What changed in this filing

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Item 1. Financial Statements

2026-05-14 compared with 2025-11-14 · 474 added, 1904 removed, 427 unchanged (85% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30, 2025

(Amounts in thousands, except par value amounts)

March 31, 2026

December 31, 2025

5 unchanged sentences

Prepaid expenses and other current assets

Deferred offering costs

Total current assets

2 unchanged sentences

Intangible assets, net

$ 774,576,211

$ 700,998,787

LIABILITIES AND STOCKHOLDERS’ EQUITY

7 unchanged sentences

Related party borrowings

Revolving lines of credit

Current maturities of debt

Investor notes at fair value

Deferred compensation

Due to seller

Total current liabilities

Long-term debt, net of current maturities

Long-term deferred compensation

Deferred tax liability

2 unchanged sentences

Other long-term liabilities

Contingent consideration

Total liabilities

3 unchanged sentences

1,000,000 shares authorized;

32,447,166 issued and 31,303,834 outstanding as of September 30, 2025 and 16,387,180 shares issued and outstanding as of December 31, 2024

32,653 issued and 31,435 outstanding as of March 31, 2026 and 32,594 issued and 31,376 outstanding as of December 31, 2025

Additional paid-in capital

Stockholder loan

Treasury shares, 1,143,332 and 0 shares as of September 30, 2025 and December 31, 2024, respectively

( 20,011,133 )

Accumulated other comprehensive income (loss)

( 9,509,285 )

Treasury shares, 1,218 shares as of March 31, 2026 and December 31, 2025

Accumulated other comprehensive income

Accumulated deficit

( 210,517,627 )

( 206,453,285 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

$ 774,576,211

$ 700,998,787

accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Operations

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(Amounts in thousands, except per share amounts)

Cost of revenue

3 unchanged sentences

General and administrative

Goodwill impairment

Total operating expenses

Loss from operations

( 11,979,879 )

( 30,367,151 )

( 34,749,969 )

( 33,524,181 )

Other income (expense):

Interest income (expense), net

( 1,675,616 )

( 9,197,656 )

( 2,917,364 )

Gain on extinguishment of debt

Other income, net

Total other income (expense)

Other (expense) income, net

Total other income

Loss before income tax benefit (expense)

( 8,575,165 )

( 27,947,730 )

( 2,333,212 )

( 34,128,673 )

Income tax benefit (expense)

( 2,382,796 )

( 1,731,130 )

( 3,811,383 )

$ ( 7,962,016 )

$ ( 30,330,526 )

$ ( 4,064,342 )

$ ( 37,940,056 )

Net loss per share – basic and diluted

Weighted-average number of shares of common stock used in computing net income (loss) per share, basic and diluted (1)

year share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-1.7 reverse stock split effected

on March 7, 2025, as discussed in Note 1.

Weighted-average number of shares of common stock used in computing net loss per share, basic and diluted

accompanying notes are an integral part of these condensed consolidated financial statements.

Group Holdings, Inc.

Consolidated Statements of Comprehensive Income (loss)

Three months ended

September 30,

Nine months ended

September 30,

$ ( 7,962,016 )

$ ( 30,330,526 )

$ ( 4,064,342 )

$ ( 37,940,056 )

Other comprehensive income (loss):

Consolidated Statements of Comprehensive (loss) Income

Three months ended March 31,

(Amounts in thousands)

Other comprehensive (loss) income:

Foreign currency translation, net of tax

( 1,057,133 )

Total other comprehensive (loss) income

( 1,057,133 )

Comprehensive (loss) income

$ ( 9,019,149 )

$ ( 25,157,720 )

$ ( 35,819,260 )

accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

Treasury Stock

Comprehensive Income

Stockholders’

Balance as of July 1, 2025

$ 873,379,525

$ ( 202,555,611 )

$ 679,559,596

Stock issued in connection with the Management Carveout Plan

Conversion of Jaunt deferred compensation

Issuance and exercise of Libertas warrants

Sale of common stock in Follow-on Offering, including over-allotment, net of $ 6,792,665 offering costs

Repurchase of common stock

( 1,116,312 )

( 19,412,665 )

( 19,412,666 )

Stock-based compensation

Foreign currency translation adjustment

( 1,057,133 )

( 7,962,016 )

Balance as of September 30, 2025

$ 962,397,353

$ ( 20,011,133 )

$ ( 210,517,627 )

$ 739,547,146

Comprehensive

Stockholders’

Balance as of July 1, 2024 (1)

$ 764,446,983

$ ( 3,813,173 )

$ ( 175,368,576 )

$ 585,265,245

Stock-based compensation

Foreign currency translation adjustment

( 30,330,526 )

Balance as of September 30, 2024 (1)

$ 764,569,485

$ ( 205,699,102 )

$ 560,230,027

Treasury Stock

Comprehensive Income

Stockholders’

Accumulated Other Comprehensive Income

Total Stockholders’

(Amounts in thousands)

Balance as of January 1, 2026

$ ( 210,557 )

$ ( 9,509,285 )

$ ( 206,453,285 )

$ 548,729,429

Conversion of Coastal Defense promissory note

Conversion of Aspen Bridge notes

Conversion of Jaunt Carter debt

Issuance of investor note interest shares

Conversion of Airo Drone debt

Conversion of Agile Defense debt

Conversion of Aspen Contingent Debt

Conversion of Jaunt deferred compensation

Reclassification of Libertas Warrants

Exercise of Libertas Warrants

Issuance of Underwriter Warrants

Sale of common stock in initial public offering, including over-allotment, net of $ 12,686,393 offering costs

Sale of common stock in initial public offering, including over-allotment, net of offering costs

Shares issued to NGA

Shares issued to Dangroup

Stock issued in connection with the Management Carveout Plan

Conversion of Jaunt deferred compensation

Issuance and exercise of Libertas warrants

Sale of common stock in Follow-on Offering, including over-allotment, net of $ 6,792,665 offering costs

Sale of common stock in Follow-on Offering, including over-allotment, net of offering costs

Repurchase of common stock

( 1,116,312 )

( 19,412,665 )

( 19,412,666 )

Stock-based compensation

Foreign currency translation adjustment

( 4,064,342 )

Balance as of September 30, 2025

$ 962,397,353

$ ( 20,011,133 )

$ ( 210,517,627 )

Balance as of March 31, 2026

$ ( 226,010 )

Comprehensive

Stockholders’

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders’

(Amounts in thousands)

Balance as of January 1, 2025

$ ( 206,453 )

$ ( 761,163 )

$ ( 167,759,046 )

$ 595,455,698

$ 763,975,896

$ ( 761,163 )

$ ( 167,759,046 )

$ 595,455,698

Stock-based compensation

Foreign currency translation adjustment

( 37,940,056 )

Balance as of September 30, 2024 (1)

$ 764,569,485

$ ( 205,699,102 )

$ 560,230,027

$ 764,569,485

$ ( 205,699,102 )

Balance as of March 31, 2025

$ ( 208,426 )

and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-1.7 reverse stock split effected on March

7, 2025, as discussed in Note 1 .

accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine months ended September 30,

Three months ended March 31,

(Amounts in thousands)

Cash flows from operating activities:

$ ( 4,064,342 )

$ ( 37,940,056 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

Non-cash gain on IPO transactions

( 5,475,721 )

Note issuance for legal settlement

Provision for credit losses

Non-cash interest

Non-cash charge for Libertas warrants

Non-cash investor note interest

Non-cash gain on debt extinguishment

( 15,559,069 )

Change in investor notes at fair value

Depreciation and amortization

1 unchanged sentence

Change in fair value of contingent consideration

( 20,271,826 )

( 2,400,000 )

Change in fair value of warrant liability

( 1,843,000 )

Change in deferred taxes

Goodwill impairment

Changes in operating assets and liabilities:

Accounts receivable

( 5,315,294 )

Related party receivables

Prepaid expenses and other assets

( 1,465,396 )

( 2,881,651 )

( 6,299,068 )

( 4,357,826 )

Accounts payable, accrued expenses and other long-term liabilities

( 19,798,619 )

Related party payables

1 unchanged sentence

Deferred revenue

( 8,886,757 )

( 8,637,649 )

Deferred compensation

Net cash used in operating activities

( 36,520,602 )

( 2,453,265 )

Cash flows from investing activities:

Purchase of property and equipment and investment in intangible assets

( 2,007,171 )

Net cash used in investing activities

( 2,007,171 )

Cash flows from financing activities:

Proceeds from the sale of common stock, net

Repurchase of common stock

( 20,011,133 )

Change in lines of credit

1 unchanged sentence

Repayments on borrowings

( 20,143,878 )

Proceeds from related party borrowings

Repayments on related borrowings

Repayments on related party borrowings

Debt issuance costs paid

Proceeds from the exercise of warrants

Payment of contingent consideration

( 8,534,610 )

Cash paid to seller

( 3,245,769 )

( 3,560,244 )

Net cash provided by (used in) financing activities

( 1,363,989 )

Net cash (used in) provided by financing activities

Effect of exchange rate changes

Net increase (decrease) in cash and restricted cash

( 4,171,554 )

Net decrease in cash and restricted cash

Cash and restricted cash as of beginning of period

1 unchanged sentence

Supplemental disclosures of non-cash information:

Deferred compensation settled in common stock

Reclass between accrued expenses and notes payable

Reclass between accrued expenses and contingent consideration

Financing of insurance premiums

Return of property previously included in accounts payable

Initial recognition of warrant liability

Right-of-use assets obtained in exchange for operating lease liabilities

Deferred offering cost in accrued expenses

Reclass of warrants to equity

Debt settled in common stock

Contingent consideration settled in common stock

Issuance of Underwriter Warrants

Deferred consideration for licensing arrangement

Reclass between related party payables and related party borrowings

accompanying notes are an integral part of these condensed consolidated financial statements.

12 unchanged sentences

vertical takeoff and landing (“eVTOL”) aircraft.

The Training segment currently provides military pilot training and expects

to provide commercial pilot training in the future.

The Electric Air Mobility segment is developing a rotorcraft eVTOL for cargo and

passenger use for fixed route flights, on-demand trips, and cargo operations.

October 2021, Holdings entered into agreements and plans of merger (the “Merger Agreements”) with AIRO Drone, LLC (“AIRO

Drone”), Agile Defense, LLC (“Agile Defense”), Coastal Defense, Inc.

(“Coastal Defense”), Jaunt Air Mobility,

LLC (“Jaunt”), and Aspen Avionics, Inc.

(“Aspen Avionics”).

Holdings also entered into an equity purchase agreement

(“Equity Purchase Agreement”) with Sky-Watch A/S (“Sky-Watch”).

AIRO Drone, Agile Defense, Coastal Defense, Jaunt,

Aspen Avionics and Sky-Watch together represent the “Merger Entities.” Under the Merger Agreements and Equity Purchase Agreement,

the parties entered into a series of transactions in which Holdings acquired all of the equity of the Merger Entities.

The acquisitions

of the Merger Entities by Holdings were completed between February and April 2022.

March 3, 2023, the Company entered into a Business Combination Agreement, as amended by that certain First Amendment to the Business

Combination Agreement, dated August 29, 2023, that certain Second Amendment to the Business Combination Agreement, dated January 16,

2024, that certain Third Amendment to the Business Combination Agreement, dated February 5, 2024, and that certain Fourth Amendment to

the Business Combination Agreement, dated June 24, 2024, with Kernel Group Holdings, Inc., a Cayman Islands exempted company (“Kernel”),

AIRO Group, Inc., a Delaware corporation (“ParentCo”), Kernel Merger Sub, Inc., a Delaware corporation and a wholly owned

subsidiary of ParentCo, AIRO Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of ParentCo, VKSS Capital, LLC, a

Delaware limited liability company, in the capacity as the representative for the stockholders of Kernel and ParentCo and also in the

capacity as Kernel’s sponsor, and Dr.

Chirinjeev Kathuria, in the capacity as the representative for the stockholders (the “Business

Combination Agreement”), pursuant to which a series of transactions would have occurred that would have resulted in the Company

becoming a wholly-owned subsidiary of ParentCo with ParentCo becoming a publicly listed company (collectively, the “BCA Transactions”).

On August 5, 2024, the Business Combination Agreement (“BCA”) was terminated and, as a result, none of the BCA Transactions

were effectuated.

June 16, 2025, the Company completed its initial public offering of 6.9 million shares of its common stock (the “IPO”), which

included an additional 0.9 million shares of common stock pursuant to the full exercise of the underwriters’ option to purchase

additional shares, at an initial public offering price of $ 10.00 per share.

The shares began trading on the Nasdaq Global Market under

the ticker symbol “AIRO” on June 13, 2025.

The net proceeds to AIRO from the IPO after deducting $ 10.7 million of underwriting

discounts and commissions and issuance costs paid were $ 58.3 million.

September 12, 2025, the Company completed a public offering of 4.8

million shares of its common stock (the “Follow-on Offering”), which included an additional 0.6

million shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares, at an

offering price of $ 18.50

The net proceeds to the Company from the Follow-on Offering after deducting $ 6.8

million of underwriting discounts and commissions and issuance costs were $ 82.6

on September 12, 2025, the Company repurchased 1.1 million shares of its common stock, which included an additional 0.1 million shares

of common stock as a result of the exercise of the underwriters’ option described above, from certain existing stockholders, including

certain directors and executive officers and their affiliates at a price of $ 17.39 per share for an aggregate purchase price of $ 19.4

million (the “Repurchase”).

The Training segment currently provides military pilot training.

The Electric Air Mobility segment is developing autonomous eVTOL platforms for defense, government, cargo logistics, and remote operations applications.

Consolidation

2 unchanged sentences

Old AGI, Inc.

f/k/a AIRO Group, Inc.

(“AIRO Group”), AIRO Drone, Agile Defense, Jaunt, Sky-Watch, Coastal Defense, and Aspen

All intercompany accounts and transactions have been eliminated in consolidation.

accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

f/k/a AIRO Group, Inc., AIRO Drone, LLC (“AIRO Drone”), Agile Defense, LLC (“Agile

Defense”), Coastal Defense, Inc.

(“Coastal Defense”), Jaunt Air Mobility, LLC (“Jaunt”), Sky-Watch A/S

(“Sky-Watch”) and Aspen Avionics, Inc.

(“Aspen Avionics”).

All intercompany accounts and transactions have been

eliminated in consolidation.

accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information.

In the opinion of management,

the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring

adjustments, considered necessary for a fair presentation of such interim results.

Certain information and disclosures normally included

in unaudited condensed consolidated financial statements prepared in accordance with U.S.

opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments,

consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

information and disclosures normally included in unaudited condensed consolidated financial statements prepared in accordance with

GAAP have been condensed or omitted.

the unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements

and notes included in the Company’s final prospectus, dated June 12, 2025, filed with the SEC pursuant to Rule 424(b) under the

Securities Act of 1933, as amended (the “Securities Act”), on June 16, 2025 (the “Prospectus”) in connection

with the IPO.

The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial

statements as of that date.

Accordingly, the unaudited condensed consolidated financial statements should be read in

conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on

Form 10-K for the year ended December 31, 2025 (“Form 10-K”) as filed with the Securities and Exchange Commission

The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated

financial statements as of that date.

results for the unaudited interim condensed consolidated statements of operations are not necessarily indicative of results to be expected

for the year ending December 31, 2026 or for any future interim period.

March 7, 2025, the Board of Directors approved a 1-for-1.7 reverse stock split (“Stock Split”) of the Company’s issued

and outstanding shares of common stock and options to purchase common stock.

The Stock Split reduced the number of shares of the Company’s

issued and outstanding common stock, as well as the numbers of shares reserved and available for future issuance and underlying outstanding

options to purchase common stock.

No fractional shares were distributed as a result of the reverse stock split, and stockholders were

entitled to a cash payment in lieu of fractional shares.

The Stock Split did not affect the par values per share or total authorized

common stock.

Accordingly, all share and per share amounts for all periods presented in the condensed consolidated financial statements

have been adjusted retroactively, where applicable, to reflect this Stock Split.

and Management’s Plans

accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization

of assets and satisfaction of liabilities in the normal course of business.

As of March 31, 2025, the Company had incurred recurring

losses from operations and negative cash flows, which raised substantial doubt about its ability to continue as a going concern.

16, 2025, the Company completed its IPO of common stock, which resulted in net proceeds of $ 58.3 million after deducting underwriting

discounts and commissions and issuance costs of $ 10.7 million.

On September 12, 2025, the Company completed the Follow-on Offering and

the Repurchase, which resulted in net proceeds to the Company of $ 63.1 million, after deducting underwriting discounts and commissions

of $ 6.8 million and $ 19.4 million in the Repurchase.

As of September 30, 2025, the Company had cash and restricted cash of $ 83.7 million

of which $ 0.2 million was either restricted or was designated to only being used for Sky-Watch operations and working capital of $ 74.5

believes that the net proceeds from the IPO and the Follow-on Offering, together with existing cash on hand, are sufficient to meet its

obligations and fund planned operations for at least the next twelve months from the date these condensed consolidated financial statements

Accordingly, the conditions that previously raised substantial doubt about the Company’s ability to continue as a going

concern have been alleviated.

Company is evaluating opportunistic debt financing to support growth initiatives;

any proceeds, if obtained, would be used to expand

our market position, pursue strategic opportunities, and support revenue growth and long-term profitability.

There can be no assurance

that additional financing will be available on terms acceptable to the Company, if at all.

As of March 31, 2026, the Company had cash and restricted

cash of $ 54.4 million of which $ 0.2 million was either restricted or was designated to only being used for Sky-Watch operations and working

capital of $ 62.5 million.

believes that the existing cash on hand is sufficient to meet its obligations and fund planned operations for at least the next twelve

months from the date these condensed consolidated financial statements are issued.

preparation of condensed consolidated financial statements in conformity with U.S.

