XTI Aerospace, Inc.

Previous wording

XTI Aerospace, Inc. is a U.S.-based aerospace company focused on unmanned aircraft systems and related services. The Company provides UAS solutions through a combination of product distribution and service offerings, including the sale and support of UAS platforms and related equipment, as well as operator training, program enablement, repair and maintenance, and other fleet lifecycle support for enterprise, public safety, government, and defense-related customers. Recently, the Company also started to design and develop unmanned platforms for defense and commercial applications.

Current wording

XTI Aerospace, Inc. is a U.S.-based aerospace company focused on unmanned aircraft systems and related services. The Company provides UAS solutions through a combination of product distribution and service offerings, including the sale and support of UAS platforms and related equipment, as well as operator training, program enablement, repair and maintenance, and other fleet lifecycle support for enterprise, public safety, and government-related customers.

Previous wording

During the three months ended March 31, 2026, the Company completed the sale of its Inpixon Business, refer to Note 16—Discontinued Operations to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. As a result, the Company’s financial statements reflect only continuing operations related to its UAS and ADS segments.

Current wording

During the first quarter of 2026, the Company completed the sale of its Inpixon Business, refer to Note 17—Discontinued Operations to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. During the second quarter of 2026, the Company reduced the headcount of and ceased investment in the ADS business, which included the legacy TriFan 600 and advanced defense systems development programs. Management did not foresee near term revenue-generating opportunities from the ADS business and concluded that a concentration of resources on the UAS platform would create a better foundation for success.

Previous wording

As a result of these transactions, our current operating profile differs materially from prior periods, and historical results may not be fully comparable. Accordingly, in addition to reviewing our GAAP results, management evaluates performance and allocates capital with an emphasis on:

Current wording

As a result of this evolution, our current operating profile differs materially from prior periods, and historical results may not be fully comparable. Accordingly, in addition to reviewing our GAAP results, management evaluates performance and allocates capital with an emphasis on:

Previous wording

In addition to its two reportable segments, the Company is in the early stages of developing a domestic manufacturing and technology division (referred to as the ATM division) focused on building U.S.-based production capabilities for unmanned systems, components, and related technologies. The ATM division does not currently meet the criteria for a reportable segment under ASC 280 as it is in a pre-operational stage and has no discrete financial information reviewed by the CODM for purposes of resource allocation . The division’s mandate is to develop a domestically sourced supply chain designed to support compliance with applicable federal procurement and sourcing requirements, including Section 848 of the NDAA for unmanned aerial systems, addressing the growing demand from federal agencies, defense contractors, and enterprise customers for platforms and components that meet applicable government procurement requirements.

Current wording

In addition to its UAS business, the Company is in the early stages of developing a domestic manufacturing and technology division (referred to as the ATM division) focused on facilitating partnerships with domestic manufacturers to increase access to NDAA-compliant products. The division’s goal is to develop and expand a domestically sourced supply chain designed to support compliance with applicable federal procurement and sourcing requirements, including Section 848 of the NDAA for unmanned aerial systems, addressing the growing demand from federal agencies, defense contractors, and enterprise customers for platforms and components that meet applicable government procurement requirements. The ATM division does not currently meet the criteria for a reportable segment under ASC 280 as it is in a pre-operational stage and has no discrete financial information reviewed by the CODM for purposes of resource allocation.

Previous wording

The ATM division has not yet generated any revenues, and its activities are at an early stage of development. The division’s ability to generate revenues will depend on its success in establishing manufacturing partnerships on acceptable terms, securing NDAA-compliant production capacity, and converting that capacity into customer relationships and contract awards, each of which is subject to significant uncertainty. There can be no assurance that manufacturing partnerships will be established on acceptable terms or that the division will generate revenues within the timeframe the Company anticipates, or at all.

Current wording

The ATM division has not yet generated any revenues, and the division’s ability to generate revenues will depend on its success in establishing manufacturing partnerships on acceptable terms, securing NDAA-compliant production capacity, and converting that capacity into customer relationships and contract awards, each of which is subject to significant uncertainty. There can be no assurance that manufacturing partnerships will be established on acceptable terms or that the division will generate revenues within the timeframe the Company anticipates, or at all.

Previous wording

As part of our growth strategy, we continue to evaluate potential acquisitions and strategic transactions that we believe could complement our UAS solutions platform, expand our capabilities in unmanned systems and domestic manufacturing, or strengthen our position with enterprise, government, and defense customers. We may from time to time engage in preliminary discussions or negotiations with potential acquisition targets or their representatives, conduct due diligence, and explore various transaction structures. There can be no assurance that any such discussions will result in a definitive agreement or a completed transaction.

