AgEagle Aerial Systems Inc.
For the period ended Mar 31, 2025. Filed May 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
UAVS$0.32+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001493152-24-046810
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001641172-25-010884
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 45 current paragraphs.
16 unchanged; 19 reworded; 10 added; 19 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Our core technological capabilities include robotics and robotics systems autonomy; advanced thermal and multispectral sensor design and development; embedded software and firmware; secure wireless digital communications and networks; lightweight airframes; small UAS (“UAS”) design, integration and operations; power electronics and propulsion systems; controls and systems integration; fixed wing flight; flight management software; data capture and analytics; human-machine interface development and integrated mission solutions.
Current report
Critical Accounting Estimates
Current report
The condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these condensed consolidated financial statements require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Significant estimates include the reserve for obsolete inventory, stock options and consideration, valuation of intangible assets, fair value of derivative liabilities, and deemed dividends resulting from the triggering of down round provisions and modifications to equity-linked instruments.
Current report
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
Current report
We believe the following critical accounting estimates affect the more significant judgments and estimates used in preparing our consolidated financial statements. Please see Note 2 to our consolidated financial statements, which are included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report, for our Summary of Significant Accounting Policies. There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements.
Current report
Other Income (Expense), net
Current report
For the three months ended March 31, 2025, other income, net was $8,062,584 as compared to other expense, net of $3,921,699 for the three months ended March 31, 2024, an increase of $11,984,283. The increase is primarily attributable to a gain on change in fair value of our outstanding warrant liabilities of $7,780,000 that were issued in October 2024 in an offering and a decrease in interest expense due to reduction in our principal balance on our outstanding convertible note as well as an approximate $3.7 million interest expense charge during the three months ended March 31, 2024 due to a reduction in the convertible notes’ conversion price.
Current report
Net Income (Loss)
Current report
Liquidity, Capital Resources and Going Concern
Current report
As of March 31, 2025, we had a working capital of $5,383,426 and cash on hand of $3,784,659. For the three months ended March 31, 2025, we incurred a loss from operations of $1,002,545, a decrease of $1,391,343, or 58.1%, as compared to $2,393,888 for the three months ended March 31, 2024. During the three months ended March 31, 2025, we used cash in our operating activities of $1,294,556. As of March 31, 2025, we do not have sufficient cash on hand to meet our financial obligations for the next twelve months and will require additional working capital.
Removed paragraphs (19)
Previous report
We believe that the following attributes and capabilities provide us with long-term competitive advantages:
Previous report
For the nine months ended September 30, 2024, revenues were $10,571,969 as compared to $10,819,213 for the nine months ended September 30, 2023, a decrease of $247,244 or 2.3%. The decline in revenues is mainly attributed to theeBee drone products of $217,083 and $75,868 of our SaaS subscription services related to ourHempOverview and Ground Controlplatforms. Offsetting these decreases was an increase in revenues of $45,707 attributable to the revenues derived from our sensor sales, specifically theRedEdge-PandAltum-PT panchromatic sensor series*.* Our continued innovation has demonstrated growth in our sales leading to strong demand of our products, specifically for our panchromatic sensor series, and the VISION drone product.
Previous report
For the nine months ended September 30, 2024, cost of sales was $5,428,705 as compared to $6,594,973 for the nine months ended September 30, 2023, a decrease of $1,166,268, or 17.7%. For the nine months ended September 30, 2024, gross profit was $5,143,264 or 49% as compared to $4,224,240 or 39% for the nine months ended September 30, 2023, an increase of $919,024, or 21.8% in actual gross margin. The increase in gross profit margin was a result of our drone products along with significant price reduction in the second and third quarter of 2023 to stimulate market demand and bring us in line specifically with competitive products manufactured in China as our products become older while awaiting the newebee VISION.
Previous report
For the nine months ended September 30, 2024, operating expenses were $11,938,779, as compared to $19,247,300 for the nine months ended September 30, 2023, a decrease of $7,308,521, or 38.0%.
