged an upfront fee based upon the number of gigapixels of aerial images uploaded into the system for processing. For customer convenience, Safe Pro AI will initially charge data processing fees on a per hectare basis (1 hectare = 1,000 square meters). Under prepaid pay-as-you-go plans, revenues related to contracts that do not include a specified contract period are recognized upon usage by the customer and satisfaction of the Company’s performance obligation. These usage-based revenues are constrained to the amount the Company expects to be entitled to and receive in exchange for providing access to its platform. If professional services are deemed to be distinct, revenue is recognized as services are performed. The Company does not view the signing of the contract or the provision of initial setup services as discrete earnings events that are distinct.