Current wording

As part of our growth strategy, we continue to evaluate potential acquisitions and strategic transactions that we believe could complement or expand our UAS solutions platform. We may from time to time engage in preliminary discussions or negotiations with potential acquisition targets or their representatives, conduct due diligence, and explore various transaction structures. There can be no assurance that any such discussions will result in a definitive agreement or a completed transaction.

Previous wording

We expect to fund potential acquisitions through a combination of available cash on hand, debt financing (which may include borrowings under our existing or new credit facilities, term loans or other debt instruments) and the issuance of our common stock or other equity or equity-linked securities, including equity interests in our subsidiaries. The specific terms and financing structure of any potential acquisition would depend on the size, nature, and strategic fit of the target, as well as prevailing market conditions at the time of any such transaction. Any acquisition financed in whole or in part with equity securities could result in dilution to our existing stockholders.

Current wording

We expect to fund potential acquisitions through a combination of debt financing (which may include borrowings under our existing or new credit facilities, term loans or other debt instruments), seller financing, the issuance of our common stock or other equity or equity-linked securities, including equity interests in our subsidiaries. The specific terms and financing structure of any potential acquisition would depend on the size, nature, and strategic fit of the target, as well as prevailing market conditions at the time of any such transaction. Any acquisition financed in whole or in part with equity securities could result in dilution to our existing stockholders.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Current wording

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In connection with the preparation of our condensed consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our condensed consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our condensed consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Previous wording

The results of the Inpixon Business have been presented as discontinued operations for all periods presented. As a result, the Company’s results from continuing operations for the three months ended March 31, 2025 do not reflect the current scale of the Company’s UAS operations, and period-to-period comparisons may not be indicative of future performance.

Current wording

The Company’s results of operations for the three and six months ended June 30, 2026 reflect the full period of operations from its UAS platform following the acquisition of Drone Nerds in November 2025, the ADS division, as well as the absence of the Inpixon Business following its disposition in February 2026. As a result, the Company’s results from continuing operations for the three and six months ended June 30, 2025 do not reflect the current scale of the Company’s UAS operations, and period-to-period comparisons may not be indicative of future performance. The results of the Inpixon Business have been presented as discontinued operations for all periods presented.

Previous wording

Operating expenses reflect investments in scaling the UAS platform, as well as ongoing development costs associated with the ADS program. General and administrative expenses also include public company costs and stock-based compensation, which may vary period to period.

Current wording

Operating expenses reflect investments in scaling the UAS platform, as well as development costs associated with the now discontinued ADS program. General and administrative expenses also include public company costs and stock-based compensation, which may vary period to period.

Previous wording

Revenues for the three months ended March 31, 2026 were $27.7 million, reflecting revenue generated by our UAS solutions platform following the acquisition of Drone Nerds in November 2025.

Current wording

Revenues for the three months ended June 30, 2026 were $32.4 million, reflecting revenue generated by our UAS solutions platform following the acquisition of Drone Nerds in November 2025.

Previous wording

Cost of revenues for the three months ended March 31, 2026 were $22.6 million, resulting in gross profit of $5.1 million and a gross margin of approximately 19%. The gross margin reflects the product mix and operating model of the UAS distribution and services business, which includes hardware sales, accessories, and related support services.

Current wording

Cost of revenues for the three months ended June 30, 2026 were $26.8 million, resulting in gross profit of $5.6 million and a gross margin of approximately 17%. The gross margin reflects the product mix and operating model of the UAS distribution and services business, which includes hardware sales, accessories, and related support services.

Previous wording

Operating expenses for the three months ended March 31, 2026 were $15.5 million, an increase of $7.3 million, or 89%, compared to $8.2 million for the comparable period ended March 31, 2025.

Current wording

Operating expenses for the three months ended June 30, 2026 were $14.7 million, an increase of $8.9 million, or 154%, compared to $5.8 million for the comparable period ended June 30, 2025. Operating expenses for the three months ended June 30, 2026 and 2025 include $3.8 million and $0.7 million of stock-based compensation, respectively.