Previous report
For the nine months ended September 30, 2024, general and administrative expenses were $6,931,496 as compared to $10,435,834 for the nine months ended September 30, 2023, a decrease of $3,504,338, or 33.6%. The decrease was primarily a result of the reduction in employee payroll related costs due to integration of roles, ERP consulting integration costs, reduction in R&D consultants, less stock compensation costs, less intangible amortization during 2024 due to the impairment recorded on December 31, 2023, less shareholders annual meeting costs offset by an increase in legal, accounting, consulting, and recruitment costs during 2024.
Previous report
For the nine months ended September 30, 2024, sales and marketing expenses were $1,825,645 as compared to $2,911,963 for the nine months ended September 30, 2023, a decrease of $1,086,318, or 37.3%. The decrease was primarily due to the integration of sales and marketing teams, along with a decrease in consulting expenses due to branding and website integration done in prior year along with less trade-shows offset by more in-person demos with our sales and marketing team for the newebee VISON.
Previous report
Other Expense, net
Previous report
For the three months ended September 30, 2024, other expense, net was $1,598,594 as compared to $2,030,015 for the three months ended September 30, 2023, an increase of $431,421.
Previous report
For the nine months ended September 30, 2024, other expense, net was $5,909,534 as compared to other expense, net of $2,887,150 for the nine months ended September 30, 2023, an increase of $3,022,384. The increase is primarily attributable to the promissory note’s original issue discount of 4% and interest at 8% per annum issued in December 2022 along with the anti-dilution price protections embedded in the convertible note that were triggered during the nine months ended September 30, 2024, we recognized interest expense of $4,098,388 for the incremental fair value of the convertible note conversion feature being reduced from its original conversion price of $0.60 to $0.4038.
Previous report
Net Loss
Previous report
For the nine months ended September 30, 2024, the Company incurred a net loss of $12,705,049 as compared to a net loss of $17,910,210 for the nine months ended September 30, 2023, a decrease of $5,205,161, or 29.1%. The overall decrease in net loss was primarily attributable to a decrease in operating costs.
Previous report
Liquidity and Capital Resources
Previous report
Inflation
Previous report
Climate Change
Previous report
Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.
Previous report
New Accounting Pronouncements
Previous report
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The ASU focuses on income tax disclosures around effective tax rates and cash income taxes paid. ASU 2023-09 requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. The guidance requires the rate reconciliation to include specific categories and provides further guidance on disaggregation of those categories based on a quantitative threshold equal to 5% or more of the amount determined by multiplying pretax income (loss) from continuing operations by the applicable statutory rate. For entities reconciling to the US statutory rate of 21%, this would generally require disclosing any reconciling items that impact the rate by 1.05% or more. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 (generally, calendar year 2025) and effective for all other business entities one year later. Entities should adopt this guidance on a prospective basis, though retrospective application is permitted. The adoption of ASU 2023-09 is expected to have a financial statement disclosure impact only and is not expected to have a material impact on the Company’s consolidated financial statements.
Previous report
In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures. The ASU will now require public entities to disclose its significant segment expenses categories and amounts for each reportable segment. Under the ASU, a significant segment expense is an expense that is:
Previous report
The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024 (calendar year public entity will adopt the ASU in its 2024 Form 10-K). The ASU should be adopted retrospectively unless its impracticable to do so. Early adoption of the ASU is permitted, including in an interim period. The adoption of ASU 2023-07 is expected to have a financial statement disclosure impact only and is not expected to have a material impact on the Company’s consolidated financial statements.
Reworded paragraphs (19)
Previous wording
AgEagle has also achieved numerous regulatory firsts, 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.
Current 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, sensors and 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 Defense.
Previous wording
AgEagle™Aerial Systems Inc. (“AgEagle”, “Company”, “We”, “Our”, “Us”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones, sensors and software 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. AgEagle’s shift and expansion from solely manufacturing fixed-wing farm drones in 2018, to offering what we believe is one of the industry’s best fixed-wing, full-stack drone solutions, culminated in 2021 when we 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 200 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, we succeeded in integrating all three acquired companies with AgEagle to form one global company focused on taking autonomous flight performance to a higher level for a wider variety of markets, including defense , public safety, and agriculture/commercial customers.
