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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 Form 10-K(Mark One)XANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2024 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT O
2、F 1934 For the transition period from _ to _ Commission file number:001-36492 AGEAGLE AERIAL SYSTEMS INC.(Exact name of registrant as specified in its charter)Nevada 88-0422242(State or other jurisdictionof incorporation or organization)(I.R.S.EmployerIdentification No.)8201 E.34th Street N,Suite 13
3、07,Wichita,Kansas 67226(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(620)325-6363 Securities registered pursuant to Section 12(b)of the Act:Title of Each Class Trading Symbol(s)Name of Each Exchange on Which RegisteredCommon Stock,par value$0.001
4、 per share UAVS NYSE American LLC Securities registered pursuant to Section 12(g)of the Act:None.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No X Indicate by check mark if the registrant is not required to file reports pur
5、suant to Section 13 or 15(d)of the Act.Yes No X Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934(the Exchange Act”)duringthe preceding 12 months(or for such shorter period that the registrant was r
6、equired to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes X No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 ofthis chapter
7、)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes X No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See the definitions of lar
8、geaccelerated filer,”accelerated filer,”emerging growth company”and smaller reporting company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated FilerXSmaller reporting companyX Emerging growth company If an emerging growth company,indicate by check mark if the
9、 registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessmen
10、t of the effectiveness of its internal control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Exchange Act,indicate by
11、 check mark whether the financial statements of the registrant included in the filing reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that require a recovery analysis of incentive-based compens
12、ation received by any of theregistrants executive officers during the relevant recovery period pursuant to 240.10D(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No X The aggregate market value of the voting and non-voting common
13、 equity held by non-affiliates computed by reference to the price at which the common equity was last sold as ofthe last business day of the registrants most recently completed second fiscal quarter was$6,919,353.As of March 31,2025,there were 12,820,421 shares of Common Stock,par value$0.001 per sh
14、are,issued and outstanding.DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrants Proxy Statement relating to the 2024 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report onForm 10-K to the extent stated herein.Such Proxy Statement will be f
15、iled with the Securities and Exchange Commission within 120 days of the registrants fiscal year endedDecember 31,2024.AGEAGLE AERIAL SYSTEMS INC.TABLE OF CONTENTS PART I 3ITEM 1.BUSINESS4ITEM 1A.RISK FACTORS17ITEM 1B.UNRESOLVED STAFF COMMENTS31ITEM 1C.CYBER-SECURITY31ITEM 2.PROPERTIES33ITEM 3.LEGAL
16、PROCEEDINGS34ITEM 4.MINE SAFETY DISCLOSURES34PART II 34ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES34ITEM 6.RESERVED36ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS36ITEM 7A.QUANTITATIVE
17、 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK46ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA46ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE46ITEM 9A.CONTROLS AND PROCEDURES47ITEM 9B.OTHER INFORMATION48ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTI
18、ONS THAT PREVENT INSPECTIONS48PART III 48ITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE48ITEM 11.EXECUTIVE COMPENSATION48ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS48ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND D
19、IRECTOR INDEPENDENCE48ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES48PART IV 49ITEM 15.EXHIBITS,FINANCIAL STATEMENTS,SCHEDULES49INDEX TO FINANCIAL STATEMENTSF-1ITEM 16.FORM 10-K SUMMARY51 2 PART I This Annual Report on Form 10-K(Annual Report”),including Managements Discussion and Analysis of Finan
20、cial Condition and Results of Operations”in Item 7,contains forward-looking statements within the meaning of the Securities Act of 1933,as amended,or the Securities Exchange Act of 1934,as amended,or the Private SecuritiesLitigation Reform Act of 1995.Investors are cautioned that such forward-lookin
21、g statements are based on our managements beliefs and assumptions and on information currentlyavailable to our management and involve risks and uncertainties.Forward-looking statements include statements regarding our plans,strategies,objectives,expectations andintentions,which are subject to change
22、 at any time at our discretion.Forward-looking statements include our assessment,from time to time of our competitive position,theindustry environment,potential growth opportunities,the effects of regulation and events outside of our control,such as natural disasters,wars or health epidemics.Forward
23、-looking statements include all statements that are not historical facts and can be identified by terms such as anticipates,”believes,”could,”estimates,”expects,”hopes,”intends,”may,”plans,”potential,”predicts,”projects,”should,”will,”would”or similar expressions.Forward-looking statements are merel
24、y predictions and therefore inherently subject to uncertainties and other factors which could cause the actual results to differmaterially from the forward-looking statement.These uncertainties and other factors include,among other things:unexpected technical and marketing difficulties inherent in m
25、ajor research and product development efforts;our ability to remain a market innovator,to create new market opportunities,and/or to expand into new markets;the potential need for changes in our long-term strategy in response to future developments;our ability to attract and retain skilled employees;
26、our ability to raise sufficient capital to support our operations and fund our growth initiatives;unexpected changes in significant operating expenses,including components and raw materials;any disruptions or threatened disruptions to or relations with our resellers,suppliers,customers and employees
27、,including shortages in components for our products;changes in the supply,demand and/or prices for our products;increased competition,including from companies which may have substantially greater resources than we have,and,in the uncrewed aircraft systems segments fromlower-cost commercial drone man
28、ufacturers who may seek to enhance their systems capabilities over time;the complexities and uncertainty of obtaining and conducting international business,including export compliance and other reporting and compliance requirements;the impact of potential security and cyber threats or the risk of un
29、authorized access to our,our customers and/or our suppliers information and systems;uncertainty in the customer adoption rate of commercial use uncrewed aerial systems;changes in the regulatory environment and the consequences to our financial position,business and reputation that could result from
30、failing to comply with suchregulatory requirements;our ability to continue to successfully integrate acquired companies into our operations,including the ability to timely and sufficiently integrate international operationsinto our ongoing business and compliance programs;failure to develop new prod
31、ucts or integrate new technology into current products;unfavorable results in legal proceedings to which we may be subject;failure to establish and maintain effective internal control over financial reporting;and general economic and business conditions in the United States and elsewhere in the worl
32、d,including the impact of inflation.Set forth below in Item 1A,Risk Factors,”are additional significant uncertainties and other factors affecting forward-looking statements.The reader should understandthat the uncertainties and other factors identified in this Annual Report are not a comprehensive l
33、ist of all the uncertainties and other factors that may affect forward-lookingstatements.We do not undertake any obligation to update or revise any forward-looking statements or the list of uncertainties and other factors that could affect those statements.3 ITEM 1.BUSINESS Overview AgEagle Aerial S
34、ystems Inc.(AgEagle”or the Company”,we”,our”or us”),through its wholly owned subsidiaries,is actively engaged in designing anddelivering best-in-class drones,sensors and software that solve important problems for our customers.Founded in 2010,AgEagle was originally formed to pioneer proprietary,prof
35、essional-grade,fixed-winged drones and aerial imagery-based data collection and analytics solutions for the agriculture industry.Today,the Company is earning distinction asa globally respected market leader offering customer-centric,advanced,autonomous uncrewed aerial systems(UAS”)which drive revenu
36、e 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 alsoachieved numerous regulatory firsts,including earning governmental approvals for its commercia
37、l and tactical drones to fly Beyond Visual Line of Sight(BVLOS”)and/orOperations 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 theU.S.Department of Defense.AgEagles shift and expansion from sole
38、ly manufacturing fixed-wing farm drones in 2018,to offering what the Company believes is one of the industrys 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 forcommercial a
39、nd government use.In addition to a robust portfolio of proprietary,connected hardware and software products;an established global network of over 200 UASresellers;and enterprise customers worldwide;these acquisitions also brought AgEagle a highly valuable workforce comprised largely of experienced e
40、ngineers and technologistswith deep expertise in the fields of robotics,automation,manufacturing and data science.In 2022,the Company successfully integrated all three acquired companies with AgEagleto form one global company focused on taking autonomous flight performance to a higher level.Our core
41、 technological capabilities include robotics and robotics systems autonomy;advanced thermal and multispectral sensor design and development;embeddedsoftware and firmware;secure wireless digital communications and networks;lightweight airframes;small UAS(sUAS”)design,integration and operations;power
42、electronics andpropulsion systems;controls and systems integration;fixed wing flight;flight management software;data capture and analytics;human-machine interface development andintegrated mission solutions.As the Company pursues its strategy to pursue new initiatives that improve its operations and
43、 cost structure,the Company is also expanding and improving itsinformation technologies,resulting in a larger technological presence,utilization of cloud”computing services,and corresponding exposure to cybersecurity risk.Certaintechnologies,such as use of autonomous vehicles,remote-controlled equip
44、ment,virtual reality,automation and artificial intelligence,present new and significant cybersecuritysafety risks that must be analyzed and addressed before implementation.If we fail to assess and identify cybersecurity risks associated with new initiatives,we may becomeincreasingly vulnerable to su
45、ch risks.As such,the Company is developing and securing technology that aims to secure against hacking and malicious attacks.As the softwarethat drives our drones and cameras become more autonomous and interconnected,they become potential targets for cyber threats.Ensuring the security of data trans
46、mission andcontrol systems has been and continue to be critical in preventing unauthorized access and misuse.The Company is currently headquartered in Wichita,Kansas,where we house our sensor manufacturing operations,and we manufacture drones in Lausanne,Switzerland.4 Product Lines senseFly,S.A.Uncr
47、ewed Aerial Vehicles In October 2021,the Company acquired senseFly,S.A.and senseFly Inc.(collectively senseFly”),a global leader in fixed-wing drones that simplify the collection andanalysis of geospatial data,allowing professionals to make better and faster decisions.Founded in 2009,senseFly develo