Previous wording

This increase was due primarily to increased personnel-related expenses, including stock-based compensation, and operating expenses incurred at the Drone Nerds business which was acquired in the fourth quarter of 2025 and therefore has no activity reflected in the three months ended March 31, 2025.** **

Current wording

This increase was due primarily to increased personnel-related expenses, including stock-based compensation, and operating expenses incurred at the Drone Nerds business which was acquired in the fourth quarter of 2025 and therefore has no activity reflected in the three months ended June 30, 2025. Operating expenses for the three months ended June 30, 2026 and 2025 include $1.0 million and $1.8 million, respectively, related to the ADS and Commercial Aviation operating segments which were wound down during the three months ended June 30, 2026. The Company expects future expenses related to ADS to be immaterial.

Previous wording

During December 2025, the Company committed to a plan to dispose of its Inpixon Business and initiated an activity process to identify a buyer. The Company completed the sale of its Inpixon Business on February 3, 2026 for total consideration of approximately $5.5 million. The Inpixon Business is presented as discontinued operations for all periods presented.

Current wording

During December 2025, the Company committed to a plan to dispose of its Inpixon Business and initiated a process to identify a buyer. The Company completed the sale of its Inpixon Business on February 3, 2026 for total consideration of approximately $5.5 million. The Inpixon Business is presented as discontinued operations for all periods presented.

Previous wording

Loss from discontinued operations was $3.3 million and $2.2 million for the three months ended March 31, 2026 and 2025, respectively. Loss from discontinued operations for the three months ended March 31, 2026 includes a loss of $0.8 million recognized upon closing of the sale, and $1.2 million in income tax expense related to estimated taxes due in foreign jurisdictions as a result of the sale.

Current wording

Loss from discontinued operations was $1.6 million and $5.3 million for the three months ended June 30, 2026 and 2025, respectively. Loss from discontinued operations was $4.9 million and $7.5 million for the six months ended June 30, 2026 and 2025, respectively. Loss from discontinued operations for the six months ended June 30, 2026 includes a loss on sale of discontinued component of $2.4 million and $1.2 million in income tax expense related to estimated taxes due in foreign jurisdictions as a result of the sale.

Previous wording

The Company completed its acquisition of a controlling interest in Drone Nerds on November 10, 2025, as such the consolidated results for the three months ended March 31, 2025 do not include the results of operations. The following unaudited pro forma combined financials presents the combined results of operations of the Company and the acquired business as if the acquisition had occurred on January 1, 2025, the beginning of the earliest period presented. The pro forma financial information has been prepared for comparative purposes only and does not necessarily reflect the results of operations that would have occurred had the acquisition been completed on that date, nor is it indicative of future operating results of operations.

Current wording

The Company completed its acquisition of a controlling interest in Drone Nerds on November 10, 2025, as such the consolidated results for the three and six months ended June 30, 2025 do not include the results of operations. The following unaudited pro forma combined financials present the combined results of operations of the Company and the acquired business as if the acquisition had occurred on January 1, 2025, the beginning of the earliest period presented. The pro forma financial information has been prepared for comparative purposes only and does not necessarily reflect the results of operations that would have occurred had the acquisition been completed on that date, nor is it indicative of future operating results of operations.

Previous wording

Operating expenses for the three months ended March 31, 2026 were $15.5 million, compared to pro forma operating expenses of $11.6 million for the three months ended March 31, 2025. The increase reflects continued investment in personnel and public company costs. Operating expenses primarily consist of stock compensation, personnel expenses, professional fees, and public company costs.

Current wording

Operating expenses for the three months ended June 30, 2026 were $14.7 million, compared to pro forma operating expenses of $9.2 million for the three months ended June 30, 2025. The increase reflects continued investment in personnel and public company costs. Operating expenses primarily consist of stock-based compensation, personnel expenses, professional fees, and public company costs.

Previous wording

The Company recognized a loss from continuing operations of $31.7 million for the three months ended March 31, 2026, compared to a pro forma loss from continuing operations of $7.3 million for the three months ended March 31, 2025. Loss from continuing operations includes a $21.4 million loss on the remeasurement of warrant liabilities and stock based compensation expense of $4.8 million for the three months ended March 31, 2026, compared to a gain on the remeasurement of warrant liabilities of $0.5 million and pro forma stock based compensation expense of $0.4 million for the three months ended March 31, 2025.

Current wording

The Company recognized a loss from continuing operations of $0.9 million for the three months ended June 30, 2026, compared to a pro forma loss from continuing operations of $13.3 million for the three months ended June 30, 2025. Loss from continuing operations includes stock based compensation expense of $3.8 million and a gain on remeasurement of warrant liabilities of $8.4 million for the three months ended June 30, 2026, compared to stock-based compensation expense of $0.7 million and loss on remeasurement of warrant liabilities of $5.9 million for the three months ended June 30, 2025.