7 unchanged sentences

from these estimates, and these differences may be material.

Combinations and Asset Acquisitions

Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values.

Goodwill is measured as

the excess of the consideration transferred over the fair value of assets acquired and liabilities assumed on the acquisition date.

the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired

and liabilities assumed, these estimates are inherently uncertain and subject to refinement.

Examples of estimates and assumptions in

valuing certain of the intangible assets and goodwill the Company has acquired include, but are not limited to, future expected cash

flows from acquired developed technologies, customer relationships, and tradenames.

Unanticipated events and circumstances may occur

that may affect the accuracy or validity of such assumptions, estimates or actual results.

authoritative guidance allows a measurement period of the purchase price allocation that ends when the entity has obtained all relevant

information about facts that existed at the acquisition date, and that cannot exceed one year from the date of acquisition.

during the measurement period the Company may record adjustments to the fair values of assets acquired and liabilities assumed, with

the corresponding offset to goodwill to the extent that it identifies adjustments to the preliminary purchase price allocation.

conclusion of the measurement period or final determination of the values of the assets acquired and liabilities assumed, whichever comes

first, any subsequent adjustments will be recorded to the condensed consolidated statements of operations.

the purchase of an entity or net assets does not meet the definition of a business, the Company accounts for the transaction as an asset

In an asset acquisition, the purchase price is allocated to the net assets acquired on a relative fair value basis, and

no goodwill is recognized in the transaction.

Direct costs for asset acquisitions are generally considered part of the purchase price.

Risk and Concentration of Credit Risk

instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and accounts receivable.

Cash is maintained with financial institutions and the composition and maturities are regularly monitored by management.

Cash is maintained with financial institutions and its composition and maturities are regularly monitored by management.

any time may exceed federally insured limits.

3 unchanged sentences

from customers.

Otherwise, customer invoices generally have payment terms of net 30 days and do not have a significant financing component.

Otherwise, customer invoices generally have payment terms of net 30 days and do not contain a significant financing component.

Company’s operational structure includes an existing operating business and early-stage businesses in emerging and developing markets

16 unchanged sentences

adversely affect the Company’s business, results of operations, and financial condition.

Company considers all highly liquid investments with an original or remaining maturity of three months or less from the date of purchase

to be cash equivalents.

The Company had no cash equivalents as of September 30, 2025 and December 31, 2024.

Company had $ 0.2 million in restricted cash as of September 30, 2025 and December 31, 2024.

As of September 30, 2025 and December 31,

2024, restricted cash was primarily deposits from a customer contract that have been placed in an escrow account to be released upon

shipment of orders.

Receivable, Net

receivable are reported on the accompanying condensed consolidated balance sheets at the gross outstanding amount adjusted for a provision

for credit losses.

The Company determines the provision for credit losses by regularly evaluating expected loss as well as individual

customer receivables and considering a customer’s financial condition, credit history, and current economic conditions.

As of September

30, 2025 and December 31, 2024, the Company provided a provision for credit losses of $ 0.1 million for amounts that may ultimately be

uncollectible.

Accounts receivable are written off when deemed uncollectible.

Recoveries of accounts receivable previously written off

are recorded when received.

is stated at the lower of cost or net realizable value.

Cost is primarily determined based on standard cost and approximates actual cost

on a first-in, first-out basis.

Work-in-process and finished goods include materials, labor and allocated overhead.

The Company writes

down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the

estimated net realizable value based upon assumptions about future demand and market conditions.

Reductions to the carrying value of

inventory are charged to cost of revenue and a new, lower cost basis for that inventory is established.

Subsequent changes to facts or

circumstances do not result in the restoration or increase in the related inventory value.

If actual market conditions are less favorable

than those projected by management, additional inventory write-downs may be required.

Offering Costs

Company capitalizes certain legal, professional, accounting, and other third-party fees that are directly associated with in-process

equity issuances as deferred offering costs until such equity issuances are consummated.

During the quarter ended June 30, 2025, $ 12.7

million of offering costs, including $ 2.0 million of non-cash warrants, were recorded as a reduction to the net proceeds received from

During the quarter ended September 30, 2025, $ 6.8 million of offering costs were recorded as a reduction to the net proceeds

received from the Follow-on Offering.

As of December 31, 2024, the Company had a balance of $ 0.8 million of deferred offering costs on

the condensed consolidated balance sheet.

Value Measurements

Company applies the requirements of the fair value measurements framework, which establishes a hierarchy for measuring fair value and

requires enhanced disclosures about fair value measurements.

The fair value measurement guidance clarifies that fair value is an exit

price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

The fair value measurement guidance also requires disclosure about how fair value is determined

for assets and liabilities and establishes a hierarchy in which these assets and liabilities must be grouped based on significant levels

of inputs as follows:

prices in active markets for identical assets or liabilities.

prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.

inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant

to the fair value measurement.

following is a summary of the financial liabilities measured at fair value on a recurring basis by caption and by level within the fair

value hierarchy as of September 30, 2025 and December 31, 2024:

Schedule of the Financial Liabilities Measured at Fair Value on a Recurring Basis

Fair value as of September 30, 2025

Investor Notes at fair value

Total financial liabilities

Fair value as of December 31, 2024

Contingent consideration

Investor Notes at fair value

Total financial liabilities

were no financial assets measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024.

There were no transfers

between Levels 1, 2, or 3 within the fair value hierarchy during the nine months ended September 30, 2025 nor during the year ended December

Consideration

of December 31, 2024, contingent consideration included an obligation assumed from the Jaunt acquisition that was contingent on future

cash receipts (the “Jaunt Contingent Arrangement”) and promissory notes issued in conjunction with the acquisitions of Agile

Defense, Airo Drone, and Coastal Defense.

contingent consideration liabilities were measured at fair value on a recurring basis for which there was no available quoted market

prices or principal markets.

The inputs for this measurement were unobservable and were, therefore, classified as Level 3 inputs.

Jaunt Contingent Arrangement was valued using discounted cash flow models.

As of December 31, 2024, the significant inputs included discount

factors ranging from 21 % to 45 % and a 67 % initial public offering (“IPO”) likelihood to arrive at a total fair value of $ 33.4

fair value of the contingent consideration promissory notes issued to the former equity holders of Agile Defense, AIRO Drone and Coastal

Defense totaled $ 9.4 million as of December 31, 2024.

Valuations were based on a 67 % probability of the IPO closing and a discount rate

of 3 % as of December 31, 2024 based on proximity to an estimated closing date.

the nine months ended September 30, 2025, 1.4 million shares were issued, $ 8.5 million in cash was paid and $ 17.5 million of income was

recorded to other income, net related to settlement of these obligations.

Notes at fair value

Company has historically issued unsecured promissory notes to certain investors (the “Investor Notes”), which have included

various interest features in the form of both stock and cash and were contingently payable upon the closing of the IPO or qualified financing.

The Company has evaluated these features and determined that they do not meet the criteria for being accounted as an embedded derivative

under Accounting Standards Codification (“ASC”) 815.

During the fourth quarter of 2024, certain Investor Notes were amended

such that when the Company performed a significance test as of the modification date in accordance with ASC 470-50, the Company determined

that the change in terms of these Investor Notes were substantially different than the previous terms such that the Company recorded

a loss on extinguishment of $ 10.5 million.

this significant modification created an election date for the fair value option and as the fair value election is applied on an instrument-by-instrument

basis, the Company chose to record these Investor Notes at fair value beginning on the modification date in October 2024 (“Investor

Notes at fair value”).

Significant judgment was required in estimating the fair value of debt prior to the IPO.

The fair value

estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management but

are inherently uncertain.

determine the fair value of Investor Notes at fair value, the Company estimated stock pricing and incorporated the probability of both

the IPO and non-IPO scenario with the IPO probability being 67 % as of December 31, 2024.

Significant estimates and assumptions inherent

in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows.

Company used a present value model for the expected cash payments, and a probability-weighted calculation to fair value the contingent

interest shares to be paid.

This probability-weighted calculation incorporated expectations to complete the IPO as well as a probability

derived from a lattice model with key assumptions being equity volatility and discount for lack of marketability (“DLOM”).

Equity volatility rates utilized were 70 % and the DLOM rates selected were 10 % for December 31, 2024.

As described in Note 2, the terms

of the Investor Notes at fair value were further amended and then partially settled through the issuance of common stock and cash payments

of $ 2.1 million during the nine months ended September 30, 2025.

During July 2025, the Company modified the remaining notes which totaled

$ 1.7 million such that $ 1.8 million, inclusive of a $ 0.1 million fee, would be due by December 16, 2025 .

the quarter ended March 31, 2025, the Company entered into two warrant agreements whereby Libertas Funding, LLC (“Libertas”)

agreed to purchase an aggregate of 0.5 % of the fully diluted number of shares of common stock of the Company immediately before the closing

of the Company’s IPO at an exercise price of $ 0.02 per share (“Libertas Warrants”).

At inception, prior to the IPO,

the Libertas Warrants did not meet the indexation criteria in ASC 815-40;

accordingly, the Libertas Warrants were recorded as a liability

measured at fair value as of March 31, 2025.

During the three months ended March 31, 2025, in conjunction with the Libertas Agreements,

as defined in Note 2, the Company allocated the net proceeds to the $ 2.9 million warrant liability with the residual proceeds then being

allocated to the debt associated with the Libertas Agreements, which resulted in the recording of a debt discount of $ 2.9 million.

the closing of the IPO, the number of shares issuable became fixed such that the Libertas Warrants became indexed to the Company’s

stock and were eligible to be classified in stockholders’ equity on the Company’s condensed consolidated balance sheets at

As such, the Company reclassified the fair value of the warrant liability of $ 1.0 million as of June 12, 2025 to stockholders’

equity and recognized $ 1.8 million of income due to the change in fair value of the Libertas Warrants within other income, net on the

condensed consolidated statements of operations.

determine the fair value of the Libertas Warrants, the Company utilized the Black-Scholes model to determine the common stock price on

a non-controlling, non-marketable value basis.

Key assumptions included equity volatility rate of 70 %.

Company modified certain debt arrangements as of March 31, 2022.

The debt was recorded at present value to estimate the fair value of

the debt obligation as of March 31, 2024 and December 31, 2023.

Since the debt was fully accreted to its expected value during the nine

months ended September 30, 2024, the debt is no longer measured at fair value on a recurring basis and was transferred out of Level 3

fair value measurements.

changes in fair value of the Level 3 financial liabilities for the three and nine months ended September 30, 2025 and 2024 were as follows:

Schedule of Changes in Fair Value of the Level 3 Financial Liabilities

Investor Notes at Fair Value

Warrant Liability

Contingent Consideration

Balance as of July 1, 2025

Change in fair value

( 2,079,222 )

Transfers out

Balance as of September 30, 2025

Investor Notes at Fair Value

Warrant Liability

Contingent Consideration

Balance as of July 1, 2024

Change in fair value

( 4,100,000 )

Transfers out

Balance as of September 30, 2024

Investor Notes at Fair Value

Consideration

Balance as of January 1, 2025

Change in fair value

( 5,493,746 )

( 1,843,000 )

( 20,271,826 )

( 6,608,542 )

( 17,242,462 )

Transfers out

( 1,042,000 )

( 5,267,988 )

Balance as of September 30, 2025

Investor Notes at Fair Value

Warrant Liability

Consideration

Balance as of January 1, 2024

Change in fair value

( 2,400,000 )

Transfers out

( 19,440,519 )

Balance as of September 30, 2024

change in the fair value of the debt is included in interest expense, net on the condensed consolidated statements of operations and

represents the amortization of the debt discount.

The change in the fair value of the Investor Notes at fair value is included in interest

expense, net on the condensed consolidated statements of operations.

The change in the fair value of the contingent consideration and

warrant liability is included in other income, net on the condensed consolidated statements of operations.

Value of Financial Instruments

carrying value of accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate

fair value due to the short time to maturity.

The carrying value of the Company’s borrowings approximates fair value based on current

rates available to the Company.

Company accounts for income taxes in accordance with the asset and liability approach method.

Deferred tax assets and liabilities are

recognized for future tax consequences attributable to temporary differences between the condensed consolidated financial statements

carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating losses and tax credit

carryforwards.

Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the temporary differences

are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in

income in the period that includes the enactment date.

A valuation allowance reduces the deferred tax assets to the amount that is more-likely-than-not

to be realized.

Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine

whether the tax positions will more-likely-than-not be sustained by the applicable tax authority.

Tax positions not deemed to meet the

more-likely-than-not threshold are not recorded as a tax benefit or expense in the current year.

Interest and penalties, if applicable,

are recorded in the period assessed as income tax expense.

No interest or penalties have been accrued for as of September 30, 2025 or

December 31, 2024.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted.

While this event has no effect

on the financial results for the three and nine months ended September 30, 2025, we are currently evaluating the impact of the new legislation.

and equipment

and equipment are stated at cost, net of accumulated depreciation.

Depreciation of property and equipment is provided primarily utilizing

the straight-line method for condensed consolidated financial statement purposes at rates based on the following useful lives:

Schedule of Property and Equipment Estimated Useful Lives

and equipment

shorter of the useful life or term of the lease

improvements, and expenditures that significantly add to the productivity or extend the economic life of assets are capitalized.

amounts incurred as recurring expenditures or that do not extend or improve the economic life of the asset are expensed as incurred.

represents the excess of the aggregate purchase price over the fair value of net identifiable assets acquired in a business combination.

Goodwill is not amortized and is tested at the reporting unit level for impairment on an annual basis or whenever events or changes in

circumstances indicate that the carrying value may not be recoverable.

The Company has selected October 1st as the date to perform its

annual impairment test.

In the valuation of goodwill, management must make assumptions regarding estimated future cash flows to be derived

from the Company’s business.

If these estimates or their related assumptions change in the future, the Company may be required

to record an impairment for these assets.

Management may first evaluate qualitative factors to assess if it is more likely than not that

the fair value of a reporting unit is less than its carrying amount and to determine if an impairment test is necessary.

Management may

choose to proceed directly to the evaluation, bypassing the initial qualitative assessment.

The impairment test involves comparing the

fair value of the reporting unit to which goodwill is allocated to its net book value, including goodwill.

A goodwill impairment loss

would be the amount by which a reporting unit’s carrying value exceeds its fair value, however, the loss recognized should not

exceed the total amount of goodwill allocated to that reporting unit.

See Note 5 for additional considerations related to goodwill impairment

recorded in 2024.

Definite-lived

Intangible Assets

Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and

allocates the purchase price of the acquired business to the respective net tangible and intangible assets.

The Company determines the

appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses.

assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic

benefits are consumed.

The Company capitalizes third-party legal costs and filing fees, if any, associated with obtaining patents.

the patent asset has been placed in service, the Company amortizes these costs over the shorter of the asset’s legal life, generally

20 years from the initial filing date, or its estimated economic life using the straight-line method.

estimated useful lives for the Company’s intangible assets are as follows:

Schedule of Estimated Useful Lives for Company’s Intangible Assets

- definite-lived

relationships

of Long-Lived Assets

Company evaluates long-lived assets, including property and equipment and intangible assets, for impairment whenever events or changes

in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets held and used is measured

by a comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated

by the asset or asset group.

If such evaluation indicates that the carrying amount of the asset or the asset group is not recoverable,

any impairment loss would be equal to the amount the carrying value exceeds the fair value.

Company recognizes revenue when, or as, it satisfies performance obligations by transferring promised products or services to its customers

in an amount that reflects the consideration the Company expects to receive.

The Company applies the following five steps:

the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate

the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company accounts for a contract with a customer when there is a legally enforceable contract, the rights of the parties are identified,

the contract has commercial terms, and collectibility of the contract consideration is probable.

certain sales, the Company has contracts with customers that include multiple performance obligations.

For these contracts, the Company

accounts for individual performance obligations separately, by allocating the contract’s total transaction price to each performance

obligation in an amount based on the relative standalone selling price (“SSP”) of each distinct good or service in the contract.

The Company determines the SSP based on its overall pricing objectives, taking into consideration market conditions.

Determining whether

products or services are considered distinct performance obligations that should be accounted for separately versus together may require

significant judgment.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue

when, or as, the performance obligation is satisfied.

Revenue is recognized when control of the promised services is transferred to the

customer in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services.

Company’s contracts do not include highly variable components.

The timing of revenue recognition, billings, and cash collections

can result in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities).

to obtain contracts, primarily commission expenses, are expensed when incurred.

that are invoiced are recorded in accounts receivable and revenues or deferred revenue, depending on whether the revenue recognition

criteria have been met.

A large portion of the Company’s sales result in partial prepayments prior to shipment from customers.

Otherwise customer invoices generally have payment terms of net 30 days and do not have a significant financing component.

Company’s revenues are derived from various sources:

(i) avionics products consisting primarily of hardware with embedded firmware

sold to an authorized dealer network and avionics and global navigation satellite system technologies (“GNSS”) products sold

to original equipment manufacturers (“OEMs”), (ii) research and development (“R&D”) projects, (iii) sales-based

royalties related to GNSS technology licensed to OEMs, (iv) consultation and training services related to aerial integration and close

air support providing the latest tactics, technique, and procedures (“TTP”) to incorporate contract close air support/intelligence

surveillance reconnaissance (“CCAS/ISR”) with video downlink systems into tactical operations, (v) technology and equipment

sales, (vi) mini unmanned aerial systems (“MUAS” or “commercial drones”) sales, including hardware, software,

training, support and product service, and (vii) drone services, including surveys, imaging, security, and other drone applications.

Company expenses costs to obtain a contract as incurred when the amortization period is one year or less.

general, revenue is disaggregated by segment and geography.