48、ps and produces a proprietary line of eBee-branded,high performance,fixed-wing drones which have flown more than one million flights around the world.Safe,ultra-light and easy to use,these autonomous drones are utilized bythousands of customers around the world in agriculture,government/defense,engi
49、neering,and construction,among other industry verticals,to collect actionable aerial dataintelligence.MicaSense,Inc.Multi Spectral Cameras In January 2021,AgEagle acquired MicaSense,Inc.(MicaSense”),a company that has been at the forefront of advanced drone sensor development since its foundingin 20
50、14.In early 2022,AgEagle completed development and brought to market the Altum-PT and RedEdge-P next generation thermal and multispectral sensors which offercritical advancements on MicaSenses legacy sensor products to customers primarily in agriculture,plant research,land management and forestry ma
51、nagement.Today,AgEaglesmultispectral sensors are distributed in over 75 countries worldwide and help customers use drone-based imagery to make better and more informed business decisions.Measure Global,Inc.In April 2021,AgEagle acquired Measure Global,Inc.(Measure”),a company founded in 2020.Measure
52、 offered a Software-as-a-Service(SaaS”)product known asGround Control”as a cloud-based,plug-and-play operating system that enabled pilots and large enterprises to operate drone fleets,fly autonomously,collaborate globally,visualize data,and integrate with existing business systems and processes.Meas
53、ure ceased operations on December 31,2024.senseFly,S.A.and SenseFly Inc.In October 2021,the Company acquired senseFly,S.A.and senseFly Inc.(collectively senseFly”),a global leader in fixed-wing drones that simplify the collection andanalysis of geospatial data,allowing professionals to make better a
54、nd faster decisions.Founded in 2009,senseFly develops and produces a proprietary line of eBee-branded,high performance,fixed-wing drones which have flown more than one million flights around the world.Safe,ultra-light and easy to use,these autonomous drones are utilized bythousands of customers arou
55、nd the world in agriculture,government/defense,engineering,and construction,among other industry verticals,to collect actionable aerial dataintelligence.Our Branded Line of Uncrewed Aerial Vehicles eBee Line of Professional Drones Sold worldwide through AgEagles direct sales team and global network
56、of trusted resellers,the Companys eBee line of commercial and government/military UAS have loggedmore than 500,000 flight hours on more than one million successful missions over the past decade.eBee TAC Designed specifically for government and military mapping and mission planning applications,the e
57、Bee TAC operates in disconnected environments,providing a higher accuracy mobile solution to map and locally share aerial imagery data on rapidly changing field conditions to analyze and provide near real-timesituational awareness to ground forces.Weighing only 3.5 pounds and featuring a digital cam
58、ouflage skin for increased stealth and up to 90 minutes flight time and silentmission mode,the eBee TAC can be rapidly deployed,from assembly to hand-launch,in three minutes by a single user to generate 3D modeling,terrain and thermal maps.Each system features National Defense Authorization Act(NDAA
59、”)compliant drone,sensors and active components,secure extension,Endurance activation,twoEndurance batteries,one Pitot Pro-kit,two micro-SD cards with adapters,AES256-bit encryption,pixel camouflage and an IP67 hard transport case with STANAG militarystandard certification that is lightweight,rugged
60、 and dust and water resistant.Camera options include RGB,multispectral and thermal payloads;and the system can alsobe upgraded to include additional features and payloads.In March 2022,AgEagles eBee TAC Uncrewed Aerial System was the first approved drone to be added to the U.S.Department of Defenses
61、(DoD”)DefenseInnovation Units(DIU”)Blue UAS Cleared List as part of Blue sUAS 2.0.The eBee TAC successfully completed a series of demonstrations in association with BluesUAS 2.0 to provide the DIU with information and verification of the drone systems mission planning and launch capabilities,range a
62、nd endurance,NDAA compliance,operational safety of flight procedures and cyber security,in addition to scripted and ad hoc flight profiles.Based on its evaluation,the DIU designated the eBee TAC asan approved light-weight,medium-range UAS available for immediate procurement by the DoD without a waiv
63、er to operate;and is also available for procurement by otherFederal Government agencies.AgEagles success with Blue sUAS 2.0 follows eBees use as an integral asset for both conventional and unconventional Department ofDefense units for over five years.5 eBee X the eBee X has been recognized as the fi
64、xed-wing drone that revolutionized the uncrewed aerial vehicle sector with its ease-of-use and multiple,state-of-the-artsensors designed to suit a wide range of mapping jobs.At just 1.6 kg(3.5 lbs.),eBee X is a lightweight,ultra-portable solution that is easy for a single person to operate.With a un
65、ique Endurance Extension option enabling a flight time of up to 90 minutes and single-flight coverage of up to 500 ha at 122m(1,236 acres at 400 ft.),the eBee Xis a premium drone that offers users the high-precision of on-demand RTK/PPK for achieving absolute accuracy of down to 1.5 cm(0.6 in)withou
66、t ground controlpoints.This capability makes the eBee X ideal for BVLOS operations,such as long corridor mapping missions for utility companies,expansive crop scouting in agricultureand by enterprise customers who desire a robust and professional drone fleet.The eBee X has proven that it meets the h
67、ighest possible quality and ground risk safety standards,and due to its lightweight design,the effects of ground impact arereduced.Consequently,the eBee X has been granted BVLOS operations permission in Brazil and has been approved to run OOP and BVLOS operations in Canada.On June 21,2022,the Compan
68、y announced that the eBee X was the first drone in its class to receive design verification essential for BVLOS and OOP from the EuropeanUnion Aviation Safety Agency,enabling drone operations to seek Specific Operations Risk Assessment(SORA”)authorization to fly BVLOS and OOP with eBee X in 27Europe
69、an Union member states,as well as Iceland,Lichtenstein,Norway and Switzerland.In October 2022,the eBee X series of fixed wing uncrewed aircraft systems,including the eBee X,eBee Geo and eBee TAC,were the first and only drones on the market tocomply with Category 3 of the Operations of Small Uncrewed
70、 Aircraft Systems Over People rules published in the Federal Registry by the FAA in March 2021.Securing aPart 107 certificate of waiver from the FAA is a long,arduous and costly process for sUAS users.Now that the eBee has proven compliant with Category 3 of the rules,eBee drone operators no longer
71、need an FAA waiver for OOP or Operations Over Moving Vehicles.This major milestone was achieved by AgEagle following months ofwork,historic reliability review and extensive testing conducted by Virginia Tech Mid-Atlantic Aviation Partnership(MAAP”).eBee VISION in December 2022,AgEagle announced its
72、latest innovation in commercial and tactical drone technology with the unveiling of its new eBee VISIONIntelligence,Surveillance and Reconnaissance(ISR”)UAS.The eBee VISION delivers high resolution,medium-range video imagery made possible by its 32x zoom andpowerful thermal observation capabilities.
73、Its sensor payloads are capable of detecting,tracking and geo-locating objects in both day and night conditions.Offering up to90 minutes of flight time and the same ease-of-use that has earned AgEagles eBee line of drones industry distinction,the eBee VISION can be deployed and operated bya single p
74、erson.Designed,developed and manufactured by AgEagles research and development team in Switzerland,the eBee VISION is NDAA compliant,weighs lessthan 3.5 pounds/1.6 kilograms and can be carried in a backpack.In December 2022,eBee VISION prototypes were successfully tested by European Armed Forces.Acc
75、ording to an official from a UAV experimentation unit of a Europeanmilitary force present at the testing,eBee VISIONs specifications fill the gap between low endurance quadcopters and large military fixed-wing drones.The small size,lightweight,ease-of-use,autonomy,range and sensor capabilities make
76、it a promising drone for tactical ISR missions.”As a result of the tests,European military units ordered multiple eBee VISION prototypes,with delivery having occurred in late 2023.Commercial production of eBeeVISION began shortly thereafter,with successful deliveries to a number of global military f
77、orces.6 Market Opportunity for UAVs Drones have transformed from being freelance videographer toys to mission critical inspection tools for enterprise businesses like construction,energy and agriculture,and for military/defense applications worldwide.Moreover,the number of use cases for drones has a
78、lso grown as drone hardware has become more advanced,safer and morereliable.Advanced aerial mapping,crop monitoring,publicly safety uses,disaster response and consumer drone deliveries have all become available as the commercial droneindustry has matured.In September 2022,the Drone Infrastructure In
79、spection Grant Act was passed by the U.S.House of Representatives.This bi-partisan bill establishes programs within theDepartment of Transportation(DOT”)to support the use of drones and other sUAS when inspecting,repairing or constructing road infrastructure,electric grid infrastructure,water infras
80、tructure or other critical infrastructure.Specifically,DOT must award grants in the aggregate of$100 million to state,tribal and local governments,metropolitan planningorganizations,or groups of those entities to purchase or otherwise use drones to increase efficiency,reduce costs,improve worker and
81、 community safety,reduce carbonemissions,or meet other priorities related to critical infrastructure projects.Grant recipients must use domestically manufactured drones that are made by companies not subject toinfluence or control from certain foreign entities,including China and Russia.This legisla
82、tion is supported by the U.S.Chamber of Commerce,National League of Cities,NationalCouncil of State Legislatures,American Association of State Highway and Transportation Officials,Commercial Drone Alliance and Association of Uncrewed Vehicle SystemsInternational among others.This bill is currently p
83、ending approval by the U.S.Senate.The Military Drone Market is expected to see substantial growth in the coming years.A recent report from Straits Research said that the global military drone market sizewas valued at USD 21.81 billion in 2024 and is expected to grow from USD 24.25 billion in 2025 to
84、 reach USD 56.69 billion by 2033,growing at a CAGR of 11.20%during the forecastperiod(2025-2033).The report said:A military drone,also known as an uncrewed aerial vehicle(UAV),is a type of aircraft that operates without a human pilot on board.Thesedrones are equipped with advanced technologies for s
85、urveillance,reconnaissance,intelligence gathering,and,in some cases,targeted strikes.Military drones are used extensivelyin modern warfare for a variety of roles,including combat,surveillance,logistical support,and search-and-rescue missions.The global market is experiencing rapid growth,drivenby te
86、chnological advancements and increasing global demand for enhanced surveillance,intelligence,and reconnaissance capabilities.As nations recognize the strategicadvantages of uncrewed aerial systems(UAS)in military operations,drones are increasingly deployed in both combat and non-combat roles.This ex
87、pansion is further supportedby rising defense budgets,particularly in regions such as Asia-Pacific,Europe,and the Middle East.Despite the promising growth,there are significant challenges facing theglobal market,including complex regulatory issues and ethical concerns surrounding the use of autonomo