Previous wording

Pro Forma EBITDA was ($31.3 million) and ($6.4 million) for the three months ended March 31, 2026 and 2025, respectively, and Pro Forma Adjusted EBITDA was ($4.9 million) and ($3.7 million) for the three months ended March 31, 2026 and 2025, respectively. Pro Forma Adjusted EBITDA Margin for the same periods was (18%) and (12%), respectively. The change in these measures is a result of the above-mentioned factors.

Current wording

Pro Forma EBITDA was $(0.4) million and $(12.6) million for the three months ended June 30, 2026 and 2025, respectively, and Pro Forma Adjusted EBITDA was $(4.9) million and $(2.2) million for the three months ended June 30, 2026 and 2025. Pro Forma Adjusted EBITDA Margin for the same periods was (15)% and (9)%, respectively. The change in these measures is a result of the above-mentioned factors.

Previous wording

Gross profit for the three months ended March 31, 2026 was $5.1 million, or 19% of revenue, compared to $7.2 million, or 24% of revenue, in the same period of 2025. The decline was primarily due to unusually strong margins in the first quarter of 2025, when limited product availability from earlier supply constraints allowed the Company to sell inventory at higher margins and focus on higher-margin sales as products became available.

Current wording

Gross profit for the six months ended June 30, 2026 was $10.8 million, or 18% of revenue, compared to pro forma gross profit of $13.3 million, or 24% of revenue, in the same period of 2025. The decline was primarily due to unusually strong margins in the first half of 2025, when limited product availability from earlier supply constraints allowed the Company to sell inventory at higher margins and focus on higher-margin sales as products became available.

Previous wording

During 2025, we completed multiple public offerings and a Series 10 Convertible Preferred Stock financing, which generated an aggregate of approximately $85.5 million in net proceeds, strengthening our liquidity and supporting our strategic initiatives, including the Drone Nerds acquisition and working capital stabilization. During the three months ended March 31, 2026, we received approximately $7.4 million in net proceeds from the exercise of warrants and entered into a $20.0 million asset-based revolving credit facility, subject to a borrowing base. The Company ended the most recent quarter with cash on hand of $15.2 million and $16.7 million as of March 31, 2026 and December 31, 2025. Our operating priorities are focused on:

Current wording

•The Company received approximately $7.4 million in net proceeds from the exercise of warrants

Previous wording

As of March 31, 2026, the Company’s liquidity position reflects cash on hand, operating cash flows from its UAS platform, and availability under its asset-based revolving credit facility. While the Company expects the Drone Nerds operations to contribute positive operating cash flows, its results remain subject to variability in sales volumes, gross margins, inventory turnover, and broader market conditions affecting demand in the enterprise and commercial drone markets, as well as risks associated with the integration of acquired operations.

Current wording

The Company continues to focus on improving operating efficiencies in its UAS business, however, its results remain subject to variability in sales volumes, gross margins, inventory turnover, and broader market conditions affecting demand in the enterprise and commercial drone markets, as well as risks associated with the integration of acquired operations. The Company also expects to recognize cost savings from the wind down of the TriFan 600 and ADS development programs. Further, management may continue to pursue a range of potential funding alternatives, including equity or debt financing, strategic partnerships, joint ventures, government incentives and other potential sources of capital in connection with any potential acquisitions.

Previous wording

As of March 31, 2026, the borrowing base was calculated to be $12.7 million, and the Company had $4.6 million outstanding, with approximately $8.1 million of remaining availability.

Current wording

As of June 30, 2026, the borrowing base was calculated to be $18.7 million, and the Company had $8.8 million outstanding and a letter of credit in the amount of $0.8 million, with approximately $9.1 million of remaining availability. As described under “Subsequent Defaults”below, our ability to borrow this remaining availability is subject to the lender’s discretion while the cross-defaults under the Credit Agreement continue.

Previous wording

The Company’s contractual obligations consist primarily of operating lease liabilities, short-term debt and acquisition-related promissory notes, and vendor commitments incurred in the ordinary course of business.

Current wording

The Company’s contractual obligations consist primarily of short-term debt, the acquisition-related promissory notes, operating lease liabilities, and vendor commitments incurred in the ordinary course of business.