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 200 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 successfully integrated all three acquired companies with AgEagle to form one global company focused on taking autonomous flight performance to a higher level.
Previous wording
AgEagle is led by a proven management team with years of drone industry experience and is currently headquartered in Wichita, Kansas, where we house our business and sensor manufacturing operations; and we operate drone manufacturing operations in Lausanne, Switzerland in support of our international business activities.
Current wording
The Company is currently headquartered in Wichita, Kansas, 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.
Previous wording
We are focused on growing our business, generating cash, and preserve our leadership position by developing new drones, sensors and embedded software and capturing a significant share of the global drone market. In addition, we expect to accelerate our growth and expansion through product development and strategic acquisitions of companies that offer distinct technological and competitive advantages and have defensible high value IP protection in place, if applicable.
Current wording
We intend to grow our business and preserve our leadership position by developing new drones, sensors and software and capturing a significant share of the global drone market. In addition, we expect to accelerate our growth and expansion through strategic acquisitions of companies offering distinct technological and competitive advantages and have defensible IP protection in place, if applicable.
Previous wording
We intend to materially grow our business by leveraging our proprietary, best-in-class, full-stack drone solutions, multi-spectral sensors, industry influence, and deep pool of talent with specialized expertise in robotics, automation, custom manufacturing and data science to achieve greater penetration of the global UAS industry – with near-term emphasis on adding stability and discipline to our operations, and capturing larger market share of the agriculture, defense, public safety, and agriculture/commercial markets. We expect to accomplish this goal by first bringing one four re-defined core values to life in our day-to-day operations and aligning them with our efforts to earn the trust and continued business of our customers and industry partners:
Current wording
We intend to materially grow our business by leveraging our proprietary, best-in-class, full-stack drone solutions, industry influence and deep pool of talent with specialized expertise in robotics, automation, custom manufacturing and data science to achieve greater penetration of the global UAS industry – with near-term emphasis on capturing larger market share of the agriculture, energy/utilities, infrastructure and government/military verticals. We expect to accomplish this goal by first bringing three core values to life in our day-to-day operations and aligning them with our efforts to earn the trust and continued business of our customers and industry partners:
Previous wording
Three and Nine Months Ended September 30, 2024 as Compared to Three and Nine Months Ended September 30, 2023
Current wording
Three Months Ended Months Ended March 31, 2025 as Compared to Three Months Ended March 31, 2024
Previous wording
For the three months ended September 30, 2024, revenues were $3,284,984 as compared to $3,483,932 for the three months ended September 30, 2023, a decrease of $198,948, or 6%. The decrease of $198,948 was attributable to a decrease of approximately $685,000 revenues due to decreased sensor sales primarily related to expected seasonality, off set by an increase of approximately $520,000 in revenues of theeBee drone products.
Current wording
For the three months ended March 31, 2025, revenues were $3,649,410 as compared to $3,894,447 for the three months ended March 31, 2024, a decrease of $245,037, or 6.3%. The decrease of $245,037 was attributable to a decrease of approximately $1,217,539 revenues due to decreased sensor sales primarily related to expected seasonality, $114,295 decrease on our SaaS revenue due to us not renewing software subscriptions and ceasing the operations of this segment off set by an increase of approximately $1,086,797 in revenues of the drone products.
Previous wording
For the three months ended September 30, 2024, cost of sales was $1,650,717 as compared to $2,269,858 for the three months ended September 30, 2023, a decrease of $619,141 or 27.3%. For the nine months ended September 30, 2024, gross profit was $1,634,267 as compared to $1,214,074 for the three months ended September 30, 2023, an increase of $420,193, or 34.6%. The primary factors contributing to the decrease in our cost of sales and the increase gross profit margin were due to the historical inventory adjustments and new bill of material system implementation.
Current wording
For the three months ended March 31, 2025, cost of sales was $1,515,592 as compared to $1,940,025 for the three months ended March 31, 2024, a decrease of $424,433 or 21.9%. For the three months ended March 31, 2025, gross profit was $2,133,818 as compared to $1,954,422 for the three months ended March 31, 2024, an increase of $179,396, or 9.2%. The primary factors contributing to the decrease in our cost of sales and the increase in gross profit margin was due to the total mix of our product sales during the current period which had higher margin drone sales then the previous period.