88、us weapons.However,innovations in artificial intelligence(AI),miniaturization,and battery life are expected to open new growth opportunities,enabling more advanced,efficient,and versatile drone capabilities in the near future.”Straits Research continued:Geopolitical tensions,especially in regions li
89、ke Asia-Pacific,the Middle East,and Eastern Europe,are driving a significant demand formilitary drones.As nations seek to strengthen their surveillance,intelligence,and tactical capabilities,military drones have become integral to modern defense strategies.Forexample,the Indo-Pacific region increasi
90、ngly views drones as vital for maintaining a strategic balance in contested areas.Similarly,Russias actions in Ukraine have highlighted thetactical advantages of drones,prompting Eastern European nations near the conflict zone to prioritize drone investments to enhance border security and ensure rea
91、diness in caseof escalations.Multi Spectral Cameras Setting entirely new standards of excellence for high resolution aerial imaging solutions,our proprietary thermal and multispectral sensors are broadly recognized as thecameras of choice worldwide for advanced applications in agriculture,plant rese
92、arch,land management and forestry management.Altum-PT an optimized three-in-one solution for advanced remote sensing and agricultural research.It seamlessly integrates an ultra-high resolution panchromaticimager,a built-in 320X256 radiometric thermal imager and five discrete spectral bands to produc
93、e synchronized outputs such as RGB color,crop vigor,heat maps and highresolution panchromatic in just one flight.Offering twice the spatial resolution of the prior Altum sensor,Altum-PT,introduced in early 2022,the sensor that empowersusers with deeper analytical capabilities and broader,more divers
94、e applications;enable them to discern issues at the plant level,even in the early growth stages;andconduct early stage stand counting,as well as season-long soil monitoring,among other critical uses.Altum-PT also features a global shutter for distortion-free results,open APIs and a new storage devic
95、e allowing for two captures per second.7 RedEdge-P Offering three times the capture speed and twice the spatial resolution of the RedEdge-MX,the all new RedEdge-P,launched in early 2022,the sensor thatbuilds on the legacy of the rugged,high-quality,multispectral sensor that the industry has come to
96、trust and adds the power of a higher resolution,panchromatic band todouble the output data resolution.A single camera solution which is compatible with a wide array of drone aircraft ranging from large,fixed wing to small multirotor,RedEdge-P captures calibrated high-resolution multispectral and RGB
97、 imagery with an optimized field of view and capture rate for efficient flights.This solutionseamlessly integrates a high resolution,all-color imager with synchronized multispectral imagers to enable pixel-aligned outputs at previously unattainable resolutions,while maintaining the efficiency and re
98、liability of its RedEdge legacy.Processing of data outputs is enabled through industry standard software platforms,includingAgEagles Ground Control flight management software.With RedEdge-P,agricultural professionals benefit from a sensor that can enable effective plant counting andspectral analysis
99、 of small plants.Likewise,federal,state and local government and commercial forestry enterprises will also benefit from precise,efficient data collectionand tree-level analysis as opposed to being limited to analyzing large swaths of land to make critical forestry management decisions.RedEdge-Pdual
100、A further specialized product,the RedEdge-Pdual offers a combined solution of the RedEdge-P and RedEdge-P blue cameras,this camera providesspecialized insight into plant classification,weed identification,environmental research and vegetation analysis of water bodies,adding a coastal blue band.The c
101、ameracoves 10 multispectral bands,and a fast capture rate.Additionally,it allows synchronized capture of all 10 bands,providing AI functions such as automatic triggeringand geo-tagging for optimizing flight efficiency and easy post-processing.Market Opportunity for Sensor Solutions Sensors for drone
102、s are increasingly being used for surveying,mapping and inspections particularly in the mining,construction,energy,environmental management,agriculture,infrastructure and waste management industries.Moreover,with every new innovation in sensor technologies,the functionality and the underpinning valu
103、eproposition of commercial UAS continues to improve and allows for an even wider range of possible applications.AgEagles Manufacturing Operations For years,federal agencies have been using drones for a wide range of use cases,from mapping to surveillance,search and rescue,and scientific research.How
104、ever,inrecent years federal agencies use of and ability to procure UAS has evolved,largely stemming from security concerns about drones from Chinese manufacturers.In 2020,forexample,the U.S.Department of Interior grounded its entire fleet of drones over concerns that Chinese parts in them might be u
105、sed for spying,making exceptions only foremergency missions like fighting wildfires and search-and-rescue operations,”as The New York Times reported on January 29,2020.AgEagle believes that these measures to ban China-manufactured drones and components not only protects our nation,but has fueled and
106、 will continue to fuel,demandfor Made in America”drones and components,creating a significant opportunity for U.S.-based drone manufacturers,like AgEagle.Consequently,it is AgEagles intention toestablish best industry practices and define quality standards for manufacturing,assembly,design/engineeri
107、ng and testing of drones,drone subcomponents and related droneequipment in the Companys U.S.facilities.The Company also has established manufacturing operations in its Lausanne,Switzerland facility,where it assembles its line of eBee-branded fixed wing drones for AgEagles international customer base
108、.AgEagles commitment to its discerning customers has driven its efforts to establish recognized centers of excellence in drone airframes,sensors and software,which,inturn,has driven the the Companys drone production and distribution operations to actively seek ISO:9001 certification for its Quality
109、Management System(QMS”),a processthat the Company expects to complete within the second quarter of 2025.Demonstrating that the Company delivers consistently high-quality products and services in every aspectof its fixed-wing drone operations,including design,manufacturing,marketing,sales and after-s
110、ales.An international certification,ISO:9001 recognizes organizational excellenceand good quality practices based on a strong customer focus,robust process approach and proof of continual improvement.8 Competitive Strengths AgEagle believes the following attributes and capabilities provide us with l
111、ong-term competitive advantages:Proprietary technologies,in-house capabilities and industry experience We believe our decade of experience in commercial UAS design and engineering;in-housemanufacturing,assembly and testing capabilities;and advanced technology development skillset serve to differenti
112、ate AgEagle in the marketplace.In addition,AgEagleis committed to meeting and exceeding quality and safety standards for manufacturing,assembly,design and engineering and testing of drones,drone subcomponentsand related drone equipment in our U.S.and Swiss-based manufacturing operations.AgEagle is m
113、ore than just customer-and product-centric,we are obsessed with innovation and knowing the needs of our customers before they do We are focused oncapitalizing on our specialized expertise in innovating and commercializing advanced drone,sensor and software technologies to provide our existing and fu
114、turecustomers with autonomous robotic solutions that meet the highest possible safety and operational standards and fit their specific business needs.We have establishedthree Centers of Excellence that our leadership has challenged to cross-pollinate ideas,industry insights and interdisciplinary ski
115、llsets to generate intelligent autonomoussolutions that efficiently leverage our expertise in robotics,automation and manufacturing to solve problems for our customers,irrespective of the industry sector inwhich they may operate.Since launching our eBee VISION,a small,fixed-wing UAS designed to prov
116、ide real-time,enhanced situational awareness for critical intelligence,surveillance andreconnaissance missions,we have been awarded a contract from the U.S.Department of Defenses Defense Innovation Unit(DIU”),and secured purchase orders from alead distributor in the United Arab Emirates,and a resell
117、er for French Army surveillance operations.In May 2023,we released the new RedEdge-P dual high resolution and RGB composite drone sensor,representing yet another AgEagle technological advancement inaerial imaging cameras,seamlessly integrating the power and performance of the RedEdge-P and the new R
118、edEdge-P blue cameras in a single solution.The RedEdge-Pdual doubles analytical capabilities with the benefit of a single camera workflow.Its coastal blue band the first of its kind in the market was specifically designed forvegetation analysis of water bodies;environmental monitoring;water manageme
119、nt;habitat monitoring,protection and restoration;and vegetation species and weedsidentification,including differentiating and counting plants,trees,invasive species and weeds.AgEagle was awarded a Multiple Award Schedule(MAS”)Contract by the U.S.federal governments General Services Administration(GS
120、A”)In April 2023,thecentralized procurement arm of the federal government,the GSA,awarded us with a five-year MAS contract.The GSA Schedule Contract is a highly coveted award inthe government contracting space and is the result of a rigorous proposal process involving the demonstration of products a
121、nd services in-demand by governmentagencies,and the negotiation of their prices,qualifications,terms and conditions.Contractors selling through the GSA Contract are carefully vetted and must have aproven track record in the industry.We believe that this will serve to advance our efforts to achieve d
122、eeper penetration of the government sector over the next five years.We offer market-tested drones,sensors and software solutions that have earned the longstanding trust and fidelity of customers worldwide through successfulexecution of our acquisition integration strategy in 2022,AgEagle is now deli
123、vering a unified line of industry trusted drones,sensors and software that have beenvigorously tested and consistently proven across multiple industry verticals and use cases.For instance,our line of eBee fixed wing drones have flown more than onemillion flights over the past decade serving customer
124、s spanning surveying and mapping;engineering and construction;military/defense;mining,quarries andaggregates;agriculture humanitarian aid and environmental monitoring,to name just a few.Featured in over 100 research publications globally,advanced sensorinnovations developed and commercialized by AgE
125、agle have served to forge new industry standards for high performance,high resolution,thermal and multispectralimaging for commercial drone applications in agriculture,plant research,land management and forestry.In addition,we have championed the development of end-to-endsoftware solutions which pow
126、er autonomous flight and deliver actionable,contextual data and analytics for numerous Fortune 500 companies,government agencies and awide range of businesses in agriculture,energy and utilities,construction and other industry sectors.9 Our eBee TAC UAS has been approved by the Defense Innovation Un
127、it(DIU)for procurement by the Department of Defense We believe that the eBee TAC is ideallypositioned to become an in-demand,mission critical tool for the U.S.military,government and civil agencies and our allies worldwide;and expect that this will prove to bea major growth catalyst for our Company
128、positively impacting our financial performance in the years ahead.eBee TAC is available for purchase by U.S.governmentagencies and all branches of the military on GSA Schedule Contract#47QTCA18D003G,supplied by Hexagon US Federal and partner Tough Stump Technologies as astandalone solution or as par