Segment Information.

revenue, which includes avionics, MUAS/commercial drones and other equipment sales, is recognized upon the transfer of control of promised

products to the customer in an amount that depicts the consideration the Company is entitled to for the related products.

Product revenue

is recognized upon shipment or delivery and title and risk of loss have transferred to the customer.

and Extended Warranty Revenue

revenue includes drone services, support, training, consultations, and out-of-warranty repairs.

Revenue from services rendered is recognized

over time in amounts that correspond directly with the value to the customer when performance is completed.

Support revenue is recognized

on a straight line basis over the support period, which is generally one year.

warranties are service-type warranties and are typically sold under separate contracts.

Revenue for those extended warranties is recognized

over the contractual service period, which is typically two or three years.

and Development Contracts

from engineering development projects is recognized over a period of time based on the input method and is measured by the percentage

of total labor and materials cost incurred to date to estimated total labor and materials cost at completion for each contract.

method of accounting involves considerable use of estimates in determining revenues, costs, and profits and in assigning the amounts

to accounting periods;

as a result, there can be a significant disparity between earnings as reported and actual cash received by the

Company during any reporting period.

for sales-based royalties is recognized at a point in time as subsequent sales occur.

following table summarizes the revenue recognition based on time periods:

Schedule of Revenue Recognition based on Time Period

September 30,

contract liabilities as of September 30, 2025 and December 31, 2024 were $ 2.8 million and $ 10.4 million, respectively.

The majority of

contract liabilities are expected to be recognized as revenue through 2025.

The Company had no significant contract assets as of September

30, 2025 and December 31, 2024.

During the three and nine months ended September 30, 2025, the Company recognized $ 1.3 million and $ 10.0

million, respectively, in revenue previously included in contract liabilities as of December 31, 2024.

of revenue includes labor cost and direct material cost, including freight and duties.

Indirect production costs comprising of consumables,

cost of sales freight, quality related costs and production maintenance costs are also included in cost of revenue.

charges billed to customers are included in revenue and related costs are included in cost of revenue.

and Development

and development costs are expensed when incurred.

Product Warranty

Company provides a one-year warranty on drone sales.

Estimated future warranty obligations related to those products are recorded as

a component of cost of revenue in the condensed consolidated statements of operations at the time of sale.

Product Warranty

Company establishes warranty reserves based on estimates of avionics product warranty return rates over two or three years depending

on the product and the related warranty period and the expected costs to repair or to replace the avionics products under warranty.

warranty provision is recorded as a component of cost of revenue in the condensed consolidated statements of operations.

does not offer returns unless special circumstances exist and the return is approved by the Company.

Company recognizes compensation expense for stock-based awards based on the grant-date estimated fair value of the awards.

restricted stock awards may be granted as time-based awards, performance-based awards or combinations of the time-based and performance-based

The Company expenses the fair value of its options to employees and non-employees on a straight-line basis over the associated

service period for time-based awards, which is generally the vesting period.

The performance-based awards begin their period of ratable

vesting at the time that the Company determines that the achievement of the performance thresholds is probable.

The Company accounts

for forfeitures as they occur and does not estimate forfeitures at the time of grant.

Ultimately, the actual expense recognized over

the vesting period will be for only those options that vest.

Comprehensive

Income (Loss)

Comprehensive

income (loss) generally represents all changes in the equity of a business except those resulting from investments or contributions by

stockholders.

Unrealized gains and losses on foreign currency translation adjustments, net of tax are included in the Company’s

components of comprehensive income (loss), which are excluded from net loss.

contract inception, the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as

an operating or a financing lease and reassesses that conclusion if the contract is modified.

Operating leases are recorded in operating

lease right-of-use (“ROU”) assets, lease liability, current and lease liability, noncurrent on the condensed consolidated

balance sheets.

The Company did not have any finance leases during the periods presented.

Company recognizes operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease

payments over the lease term at commencement date.

The lease ROU asset is reduced for tenant incentives, if any, and excludes any initial

direct costs incurred, if any.

The Company uses its incremental borrowing rate based on the information available at commencement date

to determine the present value of future payments and the appropriate lease classification.

In determining the inputs to the incremental

borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including

the probability of its exercising options to extend or terminate the underlying lease.

The Company defines the initial lease term to

include renewal options determined to be reasonably certain.

If the Company determines the option to extend or terminate is reasonably

certain, it is included in the determination of lease assets and liabilities.

The Company reassesses the lease term if and when a significant

event or change in circumstances occurs within the control of the Company, such as construction of significant leasehold improvements

that are expected to have economic value when the option becomes exercisable.

Company recognizes a single lease cost on a straight-line basis over the term of the lease, and the Company classifies all cash payments

within operating activities in the condensed consolidated statements of cash flows.

Company has lease agreements with lease and non-lease components, which it has elected to not combine for all asset classes.

the Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less of all asset classes.

Accounting Policies

material changes have been made to the Company’s significant accounting policies disclosed in Note 1.

The Company and

Summary of Significant Accounting Policies , of its audited consolidated financial statements included in the Form 10-K.

Adopted Accounting Standards

July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05,

Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets,

which provides a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current

contract assets arising from revenue transactions under Accounting Standards Codification (“ASC”) 606.

The Company adopted

this guidance effective January 1, 2026.

The adoption did not have a material impact on the Company’s condensed consolidated financial

statements or related disclosures.

Accounting Pronouncements Not Yet Adopted

November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disclosure of certain costs and expenses

on an interim and annual basis in the notes to the consolidated financial statements.

The guidance is effective for annual reporting

periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027.

adoption is permitted.

The guidance is to be applied either (1) prospectively to financial statements issued for reporting periods after

the effective date or (2) retrospectively to any or all prior periods presented in the financial statements.

The Company is currently

evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures.

December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities ,

which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants received

by business entities.

The ASU requires entities to recognize a government grant when it is probable that both (1) the entity will comply

with the conditions attached to the grant and (2) the grant will be received.

For grants related to assets, an entity may apply either

a deferred income approach or a cost accumulation approach, and for grants related to income, an entity should recognize income on a

systematic basis as related expenses are incurred.

The ASU also includes expanded disclosure requirements regarding the nature of government

grants received, the accounting policies adopted, and significant terms and conditions of the grants.

The guidance is effective for annual

reporting periods beginning after December 15, 2029.

Early adoption is permitted.

The Company is currently evaluating the potential impact

of adopting this new guidance on its consolidated financial statements and related disclosures.

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which amends the guidance

in ASC 270, Interim Reporting .

The objective of this new guidance is to improve the clarity and navigability of the interim reporting

guidance without changing the fundamental nature of interim reporting or expanding or reducing the interim disclosure requirements currently

The amendments clarify the scope and applicability of ASC 270, specify the form and content of interim financial statements

and accompanying notes, and consolidate the interim disclosures required under U.S.

GAAP into a single comprehensive list.

introduces a disclosure principle that an entity must disclose events and changes occurring after the end of the last annual reporting

period that have a material impact on the entity, consistent with the principle that previously existed under certain SEC interim reporting

The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2028.

Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively to prior interim periods presented.

The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related

December 2025, the FASB issued ASU 2025-12, Codification Improvements, which provides technical corrections, clarifications, and

improvements to the FASB ASC across multiple Topics.

The amendments are generally not expected to change current accounting practices

materially but may affect application of certain guidance such as diluted earnings per share in loss periods and other technical areas.

The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual

periods, with early adoption permitted.

An entity may elect the transition method on an issue-by-issue basis.

The Company is evaluating

the impact of ASU 2025-12 on its consolidated financial statements and related disclosures.

Loss Per Share

5 unchanged sentences

and are only included in the calculation of diluted net loss per share when the effect is dilutive.

potentially dilutive shares of common stock that have been excluded from

the calculation of net loss per share because of the anti-dilutive effect are as follows as of September 30, 2025:

potentially dilutive shares of common stock that have been excluded from the calculation of net loss per share because of the

anti-dilutive effect are as follows as of March 31, 2026:

million warrants, 0.2

0.3 million stock options, 0.1 million unsettled stock awards and units.

million stock options, and 0.5

million unsettled restricted stock units (“RSUs”).

The potentially dilutive shares of common stock that have been

excluded from the calculation of net loss per share because of the anti-dilutive effect are as follows as of September 30, 2024:

warrants, 0.3 million stock options, and 0.3 million contingent restricted stock awards, 2.2 million potential shares issuable under debt

conversion agreements and 1.0 million potential shares issuable for contingent interest payments.

The number of potentially dilutive shares

is based on the maximum number of shares issuable on exercise or conversion of the related securities as of the period end.

have not been adjusted for the treasury stock method or weighted-average outstanding calculations as required if the securities were dilutive.

issuance costs are presented as a discount to the related debt and are amortized over the term of the related loan for which the fees

were incurred using the straight-line method, which approximates the effective interest method.

As of September 30, 2025 and December

31, 2024, unamortized debt discount totaled zero and $ 0.3 million, respectively.

functional currency of the Company’s foreign subsidiary is its local currency.

As such, assets and liabilities are translated to

dollars at the exchange rates on the date of consolidation and related revenues and expenses are generally translated at average

exchange rates prevailing during the period included in results of operations.

Adjustments resulting from foreign currency translation

are recorded in accumulated other comprehensive loss on the condensed consolidated balance sheets.

Foreign currency transaction gains

and losses are included in other income, net on the condensed consolidated statements of operations.

Losses from foreign currency transactions

were not significant for the three and nine months ended September 30, 2025 and 2024, respectively.

Accounting Pronouncements Not Yet Adopted

December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09,

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This ASU is intended to improve the transparency of income tax

disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income

taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The ASU’s amendments are effective for the Company for annual periods beginning after December 15, 2025.

are permitted to early adopt the standard for annual financial statements that have not yet been issued or made available for issuance.

Adoption is either prospectively or retrospectively.

The Company will adopt this ASU on a prospective basis.

The Company is currently

evaluating the impact of the new standard on the annual consolidated financial statements and related disclosures.

January 6, 2025 and November 4, 2024, the FASB issued ASU No.

2025-01, “Expense Disaggregation Disclosures (Subtopic 220-40):

the Effective Date” (“ASU 2025-01”) and ASU No.

2024-03, “Income Statement — Reporting Comprehensive Income

— Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (“ASU 2024-03”),

respectively.

ASU 2025-01 and ASU 2024-03 requires disclosure of certain costs and expenses on an interim and annual basis in the notes

to the condensed consolidated financial statements.

The guidance is effective for annual reporting periods beginning after December 15,

2026 and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

is to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively

to any or all prior periods presented in the financial statements.

The Company is currently evaluating the potential impact of adopting

this new guidance on its condensed consolidated financial statements and related disclosures.

May 12, 2025, the FASB issued ASU No.

2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the

Accounting Acquirer in the Acquisition of a Variable Interest Entity”.

This guidance revises ASC 805 on identifying the accounting

acquirer in a business combination in which the legal acquiree is a variable interest entity (VIE).

The ASU is intended to improve comparability

between business combinations and is effective for fiscal years beginning after December 15, 2026.

Early adoption is permitted.

is currently evaluating the potential impact of adopting this new guidance on its condensed consolidated financial statements and related

May 15, 2025, the FASB issued ASU No.

2025-04, “Compensation – Stock Compensation (Topic 718) and Revenue from Contracts

with Customers (Topic 606):

Clarifications to Share-based Consideration Payable to a Customer.” This guidance clarifies ASC 606

and ASC 718 on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer.

The ASU is intended to reduce diversity in practice and improve existing guidance, primarily by revising the definition of a “performance

condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable

to a customer.

In addition, the ASU clarifies that the guidance in ASC 606 on the variable consideration constraint does not apply to

share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred” (as determined

under ASC 718).

Entities can use either a modified retrospective or a retrospective method to adopt the ASU’s amendments.

is effective for fiscal years beginning after December 15, 2026.

Early adoption is permitted.

The Company is currently evaluating the

potential impact of adopting this new guidance on its condensed consolidated financial statements and related disclosures.

July 30, 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for

Accounts Receivable and Contract Assets.” This guidance amends ASC 326-20 to provide a practical expedient (for all entities) and

an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to

the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted

for under ASC 606.

The guidance is effective for fiscal years beginning after December 15, 2025.

Early adoption is permitted.

is currently evaluating the potential impact of adopting this new guidance on its condensed consolidated financial statements and related

Revolving Lines of Credit and Debt

Lines of Credit

February 2020, Aspen Avionics entered into a Loan and Security Agreement for an asset-based loan facility (the “Facility”)

with Crestmark, a Division of Pathward (formerly known as Metabank), with a maximum advance limit of $ 2.5 million.

The Facility was due

on demand, carried variable interest at the greater of 9 % or prime plus 4.25 % and was collateralized by substantially all assets of Aspen

In October 2024, Aspen Avionics terminated the Facility and repaid the Facility in full.

November 2018, Coastal Defense obtained two variable rate non-disclosable revolving lines of credit of up to $ 0.5 million and $ 0.2 million,

due on demand, from First Citizens Community Bank (“FCCB”).

These arrangements were collateralized by aircraft security agreements,

assignments of life insurance, an assignment of a deposit account, and commercial security agreements dated November 15, 2018, and all

associated financing statements.

Interest was initially set at the prime rate as published in the Wall Street Journal plus 0.50 percentage

Commencing in 2022, the Company was in default on these facilities, resulting in an additional 4% in interest per annum.

annual interest rate was 12% as of December 31, 2024 .

Parker, Coastal Defense’s former Vice-President and Treasurer,

and stockholder of Holdings;

Kenneth Parker, stockholder of Holdings;

and Kyle Stanbro, Coastal Defense’s President and stockholder

guaranteed these notes.

As part of the Coastal Defense acquisition, the maturity dates of these notes were modified to be

in 2022 as opposed to the original maturity date in 2069 .

No withdrawals were made during 2025 or 2024.

During the quarter ended March

31, 2025, the lines of credit with FCCB were fully repaid and closed.

The total amount outstanding on the lines of credit as of September

30, 2025 and December 31, 2024 was $ 0 and $ 0.1 million, respectively.

two lines of credit with FCCB contained certain financial covenants.

As of December 31, 2024, the Company was not in compliance with

these financial covenants.

However, the Company entered into a series of forbearance agreements with FCCB, under which FCCB agreed not

to exercise its rights and remedies arising from such noncompliance through March 31, 2025, subject to the Company’s adherence

to the terms of said forbearance agreements, which were satisfied at the time of repayment during the nine months ended September 30,

Maturities of Debt and Long-Term Debt

maturities of debt and long-term debt consist of the following as of September 30, 2025 and December 31, 2024:

Schedule of Current Maturities of Debt and Long Term Debt

September 30, 2025

December 31, 2024

Muncy Bank & Trust Company 2021-1

Muncy Bank & Trust Company 2021-2

SBA COVID-19 Economic Injury Disaster Loan (“EIDL”)

Perrin Legal Settlement

Husch Blackwell

Financed Insurance Premiums

First Citizens Community Bank

unamortized debt discount

current maturities of long-term debt

( 4,459,378 )

( 27,992,450 )

Long-term debt, net of current maturities

maturities required on long-term debt as of September 30, 2025 are due in future years as follows:

Schedule of Maturities of Long Term Debt

2025 (remaining)

May 2022 through November 2024, the Company issued unsecured promissory notes, with no collateral or guarantees, to third parties for

purposes of funding its operations.

The aggregate principal balance of these notes was $ 2.8 million as of September 30, 2025 and are

due 190 days from the closing of the IPO (the “Closing Date”.) During the nine months ended September 30, 2025, the Company

issued 0.3 million shares related to these Investor Notes, funded $ 0.2 million and recorded interest expense of $ 2.9 million.

the first quarter of fiscal 2025, the notes below except for $ 0.1 million, were amended such that interest would be payable in shares

of common stock at the Closing Date whereby the number of shares would be based on the IPO price and the principal amounts due would

be payable within the same number days subsequent to the closing of the IPO as stated in the prior amended note agreements.

Loans were primarily made up of the following as of December 31, 2024:

totaling $ 0.8 million accrue an interest charge equal to 100% of the principal amount, payable in shares of common stock based on

the IPO price, with 110% of the principal paid 190 days following the Closing Date plus 12 % interest per annum accruing from the

Closing Date.

totaling $ 0.2 million carry the same terms as above except only 100% of the principal is paid 190 days following the Closing Date .

totaling $ 1.0 million, as amended, accrue an interest charge equal to 110% of the principal amount, payable in shares of common stock

based on the IPO price, with 110% of the principal paid 190 days following the Closing Date plus 12% interest per annum accruing

from the Closing Date .

totaling $ 0.1 million which include a one-time interest charge equal to 100% of the aggregate principal amount, contingently payable

in shares of common stock immediately prior to the Closing Date, with 110% of the principal to be paid on the maturity date, which

is 30 days following the closing of the IPO and accruing interest at a rate of 12 % per annum from the Closing Date.

totaling $ 0.5 million accrue an interest charge equal to 50% of the principal amount, payable in shares of common stock based on

the IPO price with 100% of the principal paid 190 days following the Closing Date plus 12 % interest per annum accruing from the Closing

totaling $ 0.1 million accrue an interest charge equal to 150% of the principal amount, payable in shares of the Company’s common

stock based on the IPO price, with the principal to be paid 190 days following the Closing Date and accruing interest at a rate of

12 % interest per annum from the Closing Date.

totaling $ 0.1 million accrue an interest charge equal to 125% of the principal amount, payable in shares of common stock on the Closing

Date, with 100% of the principal paid 190 days following the Closing Date plus 12 % interest per annum accruing from the Closing Date.

totaling $ 0.1 million accrue an interest charge equal to 100% of the principal amount, payable in shares of the Company’s common

stock based on the IPO price, with 120% of the principal to be paid 190 days following the Closing Date and accruing interest at

a rate of 15 % interest per annum from the Closing Date.

totaling $ 0.1 million, as amended, due at the earlier of April 30, 2025 or 30 days subsequent to the IPO, with 120% contingent stock

premium, contingently payable in shares of the Company’s common stock immediately prior to the Closing Date with an interest

rate of 15 % per annum from either the date of the Note through April 30, 2025 or from the Closing Date to 30 days subsequent to the

Closing Date.