Previous wording
For the three months ended September 30, 2024, operating expenses were $3,495,427, as compared to $7,204,187 for the three months ended September 30, 2023, a decrease of $3,708,760, or 51.5%.
Current wording
For the three months ended March 31, 2025, operating expenses were $3,136,363, as compared to $4,348,310 for the three months ended March 31, 2024, a decrease of $1,211,947, or 27.9%. The primary driver for reduced operating expense related to staff attrition, reduced consulting, and professional fees.
Previous wording
For the three months ended September 30, 2024, general and administrative expenses were $1,889,733 as compared to $3,357,550 for the three months ended September 30, 2023, a decrease of $1,467,817 or 43.7%. The decrease was primarily related to less stock compensation expense related to terminated employees, and the reduced stock price, less intangible amortization during 2024 due to the impairment recorded on December 31, 2023, less shareholders annual meeting cost, offset by legal fees, accounting and consulting expense.
Current wording
For the three months ended March 31, 2025, general and administrative expenses were $1,972,811 as compared to $2,682,658 for the three months ended March 31, 2024, a decrease of $709,847, or 26.5%. The decrease was primarily related to less compensation expense related to terminated employees, less intangible amortization during 2025 due to impairment charges recorded during the year ended December 31, 2024, less costs related to our annual shareholder meeting, legal fees, and accounting expenses.
Previous wording
For the three months ended September 30, 2024, research and development expenses were $969,402 as compared to $1,368,394 for the three months ended September 30, 2023, a decrease of $398,992, or 29.2%. The decrease was primarily due to the integration of research and development teams that provide development of our new airframe, sensor and software technologies resulting in a reduction in our consultants and internal headcounts.
Current wording
For the three months ended March 31, 2025, research and development expenses were $736,411 as compared to $1,130,229 for the three months ended March 30, 2024, a decrease of $393,818, or 34.8%. The decrease was primarily due to the integration of research and development teams that provide development of our new airframe, sensor and software technologies resulting in a reduction in our consultants and internal headcounts.
Previous wording
For the three months ended September 30, 2024, sales and marketing expenses were $636,292 as compared to $978,243 for the three months ended September 30, 2023, a decrease of $341,951, or 35%. The decrease was primarily due to the decrease in travel, integration of sales and marketing teams that lead to a reduction of consulting expenses along with decrease in digital advertising spend as we look to attend in-person trade shows.
Current wording
For the three months ended March 31, 2025, sales and marketing expenses were $427,141 as compared to $535,423 for the three months ended March 30, 2024, a decrease of $108,282, or 20.2%. The decrease was primarily due to the decrease in travel, and integration of sales and marketing teams that lead to a reduction of consulting expenses.
Previous wording
For the three months ended September 30, 2024, we incurred a net loss of $3,459,754 as compared to a net loss of $8,020,128 for the three months ended September 30, 2023, a decrease of $4,560,374 or 56.9%., the decrease of the losses are related to the above mentioned reductions of costs related to general and administrative, research and development, and sales and marketing.
Current wording
For the three months ended March 31, 2025, we generated net income of $7,060,039 as compared to a net loss of $6,315,587 for the three months ended March 31, 2024, an increase of $13,375,626 or 211.8%. The increase in our net income is primarily attributable to the gain on change in fair value of our outstanding warrant liabilities and the above mentioned reductions of costs related to general and administrative, research and development, and sales and marketing.
Previous wording
Nine Months Ended September 30, 2024 as Compared to the Nine Months Ended September 30, 2023
Current wording
Three Months Ended March 31, 2025 as Compared to the Three Months Ended March 31, 2024
Previous wording
As of September 30, 2024, cash on hand was $265,126, as compared to $819,024 as of December 31, 2023, a decrease of $553,898, or 67.6%.
Current wording
As of March 31, 2025, cash on hand was $3,784,659, as compared to $3,613,996 as of December 31, 2024, an increase of $170,663, or 4.7%.