129、t of the Aerial Reconnaissance Tactical Edge Mapping Imagery System(ARTEMIS”).Tough Stump is actively engaged in training militaryground forces based in the U.S.and in Central Europe on the use of eBee TAC for mid-range tactical mapping and reconnaissance missions.Our eBee X series of fixed wing UAS
130、,including the eBee X and eBee TAC,are the first drones on the market to comply with Category 3 of the sUAS Over Peoplerules published by the FAA.It is another important testament to our commitment to provide best-in-class solutions to our commercial customers,and we believe it willserve as a key dr
131、iver in the growth of eBee utilization in the United States.We further believe it will improve the business applications made possible by our droneplatform for a wide range of commercial enterprises which stand to benefit from adoption of drones in their businesses particularly those in industries s
132、uch as insurancefor assessment of storm damage,telecommunications for network coverage mapping and energy for powerline and pipeline inspections,just to name a few.Our eBee X series of drones are the worlds first UAS in its class to receive design verification for BVLOS and OOP from European Union A
133、viation Safety Agency(EASA”).The EASA design verification report(DVR”)demonstrates that the eBee X meets the highest possible quality and ground risk safety standards and,thanksto its lightweight design,effects of ground impact are reduced.As such,drone operators conducting advanced drone operations
134、 in 27 European Member States,Iceland,Liechtenstein,Norway,and Switzerland can obtain the HIGH or MEDIUM robustness levels of the M2 mitigation without additional verification from EASA.Regulatoryconstraints relating to limitations of BVLOS and OOP have continued to be a gating factor to widespread
135、adoption of commercial drone technologies across a wide rangeof industry sectors worldwide.Being the first company to receive this DVR from EASA for M2 mitigation is a milestone for AgEagle and our industry in the EuropeanUnion and will be key to fueling growth of our international customer base.Our
136、 global reseller network currently has more than 200 drone solutions providers in 75+countries By leveraging our relationships with the specialty retailers thatcomprise our global reseller network,AgEagle benefits from enhanced brand-building,lower customer acquisition costs and increased reach,reve
137、nues and geographicand vertical market penetration.We leverage our collective reseller network to accelerate our revenue growth by educating and encouraging our partners to marketAgEagles full suite of airframes,sensors and software as bundled solutions in lieu of marketing only previously siloed pr
138、oducts or product lines to end users.Government Regulation UAV Regulation AgEagle is subject to industry-specific regulations due to the nature of the products we sell to our customers.For example,certain aspects of our U.S.business aresubject to regulation by the Federal Aviation Administration(FAA
139、”),which regulates airspace for all air vehicles in the U.S.National Airspace System.10 In August 2016,the FAAs final rules for routine use of certain small UAS in the U.S.National Airspace System went into effect,providing safety rules for small UAS(under 55 pounds)conducting non-recreational opera
140、tions.These rules limit flights to visual-line-of-sight daylight operation,unless the UAS has anti-collision lights in which casetwilight operation is permitted.The final rule also addresses height and speed restrictions,operator certification,optional use of a visual observer,aircraft registration
141、and markingand operational limits,including prohibiting flights over unprotected people on the ground who are not directly participating in the operation of the UAS.Current FAA regulationsrequire drone operators to register their systems with the FAA and secure operating licenses for their drones.Th
142、ese regulations continue to evolve to accommodate theintegration of UAS into the National Airspace System for commercial applications.In April 2021,the FAAs final rule for remote identification of UAS went into effect.On the same day,the final rule for operation of small UAS over people also went in
143、toeffect.This rule permits routine operations of small uncrewed aircraft over people,moving vehicles and at night under certain conditions,provided that the operation meets therequirements of one of four operational categories.On October 27,2022,AgEagle announced that the Companys eBee X series of f
144、ixed wing UAS were the first and only drones on the market at that time to comply withCategory 3(as defined below)of the Operations of Small Uncrewed Aerial Systems Over People rules published by the FAA.Now that the eBee has proven compliant withCategory 3(as defined below)of the rules,eBee drone o
145、perators no longer need an FAA waiver for OOP or Operations Over Moving Vehicles.Category 3 eligible sUAS must notcause injury to a human being that is equivalent to or greater than the severity of injury caused by a transfer of 25 foot-pounds of kinetic energy upon impact from a rigid object,does n
146、ot contain any exposed rotating parts that could lacerate human skin upon impact with a human being,and does not contain any safety defects.Category 3 aircraft alsorequire FAA-accepted means of compliance and FAA-accepted declaration of compliance.Our non-U.S.operations are subject to the laws and r
147、egulations of foreign jurisdictions,which may include regulations that are more stringent than those imposed by theU.S.government on our U.S.operations.Environmental AgEagle is subject to various federal,state,local and non-U.S.laws and regulations relating to environmental protection,including the
148、discharge,treatment,storage,disposal and remediation of hazardous substances and wastes.We could also be affected by future laws and regulations relating to climate change,including laws related togreenhouse gas emissions and regulating energy efficiency.These laws and regulations could lead to incr
149、eased environmental compliance expenditures,increased energy and rawmaterials costs and new and/or additional investment in designs and technologies.We continually assess our compliance status and management of environmental matters toensure our operations are in compliance with all applicable envir
150、onmental laws and regulations.Investigation,remediation and operation and maintenance costs associated withenvironmental compliance and management of sites are a normal,recurring part of our operations.These costs often are allowable costs under our contracts with the U.S.government.While environmen
151、tal protection regulations have not had a significant adverse effect on our overall operations historically,it is reasonably possible that costsincurred to ensure continued environmental compliance in the future could have a material impact on our results of operations,financial condition or cash fl
152、ows if additional workrequirements or more stringent clean-up standards are imposed by regulators,or if new areas of soil,air and groundwater contamination are discovered and/or expansions of workscope are prompted by the results of investigations.11 Suppliers In 2024,we maintained strong relationsh
153、ips established with companies that provide many of the parts and services necessary to construct our advanced fixed-wingdrones and sensors.As our Company grows,we expect to pursue additional supplier relationships from which we can source less costly and better supplies to stay ahead of theneeds of
154、 the market.In addition,we have forged strong relationships with key suppliers in the U.S.and in U.S.-allied countries based on their ability to meet our needs and deliverytimelines.We will continue to expand upon our suppliers expertise to improve our existing products and develop new solutions.In
155、2023,we experienced some supply delays fromin our inability to muster funds due to high interest rates and tighter borrowing requirements that continue to crimp borrowing capacity,and thereby hindering our ability to fulfillcurrent and backorders of our products to convert accounts receivables into
156、cash.We may continue to experience potential supply chain disruptions in 2025 for the same reason.Operating Segment Revenues The table below reflects our revenue by operating segment for the years indicated below:For the Year Ended December 31,Type 2024 2023 Drones$6,410,305$6,197,049 Sensors 6,663,
157、196 7,100,419 Software-as-a-Service(SaaS)319,276 443,930 Total$13,392,777$13,741,398 Research and Development Research and development activities are core components of our business,and we follow a disciplined approach to investing our resources to create new dronetechnologies and solutions.A fundam
158、ental part of this approach is a well-defined screening process that helps us identify commercial opportunities that support current desiredtechnological capabilities in the markets we serve.Our research includes the expansion of our fixed wing products,providing for developing a portfolio of UAVs,s
159、ensors andongoing software platform development costs,as well as other technological solutions to problems to which our existing and prospective customers must confront.We cannotpredict when,if ever,we will successfully commercialize these projects,or the exact level of capital expenditures they cou
160、ld require,which could be substantial.Organizational History On March 26,2018,our predecessor company,EnerJex Resources,Inc.(EnerJex”),a Nevada company,consummated the transactions contemplated by the Agreementand Plan of Merger(the Merger Agreement”),dated October 19,2017,pursuant to which AgEagle
161、Merger Sub,Inc.,a Nevada corporation and a wholly-owned subsidiary ofEnerJex,merged with and into AgEagle Aerial Systems Inc.,a privately held company organized under the laws of the state of Nevada(AgEagle Sub”),with AgEagle Subsurviving as a wholly-owned subsidiary of EnerJex(the Merger”).In conne
162、ction with the Merger,EnerJex changed its name to AgEagle Aerial Systems Inc.(the Company,we,”our,”or us”)and AgEagle Sub changed its name initially to Eagle Aerial,Inc.”and then to AgEagle Aerial,Inc.”Prior to this merger,all of the EnerJex operations wereconducted through EnerJex Kansas,Inc.,Black
163、 Sable Energy,LLC,a Texas limited liability company(Black Sable”)and Black Raven Energy,Inc.a Nevada corporation(BlackRaven”).Its leasehold interests were held in its wholly-owned subsidiaries Black Sable,Working Interest,LLC,EnerJex Kansas and Black Raven.As of December 31,2021,theCompany continued
164、 with the wholly-owned subsidiaries,AgEagle Aerial,Inc.and EnerJex Kansas,Inc.On January 27,2021(MicaSense Acquisition Date”),we entered into a stock purchase agreement(the MicaSense Purchase Agreement”)with Parrot Drones S.A.S.andJustin B.McAllister(the MicaSense Sellers”)pursuant to which the Comp
165、any acquired 100%of the issued and outstanding capital stock of MicaSense,Inc.from the MicaSenseSellers(the MicaSense Acquisition”).The aggregate purchase price for the shares of MicaSense was$23 million less any debt,and subject to a customary working capitaladjustment.MicaSense became a wholly-own
166、ed subsidiary of the Company as a result of the MicaSense Acquisition.On April 19,2021(the Measure Acquisition Date”),the Company entered into a stock purchase agreement(the Measure Purchase Agreement”)with Brandon TorresDeclet(Mr.Torres Declet”),in his capacity as representative of the sellers,and
167、the sellers named in the Measure Purchase Agreement(the Measure Sellers”)pursuant to whichthe Company acquired 100%of the issued and outstanding capital stock of Measure Global,Inc.(Measure”)from the Measure Sellers(the Measure Acquisition”).Theaggregate purchase price for the shares of Measure is$4
168、5 million,less the amount of Measures debt and transaction expenses,and subject to a customary working capitaladjustment.Measure became a wholly-owned subsidiary of the Company as a result of the Measure Acquisition.12 On October 18,2021(the senseFly S.A.Acquisition Date”),the Company entered into a
169、 stock purchase agreement with Parrot Drones S.A.S.pursuant to which theCompany acquired 100%of the issued and outstanding capital stock of senseFly S.A.from Parrot Drones S.A.S.(the senseFly S.A.Purchase Agreement”)The aggregatepurchase price for the shares of senseFly S.A.is$21 million,less the am