This Note was amended in April to include 130% principal with a revised maturity date of June 30, 2025.

Citizens Community Bank

November 15, 2018 and May 15, 2019, Coastal Defense entered into three agreements which totaled $ 3.0 million with FCCB which had an outstanding

of $ 0.2 million as of December 31, 2024.

These arrangements were collateralized by aircraft security agreements, assignments of life

insurance, an assignment of a deposit account, a commercial security agreement, and all associated financing statements.

As of December

31, 2024, Coastal Defense was in default on the debt service coverage ratio covenant, and the term note was due on demand and is shown

as a component of “Current maturities of debt” on the condensed consolidated balance sheets.

Civil actions were filed against

Coastal Defense and individual guarantors in the Tioga County Court, State of Pennsylvania, in July 2023.

The claimant, FCCB, alleged

that payment under certain promissory notes is due, and FCCB sought recovery of the outstanding amounts.

FCCB obtained judgments against

all named defendants.

Parker, Coastal Defense’s former Vice President and Treasurer and stockholder of Holdings;

estate of Kenneth Parker, stockholder of Holdings;

and Kyle Stanbro, Coastal Defense’s President and stockholder of Holdings have

guaranteed this note.

The Company negotiated forbearance agreements to prevent FCCB from enforcing the judgments through March 31, 2025.

On March 27, 2025, the Company and FCCB agreed to payment terms and a release whereby $ 0.2 million in amounts due, including interest

and fees, would be paid by April 30, 2025.

During the nine months ended September 30, 2025, all amounts due to FCCB were paid.

2019 and 2022 Notes

maturity date of the $ 19.4 million of debt related to that certain (i) Note and Warrant Purchase Agreement dated as of March 9, 2018,

as amended (the “2018 Notes”), (ii) Note Purchase Agreement dated as of October 18, 2019, as amended (the “2019 Notes”),

and (iii) Note Purchase Agreement dated as of January 31, 2022, as amended (the “2022 Notes” and, together with the 2018

Notes and the 2019 Notes, the “Bridge Notes”) was extended to June 30, 2025.

On October 6, 2023, the Company signed a Satisfaction

of Indebtedness and Satisfaction of Covenant Agreement, whereby all of the holders agreed to convert $ 17.5 million of the principal owed

to them under the Bridge Notes into 440,584 shares of common stock immediately prior to the closing of the BCA Transactions, with the

remaining principal of $ 1.9 million owed to such holders to be paid at the closing of the BCA Transactions.

June 30, 2025, the Company amended the Satisfaction of Indebtedness and Satisfaction of Covenant Agreement to stipulate that the terms

in the original agreement that were contingent upon the BCA Transactions would be completed within 15 business days of the IPO and identified

the underlying recipients of the 440,584 shares described above.

The Company issued 440,584 shares of the Company’s common stock,

funded $ 1.9 million and recognized a gain on debt extinguishment of $ 13.1 million within interest expense, net during the nine months

ended September 30, 2025 to satisfy the obligations attributable to the Bridge Notes.

Bank & Trust Company 2021-1

September 15, 2021, Coastal Defense entered into a $ 0.7 million commercial promissory note agreement with Muncy Bank & Trust Company

(“Muncy”) for continuing operations.

The loan originally carried an annual interest rate of 4.5 % per year and matured in

The maturity date of this promissory note was extended such that the principal amount of $ 0.7 million was due and payable

on September 15, 2025 with interest payments at a rate of 8.5 % per year due monthly.

The Company repaid the Muncy note during the nine

months ended September 30, 2025.

This arrangement was collateralized by a life insurance policy and a contract with the Air Force.

Parker, Coastal Defense’s former Vice President and Treasurer, and stockholder of Holdings, and Alison D.

Parker, Corporate

Secretary of Coastal Defense, have guaranteed this note.

Bank & Trust Company 2021-2

January 21, 2021, Coastal Defense entered into a $ 0.4 million commercial promissory note agreement with the Muncy for continuing operations

and for the execution of the Naval Special Warfare task orders.

The loan originally carried an annual interest rate of 4.5 % per year

and matured in October 2021.

The maturity date of this promissory note was extended such that the principal amount of $ 0.4 million was

due and payable on September 20, 2025 with interest payments at a rate of 8.5 % per year due monthly.

The Company repaid the Muncy note

during the nine months ended September 30, 2025.

This arrangement was collateralized by a contract with the Naval Special Warfare Command.

Parker, Coastal Defense’s former Vice President and Treasurer, and stockholder of Holdings has guaranteed this note.

Small Business Administration (“SBA”) COVID-19 Economic Injury Disaster Loan (“EIDL”)

May 28, 2020, Coastal Defense entered into a $ 0.5 million EIDL agreement with the SBA.

The loan matures on May 28, 2050 and has an interest

rate of 3.75 % per year.

The SBA granted a payment deferral and amended the first payment due date to November 2022.

These payments first

reduce the interest accrued prior to reducing the principal owed.

As such, the outstanding loan balance was included as a component of

“Long-term debt, net of current maturities” on the condensed consolidated balance sheets.

The EIDL is collateralized by all

assets of Coastal Defense.

Parker, Coastal Defense’s former Vice President and stockholder of Holdings;

Kenneth Parker,

stockholder of Holdings;

and Kyle Stanbro, Coastal Defense’s President and Treasurer, and stockholder of Holdings have guaranteed

Insurance Premiums

2023, Coastal Defense entered into financing agreements which totaled $ 0.4 million in relation to financing its insurance premiums.

financings have various maturity dates during 2023 and 2024 and have interest rates ranging from 8.0 % to 13.3 % per year.

These agreements

are collateralized by a security interest in the premium refund due under the policies being purchased.

2024, Coastal Defense entered into financing agreements which totaled $ 0.3 million in relation to financing its insurance premiums.

financings have various maturity dates during 2025 and have interest rates ranging from 8.27 % to 13.75 % per year.

These agreements are

collateralized by a security interest in the premium refund due under the policies being purchased.

2025, the Company entered into financing agreements which totaled $ 1.1 million in relation to financing its insurance premiums.

The financings

have maturity dates during 2026 and have interest rates ranging from 7.98 % to 8.4 % per year.

October 2, 2024, January 31, 2025 and February 28, 2025, the Company entered into separate Agreements of Sale of Future Receipts (collectively,

the “Libertas Agreements”) with Libertas.

the terms of the agreement dated October 2, 2024, the Company sold $ 4.1 million of its future receivables with a factor rate of 1.25

in exchange for immediate cash proceeds net of origination fees of $ 3.2 million.

On April 17, 2025, the Company made a $ 1.9 million payment

and recognized a $ 0.2 million loss on debt extinguishment to fully resolve the Company’s obligations under this agreement.

the terms of the agreement dated January 31, 2025, the Company sold $ 2.5 million of its future receivables in exchange for immediate

cash proceeds of $ 2.0 million.

the terms of the agreement dated February 28, 2025, the Company sold $ 1.9 million of its future receivable in exchange for immediate

cash proceeds of $ 1.5 million.

there were no repayment terms on the Libertas Agreements, based on historical revenues, the Company estimated the associated receivables

to be remitted in 1 year.

The receivables were remitted to Libertas as they were collected, subject to a specific percentage deduction

from weekly receipts.

The Libertas Agreements were collateralized by all Accounts, as defined by UCC Article 9.

conjunction with each of the Agreements dated January 31, 2025 and February 28, 2025, the Company entered into a warrant agreement whereby

Libertas agreed to purchase an aggregate of 0.25 % of the fully diluted number of shares of common stock of the Company immediately before

the closing of the Company’s IPO at an exercise price of $ 0.02 per share.

See additional considerations related to the Libertas

Warrants in Note 1.

the terms of the agreement dated April 16, 2025, the Company sold $ 2.2 million of its future receivables in exchange for immediate cash

proceeds net of origination fees of $ 1.7 million.

June 30, 2025, the Company made a $ 4.5 million payment and recognized a $ 2.6 million loss on debt extinguishment to fully resolve the

Company’s obligations under the remaining Libertas agreements described above.

October 2, 2024, the Company entered into a Business Loan and Security Agreement (the “October WebBank Agreement”) with WebBank,

with Libertas acting as its servicer.

Under the October WebBank Agreement, the Company received a loan of $ 1.8 million collateralized

by an interest in the Company’s Accounts, Payment Intangibles and Letter of Credit Rights, as defined under UCC Article 9.

repayment terms are structured to deduct a fixed amount from collected receivables on a weekly basis with maximum term of one year and

a factor rate of 1.25 .

The Company has the right to pay to end this financing transaction early by repurchasing the future receipts sold

to WebBank but not yet delivered.

April 17, 2025, the Company entered into a Business Loan and Security Agreement with WebBank whereby the Company received a loan of $ 3.3

million which was structured with similar terms to those in the October WebBank Agreement.

With the proceeds from the April WebBank Agreement,

the Company repaid the $ 1.1 million outstanding balance on the loan affiliated with the October WebBank Agreement and the $ 1.9 million

outstanding balance on the loan affiliated with the October 2, 2024 Libertas Agreement as described above.

In conjunction with the modification

of the October WebBank Agreement, the Company recognized a $ 0.2 million loss on extinguishment.

June 30, 2025, the Company made a $ 3.0 million payment and recognized a $ 0.2 million loss on debt extinguishment to fully resolve the

Company’s obligations to WebBank.

November 18, 2024, the Company entered into a Receivables Financing Agreement with Code 1 Aviation, LLC (“Code 1”) whereby

the Company financed aircraft maintenance services provided by Code 1 between January 2018 and August 2024 which totaled $ 0.4 million.

The Receivables Financing Agreement has a payment term of two years , an interest rate of 15 %, requires monthly payments and can be prepaid

without penalty.

Code 1 obtained mechanic’s liens and other similar encumbrances on certain Coastal Defense aircraft.

June 24, 2025, the Company entered into a promissory note with Husch Blackwell LLP (“Husch Blackwell”) whereby the Company

agreed to fund aged invoices which totaled $ 0.6 million.

All amounts are due by December 15, 2025 with no interest.

Notes at Fair Value

October 2024, certain Investor Notes were amended, and the Company performed a significance test as of the modification date in accordance

with ASC 470-50.

The Company determined that the modified terms of these Investor Notes were substantially different than the previous

terms such that the Company recorded a loss on debt extinguishment of $ 10.5 million during the fourth quarter of 2024.

described in Note 1, the Company determined it appropriate to elect the fair value option for ten individual Investor Notes which had

significantly different terms established during the fourth quarter of 2024.

Investor Notes at fair value are issued unsecured promissory

notes, with no collateral or guarantees, to third parties for purposes of funding the Company’s operations.

of September 30, 2025, the Investor Notes had a fair value of $ 1.7 million and represented cash amounts due to holders.

During the nine

months ended September 30, 2025, the Company repaid $ 2.1 million of the Investor Notes at fair value and amended the remaining Investor

Notes such that the remaining $ 1.8 million, inclusive of a $ 0.1 million extension fee, is due December 16, 2025.

During the nine months

ended September 30, 2025, the Company issued 0.4 million shares related to the Investor Notes at fair value, which is inclusive of 0.1

million of default shares for the IPO being completed after May 31, 2025, and recognized a $ 5.7 million gain on debt extinguishment.

Notes at fair value were made up of the following as of December 31, 2024:

Note A which had a fair value of $ 3.7 million as of December 31, 2024.

The December 31, 2024 balance includes a one-time interest charge

equal to the issuance of 0.1 million shares of the Company’s common stock immediately prior to the Closing Date, with the $0.8

million principal paid on the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31,

2025 and with interest accruing from the date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise

of at least $10 million or May 31, 2025 at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number

of shares issued as an interest charge was calculated using an enterprise value of $ 770 million, which was to be increased by a factor

of 1.25x if the Company’s valuation was less than $770 million at the Closing Date.

On March 27, 2025, Note A was amended such

that the number of shares became fixed at 0.1 million shares with an additional 22,058 shares of common stock if the IPO was not completed

prior to May 31, 2025.

Note B which had a fair value of $ 2.5 million as of December 31, 2024 which includes a one-time interest charge equal to 0.1 million

shares of the Company’s common stock immediately prior to the Closing Date, with the $0.1 million principal to be paid on the earlier

of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025 and with interest accruing from the

date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025

at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number of shares issued as an interest charge was

calculated using an enterprise value of $ 770 million, which shall be increased by a factor of 1.25x if the Company’s valuation

is less than $770 million at the Closing Date.

On March 27, 2025, Note B was amended such that the number of shares became fixed at 0.1

million shares.

An additional 12,867 shares of common stock will be issued if the IPO is not completed prior to May 31, 2025.

Note C which had a fair value of $ 1.5 million as of December 31, 2024 which includes a one-time interest charge equal to 0.04 million

shares of the Company’s common stock immediately prior to the Closing Date, with the $0.2 million principal and a $0.2 million

additional cash payment to be paid on the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million

or May 31, 2025 and with interest accruing from the date of the note through the earlier of 5 days subsequent to the Closing Date or

a capital raise of at least $10 million or May 31, 2025 at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby

the number of shares issued as an interest charge was calculated using an enterprise value of $ 770 million, which shall be increased

by a factor of 1.25x if the Company’s valuation was less than $770 million at the Closing Date.

On March 27, 2025, Note C was amended

such that the number of shares became fixed at 0.04 million shares.

An additional 5,514 shares of common stock will be issued if the

IPO is not completed prior to May 31, 2025.

Note D which had a fair value of $ 1.0 million as of December 31, 2024 which includes a one-time interest charge equal to 0.02 million

shares of the Company’s common stock immediately prior to the Closing Date, with the $0.2 million principal to be paid on the earlier

of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025 and with interest accruing from the

date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025

at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number of shares issued as an interest charge was

calculated using an enterprise value of $ 770 million, which shall be increased by a factor of 1.25x if the Company’s valuation

was less than $770 million at the Closing Date.

On March 27, 2025, Note D was amended such that the number of shares became fixed at

0.02 million shares.

An additional 5,882 shares of common stock will be issued if the IPO is not completed prior to May 31, 2025.

Note E which had a fair value of $ 0.7 million as of December 31, 2024 which includes a one-time interest charge equal to 0.02 million

shares of the Company’s common stock immediately prior to the Closing Date, with the $0.2 million principal to be paid on the earlier

of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025 and with interest accruing from the

date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025

at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number of shares issued as an interest charge is

calculated using an enterprise value of $770 million, which shall be increased by a factor of 1.25x if the Company’s valuation

is less than $ 770 million at the Closing Date.

On March 27, 2025, Note E was amended such that the number of shares became fixed at 0.02

million shares.

An additional 4,411 shares of common stock will be issued if the IPO is not completed prior to May 31, 2025.

Note F which had a fair value of $ 0.8 million as of December 31, 2024 which includes a one-time interest charge equal to 0.02 million

in shares of the Company’s common stock immediately prior to the Closing Date, with the $0.1 million principal to be paid on the

earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025 and with interest accruing

from the date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or

May 31, 2025 at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number of shares issued as an interest

charge is calculated using an enterprise value of $ 770 million, which shall be increased by a factor of 1.25x if the Company’s

valuation is less than $770 million at the Closing Date.

On March 27, 2025, Note E was amended such that the number of shares became

fixed at 0.02 million shares.

On March 27, 2025, Note F was amended such that the number of shares became fixed at 0.02 million shares.

An additional 3,676 shares of common stock will be issued if the IPO is not completed prior to May 31, 2025.

Note G which had a fair value of $ 0.5 million as of December 31, 2024 which includes a one-time interest charge equal to 0.01 million

in shares of the Company’s common stock immediately prior to the Closing Date, with the $0.1 million principal to be paid on the

earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025 and with interest accruing

from the date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or

May 31, 2025 at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number of shares issued as an interest

charge is calculated using an enterprise value of $ 770 million, which shall be increased by a factor of 1.25x if the Company’s

valuation is less than $770 million at the Closing Date.

On March 27, 2025, Note G was amended such that the number of shares became

fixed at 0.01 million shares.

An additional 2,941 shares of common stock will be issued if the IPO is not completed prior to May 31,

Note H which had a fair value of $ 0.2 million as of December 31, 2024 which includes a one-time interest charge equal to 0.01 million

in shares of the Company’s common stock immediately prior to the Closing Date, with the $0.05 million principal to be paid on the

earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or May 31, 2025 and with interest accruing

from the date of the note through the earlier of 5 days subsequent to the Closing Date or a capital raise of at least $10 million or

May 31, 2025 at a rate of 12 % per annum.

As of December 31, 2024, this note had a term whereby the number of shares issued as an interest

charge is calculated using an enterprise value of $ 770 million, which shall be increased by a factor of 1.25x if the Company’s

valuation is less than $770 million at the Closing Date.

On March 27, 2025, Note H was amended such that the number of shares became

fixed at 0.01 million shares.

An additional 1,470 shares of common stock will be issued if the IPO is not completed prior to May 31,

Notes I and J with a combined fair value of $ 2.9 million as of December 31, 2024 which each includes a one-time interest charge equal

to 0.1 million in shares of the Company’s common stock immediately prior to the Closing Date, with the 120% of the combined $1.0

million principal to be paid on the earlier of 30 days subsequent to the Closing Date or April 30, 2025 and with interest accruing from

the date of the note or from October 31, 2022 through the earlier of 30 days subsequent to the Closing Date or April 30, 2025 at a rate

of 15 % per annum.