Previous wording

As of March 31, 2026, total operating lease liabilities were approximately $1.7 million, of which approximately $0.7 million is expected to be paid in the next twelve months. As of March 31, 2026, the Company had acquisition-related promissory note obligations of $5.9 million, representing scheduled principal payments due within one year. As of March 31, 2026, the Company had $4.6 million drawn on its credit facility, which matures on February 11, 2029.

Current wording

As of June 30, 2026, the Company had acquisition-related promissory note obligations of $4.4 million, representing scheduled principal payments due within one year, and $8.8 million drawn on its credit facility, which matures on February 11, 2029. Additionally, as of June 30, 2026, total operating lease liabilities were approximately $1.5 million, of which approximately $0.6 million is expected to be paid in the next twelve months.

Previous wording

As of March 31, 2026, customer deposits totaled approximately $2.5 million. Customer deposits consist of (i) refundable and conditional deposits received in connection with aircraft pre-orders and (ii) advance payments received in the ordinary course of business from customers of the Drone Nerds distribution operations. Aircraft-related deposits are generally refundable until a definitive purchase agreement is executed. If a significant number of customers request refunds, it could adversely impact liquidity.

Current wording

As of June 30, 2026, customer deposits totaled approximately $1.9 million. Customer deposits consist of (i) refundable and conditional deposits received in connection with aircraft pre-orders and (ii) advance payments received in the ordinary course of business from customers of the Drone Nerds distribution operations. If a significant number of customers request refunds, it could adversely impact liquidity.

Previous wording

As of March 31, 2026, the Company had approximately 21 million outstanding warrants with an exercise price ranging from $1.36 to $2.19 per share. If fully exercised for cash, these warrants would provide aggregate gross proceeds of approximately $41.9 million; however, exercise is at the discretion of the holders and dependent on market conditions. These amounts exclude prefunded warrants and warrants that management does not expect to be redeemed due to the exercise price. During the three months ended March 31, 2026, certain warrant holders exercised warrants, resulting in net proceeds of approximately $7.4 million. The timing and extent of any future warrant exercises are not within the Company’s control.

Current wording

As of June 30, 2026, the Company had approximately 21 million outstanding warrants with an exercise price ranging from $1.36 to $2.19 per share. If fully exercised for cash, these warrants would provide aggregate gross proceeds of approximately $41.9 million; however, exercise is at the discretion of the holders and dependent on market conditions. These amounts exclude prefunded warrants and warrants that management does not expect to be redeemed due to the exercise price. During the six months ended June 30, 2026, certain warrant holders exercised warrants, resulting in net proceeds of approximately $7.4 million. The timing and extent of any future warrant exercises are not within the Company’s control.

Previous wording

The Company’s net cash flows used in operating, investing and financing activities for the three months ended March 31, 2026 and 2025 and certain balances as of the end of those periods are as follows (in thousands):

Current wording

The Company’s net cash flows used in operating, investing and financing activities for the six months ended June 30, 2026 and 2025 and certain balances as of the end of those periods are as follows (in thousands):

Previous wording

Operating Activities for the three months ended March 31, 2026

Current wording

Operating Activities for the six months ended June 30, 2026

Previous wording

Net cash used in operating activities was approximately $10.5 million for the three months ended March 31, 2026.

Current wording

Net cash used in operating activities was approximately $21.0 million for the six months ended June 30, 2026.

Previous wording

Included in operating cash flows for the three months ended March 31, 2026 is approximately $0.1 million of cash used in operating activities related to discontinued operations (Inpixon Business). Excluding discontinued operations, net cash used in operating activities from continuing operations was approximately $10.3 million. Additional information regarding cash flows from discontinued operations is included in Note 16 – Discontinued Operations.

Current wording

Included in operating cash flows for the six months ended June 30, 2026 is approximately $0.1 million of cash used in operating activities related to discontinued operations (Inpixon Business). Excluding discontinued operations, net cash used in operating activities from continuing operations was approximately $20.9 million. Additional information regarding cash flows from discontinued operations is included in Note 17 – Discontinued Operations.

Previous wording

Cash used in operating activities during three months ended March 31, 2026 was primarily driven by the Company’s consolidated net loss of $35.0 million, adjustments for non-cash items of approximately $27.3 million and changes in working capital resulting in a net use of cash of approximately $2.8 million. The largest cash operating expenses include costs of goods sold and personnel related costs. The changes in working capital are primarily driven by increases in inventory and prepaid and other current assets, as well as a reduction in accounts payable, partially offset by a decrease in accounts receivable and increase in accrued liabilities. The quarter’s working capital activity reflects the integration of the Drone Nerds acquisition in the fourth quarter.