170、ount of senseFly S.A.s debt and subject to a customary working capital adjustment.senseFly S.A.becamea wholly-owned subsidiary of the Company as a result.On October 18,2021(the senseFly Inc.Acquisition Date),AgEagle Aerial and the Company entered into a stock purchase agreement(the senseFly Inc.Purc
171、haseAgreement”)with Parrot Inc.pursuant to which AgEagle Aerial agreed to acquire 100%of the issued and outstanding capital stock of senseFly Inc.from Parrot Inc.The aggregatepurchase price for the shares of senseFly Inc.is$2 million,less the amount of senseFly Inc.s debt and subject to a customary
172、working capital adjustment.senseFly Inc.became awholly-owned subsidiary of the Company as a result.Our Headquarters Our principal executive offices are located at 8201 E.34th Street North,Suite 1307,Wichita,Kansas 67226 and our telephone number is 620-325-6363.Our website addressis .The information
173、contained on,or that can be accessed through,our website is not a part of this Annual Report.We have included our website address in thisAnnual Report solely as an inactive textual reference.Human Capital Resources As of March 31,2025,we employed 50 full-time employees and 2 part-time employees.We a
174、cknowledge that our employees are the Companys most valued asset and thedriving force behind our success.For this reason,we aspire to be an employer that is known for cultivating a positive and welcoming work environment and one that fostersgrowth,provides a safe place to work,supports diversity and
175、 embraces inclusion.To support these objectives,our human resources programs are designed to develop talent toprepare them for critical roles and leadership positions for the future;reward and support employees through competitive pay,benefit and perquisite programs;enhance theCompanys culture throu
176、gh efforts aimed at making the workplace more engaging and inclusive;acquire talent and facilitate internal talent mobility to create a high performing,diverse workforce;engage employees as brand ambassadors of the Companys products;and evolve and invest in technology,tools and resources to enable e
177、mployees at work.Diversity,Equity,and Inclusion We are committed to fostering,cultivating and preserving a culture of diversity,equity and inclusion(DE&I).We recognize that a diverse,extensive talent pool providesthe best opportunity to acquire unique perspectives,experiences,ideas,and solutions to
178、drive our business forward.We believe that diverse teams solving complex problemsleads to the best business results.We promote diversity by developing policies,programs,and procedures that foster a work environment where differences are respected,and allemployees are treated fairly.Talent Management
179、 We recognize the importance of attracting and retaining the best employees.Our continued success is not only contingent upon seeking out the best possible candidatesbut also retaining and developing the talent that lies within the organization.We strive to attract,develop,and retain the best and br
180、ightest from all walks of life and backgrounds.Our goal is to offer opportunities for employees to improve their skills to achieve their career goals.13 Employee Health and Safety We acted quickly to protect the health and safety of our employees in response to the pandemic protocols.In March 2020,a
181、ll employees who could work remotely beganworking from home.Employees continue to have the flexibility to work remotely or on a hybrid basis with most of our employees.The health and safety of our employees has beenand continues to be a priority.No OSHA recordable or lost time injuries in the US and
182、 zero injuries at our other global sites.Intellectual Property As reflected in the table below,we currently have registered trademarks,several patents or pending patents for our proprietary drone,sensor and software technologiesfiled in the United States and certain jurisdictions abroad.As of Decemb
183、er 31,2024,our trademark portfolio includes registered and/or pending in various countries and patents invarious stages of the patent granting process.We also consider our UAV and sensor manufacturing processes to be trade secrets and have non-disclosure agreements withcurrent employees and business
184、 partners to protect those and other trade secrets held by the Company.Risks related to the protection and exploitation of IP rights are set forth inRisk Factors.”TrademarksMark Country Application No.Filing Date Registration No.Registration Date Status(RE)DEFINING AGRICULTURALDRONE SENSING US 88/52
185、1832 7/18/2019 6078193 6/16/2020 RegisteredALTUM US 88/412439 5/2/2019 6823409 8/23/2022 RegisteredALTUM-PT US 97/174411 12/15/2021 6918181 12/6/2022 Registered Canada 2198057 6/15/2022 1672211 6/15/2022 Registered China 6/15/2022 1672211 6/15/2022 Registered European Union 6/15/2022 1672211 6/15/20
186、22 Registered Japan 6/15/2022 6/15/2022 Registered Mexico 6/15/2022 6/15/2022 Registered Madrid Protocol A0124015 6/15/2022 1672211 6/15/2022 RegisteredMICASENSE US 86/659942 6/11/2015 4922111 3/22/2016 RegisteredREDEDGE US 88/749873 1/7/2020 6344611 5/11/2021 RegisteredREDEDGE-MX US 88/749880 1/7/2
187、020 6359035 5/25/2021 RegisteredREDEDGE-P US 97/105307 11/2/2021 6917109 12/6/2022 Registered Canada 2189471 4/29/2022 1664529 4/29/2022 Registered 14 REDEDGE-P European Union 4/29/2022 1664529 4/29/2022 Registered Japan 4/29/2022 1664529 4/29/2022 Registered Mexico 4/29/2022 1664529 4/29/2022 Regis
188、tered Madrid Protocol A0122452 4/29/2022 1664529 4/29/2022 RegisteredTHE SENSOR THAT DOESNTCOMPROMISE US 88/521846 7/18/2019 6062427 5/26/2020 RegisteredAGEAGLE US 90/837274 7/20/2021 6808302 8/2/2022 Registered Canada 2068393 12/3/2020 PendingSENSEFLY,A KAMBILL COMPANYAND DESIGN India 5249406 12/16
189、/2021 3020013 7/23/2022 Registered Australia 1553690 3/13/2013 1156183 3/13/2013 Registered Brazil 3/25/2013 840461313 1/12/2016 Registered Brazil 3/25/2013 840461305 3/6/2018 Registered Canada 1618501 3/15/2013 TMA932233 3/21/2016 Registered China 3/13/2013 1156183 03/13/2013 Registered European Un
190、ion 3/13/2013 1156183 3/13/2013 RegisteredEBEE Russia 3/13/2013 1156183 3/13/2013 Registered Switzerland 61158/2012 9/18/2012 638841 1/21/2013 Registered US 79128567 3/13/2013 4503673 4/1/2014 Registered WIPO 3/13/2013 1156183 3/13/2013 Registered United Kingdom UK00801156183 3/13/2013 UK00801156183
191、 9/21/2016 Registered EXOM Australia 1/22/2015 1241930 1/22/2015 Registered China 1/22/2015 1241930 1/22/2015 Registered European Union 1/22/2015 1241930 1/22/2015 Registered Russia 1/22/2015 1241930 1/22/2015 Registered South Africa 2015/01806 1/23/2015 2015/01806 6/19/2017 Registered Switzerland 5
192、9684/2014 8/20/2014 663964 9/24/2014 Registered WIPO 1/22/2015 1241930 1/22/2015 RegisteredSENSEFLY Australia 11/8/2011 1100123 11/8/2011 Registered Brazil 3/4/2016 910715637 4/17/2018 Registered Brazil 3/4/2016 910715580 4/17/2018 Registered Canada 1769512 2/25/2016 TMA1013787 1/24/2019 Registered
193、China 11/8/2011 1100123 11/8/2011 Registered European Union 11/8/2011 1100123 11/8/2011 Registered Russia 11/8/2011 1100123 11/8/2011 Registered Switzerland 62950/2010 5/8/2011 615741 5/26/2011 Registered WIPO 1100123 11/8/2011 Registered United Kingdom UK00801322220 9/9/2016 UK00801322220 5/11/2017
194、 RegisteredALBRIS Australia 1814255 9/9/2016 1322220 9/9/2016 Registered China 1322220 9/9/2016 Registered European Union 132220 9/9/2016 RegisteredALBRIS Russia 132220 9/9/2016 Registered Switzerland 53355/2016 3/16/2016 685791 3/30/2016 Registered US 79197603 9/9/2016 5178765 4/11/2017 Registered
195、WIPO 132220 9/9/2016 RegisteredEBEE TAC Switzerland 15306/2020 10/29/2020 754619 11/6/2020 Registered WIPO 4/21/2021 1615756 4/21/2021 Registered 15 Patents and Pending PatentsInvention Name Country Code Status ApplicationNo.FilingDate Publication No.PublicationDate Patent No.PatentDateREFLECTANCE P
196、ANELS FEATURINGMACHINE-READABLE SYMBOL ANDMETHODS OF USE US NP-Filed 62/160732 5/13/15 REFLECTANCE PANELS FEATURINGMACHINE-READABLE SYMBOL ANDMETHODS OF USE US Granted 15/154719 5/13/16 20170352110 12/7/17 10467711 11/5/19THERMAL CALIBRATION OF ANINFRARED IMAGE SENSOR US Granted 15/620627 6/12/17 20
197、170358105 12/14/17 10518900 12/31/19THERMAL CALIBRATION OF ANINFRARED IMAGE SENSOR US NP-Filed 62/350116 6/14/16 MULTI-SENSOR IRRADIANCEESTIMATION PCT Converted US2017/066524 12/14/17 WO2018/136175 7/26/18 MULTI-SENSOR IRRADIANCEESTIMATION US Granted 16/037952 7/17/18 20180343367 11/29/18 11290623 3
198、/29/22MULTI-SENSOR IRRADIANCEESTIMATION China Published 201780083888.1 12/14/17 CN110291368A 9/27/19 AERIAL VEHICLE COMPRISINGIRRADIANCE SENSOR AND IMAGINGDEVICE Europe Converted 17892899.0 12/14/17 3571480 11/27/19 3571480 12/11/24AustriaBelgiumSwitzerland/LichtensteinGermanyDenmarkSpainMULTI-SENSO
199、R IRRADIANCEESTIMATION FinlandFranceUnited KingdomNetherlandsNorwaySwedenJapan Granted 2019-529189 12/14/17 2020-515809 5/28/20 7321093 7/27/2023IMAGE SENSOR AND THERMAL CAMERADEVICE,SYSTEM AND METHOD Europe Published 19892185.0 12/3/19 3890466 10/13/21 IMAGE SENSOR AND THERMAL CAMERADEVICE,SYSTEM A
200、ND METHOD China Granted 201980079714.7 12/3/19 CN113226007A 8/6/21 ZL201980079714.7 4/14/2023IMAGE SENSOR AND THERMAL CAMERADEVICE,SYSTEM AND METHOD US Granted 17/299258 6/2/21 20220038644 2/3/22 12028588 7/2/2024 IMAGE SENSOR AND THERMAL CAMERADEVICE,SYSTEM AND METHOD PCT Converted US2019/064296 12
201、/3/19 WO2020/117847 6/11/20 IMAGE SENSOR AND THERMAL CAMERADEVICE,SYSTEM AND METHOD US Allowed 18/744539 6/14/24 2019064296 12/3/19 DIFFUSER FOR IRRADIANCE SENSORINCLUDING DIFFUSER PROTRUDING FROMEXTERIOR SURFACE US Granted 17/720093 4/13/22 20220333979 10/20/22 12055434 8/6/2024 DIFFUSER FOR LIGHT
202、SENSOR US NP-Filed 63/174929 4/14/21 CAMERA US Granted 29/691510 5/16/19 D907099 1/5/21CAMERA US Granted 29/691512 5/16/19 D907100 1/5/21LIGHT SENSOR US Granted 29/691513 5/16/19 D906845 1/5/21LENS HOUSING US Granted 29/691516 5/16/19 D907102 1/5/21 16 Where You Can Find Additional Information The C
203、ompany is subject to the reporting requirements under the Exchange Act.The Company files with,or furnishes to,the Securities and Exchange Commission(SEC”)annual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and amendments to those reports and other filings with the
204、SEC.These filings areavailable free of charge on the Companys website,as soon as reasonably practicable after they are filed with,or furnished to,the SEC.The SEC maintains anInternet website,www.sec.gov,which contains reports and information statements and other information regarding issuers.The inf
205、ormation found on our website is notincorporated into this or any other report we file with or furnish to the SEC.ITEM 1A.RISK FACTORS The risk factors discussed below could cause our actual results to differ materially from those expressed in any forward-looking statements.Although we have attempte
206、dto list comprehensively these important factors,we caution you that other factors may in the future prove to be important in affecting our results of operations.New factors emergefrom time to time,and it is not possible for us to predict all of these factors,nor can we assess the impact of each suc
207、h factor on the business or the extent to which any factor,orcombination of factors,may cause actual results to differ materially from those contained in any forward-looking statement.The risks described below set forth what we believe to be the most material risks associated with the purchase of ou
208、r Common Stock.Before you invest in our CommonStock,you should carefully consider these risk factors,as well as the other information contained in this prospectus.We have a history of operating losses and expect to incur significant additional operating expenses.We have been operating through our wh
209、olly-owned subsidiary,AgEagle Aerial,Inc.for over ten years.It was not until 2021 that we acquired the latest go-to-marketairframes,sensors and software technologies of our products.As of December 31,2024,we had an accumulated deficit of approximately$218.4 million which included net losses ofapprox
210、imately$35.0 million and$42.4 million for the years ended December 31,2024 and 2023,respectively.We are currently still incurring significant net losses as we continue toinvest in our business strategy and grow our business as a result,we cannot guarantee that when we expect to generate sufficient c