During the second quarter of 2025, Notes I and J were amended such that 130% of the combined principal was to be paid

on the earlier of 30 days subsequent to the Closing Date or June 30, 2025.

excluded from the calculation of net loss per share because of the anti-dilutive effect are as follows as of March 31, 2025:

million warrants, 0.3

million stock options, and 0.3

million contingent restricted stock awards, 2.2

million potential shares issuable under debt conversion agreements, 0.6

million potential shares issuable for contingent interest payments, and 0.1

million shares potentially issuable under unsecured promissory notes in the event that the Company’s initial public offering

was not completed by May 31, 2025.

The number of potentially dilutive shares is based on the maximum number of

shares issuable on exercise or conversion of the related securities as of the period end.

Such amounts have not been adjusted for

the treasury stock method or weighted-average outstanding calculations as required if the securities were dilutive.

Warrants and Equity Incentive Plan

capital stock consists of 1.0 billion shares of our common stock, par value $ 0.000001 per share, and 10.0 million shares of preferred

stock, par value $ 0.000001 per share.

All of our authorized preferred stock is undesignated.

Company has reserved the following shares of authorized but unissued common stock as of September 30, 2025:

0.3 million stock options,

0.4 million warrants, and 0.1 million of contingent restricted stock awards and units.

Company recorded $ 14.4 million of stock compensation expense which was primarily related to 0.5 million contingent restricted stock awards

and units during the nine months ended September 30, 2025.

The majority of these awards and units were issued in July 2025.

December 2024, the Company amended an Incentive Agreement with Dangroup such that Dangroup will receive shares in conjunction with the

closing on the IPO such that their ownership will be 5 % on a fully diluted basis.

During the nine months ended September 30, 2025, the

Company recorded $ 5.5 million of stock compensation expense related to the 0.5 million shares that were issued to Dangroup on June 12,

The Company’s authorized

capital stock consists of 1.0 billion shares of common stock, par value $ 0.000001 per share, and 10.0 million shares of preferred stock,

par value $ 0.000001 per share.

All of the authorized preferred stock is undesignated.

Company has reserved the following shares of authorized but unissued common stock as of March 31, 2026:

million shares for stock options, 0.4

million shares for warrants, 0.5

million shares for RSUs, and 2.0 million shares available for issuance under the Equity Incentive Plan described below.

Company assumed warrants to purchase 0.1 million shares of the Company’s common stock as part of the merger with Jaunt.

These warrants

expire ten years from the date of issuance, March 10, 2022, have an exercise price of $ 16.83 per share and were outstanding as of September

expire ten years from the date of issuance, March 10, 2022, have an exercise price of $ 16.83 per share and were outstanding as of March

31, 2026 and December 31, 2025.

The Company determined that these warrants are equity classified.

the quarter ended March 31, 2025, the Company entered into two warrant agreements with Libertas to purchase an aggregate of 0.5 % of the

fully diluted number of shares of common stock immediately before the closing of the IPO at an exercise price of $ 0.02 per share as described

On June 12, 2025, in conjunction with the IPO, the number of Libertas Warrants became fixed, and on June 13, 2025, Libertas

exercised their warrants in exchange for 104,415 shares of common stock.

In July 2025, the Company entered into a warrant agreement with

Libertas whereby Libertas had the option to purchase 0.1 million shares with an exercise price of $ 0.02 between July 28, 2025 and July

28, 2030 which resulted in the Company recording a charge of $ 1.2 million during the nine months ending September 30, 2025.

exercised the warrants on July 31, 2025.

September 2024, the Company executed a financing advisor agreement with Cantor Fitzgerald & Co.

as compensation for assistance with

the IPO, pursuant to which the Company agreed to issue to certain of the underwriters upon the closing of the IPO, the Underwriter Warrants,

which are warrants exercisable for the number of shares of common stock equal to 5 % of the total number of shares of common stock sold

In conjunction with the IPO, the Company issued the Underwriter Warrants, which are exercisable into 345,000 shares of common

The Company determined the fair value of the Underwriter Warrants at the grant date on June 12, 2025 to be $ 2.0 million which

was recorded as an issuance cost against IPO proceeds during the nine months ended September 30, 2025.

The Underwriter Warrants have

an exercise price of $ 11.00 and can be exercised between December 12, 2025 and June 12, 2030.

In September 2024, the Company executed a

financing advisor agreement with Cantor Fitzgerald & Co.

as compensation for assistance with the initial public offering

(“IPO”), pursuant to which the Company agreed to issue warrants to certain of the underwriters upon the closing of the

IPO (the “Underwriter Warrants”) exercisable for the number of shares of common stock equal

to 5 % of the total number of shares of common stock sold in such IPO.

In conjunction with the IPO, the Company issued the

Underwriter Warrants, which are exercisable into 345,000 shares of common stock.

The Company determined the fair value of

the Underwriter Warrants at the grant date on June 12, 2025 to be $ 2.0 million which was recorded as an issuance cost against

IPO proceeds during the year ended December 31, 2025.

The Underwriter Warrants have an exercise price of $ 11.00 and can be

exercised between December 12, 2025 and June 12, 2030.

The Underwriter Warrants remain outstanding as of March 31, 2026 and December

Incentive Plan

4 unchanged sentences

employees of any parent or subsidiary, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock

awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors, and consultants, including

employees and consultants of the Company’s affiliates.

The 2025 Plan is a successor to and continuation of the Legacy Plan (referred

to in the 2025 Plan as the Prior Plan) and will become effective on the execution of the underwriting agreement related to the IPO.

the maximum number of shares of the Company’s common stock that may be issued under the 2025 Plan after it becomes effective will

not exceed 1.9 million shares of the Company’s common stock (the “Share Reserve”).

In addition, the number of shares

of the Company’s common stock reserved for issuance under the 2025 Plan will automatically increase on January 1 of each year,

starting on January 1, 2026, through and including January 1, 2035, in an amount equal to (1) 5% of the total number of shares of the

Company’s common stock outstanding on the last day of the preceding calendar year, or (2) a lesser number of shares of the Company’s

common stock determined by the Board of Directors prior to the date of the increase.

The maximum number of shares of the Company’s

common stock that may be issued upon the exercise of ISOs under the 2025 Plan will be three times the Share Reserve.

the nine months ended September 30, 2025, there were 0.1 million of stock awards and 0 options, respectively, granted under the 2025

Carveout Plan

December 2021, the Company adopted the 2021 Management Carveout Plan (the “Aspen Carveout Plan”), which establishes a benefit

pool for designated employees and consultants payable upon the occurrence of a change in control, which is defined as two steps consisting

of 1) the closing of the merger with Holdings and 2) the IPO of Holdings or merger with a special purpose acquisition company (“SPAC”)

by a specified expiration date, which was extended through June 30, 2025.

The amount to be paid as benefits under the Aspen Carveout

Plan are determined based upon percentages of the total net proceeds calculated at the closing of the IPO or a SPAC merger, ranging from

The net proceeds are calculated as the net sum of cash and the fair value of equity securities available for distribution to

the stockholders of the Company after all liabilities, exclusive of the subordinated convertible notes or other loans from the stockholders

and transaction costs are paid, capped at $ 2.3 billion.

The benefit payments to the participants in the Aspen Carveout Plan are to be

made in the form or forms of payment and in the same proportions as the consideration paid by the purchaser which were estimated to be

$ 2.0 million in stock and $ 0.9 million in cash.

October 6, 2023, the Company signed a Satisfaction of Indebtedness and Satisfaction of Covenant Agreement, whereby all of the holders

agreed to convert $ 0.8 million of the cash amount owed to them under the Aspen Carveout Plan into 20,010 shares of common stock immediately

prior to the closing of the BCA Transactions, with the remaining amount of $ 0.1 million owed to such holders to be paid at the closing

of the BCA Transactions.

In addition, the Satisfaction of Indebtedness and Satisfaction of Covenant Agreement stipulated that the $ 2.0

million in stock would be settled through the issuance of 51,309 shares.

June 30, 2025, the Company amended the Aspen Satisfaction of Indebtedness

and Satisfaction of Covenant Agreement to stipulate that the terms in the original agreement that were contingent upon the BCA Transactions

would be completed within 15 business days of the IPO and identified the underlying recipients of the 71,319 shares related to the Aspen

Carveout Plan.

During the nine months ended September 30, 2025, the Company issued 63,447 shares of common stock, net of 7,872 shares

that were withheld for taxes, funded $ 0.1 million, and recognized $ 1.7 million of stock compensation expense based on the June 30, 2025

modification date.

awards, RSUs, performance awards, and other forms of stock awards to employees, directors, and consultants, including employees and consultants

of the Company’s affiliates.

The initial share reserve of the Company’s common stock authorized for issuance under the 2025

million shares.

Effective January 1, 2026, the share reserve

automatically increased by 0.9

million shares pursuant to the plan’s “evergreen”

share reserve will continue to increase annually through January 1, 2035 by 3% of the outstanding shares of common stock or a lesser

amount approved by the Board of Directors.

The maximum number of shares issuable upon exercise of ISOs under the 2025 Plan is 5.7

the three months ended March 31, 2026, the Company granted 0.3

million RSUs under the 2025 Plan and recognized $ 1.5

million of stock-based compensation expense related to these RSUs.

The weighted-average grant date fair value per share of RSUs

granted during the period was $ 10.63 .

As of March 31, 2026, there were 0.3

million unvested RSUs outstanding under the 2025 Plan.

Total unrecognized compensation expense related to unvested RSUs

million as of March 31, 2026, which is expected to be recognized over a weighted average period of 2.7

changes in the carrying value of goodwill were as follows:

Balance as of July 1, 2025

$ 122,143,519

$ 434,346,520

$ 572,031,507

Effect of exchange rate

Balance as of September 30, 2025

$ 121,680,414

$ 434,346,520

$ 571,568,402

Balance as of July 1, 2024

$ 111,562,065

$ 451,370,520

$ 599,444,053

( 17,024,000 )

( 20,970,000 )

( 37,994,000 )

Effect of exchange rate

Balance as of September 30, 2024

$ 115,790,613

$ 434,346,520

$ 565,678,601

(In Thousands)

Electric Air Mobility

Balance as of January 1, 2026

$ 107,620,343

$ 434,346,520

$ 557,508,331

Effect of exchange rate

Balance as of September 30, 2025

$ 121,680,414

$ 434,346,520

$ 571,568,402

Balance as of March 31, 2026

Balance as of January 1, 2025

$ 114,720,513

$ 451,370,520

$ 602,602,501

$ 114,720,513

$ 451,370,520

$ 602,602,501

( 17,024,000 )

( 20,970,000 )

( 37,994,000 )

Effect of exchange rate

Balance as of September 30, 2024

$ 115,790,613

$ 434,346,520

$ 565,678,601

$ 115,790,613

$ 434,346,520

$ 565,678,601

a result of the BCA Transactions being terminated in August 2024 and the continued delays in securing financing, the Company determined

it appropriate to test the fair value of each reporting unit for goodwill impairment as of September 30, 2024 for all of its reporting

units except Avionics as no goodwill had been allocated to this reporting unit.

Management determined that the fair value of the Drones

reporting unit substantially exceeded its respective carrying value.

The Electric Air Mobility and Training reporting unit fair values

indicated goodwill impairment as detailed below.

of Goodwill Impairment

Goodwill carrying value as of September 30, 2024

$ 115.8 million

$ 451.4 million

Fair value of reporting unit as of September 30, 2024

Carrying value of reporting unit as of September 30, 2024

$ 133.5 million

Impairment as of September 30, 2024

and assumptions varied between each reporting unit depending on the facts and circumstances specific to that reporting unit.

rate for each reporting unit is influenced by general market conditions as well as factors specific to the reporting unit.

The fair value

of the reporting units for which the Company performed quantitative impairment tests was estimated using an income approach, which incorporates

the use of the discounted cash flow method.

Projections used require the use of significant estimates and assumptions specific to the

reporting unit as well as those based on general economic conditions.

Factors specific to each reporting unit include revenue growth,

profit margins, terminal value growth rates, capital expenditures projections, assumed tax rates, discount rates and other assumptions

deemed reasonable by management.

For the 2024 impairment test, the weighted average cost of capital (“WACC”) discount rates

the Company used for its reporting units was 30 %- 35 % and the terminal value growth rate was 4 %.

The terminal value growth rate represents

the expected long-term growth rate for the Company’s industry, which incorporates the type of services each reporting unit provides

as well as global economic conditions.

Other factors influencing the revenue growth rates include the nature of the services the reporting

unit provides for its customers, the geographic locations in which the reporting unit conducts business and the maturity of the reporting

to the Electric Air Mobility segment’s projections as of September 30, 2024, projected revenue was revised to include projected

aircraft production timing for the Jaunt Journey in 2031 and a downscaled cargo version of the Jaunt Journey in 2028.

Projected revenue

in years 1 and 2 of commercialization of the downscaled cargo version of the Jaunt Journey as of September 30, 2024 were increased as

compared to prior revenue estimates from the Company’s prior year testing date of October 1, 2023 for the same two-year period.

Projected revenue in years 1 and 2 of commercialization of the Jaunt Journey as of September 30, 2024 also increased as compared to prior

revenue estimates from the Company’s prior year testing date of October 1, 2023 for the same two-year period.

before interest, taxes, depreciation and amortization (“EBITDA”) projections as of September 30, 2024 were developed using

revised estimates of manufacturing costs, production hours per unit, learning curves and subsequent efficiencies, and operating costs.

and long-term EBITDA projections at maximum capacity have not significantly changed compared to the Company’s prior year testing

date of October 1, 2023, but the shifting and corresponding discounting of these projections resulted in a significant decrease in the

fair value of the Electric Air Mobility segment, which indicated impairment.

to the degree of uncertainty associated with the Company’s assumptions, the Company believes its long-term projected revenue is

reasonable given a sales price supported by non-binding letters of intent and a relatively small number of units.

There is a higher degree

of uncertainty in projected EBITDA, as compared to projected revenue as projected EBITDA includes estimates as to future labor and material

costs, efficiency rates as to the number of production hours required over time, and synergies.

most sensitive factor in the Company’s analysis was the WACC discount rate.

As of September 30, 2024, a 33 % WACC discount rate

was applied to the Electric Air Mobility segment, which is fairly consistent with the 35 % WACC discount rate used as of the Company’s

prior year testing date of October 1, 2023.

The 200 basis-point decrease from prior year was deemed appropriate due to more conservative

projected long term EBITDA margins as compared to sales in the prior year, regulatory harmonization that has occurred for the industry

between the Federal Aviation Association, Transport Canada Civil Aviation, and European Union Aviation Safety Agency, advances in electric

propulsion, battery density, and autonomous systems which lower remaining technical development risk.

While these factors reduce risk

to the Electric Air Mobility segment, a larger decrease in the WACC was not deemed appropriate due to delays in funding for development

efforts and overall implementation risk that remains similar to October 1, 2023.

As to the sensitivity of the WACC rate, another hypothetical

100-basis-point increase in the WACC discount rate would have yielded an additional $ 46.0 million in goodwill impairment.

Company believes the factors considered in the impairment analysis are reasonable;

however, significant changes in any one of its assumptions

could produce a different result and result in additional impairment charges that could be material to its condensed consolidated financial

For example, the fair value of the Electric Air Mobility segment could be adversely affected and may result in an additional

impairment of goodwill if this reporting unit is not able to advance the development of its aircraft and other products, obtain regulatory

approvals, and launch and commercialize its products at scale, if the estimated production costs are significantly higher than estimated

or if the WACC discount rate is increased.

to the Training segment’s projections as of September 30, 2024, the Company noted a significant decrease in sales and gross margins

as a result of not being able to meet contractual demands due to delays in the funding of aircraft.

In prior years, government intelligence,

surveillance and reconnaissance (“ISR”) aircraft contracts did not require that the aircraft be able to employ weapons.

those contracts have aged-out, the new requirements for the re-competitions require assets that have the ability to employ training munitions

and have been approved by the government to do so.

Coastal Defense does not possess aircraft that can achieve this requirement;

the Company has either not been awarded or chose not to bid on certain contracts.

The projected revenue and margins were revised to include

the timing of projected aircraft and investments to be made in flight schools in the short-term (between 2025 and 2028) and then the

acquisition of additional aircraft beginning in years after 2029.

projections as of September 30, 2024 did not significantly change compared to the Company’s prior year testing date of October

1, 2023, and the Company does not anticipate any changes until the Company is able to make more significant investments in aircraft,

and at which time the Company can better leverage its operating expenses.

At that point, the Company anticipates that mid-term and long-term

EBITDA margins would increase.

The shifting and corresponding discounting of these projections resulted in a significant decrease in

the fair value of the Training segment, which indicated impairment.

to the degree of uncertainty associated with the Company’s assumptions, the Company believes its short-term projected revenue is

reasonable given its history with military contract practices and the historical results of flight schools, while the Company’s

long-term projected revenue is subject to a higher degree of uncertainty.

To mitigate this risk, a 30 % WACC discount rate was applied

to these projections which was consistent with the Company’s prior year testing date of October 1, 2023.

As to the sensitivity

of the WACC rate, another hypothetical 100-basis-point increase in the WACC discount rate would have yielded an additional $ 3.4 million

in goodwill impairment.

Company believes the factors considered in the impairment analysis are reasonable;

however, significant changes in any one of its assumptions

could produce a different result and result in additional impairment charges that could be material to its condensed consolidated financial

For example, the fair value of the Training segment could be adversely affected and may result in an additional impairment

of goodwill if this reporting unit is not able to purchase the needed aircraft, if the estimated costs for managing the flight schools

are significantly higher than estimated or if the WACC discount rate is increased.

assets acquired through business combinations were as follows:

Balance as of March 31, 2025

Company evaluates goodwill for impairment as of October 1 each year, and more frequently if events or circumstances indicate that

there may be impairment.