Previous wording
For the nine months ended September 30, 2024, cash used in operations was $4,056,700 a decrease of $4,772,969 or 54.1%, as compared to cash used of $8,829,669 for the nine months ended September 30, 2023. The decrease in cash used in operating activities was principally driven by the lower operating expenses which included significantly lower inventory purchases and prepayments offset by higher accounts receivables, account payables and accrued expenses.
Current wording
For the three months ended March 31, 2025, cash used in operations was $1,294,556, a decrease of $258,537 or 16.6%, as compared to cash used of $1,553,093 for the three months ended March 31, 2024. The decrease in cash used in operating activities was principally driven by the reduction in our operating loss due to reduced expenses resulting in less cash used in operating activities.
Previous wording
For the nine months ended September 30, 2024, cash used in investing activities was $96,087, a decrease of $468,029, or 83%, as compared to cash used of $564,116 for the nine months ended September 30, 2023. The decrease is related to the capitalization of the internal software and platform costs incurred during 2023 which did not continue at the same rate in 2024.
Current wording
For the three months ended March 31, 2025, cash used in investing activities was $10,424, a decrease of $32,657, or 75.8%, as compared to cash used of $43,081 for the three months ended March 31, 2025. The decrease is related to less purchases of property and equipment and internal software and platform costs in 2025 compared to 2024.
Previous wording
For the nine months ended September 30, 2024, cash provided by financing activities was $3,607,482 a decrease of $3,122,866 or 46.4%, as compared to cash provided of $6,730,348 for the nine months ended September 30, 2023. The decrease in cash provided by our financing activities was due to less sales of our Common stock through an at-the-market offering and exercise of warrants in the prior year offset by the sale of Series F Preferred stock.
Current wording
For the three months ended March 31, 2025, cash provided by financing activities was $1,434,903, a decrease of $206,991 or 12.6%, as compared to cash provided of $1,641,894 for the three months ended March 31, 2024. The decrease in cash provided by our financing activities was due to less proceeds from the exercise of warrants and other short-term loans, offset by an increase in proceeds from the sale of Series F Preferred Stock during 2025 as compared to 2024.
Previous wording
As of September 30, 2024, we had a working capital deficit of $4,541,048. For the nine months ended September 30, 2024, we incurred a loss from operations of $6,795,515, a decrease of $8,227,545, or 54.8%, as compared to $15,023,060 for the nine months ended September 30, 2023. While we have historically been successful in raising capital to meet its working capital needs, the ability to continue raising such capital to enable us to continue our growth is not guaranteed. We will require additional liquidity to continue its operations and meet its financial obligations over the next twelve months, there is substantial doubt about our ability to continue as a going concern. We are evaluating strategies to obtain the required additional funding for future operations and the restructuring of operations to grow revenues and reduce expenses.
Current wording
While we have historically been successful in raising capital to meet our working capital needs, the ability to continue raising such capital to enable us to continue our growth is not guaranteed. We will require additional liquidity to continue our operations and meet our financial obligations over the next twelve months, therefore is substantial doubt about our ability to continue as a going concern. We are evaluating strategies to obtain the required additional funding for future operations and the restructuring of operations to grow revenues and reduce expenses.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
For the nine months ended September 30, 2024, research and development expenses were $3,181,638, as compared to $4,320,216 for the nine months ended September 30, 2023, a decrease of $1,138,578, or 26.4%. The decrease was primarily due to the integration of research and development teams that provide development of our new airframe, sensor and software technologies resulting in a reduction in our consultants and internal headcounts.
Previous report — wording carried elsewhere
During the nine months ended September 30, 2024, inflation has had a negative impact on the unmanned aerial vehicle systems industry, our customers, and our business globally. Specifically, our ability to access components, parts and labor needed to manufacture its proprietary drones and sensors, and to perform quality testing have been, and continue to be, impacted. If either the Company or any of its third parties in the supply chain for materials used in our manufacturing and assembly processes continue to be adversely impacted, our supply chain may be further disrupted, limiting its ability to manufacture and assemble products. We expect inflation and its effects to continue to have a significant negative impact on our business.