211、ash flows from operations to be adequate tocover our operating business.Moreover,even if we achieve profitability,given the competitive and evolving nature of the industries in which we operate,we may be unable tosustain or increase profitability and failure to do so would adversely affect our busin
212、ess,including our ability to raise additional funds.17 We will need additional funding and may be unable to raise capital when needed,which would force us to delay,curtail or eliminate one or more of our research anddevelopment programs or commercialization efforts.Our operations have consumed subst
213、antial amounts of cash since inception.We expect to continue to spend substantial amounts on product and software development.We will require additional funds to support our continued research and development activities,as well as the costs of commercializing,marketing and selling any existing and n
214、ewproducts and/or services resulting from those activities.Until such time,that we can generate sufficient revenue and achieve profitability,we will need to meet our future cashneeds through equity or debt financings.There can be no assurance that we will be successful in our capital raising efforts
215、.On March 10,2023,the Company issued and sold to the Alpha Capital Anstalt(Alpha”or Investor”)an additional 3,000 shares of Series F convertible into 2,381 sharesof the Companys common stock,per$1,000 Stated Value per share of Preferred Stock,at a conversion price of$420.00 per share and associated
216、common stock warrant to purchaseup to 7,143 shares of common stock at the exercise price of$420.00 per share warrant(the Additional Warrant”)in a private placement and raised$3,000,000 in gross proceeds.The Additional Warrant is exercisable upon issuance and has a three-year term.On June 5,2023,the
217、Company entered into a Securities Purchase Agreement(the Purchase Agreement”)with certain accredited investors,which included Alpha,(theInvestors”).Pursuant to the terms of the Purchase Agreement,the Company has agreed to issue and sell to Investors(i)16,720 shares of Common Stock(the Offering Share
218、s”)at$250.00 per share and(ii)warrants to purchase up to 25,080 shares of common stock(the Warrants”),exercisable at$380.00 per share(the Warrant Shares”together with theWarrants and Offering Shares,the Securities”)and raised gross sales proceeds of$4,180,000.The Warrant is for a term of 5.5 years c
219、ommencing on the closing date but is notexercisable for the first six months after closing.As a result,pursuant to the Purchase Agreement the Company issued 16,720 shares of Common Stock for proceeds of$3,817,400,net of issuance costs from the offering and warrants to purchase up to 25,080 shares of
220、 common stock exercisable at$380.00 per share.On November 15,2023,the Company and Investors,which included Alpha,entered into the Assignment Agreement,pursuant to which,among other things,(i)Alphatransferred and assigned to certain institutional and accredited investors(the Assignees”),the rights an
221、d obligations to purchase up to$1,850,000 or 1,850 shares at a price of$1,000 per share of Series F Preferred pursuant to the Additional Investment Right provided in the Series F Agreement(the Assigned Rights”),(ii)the Series F Agreement wasamended so that the Assignees are party thereto and have th
222、e same rights and obligations thereunder as the investor to the extent of the Assigned Rights,(iii)the time periodduring which the investor can provide an investor notice was extended from August 3,2024 until February 3,2025;and(iv)Alpha and the Company agreed to a one-time waiver ofthe Minimum Subs
223、cription Requirement to allow exercise of the Assigned Rights.Pursuant to the investor notices received by the Company from Alpha and the Assignees on November 15,2023,delivered in connection with the Assignment,theInvestor and the Assignees have provided notices of their desire to purchase 1,850 sh
224、ares of Preferred Stock(the November Additional Series F Preferred”)convertible into14,836 shares of Common Stock(the November Conversion Shares”)at a conversion price of$124.70 per share and warrants(the November Additional Warrants”)to purchaseup to 14,836 shares of our Common Stock an exercise pr
225、ice of$124.70 per share for an aggregate purchase price of$1,850,000.The November Additional Warrants will beexercisable upon issuance and have a three-year term.18 Pursuant to the Investor Notice received by the Company from Alpha,the Company sold to Alpha 650 shares of November Additional Series F
226、 Preferred,which are part ofthe 1,850 shares and are convertible into 5,213 shares of Common Stock at a conversion price of$124.70 per share(which was adjusted to$100.00 per share as a result of theCommon Stock Offering)and November Additional Warrants to purchase up to 5,213 shares of our Common St
227、ock an initial exercise price of$124.70 per share(which was adjustedto$100.00 per warrant as a result of the Common Stock Offering)for an aggregate purchase price of$650,000.On March 6,2024,in connection with the Assigned Rights,the Company received investor notices from Alpha and the Assignees for
228、the aggregate purchase of 1,000shares of Series F Convertible Preferred convertible into 16,588 shares of Common Stock at a conversion price of$60.29 and warrants to purchase up to 16,588 shares of CommonStock an exercise price of$60.29 per share for an aggregate purchase price of$1,000,000.The Warr
229、ants were immediately exercisable upon issuance and have a three-year term.On April 12,2024,the Company received an investor notice from Alpha for the aggregate purchase of 1,050 shares of Series F Convertible Preferred convertible into 28,378shares of Common Stock,in the aggregate,at a conversion p
230、rice of$37.00 and warrants to purchase up to 28,378 shares of Common Stock at an exercise price of$37.00 per share(based on the VWAPs of the Companys common stock for April 9,2024,April 10,2024,and April 11,2024)for an aggregate purchase price of$1,050,000.The Warrants wereimmediately exercisable up
231、on issuance and have a three-year term.On May 31,2024,the Company received investor notices from Alpha and certain of the Assignees for the aggregate purchase of 1,050 shares of Series F ConvertiblePreferred convertible into 32,659 shares of Common Stock at a conversion price of$32.15 and warrants t
232、o purchase up to 32,659 shares of Common Stock at an exercise price of$32.15 per share for an aggregate purchase price of$1,050,000.The Warrants were immediately exercisable upon issuance and have a three-year term.On July 25,2024,the Company received investor notice from Alpha for the aggregate pur
233、chase of 500 shares of Series F Convertible Preferred convertible into 21,598shares of Common Stock at a conversion price of$23.15 and warrants to purchase up to 21,598 shares of Common Stock at an exercise price of$23.15 per share for an aggregatepurchase price of$500,000.The Warrants were immediat
234、ely exercisable upon issuance and have a three-year term.On August 27,2024,the Company received investor notice from Alpha for the aggregate purchase of 500 shares of Series F Convertible Preferred convertible into 24,765shares of Common Stock at a conversion price of$20.19 and warrants to purchase
235、up to 24,765 shares of Common Stock at an exercise price of$20.19 per share for an aggregatepurchase price of$500,000.The Warrants were immediately exercisable upon issuance and have a three-year term.On September 30,2024,the Company entered into a placement agency agreement(the Placement Agency Agr
236、eement”)with Spartan Capital Securities,LLC(thePlacement Agent”)in connection with the issuance and sale by the Company in a public offering(the Offering”)of 538,000 units(the Units”),consisting of common units(Common Units”),each consisting of one share of common stock of the Company,$0.001 par val
237、ue per share,one Series A warrant(Series A Warrant”)to purchase one share ofcommon stock and one Series B warrant(Series B Warrant”)to purchase one share of common stock and pre-funded Units(the Pre-Funded Units”and together with theCommon Units,the Units”),with each Pre-Funded Unit consisting of on
238、e pre-funded warrant(the Pre-Funded Warrants”)to purchase one share of common stock,one Series AWarrant to purchase one share of common stock and one Series B Warrant to purchase one share of common stock,resulting in net proceed of$5,677,739.On October 7,2024,as part of October 2024 Offering”,the C
239、ompany issued and delivered to Alpha 1,500 shares of Series F 5%Convertible Preferred Stock with anaggregate stated value of$1,500,000 and having all the rights and benefits of Series F 5%Convertible Preferred Stock convertible into 1,363,636 shares of Common Stock with aconversion price of$1.10 as
240、of December 31,2024.On December 18,2024,the Company received investor notice from Alpha for the aggregate purchase of 750 shares of Series F Convertible Preferred convertible into142,857 shares of Common Stock at a conversion price of$5.25 and warrants to purchase up to 142,857 shares of Common Stoc
241、k at an exercise price of$5.25 per share for anaggregate purchase price of$750,000.The Warrants were immediately exercisable upon issuance and have a three-year term.19 Despite the foregoing,we will require additional financing in the future.If we are unable to raise additional capital,we may have t
242、o delay,curtail,or eliminatecommercializing,marketing and selling one or more of our solutions.Should the financing we require be unavailable to us,or on terms unacceptable to us when we require it,theconsequences could have a material adverse effect on our business,operating results,financial condi
243、tion,and prospects.In addition,if additional funds are obtained through arrangements with collaborative partners or other non-dilutive sources,we may have to relinquish economic and/orproprietary rights to some of our technologies or products under development that we would otherwise seek to develop
244、 or commercialize by ourselves.Such events may have amaterial adverse effect on our business,operating results,financial condition and prospects.Our independent registered public accounting firms report contains an explanatory paragraph that expresses substantial doubt about our ability to continue
245、as a goingconcern.”As of December 31,2024,the Company had$3.6 million cash on hand and a working capital of$3.1 million.During the year ended December 31,2024,the Companyincurred a net loss of approximately$35.0 million and used cash in operating activities of approximately$6.6 million.While the Com
246、pany has historically been successful in raisingcapital to meet its working capital needs,the ability to continue raising such capital to enable the Company to continue its growth is not guaranteed.As the Company will requireadditional liquidity to continue its operations and meet its financial obli
247、gations over the next twelve months,there is substantial doubt about the Companys ability to continue asa going concern.The Company is evaluating strategies to obtain the required additional funding for future operations and the restructuring of operations to grow revenues andreduce expenses.If the
248、Company is unable to generate significant sales growth in the near term and raise additional capital,there is a risk that the Company could default on obligations;and could be required to discontinue or significantly reduce the scope of its operations if no other means of financing options are avail
249、able.The consolidated financial statementscontained in this Annual Report do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification ofliabilities or any other adjustment that might be necessary should the Company be un
250、able to continue as a going concern.Risks Related to Our Business and the Industries We Serve We operate in evolving markets,which makes it difficult to evaluate our business and future prospects.AgEagles drone,sensor and software technologies are and will be sold in new and rapidly evolving markets
251、.The commercial UAV industry is in the early stages ofcustomer adoption and the FAAs definition of regulations relating to the integration of commercial drones into the U.S.National Airspace System is rapidly evolving.Accordingly,our business and future prospects may be difficult to evaluate.We cann