The Company completed its most recent annual goodwill impairment test as of October 1, 2025

and determined that no goodwill impairment existed.

No triggering events were identified during the three months ended

March 31, 2026 that would require an interim impairment assessment.

assets, net, consist primarily of intangible assets acquired through business combinations.

During the three months ended March 31, 2026,

the Company also capitalized $ 1.3 million related to a manufacturing license agreement that provides rights to intellectual property,

technical data, and know-how used to manufacture and commercialize products.

The agreement is recorded as a definite-lived intangible

asset and is amortized on a straight-line basis over its five-year contractual term.

assets, net consisted of the following as of March 31, 2026 and December 31, 2025:

of Intangible Assets, Net

Weighted Average

Remaining Life (Years)

As of September 30, 2025

Weighted Average

Remaining Life (Years)

As of March 31, 2026

(In Thousands)

Weighted Average Remaining Life (Years)

Accumulated Amortization

Carrying Value

Developed technology - definite lived

$ 100,207,657

Developed technology - indefinite lived

2 unchanged sentences

Customer relationships

Manufacturing license agreement

Intangible assets net

$ 131,826,146

Weighted Average

As of December 31, 2025

(In Thousands)

Weighted Average

Remaining Life (Years)

Accumulated Amortization

Carrying Value

Developed technology – definite lived

Patents pending

Developed technology – indefinite lived

Tradenames - definite lived

2 unchanged sentences

Intangible assets net

$ 130,657,359

expense is reported on the condensed consolidated statements of operations line items as shown in the table below for the three and nine

months ended September 30:

expense is reported on the condensed consolidated statements of operations line items as shown in the table below for the three months

ended March 31:

of Amortization Expense

Three months ended

September 30,

Nine months ended

September 30,

(In Thousands)

Cost of revenue

3 unchanged sentences

Amortization expense

estimated future amortization expense as of September 30, 2025 is as follows:

estimated future amortization expense as of March 31, 2026 is as follows:

of Estimated Future Amortization Expense

(In Thousands)

2026 (remaining)

Amortization expense

consisted of the following as of September 30, 2025 and December 31, 2024:

September 30, 2025

consisted of the following as of March 31, 2026 and December 31, 2025:

(In Thousands)

March 31, 2026

December 31, 2025

2 unchanged sentences

Finished goods

increased by $ 10.9 million as of March 31, 2026 compared to December 31, 2025, primarily due to increased inventory levels in the Drones

segment to support anticipated shipments during the remainder of 2026.

Sheet Details

expenses consisted of the following as of September 30, 2025 and December 31, 2024:

expenses and other current assets consisted of the following as of March 31, 2026 and December 31, 2025:

of Prepaid expenses and other current assets

(In Thousands)

March 31, 2026

December 31, 2025

Prepaid insurance

Prepaid taxes

Value added tax

Vendor prepayments

expenses and other current assets

expenses consisted of the following as of March 31, 2026 and December 31, 2025:

of Accrued expenses

September 30, 2025

(In Thousands)

March 31, 2026

December 31, 2025

5 unchanged sentences

Accrued expenses

part of the Agreement and Plan of Merger by and among Jaunt, Legacy AIRO, the Company, Jaunt Merger Sub, LLC and Martin Peryea as member

representative, dated as of October 6, 2021, as amended, and subsequent to that acquisition, the Company had deferred salary arrangements

with various employees that allowed for a portion of their compensation to be deferred and paid upon a single outside investment of no

less than $ 25 million, or such earlier time as the Company determined in its sole discretion that sufficient funds were available to

commence payment of the deferred amounts.

As of December 31, 2024, the accrued deferred compensation was $ 11.2 million.

the nine months ended September 30, 2025, the Company issued 0.2 million

shares, net of shares withheld for taxes, made cash payments of $ 0.8 million and recorded a $ 5.9 million gain within other income to partially

settle these obligations.

During October 2025, the Company funded the remaining $ 0.3 million to fully settle these obligations.

and Contingencies

October 2020, the Company entered into an agreement for market analysis and business strategy consulting.

The services were performed

in prior periods.

The agreement states a fee of $ 0.5 million for the services, due upon the completion of the IPO, SPAC merger, financing

raise of at least $ 100 million or an acquisition of at least 50 % of the equity of the Company.

During the nine months ended September

30, 2025, the Company recorded $ 0.5 million of expense and funded the payment related to this consulting agreement.

Fee Arrangement

June 2022, the Company executed a previously arranged contingent fee agreement with New Generation Aerospace, Inc.

to compensate NGA for past services rendered and future services rendered through December 31, 2022 related to the acquisitions and financing

of the Merger Entities in the amount of $ 1.5 million (the “Contingent Fee”).

The Contingent Fee is payable upon the closing

On October 2, 2023, the Company signed an Amended and Restated Success Fee Agreement, whereby NGA agreed to convert $ 1.4

million of the amounts owed to it into 33,995 shares of the Company’s common stock immediately prior to the closing of the BCA

Transactions, with the remaining amount of $ 0.1 million owed to such holders to be paid at the closing of the BCA Transactions.

the nine months ended September 30, 2025, the Company issued 33,995 shares of common stock, recorded $ 0.3 million of stock compensation

and funded $ 0.1 million to fully satisfy obligations under this agreement.

Financing Fee Arrangement

September 2024, the Company executed a financing advisor agreement with Cantor Fitzgerald & Co.

as compensation for assistance with

the IPO which totals the greater of $ 2 million and 7 % of the gross proceeds in conjunction with the IPO (the “Cantor Contingent

Financing Fee”).

In conjunction with the IPO, the Company recorded $ 4.8 million related to the Cantor Contingent Financing Fee

as an offset to gross proceeds.

IPO Payment Agreement

April 2022, Aspen Avionics and KippsDeSanto & Co.

(“KDC”) entered into an amendment (the “KDC IPO Payment Agreement”)

to the parties’ prior engagement letter dated August 7, 2018 (the “KDC Agreement”), pursuant to which Aspen Avionics

engaged KDC to provide financial advisory services in connection with AIRO’s potential acquisition of Aspen Avionics.

to the terms of the KDC IPO Payment Agreement upon the closing of the IPO, Aspen Avionics was obligated to fund a one-time, final payment

of $ 1.0 million to be made to KDC in satisfaction of Aspen Avionics obligations under the KDC Agreement.

During the nine months ended

September 30, 2025, the Company recorded $ 1.0 million of expense and funded the payment related to the KDC Agreement.

Letters of Intent

November 2023, the Company signed non-binding letters of intent to acquire two businesses for the Training segment including flight training

The parties have undertaken due diligence to determine whether a binding purchase agreement will be negotiated.

The total anticipated

purchase price for the acquisitions is expected to range from $ 5.1 million to $ 7.7 million, which would be paid in a combination of cash

and the issuance of common stock.

During the quarter ended September 30, 2025, the Company entered into a 5 five-year lease agreement in Phoenix, Arizona

in support of its efforts to expand its U.S.

footprint for advanced drone innovation which resulted in a right-of-use operating lease

asset of $ 1.9 million, current operating lease liability of $ 0.3 million and noncurrent operating lease liability of $ 1.6 million.

Venture Agreement

November 13, 2025, AIRO Drone entered into a Joint Venture and Operating Agreement (the “JV Agreement”) with Nord Drone Group,

LLC (“NDG”), a Ukrainian limited liability company, pursuant to which AIRO Drone and NDG will form AIRO Nord-Drone, LLC,

a Delaware limited liability company (the “JV”).

Pursuant to the terms of the JV Agreement, the JV will develop, manufacture,

and commercialize unmanned aerial systems primarily designed for delivering munitions, targeting U.S., North Atlantic Treaty Organization

(“NATO”), and Ukrainian defense markets.

Each of the parties will contribute operational resources and capabilities to the

The Company will contribute business development, sales, manufacturing, engineering, and government certification resources, as well

as manufacturing facilities in the United States, while NDG will contribute intellectual property, engineering data, operational resources,

and manufacturing facilities in Ukraine.

In addition, the Company will reimburse NDG for reasonable out-of-pocket costs incurred by NDG

in obtaining NATO certification required by the JV Agreement, up to a maximum amount of $ 50,000 within 30 days of the closing of the

party to the JV will receive 50% of the limited liability company interests of the JV.

The JV will be governed by a five-member board

of managers, with each party appointing two directors and the acting chairman of the Company’s board of directors serving as the

fifth director and chairman of the JV.

consummation of the JV is subject to various closing conditions, including executing certain ancillary agreements between the parties

and the JV, including intellectual property license, manufacturing, and services agreements, and obtaining any regulatory approval required

under applicable law or by any governmental authority.

Unless revised, the JV Agreement (as amended) will terminate and the JV will not

be consummated if closing does not occur on June 30, 2026.

can be no assurance that closing conditions under the JV Agreement will be satisfied or when or that the JV will be consummated on the

terms described herein or at all.

The JV involves material risks including operational challenges related to NDG’s location in

Ukraine during ongoing military conflict, complex export control and sanctions compliance requirements, and potential regulatory scrutiny

regarding foreign defense partnerships.

civil action was filed against Old AGI, Inc.

9 unchanged sentences

On December 19, 2024, the Circuit Court denied the Company’s motion for summary judgment.

In March 2025, the Company agreed to

Perrin’s individual claims in the lawsuit as described below.

actions were filed against Coastal Defense and individual guarantors in the Tioga County Court, State of Pennsylvania, in July 2023.

The claimant, First Citizens Community Bank (“FCCB”), alleged that payment under certain promissory notes is due, and the

claimant is seeking recovery of the outstanding amounts.

The claimant obtained judgments against all named defendants.

On March 27, 2025,

the Company entered into a settlement agreement with FCCB providing for a full and unconditional release of all claims related to the

underlying debt upon completion of payments totaling approximately $0.2 million.

As of April 30, 2025, the Company had fulfilled its

payment obligations under the agreement, and the parties had fully and unconditionally released each other from and all claims/liabilities,

or obligations related to the underlying debt.

civil action was filed against Holdings, AIRO Group, AIRO Group (Illinois), AIRO Drone, Agile Defense, Joseph Burns, Chirinjeev Kathuria

and John Uczekaj in Chancery Court in Delaware in September 2023.

The claimant, Robert Perrin, one of the Company’s stockholders,

alleged that the these entities failed to pay him for services allegedly rendered under an Employment Agreement with AIRO Group (Illinois),

that the individual defendants have breached their fiduciary duties as members of the Company’s board of directors, and that defendants

violated the Computer Fraud and Abuse Act.

On November 17, 2023, the Company filed a motion to dismiss.

In response, the claimant filed

an Amended Complaint on February 22, 2024 in which he dropped AIRO Group (Illinois) as a defendant, dropped the breach of contract claim

and added a wage claim under Delaware statute.

On April 5, 2024, the Company filed a Partial Answer and Affirmative Defenses as well

as a Partial Motion to Dismiss.

In response, the claimant filed a Second Amended Complaint on May 16, 2024 in which he dropped the wage

claim under Delaware statute and added a civil conspiracy claim against all defendants.

The Company filed an Amended Answer on November

During the nine months ended September 2025, the Company agreed to settle Mr.

Perrin’s individual claims in the lawsuit

for $ 0.8 million, which will be paid over six quarters beginning the quarter ending September 30, 2025.

As of September 30, 2025, the

Company had recorded the $ 0.5 million and $ 0.1 million in current maturities of debt and long-term debt, net of current maturities, respectively.

from the above matters, the Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims.

In February 2026, the Company and the

claimant filed documents to request that the 2022 Lawsuit be dismissed in its entirety, and the matter was subsequently dismissed without prejudice.

from the above matter, the Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims.

From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business

6 unchanged sentences

The Company’s

chief operating decision maker (“CODM”) has been identified as the chief executive officer.

The Company will continue to

reevaluate reportable and operating segments.

chief operating decision maker has been identified as the chief executive officer.

The Company periodically

reevaluates its reportable and operating segments.

The Company manages its business primarily based upon four operating segments:

2 unchanged sentences

similarity of its operating segments and determined that each of these operating segments represents a reportable segment.

Company has determined that each reportable segment represents a reporting unit and, in accordance with ASC 350, each reporting unit

requires an allocation of goodwill.

This segment develops, manufactures, and sells avionics and GPS sensors for the GA, UAS and eVTOL market segments.

The Company’s

advanced avionics products are focused on GA aftermarket, OEM display, integration and connected panel solutions.

This segment develops, manufactures, and sells avionics and GPS sensors for general aviation (“GA”), unmanned aircraft

systems (“UAS”) and eVTOL applications.

The Company’s avionics products are focused on GA aftermarket, original

equipment manufacturer (“OEM”) display, integration and connected panel solutions.

This segment offers direct operation of drones and drone systems, provision of drone-derived information, and the development of

drone-optimized communication services.

Additionally, it consists of development and commercialization of market leading MUAS for

professional users, primarily in the defense and security markets.

The MUAS includes internally developed software, hardware, and

mechanical system components.

Operations cover sourcing, manufacturing, assembly, quality assurance testing activities and logistics.

Additionally, it consists of development and commercialization of market leading mini unmanned

aircraft systems (“mUAS”) for professional users, primarily in the defense and security markets.

The mUAS includes internally

developed software, hardware, and mechanical system components.

Operations cover sourcing, manufacturing, assembly, quality assurance

testing activities and logistics.

Air Mobility:

This segment includes designing, licensing and ultimately the manufacturing of air vehicles incorporating slowed

rotor compound technology that is capable of transporting people and packages operated by pilots or autonomous flight systems.

This segment provides and operates military aircraft for U.S.

military services and Department of Defense (“DoD”)

Segment revenues are earned from 1) flying training missions as part of armed forces training groups, and 2) providing

aircraft and support services to DoD contractors.

This segment is designing and developing dual-use electric and hybrid-electric

compound rotorcraft aircraft, with a near-term focus on cargo-configured and multi-role autonomous platforms supporting middle-mile logistics,

tactical resupply, emergency medical delivery, law enforcement, intelligence, surveillance and reconnaissance (“ISR”), and

other commercial and government missions.

segment provides and operates military aircraft for U.S.

military services and Department of War (“DoW”) (formerly

referred to as the U.S.

Department of Defense) contractors.

Segment revenues are earned from (1) flying training missions as part of

armed forces training groups, and (2) providing aircraft and support services to DoW contractors.

Company evaluates the performance of its reportable segments based on the net income (loss) for each reporting segment.

1 unchanged sentence

are reconciliations of the reportable segment total revenues to the condensed consolidated revenues and the reportable segment total

net income (loss) to the condensed consolidated net loss for the three and nine months ended September 30, 2025 and September 30, 2024:

net income (loss) to the condensed consolidated net loss for the three months ended March 31, 2026 and 2025:

of Segment Information

Electric Air Mobility

Three months ended September 30, 2025

Three months ended March 31, 2026

(In Thousands)

Electric Air Mobility

6 unchanged sentences

Other expense (income), net

( 4,543,419 )

( 4,466,845 )

Income tax benefit (expense)

Segment (loss) profit

$ ( 1,311,132 )

$ ( 1,623,309 )

$ ( 1,240,059 )

( 1,988,111 )

Unallocated amounts:

Corporate expenses

Interest expense, net

Other expense, net

$ ( 7,962,016 )

Electric Air Mobility

Three months ended September 30, 2024

Electric Air Mobility

Cost of revenue

Research and development

Sales and marketing

General and administrative

Goodwill impairment

Interest expense

Interest income

Other (income) expense, net

( 4,100,628 )

( 4,108,660 )

Income tax expense

( 2,382,796 )

$ ( 511,987 )

$ ( 15,294,472 )

$ ( 22,062,633 )

( 29,301,788 )

Income tax benefit

Unallocated amounts:

Corporate expenses

Interest expense, net

Interest income, net

Other expense, net

$ ( 30,330,526 )

Electric Air Mobility

Nine months ended September 30, 2025

Electric Air Mobility

Cost of revenue

Research and development

Sales and marketing

General and administrative

Interest expense

Interest income

Gain on debt extinguishment, net

( 13,090,628 )

Other expense (income), net

( 23,116,974 )

( 2,678,450 )

( 25,373,193 )

Income tax expense

( 1,731,130 )

Segment profit (loss)

$ ( 10,672,612 )

Unallocated amounts:

Corporate expenses

Interest expense, net

Gain on debt extinguishment, net

( 2,468,441 )

Other income, net

$ ( 4,064,342 )

Electric Air Mobility

Nine months ended September 30, 2024

Three months ended March 31, 2025

(In Thousands)

Electric Air Mobility

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General and administrative

Goodwill impairment

Interest expense

1 unchanged sentence

Other expense (income), net

( 2,400,783 )

( 2,326,495 )

Income tax expense

( 3,811,383 )

Segment (loss) profit

$ ( 865,223 )

$ ( 22,194,615 )

$ ( 24,243,705 )

( 34,143,830 )

Segment income (loss)

Unallocated amounts:

2 unchanged sentences

Other expense, net

$ ( 37,940,056 )

following table presents revenue by geographic area for the three and nine months ended September 30:

of Revenue by Geographic

Electric Air Mobility

Three months ended September 30, 2025

Electric Air Mobility

United States

Electric Air Mobility

Three months ended September 30, 2024

Electric Air Mobility

United States

following table presents revenue by geographic area for the three months ended March 31, 2026 and 2025:

of Revenue by Geographic Area

Electric Air Mobility

Nine months ended September 30, 2025

Three months ended March 31, 2026

(In Thousands)

Electric Air Mobility

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Electric Air Mobility

Nine months ended September 30, 2024

Three months ended March 31, 2025

(In Thousands)

Electric Air Mobility

United States

following table presents revenue by products and services for the three and nine months ended September 30:

following table presents revenue by products and services for the three months ended March 31, 2026 and 2025:

of Revenue by Products and Services

Electric Air Mobility

Three months ended September 30, 2025

Electric Air Mobility

Three months ended September 30, 2024

Electric Air Mobility

months ended September 30, 2025

Electric Air Mobility

Nine months ended September 30, 2024

Three months ended March 31, 2026

(In Thousands)

Electric Air Mobility

Three months ended March 31, 2025

(In Thousands)

following table presents capital expenditures, depreciation and amortization, stock-based compensation and contingent consideration fair

value adjustments for the three and nine months ended September 30:

value adjustments for the three months ended March 31, 2026 and 2025:

of Capital Expenditures, Depreciation and Amortization

Electric Air Mobility

Three months ended September 30, 2025

Electric Air Mobility

Depreciation and amortization

Stock-based compensation

Capital expenditures

Electric Air Mobility

Three months ended September 30, 2024

Electric Air Mobility

Depreciation and amortization

Stock-based compensation

Contingent consideration fair value adjustments

( 4,100,000 )

Capital expenditures

Electric Air Mobility

Nine months ended September 30, 2025

Three months ended March 31, 2026

(In Thousands)

Electric Air Mobility

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Stock-based compensation

Contingent consideration fair value adjustments

( 17,223,030 )

( 2,683,743 )

( 20,271,826 )

Capital expenditures

totals above exclude corporate amounts, including $ 0.02 million of depreciation and amortization,

$ 0.3 million of stock-based compensation, and $ 0.3 million of capital expenditures.

