Safe Pro Group Inc.

Previous wording

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that may cause actual results, our performance or achievements, or industry results to differ materially from those contemplated by such forward-looking statements include, without limitation, those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K as filed with the SEC.

Current wording

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that may cause actual results, our performance or achievements, or industry results to differ materially from those contemplated by such forward-looking statements include, without limitation, those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K as filed with the SEC on March 31, 2026.

Previous wording

We were incorporated in the State of Delaware on December 15, 2021. Safe Pro Group Inc. is the parent company of Airborne Response Corp. and Safe-Pro USA, LLC, which were both incorporated in Florida, in 2016 and 2008, respectively. On March 9, 2023, Safe Pro Group Inc. acquired Safe Pro AI LLC (formerly known as Demining Development LLC), a privately held developer of Artificial Intelligence (“AI”) and Machine Learning (“ML”) software technology for processing of drone-based imagery and data. We are a company focused on innovative security and protection solutions, specifically, advanced artificial intelligence / machine learning (AI/ML) software technology for the creation of robust datasets sourced from the analysis of aerial imagery, bullet and blast resistant personal protection equipment and providing mission-critical aerial managed services.

Current wording

We were incorporated in the State of Delaware on December 15, 2021. Safe Pro Group Inc. is the parent company of Airborne Response Corp. and Safe-Pro USA, LLC, which were both incorporated in Florida, in 2016 and 2008, respectively. On March 9, 2023, Safe Pro Group Inc. acquired Safe Pro AI LLC (formerly known as Demining Development LLC), a privately held developer of Artificial Intelligence (“AI”) and Machine Learning (“ML”) software technology for processing of drone-based imagery and data. On December 23, 2025, we formed SPAI Ventures LLC. Currently, SPAI Ventures is a non-active wholly owned subsidiary, that was established to pursue both strategic collaborations and investments with Ukrainian and other international tech developers. Through SPAI Ventures, Safe Pro Group, will evaluate opportunities in which to invest or to commercialize technologies that it believes could complement the capabilities of its portfolio of AI and ballistic protective solutions. SPAI Ventures has not made any investments or entered into any agreements.

Previous 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.

Current 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.

Previous 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.

Current wording

The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the chief executive officer of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. During the three months ended March 31, 2026 and 2025, 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

***Revenues.***Our revenues are generated primarily from the sale of our products, which consist primarily of personal protective gear (“PPE”) and ballistic protective equipment including Explosive Ordnance Disposal (“EOD”) and blast and fragmentation resistant vests and body armor, as well as aerial managed services (drones) for the inspection of customer’s critical infrastructure including radio towers and power grids. At contract inception, we assess the goods and services promised in the contract with customers and identify a performance obligation for each. To determine the performance obligation, we consider all products and services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. The timing of satisfaction of the performance obligation is not subject to significant judgment. We measure revenue as the amount of consideration expected to be received in exchange for transferring goods and services. We generally recognize product revenues at the time of shipment, provided that all other revenue recognition criteria have been met.

Current wording

***Revenues.***Our revenues are generated primarily from the sale of our products, which consist primarily of standalone hardware/software solution called NODE (“Navigation, Observation & Detection Engine”) which provides local /edge computing and processing of drone-based imagery to create maps without requiring connectivity to the internet, personal protective gear (“PPE”) and ballistic protective equipment including Explosive Ordnance Disposal (“EOD”) and blast and fragmentation resistant vests and body armor, as well as aerial managed services (drones) for the inspection of customer’s critical infrastructure including radio towers and power grids. At contract inception, we assess the goods and services promised in the contract with customers and identify a performance obligation for each. To determine the performance obligation, we consider all products and services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. The timing of satisfaction of the performance obligation is not subject to significant judgment. We measure revenue as the amount of consideration expected to be received in exchange for transferring goods and services. We generally recognize product revenues at the time of shipment, provided that all other revenue recognition criteria have been met.

Previous 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).

Current wording

*Operating Expenses.*Total operating expenses for the three months ended March 31, 2026 and 2025 were $3,747,818 and $4,067,256, a decrease of $319,438 or 7.9%. Factors resulting in the decrease are described more fully below.

Previous 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.

Current wording

Research and Development expenses were $360,397 and $0, for the three months ended March 31, 2026 and 2025, respectively, an increase of $360,397 or 100.0%. 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

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.

Current wording

Net Loss. We recorded a net loss of $2,793,485 for the three months ended March 31, 2026 as compared to a net loss of $3,965,017, for the three months ended March 31, 2025. The decrease 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 September 30, 2025, we had a cash balance of $7,597,009 and working capital of $7,313,982.

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 March 31, 2026, we had a cash balance of $14,802,060 and working capital of $14,394,175.

Previous 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.

Current wording

Our current liabilities at March 31, 2026 decreased to $1,172,631 from $1,250,844 or a decrease of $78,213, or 6.3% from December 31, 2025. The decrease is comprised of decreases in accrued expenses of $71,009, due to related parties of $272, and current portion of lease liabilities of $18,606, partially offset by increases in accounts payable of $2,341, and contract liabilities of $9,333.

Previous 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.

Current wording

Net cash flows used in operating activities for the three months ended March 31, 2026 amounted to $1,177,977 and were primarily attributable to our net loss of $2,793,485, offset by depreciation and amortization expense of $78,822 and stock-based compensation and professional fees of $1,225,520. Changes in operating assets and liabilities were reflected by decreases in; accounts receivable of $38,305, inventory of $161,209, and prepaid and other current assets of $171,098, as well as increases in accounts payable of $2,341 and contract liabilities of $9,333; and partially offset by decreases in lease liabilities $111, and accrued expenses of $71,009.

Previous 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.

Current wording

Net cash flows used in operating activities for the three months ended March 31, 2025 amounted to $941,751 and were primarily attributable to our net loss of $3,965,017, offset by depreciation and amortization expense of $103,366 and stock-based compensation and professional fees of $2,669,337. Changes in operating assets and liabilities were reflected by increases in; inventory of $28,344, prepaid and other current assets of $69,731, accounts payable of $106,247, accounts receivable of $107,901; and offset by decreases in accrued expenses of $4,601, lease liabilities $33 and contract liabilities of $57,026.

Previous 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.

Current wording

Net cash flows used in investing activities were $81,700 and $123,359, for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, we purchased property and equipment of $48,200 and investment in intangible technologies of $33,500. During the three months ended March 31, 2025, we purchased property and equipment of $18,247 and investment in intangible technologies of $105,112.

Previous 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.

Current wording

During the three months ended March 31, 2025, we had related party advances of $15,816 partially offset by related party repayments of $9,206.

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 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.

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 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.

Previous wording

The Company accounts for business acquisitions using the acquisition method of accounting where the assets are acquired, and the liabilities assumed are recognized based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses, and cash flows, weighted average cost of capital, discount rates, and estimates of terminal values. Business acquisitions are included in the Company’s consolidated financial statements as of the date of the acquisition.

Current wording

The Company accounts for business acquisitions using the acquisition method of accounting where the assets acquired, and the liabilities assumed are recognized based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses, and cash flows, weighted average cost of capital, discount rates, and estimates of terminal values. Business acquisitions are included in the Company’s consolidated financial statements as of the date of the acquisition.