252、ot accurately predict the extent to which demand for our drone systems and solutions willincrease,if at all.The challenges,risks and uncertainties frequently encountered by companies in rapidly evolving markets could impact our ability to do the following:Generate sufficient revenue to achieve susta
253、inable profitability;Acquire and maintain market share;Achieve or manage growth in our business operations;Renew contracts;Attract and retain software and system engineers and other highly qualified personnel;Successfully develop for the commercial market new products and end-to-end solutions;20 Ada
254、pt to new or changing polices and spending priorities of current and prospective clients;and Access to additional capital when required and on reasonable terms.If we fail to address these and other challenges,risks and uncertainties successfully,our business,results of operations and financial condi
255、tion would be materiallyharmed.Product development is a long,expensive,and uncertain process.The development of UAV systems is a costly,complex and time-consuming process,and investments in product development often involve a long wait until a return,ifany,can be achieved on such investment.We might
256、 face difficulties or delays in the development process that will result in our inability to timely offer products that satisfy themarket,which might allow competing products to emerge during the development and certification process.We plan to continue making significant investments in research and
257、development relating to our products and technology services,but such investments are inherently speculative and require substantial capital expenditures.Any unforeseentechnical obstacles and challenges that we encounter in the research and development process could result in delays in or the abando
258、nment of product commercialization,maysubstantially increase development costs,and will likely negatively affect our results of operations.Successful technical development of our products does not guarantee successful commercialization.Although we have successfully acquired our fully developed go-to
259、-market UAV systems,sensors,and software technology solutions ready for sale or subscription,wemay still fail to achieve commercial success for several reasons,including,among others,the following:failure to obtain the required regulatory approvals for their use;rapid obsolescence of a product due t
260、o new,more advanced technologies;prohibitive production costs;competing products;lack of product innovation;unsuccessful distribution and marketing through our sales channels;insufficient cooperation from our supply and distribution partners;and product development that does not align with or meet c
261、ustomer needs.Our success in the market for the products and services we develop will depend largely on our ability to properly demonstrate their capabilities.Upon demonstration,oursolutions may not have the capabilities they were designed to have or that we believed they would have.Furthermore,even
262、 if we do successfully demonstrate our productscapabilities,potential customers may be more comfortable doing business with our competitors;or may not feel there is a significant need for the products we develop.As a result,significant revenue from our current and new product investments may not be
263、achieved for several years,if at all,and that will affect the Companys profitability.We face competition from other companies,many of which have substantially greater resources.Our competitors may be able to provide customers with products that have different or greater capabilities or benefits than
264、 we can provide in areas such as technicalqualifications,past contract performance,geographic presence,price,and the availability of key professional personnel.Furthermore,many of our competitors may be able toutilize their substantially greater resources and economies of scale to develop competing
265、products and technologies,manufacture in high volumes more efficiently,divert salesaway from us by winning broader contracts or hire away our employees by offering more lucrative compensation packages.Small business competitors may be able to offer morecost competitive solutions,due to their lower o
266、verhead costs.The markets for commercial drones and services are quickly expanding,and competition is intensifying as additionalcompetitors enter the market and current competitors expand their product offerings.In order to secure contracts successfully when competing with larger,better financedcomp
267、anies,we may be forced to agree to contractual terms that provide for lower aggregate payments to us over the life of the contract,which could adversely affect our margins.Our failure to compete effectively could have a material adverse effect on our business,prospects,financial condition or future
268、operating results.21 If we fail to protect our intellectual property rights,we could lose our ability to compete in the marketplace.Our intellectual property and proprietary rights are important to our ability to remain competitive and successful in the development of our products and to our futureg
269、rowth potential.Patent protection can be limited and not all intellectual property can be patented.We expect to rely on a combination of patent,trademark,copyright and tradesecret laws,as well as confidentiality and non-disclosure agreements and procedures,non-competition agreements and other contra
270、ctual provisions to protect our intellectualproperty,other proprietary rights and our brand.As we currently only have a limited amount of granted patent or copyright protections,we must rely on trade secrets andnondisclosure agreements,which provide limited protections.Our intellectual property righ
271、ts may be challenged,invalidated,or circumvented by third parties.We may not be ableto prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by employees or competitors.Furthermore,our competitors may independently develop technologies and products that are sub
272、stantially equivalent or superior to our technologies and products,which could result in decreased revenues.Litigation may be necessary to enforce our intellectual property rights,which could result in substantial costs to us and substantialdiversion of managements attention.If we do not adequately
273、protect our intellectual property,our competitors could use it to enhance their products.Our inability to adequatelyprotect our intellectual property rights could adversely affect our business and financial condition,and the value of our brand and other intangible assets.Other companies may claim th
274、at we infringe their intellectual property,which could materially increase our costs and harm our ability to generate future revenue and profit.We do not believe that our technologies infringe on the proprietary rights of any third party;however,claims of infringement are becoming increasingly commo
275、n and thirdparties may assert infringement claims against us.It may be difficult or impossible to identify,prior to receipt of notice from a third party,the trade secrets,patent position or otherintellectual property rights of a third party,either in the United States or in foreign jurisdictions.Any
276、 such assertion may result in litigation or may require us to obtain a license forthe intellectual property rights of third parties.If we are required to obtain licenses to use any third-party technology,we would have to pay royalties,which may significantlyreduce any profit on our products.In addit
277、ion,any such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market opportunities.Ifany of our products were found to infringe other parties proprietary rights and we are unable to come to terms regarding a license with such parties,we may be forced
278、to modifyour products to make them non-infringing or to cease production of such products altogether.The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnification.We have developed and sold products and services in circumstances where
279、 insurance or indemnification may not be available,for example,in connection with thecollection and analysis of various types of information.In addition,our products and services raise questions with respect to issues of civil liberties,intellectual property,trespass,conversion,and similar concepts,
280、which may create legal issues.Indemnification to cover potential claims or liabilities resulting from the failure of any technologies that wedevelop or deploy may be available in certain circumstances but not in others.Currently,the uncrewed aerial systems industry lacks a formative insurance market
281、.We may not beable to maintain insurance to protect against all operational risks and uncertainties that our customers confront.Substantial claims resulting from an accident,product failure,orpersonal injury or property liability arising from our products and services in excess of any indemnity or i
282、nsurance coverage(or for which indemnity or insurance coverage is notavailable or is not obtained)could harm our financial condition,cash flows and operating results.Any accident,even if fully covered or insured,could negatively affect ourreputation among our customers and the public,and make it mor
283、e difficult for us to compete effectively.22 We may incur substantial product liability claims relating to our products.As a manufacturer of UAV products,and with aircraft and aviation sector companies under increased scrutiny in recent years,claims could be brought against us if use ormisuse of one
284、 of our UAV products causes,or merely appears to have caused,personal injury or death.In addition,defects in our products may lead to other potential life,healthand property risks.Any claims against us,regardless of their merit,could severely harm our financial condition,strain our management and ot
285、her resources.We are unable topredict if we will be able to obtain or maintain product liability insurance for any of our products.We maintain cash deposits in excess of federally insured limits.Adverse developments affecting financial institutions,including bank failures,could adversely affect ourl
286、iquidity and financial performance.We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation(FDIC”)insured banks,which exceed the FDIC insurance limits.We also maintaincash deposits in foreign banks where we operate,some of which are not insured or are only partially insu
287、red by the FDIC or other similar agencies.Bank failures,events involvinglimited liquidity,defaults,non-performance or other adverse developments that affect financial institutions,or concerns or rumors about such events,may lead to liquidityconstraints.For example,on March 10,2023,Silicon Valley Ban
288、k failed and was taken into receivership by the FDIC.Additionally,on March 15,2023,Credit Suisse announced thatit would borrow up to 50 billion Swiss francs,or$53.7 billion,from the Swiss National Bank to address its liquidity concerns.We have historically maintained deposits less than$1million euro
289、s at Credit Suisse and have now lowered our funds as part of our risk mitigation plan in connection with the foregoing,we may increase our deposits at Credit Suisse inthe future however there can be no assurance that we will be able to effectively mitigate the risk of loss should a similar event imp
290、act Credit Suisse in the future or any other bankat which we maintain deposits.The failure of a bank,or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances,could adversely impact our liquidity and financial performance.There can
291、be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will bebackstopped by the U.S.or applicable foreign government,or that any bank or financial institution with which we do business will be able to obtain needed liquidity from otherbanks,government instituti
292、ons or by acquisition in the event of a failure or liquidity crisis.If our subcontractors or suppliers fail to perform their contractual obligations,our performance and reputation as a contractor and our ability to obtain future businesscould suffer.We often rely upon other companies to perform work