Electric Air Mobility

Nine months ended September 30, 2024

Three months ended March 31, 2025

(In Thousands)

Electric Air Mobility

2 unchanged sentences

Contingent consideration fair value adjustments

( 2,400,000 )

Capital expenditures

following table presents tangible long-lived assets by geographic area as of September 30, 2025 and December 31, 2024:

following table presents tangible long-lived assets by geographic area as of March 31, 2026 and December 31, 2025:

of Tangible Long Lived Assets by Geographic Area

Electric Air Mobility

September 30, 2025

March 31, 2026

(In Thousands)

Electric Air Mobility

United States

Electric Air Mobility

December 31, 2025

Electric Air Mobility

(In Thousands)

United States

segment assets reconciled to consolidated amounts are as follows as of September 30, 2025 and December 31, 2024:

segment assets reconciled to condensed consolidated amounts are as follows as of March 31, 2026 and December 31, 2025:

of Segment Assets

Total Segment assets

(In Thousands)

Electric Air Mobility

September 30, 2025

$ 158,044,795

$ 507,741,408

$ 774,576,211

March 31, 2026

December 31, 2025

$ 150,721,804

$ 514,151,757

$ 700,998,787

Company is subject to various local, state, federal and international laws and regulations relating to the development, manufacturing,

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safety, employment, labor and data privacy.

it contracts with the “DoD” and other agencies of the U.S.

government—and, for certain of those contracts, requires

access to classified information—the Company’s Drones segment is subject to extensive federal statutes and regulations, including

the Federal Acquisition Regulation, the Defense Federal Acquisition Regulation Supplement, the Truthful Cost and Pricing statute, the

Foreign Corrupt Practices Act, the False Claims Act, and the regulations implementing the National Industrial Security Program Operating

Manual (“NISPOM”).

The NISPOM regulations establish the security requirements applicable to classified contracts and programs,

facility security clearances, and personnel security clearances.

The federal government audits and reviews contractors’ performance

on contracts, pricing practices, cost accounting systems and practices, and compliance with applicable laws, regulations and standards.

Like most government contractors, the Drones segment’s contracts are audited and reviewed regularly by federal agencies, including

the Defense Contract Management Agency and the Defense Contract Audit Agency.

it contracts with the DoW and other agencies of the U.S.

government—and, for certain of those contracts, requires access to classified

information—the Company’s Drones segment is subject to extensive federal statutes and regulations, including the Federal

Acquisition Regulation, the Defense Federal Acquisition Regulation Supplement, the Truthful Cost and Pricing statute, the Foreign Corrupt

Practices Act, the False Claims Act, and the regulations implementing the National Industrial Security Program Operating Manual (“NISPOM”).

The NISPOM regulations establish the security requirements applicable to classified contracts and programs, facility security clearances,

and personnel security clearances.

The federal government audits and reviews contractors’ performance on contracts, pricing practices,

cost accounting systems and practices, and compliance with applicable laws, regulations and standards.

Like most government contractors,

the Drones segment’s contracts are audited and reviewed regularly by federal agencies, including the Defense Counterintelligence

and Security Agency, the Defense Contract Management Agency and the Defense Contract Audit Agency.

addition, the Drones segment is subject to industry-specific regulations due to the nature of the products and services it provides.

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government authorities, including:

(i) the Federal Aviation Administration (“FAA”), which regulates airspace for all air vehicles in the U.S.

(i) the Federal Aviation Administration (“FAA”), which regulates airspace for all aircraft in the U.S.

National Airspace

System (“NAS”);

(ii) the National Telecommunications and Information Administration and the Federal Communications Commission,

which regulate the wireless communications upon which its unmanned aircraft system (“UAS”) depend in the U.S.;

Directorate of Defense Trade Controls of the U.S.

Department of State, which administers the International Traffic in Arms Regulations

that regulate the export of controlled technical data, defense articles and defense services and (iv) the Bureau of Industry and Security

which regulate the wireless communications upon which its UAS depend in the U.S.

and also regulate any device that emits radiofrequency

emissions as a result of its operations;

(iii) the Directorate of Defense Trade Controls of the U.S.

Department of State, which administers

the International Traffic in Arms Regulations that regulate the export of controlled technical data, defense articles and defense services

and (iv) the Bureau of Industry and Security of the U.S.

Department of Commerce, which regulates matters relating to U.S.

national security and technology.

national security

and technology.

transport category type certification is the highest level in safety provided by the Civil Aviation Authorities.

Jaunt intends to certify

under CAR 529, single pilot IFR (instrument flight rules) and comply with Category Enhanced of EASA SC-VTOL-01 by:

using System Safety Assessment processes (Aerospace Recommended Practice “ARP” 4761 with ARP 4754A) that are industry standard

for commercial transport aircraft (Exposure Draft (ED) 79A);

designing flight critical systems to meet the requirements of a probability of catastrophic failure of less than 10-9 per flight hour

(less than once every billion flight hours);

developing robust software design processes to meet Development Assurance Level A for functions that could exhibit catastrophic failures;

meeting requirements for bird strike, fatigue and damage tolerance, lightning strike, fire protection, and designing and incorporating

elements for crashworthiness right from conceptual stage.

the near-term, the efforts of the Electric Air Mobility segment will focus on obtaining FAA certification of its aircraft and engaging

with key decision makers in the cities in the United States in which it anticipates its aircraft and urban air mobility (“UAM”)

service will initially operate.

Its aircraft will be required to comply with regulations governing aircraft design, production and airworthiness.

In the United States, this primarily includes regulations put forth by the FAA and the Department of Transportation (“DOT”).

under CAR 529, single pilot (instrument flight rules and comply with Category Enhanced of European Union Aviation Safety Agency (“EASA”)

SC-VTOL-01 by:

System Safety Assessment processes (Aerospace Recommended Practice (“ARP”) 4761 with ARP 4754A) that are industry standard

for commercial transport aircraft (Exposure Draft 79A);

flight critical systems to meet the requirements of a probability of catastrophic failure of less than 10-9 per flight hour (less

than once every billion flight hours);

robust software design processes to meet Development Assurance Level A for functions that could exhibit catastrophic failures;

requirements for bird strike, fatigue and damage tolerance, lightning strike, fire protection, and designing and incorporating elements

for crashworthiness right from conceptual stage.

In the near-term, the efforts of the Electric Air Mobility segment will

focus on cargo logistics, ISR, remote operations, and other commercial and

government applications, including obtaining FAA certification and advancing the development and commercialization of autonomous cargo

and multi-role eVTOL platforms.

The segment is currently focused on autonomous aircraft platforms, including the JC250 and JX250 variants,

designed to support middle-mile logistics, tactical resupply, ISR, emergency medical delivery, law enforcement, and related missions.

Passenger applications may represent a longer-term opportunity.

Its aircraft will be required to comply with regulations governing aircraft

design, production, and airworthiness, and its operations will be required to comply with regulations governing, among other things, operational

safety and citizenship.

In the United States, this primarily includes regulations put forth by the FAA and the Department of Transportation.

Outside the United States, similar requirements are generally administered by the national civil aviation and transportation authorities

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These include but are not limited to

FAA, European Union Aviation Safety Agency (“EASA”), Transport Canada Civil Aviation (“TCCA”), and National Civil

Aviation Agency of Brazil (“ENAC (Brazil)”) regulations.

These govern the design test, certification, installation, and manufacturing

of Aspen’s equipment.

FAA, EASA, Transport Canada Civil Aviation, and National Civil Aviation Agency of Brazil regulations.

These govern the design, test,

certification, installation, and manufacturing of Aspen’s equipment.

FAA regulates the manufacture, repair and operation of all aircraft and aircraft parts operated in the United States.

8 unchanged sentences

certified technicians.

Certification and conformance is required prior to installation of a part on an aircraft.

Aircraft operators must

maintain logs concerning the utilization and condition of aircraft engines, life-limited engine parts and airframes.

In addition, the

FAA requires that various maintenance routines be performed on aircraft engines, some engine parts, and airframes at regular intervals

Certification and conformance are required prior to installation of a part on an aircraft.

Aircraft operators

must maintain logs concerning the utilization and condition of aircraft engines, life-limited engine parts and airframes.

the FAA requires that various maintenance routines be performed on aircraft engines, some engine parts, and airframes at regular intervals

based on cycles or flight time.

4 unchanged sentences

Aspen Avionics’ operations may in the future be subject to new and more stringent regulatory requirements.

In that regard, Aspen Avionics closely monitors the FAA and industry trade groups in an attempt to understand how possible future regulations

In that regard, Aspen Avionics closely monitors the FAA and industry trade groups to understand how potential future regulations

might impact it.

2 unchanged sentences

government can be subject to various laws and regulations that govern pricing and other factors.

Company generates revenue from (i) product sales, including avionics, Global Navigation Satellite System (“GNSS”)

technologies, and mUAS/commercial drones;

(ii) services, including training, support, and drone services;

research and development (“R&D”) contracts;

and (iv) sales-based royalties.

revenue is recognized at a point in time upon shipment or delivery when control transfers to the customer.

Service revenue, including

support, training, and drone services, is recognized over time as services are performed, generally on a straight-line basis over the

service period.

Extended warranties are service-type warranties and are recognized over the contractual term, typically two to three

Revenue from R&D contracts is recognized over time using an input method based on costs incurred relative to total estimated

Sales-based royalties are recognized at a point in time as underlying sales occur.

following table summarizes revenue recognized at a point in time and over time for the three months ended March 31, 2026 and 2025:

of Revenue Recognition based on Time Periods

(In Thousands)

Three Months ended March 31,

(In Thousands)

Point in time

Contract liabilities as of March 31, 2026 and December 31, 2025 were $ 3.6 million and $ 4.5 million, respectively.

The majority of contract

liabilities are expected to be recognized as revenue during 2026.

The Company had no significant contract assets as of March 31, 2026

and December 31, 2025.

During the three months ended March 31, 2026, the Company recognized $ 1.0 million in revenue previously included

in contract liabilities as of December 31, 2025.

is also disaggregated by segment and geography.

Segment Information .

Party Transactions

6 unchanged sentences

unpaid royalty amounts due under a development agreement.

The Company owed $ 0.6 million to CIRA as of September 30, 2025 and December

Avionics owed $ 0.4 million to Accord Global, a stockholder, as of December 31, 2024, which was funded during the nine months ended

September 30, 2025.

Sales to Accord Global were $ 0 during the three and nine months ended September 30, 2025, respectively.

to Accord Global were $ 0.2 million and $ 0.3 million during the three and nine months ended September 30, 2024, respectively.

of September 30, 2025 and December 31, 2024, Coastal Defense had net receivables due from Failor Services, Inc.

which is owned by a stockholder of the Company, of $ 0.4 million which are included in “Related party receivables” on

the condensed consolidated balance sheets.

No purchases were made from Failor during the three and nine months ended September 30,

2025 or 2024.

Coastal Defense also pays for certain expenses on Failor’s behalf, which are reimbursable to Coastal Defense.

The Company owed $ 0.6 million to CIRA as of March 31, 2026 and December

Avionics owed $ 0.4 million to Accord Global, a stockholder, as of March 31, 2025, which was fully settled during the year ended December

Sales to Accord Global were zero and $ 0.4 million during the three months ended March 31, 2026 and 2025, respectively.

There were no amounts due from Accord Global as of March 31, 2026 or December 31, 2025.

of December 31, 2025, Coastal Defense had net receivables of $ 0.4 million due from Failor Services, Inc.

which is owned by a stockholder of the Company, included in “Related party receivables” on the condensed consolidated

balance sheets.

This balance was fully settled during the three months ended March 31, 2026, with no amounts outstanding as of that

No purchases were made from Failor during the three months ended March 31, 2026 or 2025.

Coastal Defense also pays for certain

expenses on Failor’s behalf, which are reimbursable.

Defense entered into unsecured due on demand notes with two stockholders (the “Stockholder Notes”).

Interest is charged

As of March 31, 2026 and December 31, 2025, the total outstanding balance of the Stockholder Notes was $ 1.0 million and

$ 1.1 million, respectively.

2025, the Company engaged in settlement discussions with one counterparty, Jeffrey F.

Parker as executor of the estate of Kenneth Parker,

and received a proposed settlement pursuant to which the Company is expected to pay the counterparty $ 1.0 million in full satisfaction

of the obligations.

The proposed settlement reflects a comprehensive resolution that includes offsets for amounts owed by Failor and

Coastal Restaurant Group (“CRG”) to Coastal Defense.

As of December 31, 2025, Coastal Defense’s recorded balances relating

to these items were as follows:

(i) amount due to Jeffrey F.

Parker related to the Stockholder Notes of $ 1.0 million, (ii) amount due

from Failor of $ 0.4 million, and (iii) an immaterial amount due from CRG, resulting in a net amount due of $ 0.6 million.

settlement payment of $ 1.0 million exceeds the net recorded balance by $ 0.4 million, which was accrued at December 31, 2025 and included

in “Related party payables” on the condensed consolidated balance sheets.

January 2026, the Company made a payment of $ 0.1 million to one of the stockholders.

In March 2026, the Company finalized the settlement

with Jeffrey F.

The remaining $ 1.0 million was paid in April 2026.

Defense uses West Run LLC (“West Run”) as a subcontractor for its military exercises.

2 unchanged sentences

The Company owed $ 0.2

million and $ 0.3 million to West Run as of September 30, 2025 and December 31, 2024, respectively.

2024, the Company issued a series of promissory notes to Martin Peryea, its Senior Vice President and General Manager, Electric Air

Mobility Division, which totaled $ 0.2 million as of September 30, 2025 and December 31, 2024 which were payable within two weeks

of closing of the IPO and has an interest charge of $ 1 .

The Company is in discussions with Mr.

Peryea and is evaluating potential

changes to the terms.

May 2022 through January 2025, the Company issued unsecured promissory notes, with no collateral or guarantees, to employees and

stockholders for purposes of funding its operations.

The principal balance of these notes was $ 3.8 million and $ 4.2 million as of

September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025, the $ 3.8 million of Investor Notes as described

below are due 190 days from the IPO.

the nine months ended September 30, 2025, the Company repaid $ 0.6 million, issued 0.4 million shares related to these Investor Notes

and recognized $ 3.9 million of interest expense.

the first quarter of 2025, $ 3.4 million of the notes below were amended such that interest would be payable in shares at the Closing

whereby the number of shares would be based on the trading price and the principal amounts due would be payable within the same number

days subsequent to the Closing.

of December 31, 2024, notes totaling $2.3 million, as amended, accrue an interest charge equal to 100% of the principal amount, payable

in shares of common stock on the Closing Date, with 110% of the principal paid 190 days following the Closing Date plus 12% interest

per annum accruing from the Closing Date.

Notes totaling $0.6 million carry the same terms except only 100% of the principal is paid

190 days following the Closing Date.

Notes totaling $0.2 million accrue an interest charge equal to 50% of the principal amount,

payable in shares of common stock on the Closing Date with 100% of the principal paid 190 days following the Closing Date plus 12%

interest per annum accruing from the Closing Date.

Notes totaling $0.2 million accrue an interest charge equal to 115% of the principal

amount, payable in shares of common stock on the Closing Date, with 100% of the principal paid 190 days following the Closing Date

plus 15% interest per annum accruing from the Closing Date.

Notes totaling $0.4 million accrue an interest charge equal to 125% of

the principal amount, payable in shares of common stock on the Closing Date, with 100% of the principal paid 190 days following the

Closing Date plus 12% interest per annum accruing from the Closing Date.

Notes totaling $0.1 million accrue an interest charge equal

to 150% of the principal amount, payable in shares of common stock on the Closing Date, with 100% of the principal paid 190 days

following the Closing Date plus 12% interest per annum accruing from the Closing Date.

totaling $ 0.1 million, as amended, accrued an interest charge equal to $ 50,000 payable in

shares of common stock immediately prior to Closing, with the principal due by June 30, 2025.

totaling $ 0.5 million with Dangroup which accrued interest at a rate of 10.5 % per annum became payable five days after the Closing

or the closing of one or more financing transactions with an aggregate value of at least $ 35.0 million.

Defense entered into unsecured due on demand notes with two stockholders (the “Stockholder Notes”).

Interest is charged

at 7.00 % per year.