Current wording

Cash used in operating activities during the six months ended June 30, 2026 was primarily driven by the Company’s consolidated net loss of $37.4 million, off-set by adjustments for non-cash items of approximately $23.2 million and changes in working capital resulting in a net use of cash of approximately $6.8 million. The largest cash operating expenses include costs of goods sold and personnel related costs. The changes in working capital are primarily driven by increases in inventory and prepaid and other current assets, as well as a reduction in accounts payable, and decrease in customer deposits. The quarter’s working capital activity reflects the integration of the Drone Nerds acquisition in the fourth quarter.

Previous wording

Management expects that the acquisition of Drone Nerds, a historically EBITDA-profitable business, will contribute positive operating cash flows going forward. However, operating cash flows will continue to be influenced by sales volumes, gross margins, inventory turnover, discretionary operating expenditures, and the pace of investment in the development of unmanned platforms for defense and commercial applications.

Current wording

Management expects that the acquisition of Drone Nerds, a historically EBITDA-profitable business, will contribute positive operating cash flows going forward, although there can be no assurance that it will do so. However, operating cash flows will continue to be influenced by sales volumes, gross margins, inventory turnover, discretionary operating expenditures, and the pace of investment in the development of unmanned platforms for defense and commercial applications.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was approximately $15.2 million, primarily driven by the Company’s net loss and changes in working capital. Included in operating cash flows for the three months ended March 31, 2025 is approximately $1.1 million of cash used in operating activities related to discontinued operations. Excluding discontinued operations, net cash used in operating activities from continuing operations was approximately $14.1 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was approximately $22.0 million, primarily driven by the Company’s net loss and changes in working capital. Included in operating cash flows for the six months ended June 30, 2025 is approximately $1.9 million of cash used in operating activities related to discontinued operations.

Previous wording

Cash used in operating activities during three months ended March 31, 2025 was primarily driven by the Company’s consolidated net loss of $12.9 million, adjustments for non-cash items, of approximately $3.2 million and changes in working capital resulting in a net use of cash of approximately $5.6 million. The largest cash operating expenses for the three months ended March 31, 2025 were professional services, personnel related costs, and legal fees. The increase in working capital was primarily driven by a decrease in accrued liabilities, related to transaction and employee bonuses and consulting fees, and accounts payable, as well as increases in prepaid and other current assets.

Current wording

Cash used in operating activities during six months ended June 30, 2025 was primarily driven by the Company’s consolidated net loss of $33.7 million, adjustments for non-cash items of approximately $17.7 million and changes in working capital resulting in a net use of cash of approximately $5.9 million. The largest cash operating expenses for the six months ended June 30, 2025 were professional services, personnel related costs, and legal fees. The increase in working capital was primarily driven by a decrease in accrued liabilities, related to transaction and employee bonuses and consulting fees, and accounts payable.

Previous wording

Cash Flows from Investing Activities as of March 31, 2026 and 2025

Current wording

Cash Flows from Investing Activities for thesix months ended June 30, 2026 and 2025

Previous wording

Net cash flows used in investing activities during the three months ended March 31, 2026 was approximately $825,000, which included $694,000 of cash used in investing activity from discontinued operations.

Current wording

Net cash flows used in investing activities during the six months ended June 30, 2026 was approximately $864,000, which included $694,000 of cash used in investing activity from discontinued operations.

Previous wording

Net cash flows used in investing activities during the three months ended March 31, 2025 was approximately $45,000.

Current wording

Net cash flows used in investing activities during the six months ended June 30, 2025 was approximately $103,000.

Previous wording

Net cash flows from financing activities during the three months ended March 31, 2026 was approximately $9.5 million. During the three months ended March 31, 2026, the Company received incoming cash flows of $7.4 million from the exercise of warrants, net of commission and advisory fees, and had net borrowings on its credit facility of $4.6 million, offset by $2.0 million of principal paid on the promissory note entered into in connection with the Drone Nerds Acquisition and $0.6 million of debt issuance costs associated with the credit facility.

Current wording

Net cash flows from financing activities during the six months ended June 30, 2026 was approximately $12.1 million. During the six months ended June 30, 2026, the Company received incoming cash flows of $7.4 million from the exercise of warrants, net of commission and advisory fees, and had net borrowings on its credit facility of $8.8 million, offset by $3.5 million of principal paid on the promissory note entered into in connection with the Drone Nerds Acquisition and $0.6 million of debt issuance costs associated with the credit facility.