293、 we are obligated to perform for our customers.As we secure more work under certain of our contracts,we expect torequire an increasing level of support from subcontractors that provide complementary or supplementary services to our offers.We are responsible for the work performed by oursubcontractor
294、s,even though in some cases we have limited involvement in that work.If one or more of our subcontractors fails to satisfactorily perform the agreed-upon serviceson a timely basis or violates contracting policies,laws or regulations,our ability to perform our obligations as a prime contractor or mee
295、t our customers requirements may becompromised.In extreme cases,performance,or other deficiencies on the part of our subcontractors could result in a customer terminating our contract for default.A terminationfor default could expose us to liability,including liability for the costs of re-procuremen
296、t,could damage our reputation and could hurt our ability to compete for future contracts.For certain of the components included in our products,there are a limited number of suppliers we can rely upon.If we are unable to obtain these components when needed,we could experience delays in the manufactu
297、ring of our products and our financial results could be adversely affected.Suppliers of some of the components of our products may require us to place orders with significant lead-time to assure supply in accordance with their manufacturingrequirements and enter into agreements specifically for our
298、technological services business.Delays in supply may significantly hurt our ability to fulfill our contractual obligationsand therefore our business and result of operations.In addition,we may not be able to continue to obtain such components from these suppliers on satisfactory commercial terms.Dis
299、ruptions of our manufacturing operations would ensue if we were required to obtain components from alternative sources,which would have an adverse effect on our business,results of operations and financial condition.23 If we are unable to recruit and retain key management,technical and sales personn
300、el,our business would be negatively affected.For our business to be successful,we need to attract and retain highly qualified executive,technical and sales personnel.The failure to recruit additional key personnelwhen needed,with specific qualifications,on acceptable terms and with an ability to mai
301、ntain positive relationships with our partners,might impede our ability to continue todevelop,commercialize and sell our products and services.To the extent the demand for skilled personnel exceeds supply,we could experience higher labor,recruiting and trainingcosts in order to attract and retain su
302、ch employees.The loss of any members of our management team may also delay or impair achievement of our business objectives and resultin business disruptions due to the time needed for their replacements to be recruited and become familiar with our business.We face competition for qualified personne
303、l from othercompanies with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our business to succeed.If our proposed marketing efforts are unsuccessful,we may not earn enough revenue to become profitable.Our future growth depends on
304、our gaining market acceptance and regular production orders for our products and services.Our marketing plan includes attendance attrade shows,conducting private demonstrations,advertising,social media,public relations,promotional materials and advertising campaigns in print and/or broadcast media.I
305、naddition,our marketing plan incorporates strategies to nurture,expand and leverage our global reseller network and relationships with government and defense contractors toachieve greater market penetration in the commercial and government/military verticals.In the event we are not successful in obt
306、aining a significant volume of orders for ourproducts and technology services,we will face significant obstacles in expanding our business.We cannot give any assurance that our marketing efforts will be successful.If theyare not,revenue may not be sufficient to cover our fixed costs and we may not b
307、ecome profitable.Our operating margins may be negatively impacted by a reduction in sales or an increase in the cost of products sold.Expectations regarding future sales and expenses are largely fixed in the short term.We maintain raw materials and finish goods at a volume we feel is necessary foran
308、ticipated distribution and sales.Therefore,we may not be able to reduce costs in a timely manner to compensate for any unexpected shortfalls between forecasted and actualsales.Additionally,the countries in which we purchase raw materials from to manufacture our finished product could become subject
309、to new trade restrictions,including increasedtaxation on imported goods,customs restrictions,tariffs or quotas.We face a significant risk of failure because we cannot accurately forecast our future revenues and operating results.The rapidly changing nature of the markets in which we compete makes it
310、 difficult to accurately forecast our revenues and operating results.Furthermore,we expect ourrevenues and operating results to fluctuate in the future due to a number of factors,including the following:the timing of sales or subscription of our products;unexpected delays in introducing new products
311、 and services;increased expenses,whether related to sales and marketing or administration;and costs related to possible acquisitions of businesses.24 Rapid technological changes may adversely affect the market acceptance of our products and could adversely affect our business,financial condition,and
312、 results ofoperations.The markets in which we compete are subject to technological changes,introduction of new products,change in customer demands and evolving industry standards.Ourfuture success will depend upon our ability to keep pace with technological developments and to timely address the inc
313、reasingly sophisticated needs of our customers bysupporting existing and new technologies and by developing and introducing enhancements to our current products and services and new products and services.We may not besuccessful in developing and marketing enhancements to our products that will respo
314、nd to technological change,evolving industry standards or customer requirements.Inaddition,we may experience difficulties internally or in conjunction with key vendors and partners that could delay or prevent the successful development,introduction and sale ofsuch enhancements and such enhancements
315、may not adequately meet the requirements of the market and may not achieve any significant degree of market acceptance.If therelease dates of our new products or enhancements are delayed or,if when released,they fail to achieve market acceptance,our business,operating results,and financial condition
316、may be adversely affected.Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies,or limitations put on the use of small UAS in response to public privacyconcerns,may prevent us from expanding the sales of our drone solutions to commercial and industrial customer
317、s in the United States.The regulation of small UAS for commercial use in the United States is undergoing substantial change and the ultimate treatment is uncertain.In August 2016,the FAAsfinal rules regarding the routine use of certain small UAS(under 55 pounds)in the U.S.National Airspace System we
318、nt into effect,providing safety regulations for small UASconducting non-recreational operations and contain various limitations and restrictions for such operations,including a requirement that operators keep UAS within visual-line-of-sight and prohibiting flights over unprotected people on the grou
319、nd who are not directly participating in the operation of the UAS.In April 2021,the FAAs final rules requiringremote identification of UAS went into effect.On the same day,the final rule for operation of small UAS to fly over people and at night under certain conditions also went intoeffect.We canno
320、t assure you that any additional final rules will result in the expanded use of our UAS and UAS solutions by commercial and industrial entities.In addition,thereexists public concern regarding the privacy implications of U.S.commercial use of small UAS.This concern has included calls to develop expl
321、icit written policies and proceduresestablishing usage limitations.We cannot assure you that the response from regulatory agencies,customers and privacy advocates to these concerns will not delay or restrict theadoption of small UAS by the commercial use markets.We may pursue additional strategic tr
322、ansactions in the future,which could be difficult to implement,disrupt our business or change our business profile significantly.We intend to consider additional potential strategic transactions,which could involve acquisitions of businesses or assets,joint ventures or investments in businesses,prod
323、ucts or technologies that expand,complement or otherwise relate to our current or future business.We may also consider,from time to time,opportunities to engage in jointventures or other business collaborations with third parties to address particular market segments.Should our relationships fail to
324、 materialize into significant agreements,or shouldwe fail to work efficiently with these companies,we may lose sales and marketing opportunities and our business,results of operations and financial condition could be adverselyaffected.These activities,if successful,create risks such as,among others:
325、(i)the need to integrate and manage the businesses and products acquired with our own business andproducts;(ii)additional demands on our resources,systems,procedures and controls;(iii)disruption of our ongoing business;(iv)potential unknown or unquantifiable liabilitiesassociated with the target com
326、pany;and(v)diversion of managements attention from other business concerns.Moreover,these transactions could involve:(a)substantialinvestment of funds or financings by issuance of debt or equity securities;(b)substantial investment with respect to technology transfers and operational integration;and
327、(c)theacquisition or disposition of product lines or businesses.Also,such activities could result in one-time charges and expenses and have the potential to either dilute the interests ofour existing shareholders or result in the issuance of,or assumption of debt.Such acquisitions,investments,joint
328、ventures or other business collaborations may involvesignificant commitments of financial and other resources.Any such activities may not be successful in generating revenue,income or other returns,and any resources wecommitted to such activities will not be available to us for other purposes.Moreov
329、er,if we are unable to access the capital markets on acceptable terms or at all,we may not be ableto consummate acquisitions or may have to do so on the basis of a less than optimal capital structure.Our inability to take advantage of growth opportunities or address risksassociated with acquisitions
330、 or investments in businesses may negatively affect our operating results.Additionally,any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment,or charges to earnings associated with any acquisitionor investment activity,may materially reduce our earnings.
331、Future acquisitions or joint ventures may not result in their anticipated benefits and we may not be able to properlyintegrate acquired products,technologies or businesses with our existing products and operations or successfully combine personnel and cultures.Failure to do so could depriveus of the
332、 intended benefits of those acquisitions.25 Cyberattacks and other security breaches of network or information technology security could have an adverse effect on our business.We maintain information necessary to conduct our business,including confidential and proprietary information as well as pers
333、onal information regarding our customersand employees,in digital form.We also use computer systems to deliver our products and services and operate our businesses.Data maintained in digital form is subject to therisk of unauthorized access,modification,exfiltration,destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions inservice.We use
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