As of September 30, 2025 and December 31, 2024, the total outstanding balance of the Stockholder Notes was $ 1.0

The Company is in discussions with the counterparties and is evaluating potential changes to the terms.

Company entered into promissory notes with the Merger Entities during 2022.

The fair value

of the contingent consideration promissory notes issued to the former equity holders of Agile

Defense, AIRO Drone and Coastal Defense totaled $ 9.4 million as of December 31, 2024 and

were included in contingent consideration on the condensed consolidated balance sheets.

October 2023, the Company signed various agreements pursuant to which approximately 90 % of

the principal owed would be converted to equity in the Company at a rate of $ 39.7112 per

share no later than two days prior to closing of the BCA Transactions.

In March 2025, the

Company signed an amendment with Coastal Defense pursuant to which immediately prior to the

closing of the IPO, the Company would issue 203,707 shares for 80 % of the principal owed

under the contingent consideration promissory note.

that the BCA Transactions were not consummated, at the closing of the IPO, the Company issued the following shares and used the following

proceeds to satisfy the following contingent consideration obligations:

Note issued in connection with the Agile Defense Acquisition (the “Agile Defense Promissory Note”) - issued 34,360 shares

of common stock and used proceeds of $ 1.0 million during the nine months ended September 30, 2025 to satisfy the Company’s

obligations to the under the Agile Defense Promissory Note and Note Termination Agreement.

Note issued in connection with the Airo Drone acquisition (the “Airo Drone Promissory Note”) - issued 37,080 shares of

common stock and used proceeds of $ 0.6 million during the nine months ended September 30, 2025 to satisfy the Company’s obligations

under the Airo Drone Promissory Note and Note Termination Agreement.

Note issued in connection with the acquisition of Coastal Defense (the “CDI Promissory Note”), as amended on March 7,

2025 - issued 203,707 shares of common stock and used proceeds of $ 2.0 million during the nine months ended September 30, 2025 to

satisfy the Company’s obligations to the holders under the CDI Promissory Note pursuant to a Promissory Note Termination Agreement.

part of the Jaunt acquisition, the Company acquired a contingent obligation originating from

Jaunt’s acquisition of certain patents, licenses, and other intellectual property from

Carter Aviation, a former member of Jaunt, in April 2019 (the “Jaunt Contingent Arrangement”).

Under the Jaunt Contingent Arrangement, 10 % of any cash receipt, including all income, receipts,

proceeds, debt or equity investment, earnings, sales, or winnings, up to $ 50 million is payable

to Carter Aviation.

As of the acquisition date, $ 49.6 million in future payments remained

on this obligation.

The original terms of the Jaunt Contingent Arrangement provided that

upon the completion of a business combination, the contingent consideration assumed from

Jaunt would be replaced by promissory notes, the first of which would be for $ 23.0 million

due one day after the closing of such business combination, and the second would be for the

remaining portion of the contingent consideration and would be paid over three years subsequent

to such closing.

On October 27, 2023, the Company signed a satisfaction of indebtedness and

satisfaction of covenant agreement (the “Jaunt Satisfaction of Indebtedness and Satisfaction

of Covenant Agreement”), whereby the holder agreed to convert $ 44.6 million of the

obligations owed to it as part of the Jaunt acquisition into 1,122,437 shares of the Company’s

common stock immediately prior to the closing of the BCA Transactions, with the remaining

portion of the contingent consideration of $ 5.0 million owed to such holders to be paid at

the closing of the BCA Transactions.

that the BCA Transactions were not consummated, at the Closing, the Company issued 1,122,437 shares of the Company’s common

stock and funded $ 5.0 million during the nine months ended September 30, 2025 to satisfy the Company’s obligations to the holders

under the Jaunt Satisfaction of Indebtedness and Satisfaction of Covenant Agreement.

conjunction with the Aspen Avionics acquisition, the Company agreed to assume $ 25.3 million of obligations as defined within the

merger agreement of which $ 19.4 million was attributable to the Aspen Notes, $ 1.9 million was attributable to future allowable services

or to be payable to the former Aspen Avionics shareholders at the Closing, and $ 0.9 million was attributable to the Aspen Carveout

The Aspen Carveout Plan also includes a one-time stock payment of $ 2.0 million for designated employees and consultants payable

upon the occurrence of certain change in control events.

On October 6, 2023, the Company signed a satisfaction of indebtedness and

satisfaction of covenant agreement (the “Aspen Satisfaction of Indebtedness and Satisfaction of Covenant Agreement”),

whereby all of the holders agreed to convert various amounts due, which included $ 17.5 million under the Bridge Notes, $ 0.8 million

related to the cash portion of Aspen Carveout Plan, and $ 1.7 million attributable to the a contingency to Aspen shareholders (“Aspen

Contingent Debt”) into 440,584 shares, 20,010 shares and 43,512 shares, respectively, of the Company’s common stock immediately

prior to the closing of the BCA Transactions, with the remaining amount of $ 2.2 million owed to such holders to be paid at the closing

of the BCA Transactions.

The $ 2.0 million payment in stock, which equates to 51,309 shares, was also due at the closing of a business

Company issued 440,584 shares of the Company’s common stock, funded $ 1.9 million and

recognized a gain on debt extinguishment of $ 13.1 million during the nine months ended September

30, 2025 as described in Note 2 to satisfy the obligations attributable to the Bridge Notes.

to the IPO, the Company had not recorded the Aspen Contingent Debt as it was not probable or estimable in accordance with ASC 450.

On June 12, 2025, the Company issued 43,512 shares to the target representative and recorded an accrual for $ 0.2 million related

to the Aspen Contingent Debt which resulted in $ 0.6 million of other expense during the nine months ended September 30, 2025.

June 30, 2025, the Company amended the Aspen Satisfaction of Indebtedness and Satisfaction of Covenant Agreement to stipulate that

the terms in the original agreement that were contingent upon the BCA Transactions would be completed within 15 business days of

the IPO and identified the underlying recipients of 43,512 of the shares described above.

In conjunction with the amended Satisfaction

of Indebtedness and Satisfaction of Covenant Agreement, the target representative transferred the shares to the underlying shareholders.

The Company agreed to fund the remaining $ 0.2 million owed under the Aspen Contingent Debt by December 1, 2025.

the nine months ended September 30, 2025, the Company issued 71,319 shares of the Company’s common stock, funded $ 0.1 million

and recognized $ 1.7 million of stock compensation, as described in Note 4, to fully settle all obligations with the participants

of the Aspen Carveout Plan.

Company entered into a $ 12.9 million promissory note in conjunction with the acquisition of Sky-Watch in 2022.

The $ 12.9 million

promissory note was fully repaid during the year ended December 31, 2024.

detailed in Note 1, the Sky-Watch earnout liability was originally payable up to $ 6.5 million, of which up to a maximum of $ 3.0 million

was payable on a dollar-for-dollar basis on revenue earned within the first two-year anniversary of the acquisition and $ 3.5 million

would become due and payable if and only if Sky-Watch earns a minimum of $ 13.8 million in revenue during the period from the acquisition

date through June 2024.

In December 2022, the Equity Purchase Agreement was amended to increase the second earnout amount to $ 7.5

million and to extend the earnout period to include the full fiscal year periods of 2022 through 2024.

In March 2023, the Equity

Purchase Agreement was further amended to add a third earnout of $ 4.0 million if revenue during the full fiscal year periods of 2022

through 2024 reaches $ 17.0 million with the earnouts payable by May 31, 2024.

As of December 31, 2023, the earnout liability was

recorded to the full amount owed net of $ 3.0 million in payments made to date, or $ 11.5 million and was classified as due to seller

as all contingencies had been resolved.

March 2024, the parties further amended the Equity Purchase Agreement, to extend the due dates of the earnout liability and the promissory

note to June 30, 2024 in exchange for the former shareholders of Sky-Watch becoming eligible for an additional earnout of $ 1.0 million

if Sky-Watch achieved EBITDA of DKK 127,107,500 or above for fiscal year 2024.

As both the promissory note and the second and third

earnouts were due within three months of the amendment date and as the Company would not have been able to refinance the then current

balance of $ 18.3 million with another lender, the Company determined this modification to be an extinguishment in accordance with

The loss on debt extinguishment was not significant.

June 2024, the Company amended the Equity Purchase Agreement to extend the payment dates for the remaining balance on the seller

promissory note to five business days following the date that the Company, or its successor, closes one or more financing transactions

with an aggregate value of at least $ 35 million, and for the remaining earnout liability to five business days following the date

that the Company, or its successor, closes one or more financing transactions with an aggregate value of at least $ 45 million.

shall continue to accrue on the earned but unpaid earnout amounts at the federal discount rate plus five percent, compounded quarterly.

The former shareholders agreed to waive enforcement of payment until June 30, 2025.

The Company recorded $ 0.7 million and $ 1.0 million

of interest during the three and nine months ended September 30, 2024, respectively.

The Company recorded $ 0 million and $ 0.2 million

of interest during the three and nine months ended September 30, 2025, respectively.

the nine months ended September 30, 2025, the Company repaid $ 3.2 million of its Due to seller obligations.

As of December 31, 2024,

the total amount included in due to seller and owed under the earnouts was $ 3.1 million.

June 28, 2024, the Company signed an Incentive Agreement whereby the Company will pay Dangroup 20 % of Sky-Watch’s EBITDA as

an incentive bonus for their continued involvement in Sky-Watch’s governance, management and/or other operations commencing

on January 1, 2025 for an initial term of five years.

The Incentive Agreement also included a contingent 5 % payout on any aggregate

earnout awards that the Company’s stockholders were entitled to in conjunction with the BCA Transactions.

In December 2024,

the Incentive Agreement was amended such that Dangroup will contingently receive shares in conjunction with the Closing such that

their ownership will be 5 % on a fully diluted basis.

In conjunction with the IPO, the Company recorded $ 5.5 million of stock compensation

expense related to the 0.5 million shares that were issued to Dangroup during the nine months ended September 30, 2025.

June 28, 2024, the Company signed a Consulting Agreement whereby the Company will pay a shareholder and former board member of Sky-Watch

2.5 % of Sky-Watch’s EBITDA as a consulting fee for his assistance with branding and rolling out products and services into

new and additional markets commencing on January 1, 2024.

This agreement may be terminated by either party with 30 days notice.

the three and nine months ended September 30, 2025, the Company recorded $ 0.5 million of income and $ 2.1 million of expense, respectively,

within general and administrative expense related to the Incentive and Consulting Agreement.

During the three and nine months ended

September 30, 2024, the Company recorded $ 0.3 million and $ 0.5 million, respectively, related to the Incentive and Consulting Agreement.

Company has evaluated subsequent events through November 14, 2025, which represents the date the condensed consolidated financial statements

were available for issuance.

Other than the items listed below, there were no subsequent events that would require adjustment to or disclosure

in these condensed consolidated financial statements.

October 2025, the Company entered into a non-binding letter of intent with Degree-Trans LLC dba Bullet (“Bullet”), a Ukrainian developer of turbojet

unmanned interceptor systems, to establish a 50/50 joint venture to produce and deploy Bullet’s combat-proven fixed-wing unmanned aerial vehicle (“UAV”) technology

across the United States, North Atlantic Treaty Organization (“NATO”) defense markets and Ukraine.

November 13, 2025, AIRO Drone, entered into a Joint Venture and Operating Agreement (the “JV Agreement”) with Nord Drone

Group, LLC (“NDG”), a Ukrainian limited liability company, pursuant to which AIRO Drone and NDG will form AIRO

Nord-Drone, LLC, a Delaware limited liability company (the “JV”).

Pursuant to the terms of the JV Agreement, the JV will

develop, manufacture, and commercialize unmanned aerial systems primarily designed for delivering munitions, targeting U.S., NATO,

and Ukrainian defense markets.

Each of the parties will contribute operational resources and capabilities to the JV.

will contribute business development, sales, manufacturing, engineering, and government certification resources, as well as

manufacturing facilities in the United States, while NDG will contribute intellectual property, engineering data, operational

resources, and manufacturing facilities in Ukraine.

In addition, the Company will reimburse NDG for reasonable out-of-pocket

costs incurred by NDG in obtaining NATO certification required by the JV Agreement, up to a maximum amount of $ 50,000

within 30 days of the closing of the JV.

party to the JV will receive 50% of the limited liability company interests of the JV.

The JV will be governed by a five-member board

of managers, with each party appointing two directors and the acting chairman of the Company’s board of directors serving as the fifth director

and chairman of the JV.

consummation of the JV is subject to various closing conditions, including executing certain ancillary agreements between the parties

and the JV, including intellectual property license, manufacturing, and services agreements, and obtaining any regulatory required under

applicable law or by any governmental authority.

Unless the parties agree, the JV Agreement will terminate and the JV will

not be consummated if closing does not occur by February 11, 2026.

can be no assurance that closing conditions under the JV Agreement will be satisfied or when or that the JV will be consummated on the

terms described herein or at all.

The JV involves material risks including operational challenges related to NDG’s location in Ukraine

during ongoing military conflict, complex export control and sanctions compliance requirements, and potential regulatory scrutiny regarding

foreign defense partnerships.

million to West Run as of March 31, 2026 and December 31, 2025, respectively.

Per Erik Svehag, a member of the Company’s Board of Directors, is a director of Dangroup ApS (“Dangroup”) and indirectly

beneficially owns approximately 60 % of Dangroup.

Dangroup was also a former shareholder of Sky-Watch, which the Company acquired in March

June 28, 2024, the Company signed an Incentive Agreement whereby the Company will pay Dangroup 20 % of

Sky-Watch’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) as an incentive bonus for

their continued involvement in Sky-Watch’s governance, management and/or other operations commencing on January 1, 2025 for

an initial term of five years.

June 28, 2024, the Company signed a Consulting Agreement whereby the Company will pay a Mr.

of Sky-Watch’s EBITDA as a consulting fee for his assistance with branding and rolling out products and services into new and

additional markets commencing on January 1, 2024.

In February 2026, the Company hired Mr.

Svehag as an employee and terminated the

Consulting Agreement.

The amounts owed under this agreement are included in “Accrued expenses” on the condensed consolidated

balance sheet as of March 31, 2026 but were included in “Related party payables” on the condensed consolidated balance sheet as of

December 31, 2025.

the three months ended March 31, 2026 and 2025, the Company recorded $ 0.6 million and $ 0.5 million of expense, respectively, within general and

administrative expense related to these agreements.

April 2026, the Company paid the remaining $1.0 million to Jeffrey F.

Parker, which fully settled the Stockholder Notes as described

Regarding Forward-Looking Statements

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to differ materially from those expressed or implied in our forward-looking statements:

failure to comply with covenants under debt instruments;

ability to successfully integrate the businesses and personnel of acquired companies and businesses, including those acquired in

the Put-Together Transaction, and our ability to realize the anticipated synergies and benefits of such acquisitions;

ability to keep pace with technological advances and our dependance on advances in technology by other companies, many of which have

dependence on a limited number of customers for most of our revenue;

lack of long-term commitments from our customers;

ability to successfully integrate the businesses and personnel of acquired companies, including AIRO Drone, LLC (“AIRO Drone”), Agile Defense, LLC (“Agile

Defense”), Coastal Defense, Inc.

(“Coastal Defense”), Jaunt Air Mobility, LLC (“Jaunt”), Sky-Watch A/S (“Sky-Watch”)

and Aspen Avionics, Inc.

(“Aspen Avionics”), and our ability to realize the

anticipated synergies and benefits of such acquisitions;

ability to keep pace with technological advances and our dependence on advances in technology by other companies, many of which have

substantially greater resources than we do;

inability to acquire additional aircraft to support our Training segment on acceptable terms or at all;

ability to acquire additional aircraft to support our Training segment on acceptable terms or at all;

impact that our customers may experience from service failures or interruptions due to defects in the software, infrastructure, components

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dependence on the continuing efforts of our key personnel and on our ability to attract and retain highly skilled personnel and senior

we have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the

reliability of our condensed consolidated financial statements;

have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the reliability

of our condensed consolidated financial statements;

failure to comply with applicable government regulations;

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in components for our products;

significant reliance on sales to the U.S.

government, particularly to agencies of the DoD and a decline in government budgets, funding,

changes in spending or budgetary priorities, or delays in contract awards;

sales to the U.S.

government, particularly to agencies of the DoW, and a decline in government

budgets, funding, changes in spending or budgetary priorities, or delays in contract awards;

uncertainty, the risk of future budget cuts, the impact of continuing resolution funding mechanisms, the debt ceiling and government

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including in the Middle East and Ukraine;

to develop new products or integrate new technology into current products;

failure to develop new products or integrate new technology into current products;

results in legal proceedings;

anticipated use of the net proceeds;

accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

expectations regarding the period during which we qualify as an emerging growth company and smaller reporting company.

expectations regarding the period during which we will qualify as an emerging growth company and smaller reporting company.

some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “continue,”

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addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

statements are based upon information available to us as of the date of this Form 10-Q, and while we believe such information forms a

reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate

that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are

inherently uncertain and investors are cautioned not to unduly rely upon these statements.

should read the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to

differ materially from those expressed or implied by our forward-looking statements.

statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such

information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not

be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

should read the section titled “Risk Factors” included in our Annual Report on Form 10-K for a discussion of important

factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

Moreover, we operate in an evolving environment.

New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and

uncertainties.

As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained

herein, whether as a result of any new information, future events, changed circumstances or otherwise.

New risk factors and uncertainties may emerge from time to time, and it is not

possible for management to predict all risk factors and uncertainties.

As a result of these factors, we cannot assure you that the

forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate.

Except as required by applicable law,

we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new

information, future events, changed circumstances or otherwise.

should read this Form 10-Q and the documents that we reference in this report and have filed as exhibits to the report, completely and

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements