July 22, 2025 – TheNewswire - Toronto, Canada – SPARC AI INC.  (CSE: SPAI) (OTCQB: SPAIF) (Frankfurt: 5OV0) is excited to announce a transformative expansion into the commercial drone sector through the development of a groundbreaking, AI-powered product, currently in stealth mode. This strategic initiative builds on SPARC AI’s expertise in drone software technology for Target Acquisition Systems while venturing into the broader drone software market to address diverse commercial applications.While specifi ...

Core Insights - SPARC AI INC. has been shortlisted for the 2025 Australian Association for Uncrewed Systems (AAUS) Innovation Award, recognizing its contributions to uncrewed systems and advanced air mobility (AAM) sectors in Australia [1][2] - The AAUS Innovation Award honors organizations that exhibit creativity and technical excellence in uncrewed systems across various domains [2] - SPARC AI is preparing for an investor roadshow in Canada in June 2025, including a presentation at the Investor Clubhouse event in Toronto, aimed at showcasing its AI solutions to 80 VIP investors [3] Company Overview - SPARC AI has developed a Target Acquisition System that determines geolocation coordinates of distant objects without relying on traditional technologies such as radar, lidar, GPS, sensors, satellites, or image recognition software [5]

PART I: FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=ITEM%201%2E%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) Presents unaudited financial statements for Q1 2025, showing a net loss and detailing a subsequent capital raise [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased to $3.69 million, driven by a reduction in cash, leading to a decline in shareholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $912,219 | $1,970,719 | | Total current assets | $1,485,653 | $2,750,129 | | Total Assets | $3,686,590 | $4,949,943 | | **Liabilities & Equity** | | | | Total current liabilities | $872,025 | $893,926 | | Total liabilities | $1,043,230 | $1,075,518 | | Accumulated deficit | $(18,215,768) | $(14,250,751) | | Total shareholders' equity | $2,643,360 | $3,874,425 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 revenue fell 39.9% year-over-year while operating expenses surged, resulting in a significantly wider net loss Statement of Operations Summary (Unaudited) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $184,802 | $307,653 | | Gross Profit | $61,566 | $127,215 | | Total Operating Expenses | $4,067,256 | $1,212,101 | | Loss from Operations | $(4,005,690) | $(1,084,886) | | Net Loss | $(3,965,017) | $(1,143,860) | | Net Loss Per Share (Basic & Diluted) | $(0.27) | $(0.13) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) Shareholders' equity declined by $1.23 million, as the quarterly net loss outpaced non-cash compensation and capital additions - For the three months ended March 31, 2025, total shareholders' equity decreased by **$1,231,065**, mainly due to a net loss of **$3,965,017**, offset by stock-based compensation of **$2,435,625** and other capital additions[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company experienced increased cash burn from operations, leading to a total cash decrease of $1.06 million in Q1 2025 Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(941,751) | $(568,016) | | Net Cash Used in Investing Activities | $(123,359) | $0 | | Net Cash Provided by Financing Activities | $6,610 | $264,255 | | **Net Decrease in Cash** | **$(1,058,500)** | **$(303,761)** | | **Cash, end of period** | **$912,219** | **$399,607** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes highlight substantial going concern uncertainty, segment details, significant customer concentration, and a subsequent equity offering - The company has a history of net losses (**$3.97M in Q1 2025**) and negative operating cash flow (**$941,751 in Q1 2025**), with an accumulated deficit of **$18.2M**, raising **substantial doubt about its ability to continue as a going concern**[19](index=19&type=chunk)[21](index=21&type=chunk) - On May 9, 2025, after the quarter ended, the company closed a private offering of Series C convertible preferred stock, raising aggregate gross proceeds of **$1.05 million** to mitigate liquidity concerns[23](index=23&type=chunk)[129](index=129&type=chunk) - The company operates in three segments: Safe-Pro USA (protective gear), Airborne Response (drone services), and Safe Pro AI (AI/ML software), with Q1 2025 revenues of **$140,600**, **$4,204**, and **$39,998** respectively[46](index=46&type=chunk)[126](index=126&type=chunk) - For Q1 2025, three customers accounted for **94.4% of total sales**, indicating significant customer concentration risk[104](index=104&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=29&type=section&id=ITEM%202%2E%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes a 39.9% revenue decline to funding cuts and a 235.6% expense increase to non-cash stock compensation [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q1 2025 revenue fell 39.9% while operating expenses rose 235.6%, driven by stock-based compensation, widening the net loss Comparison of Operations for the Three Months Ended March 31 | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $184,802 | $307,653 | $(122,851) | (39.9)% | | Gross Profit | $61,566 | $127,215 | $(65,649) | (51.6)% | | Total Operating Expenses | $4,067,256 | $1,212,101 | $2,855,155 | 235.6% | | Net Loss | $(3,965,017) | $(1,143,860) | $(2,821,157) | 246.6% | - The increase in operating expenses was primarily due to non-cash stock-based compensation, including **$1,579,285** related to salaries and **$992,052** related to professional fees[166](index=166&type=chunk)[168](index=168&type=chunk) - The decrease in revenue was attributed to security services budgetary cuts in Federal Funding and the timing of a training contract with Florida Power and Light[163](index=163&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity weakened, with cash falling to $0.91 million and working capital decreasing to $0.61 million Key Liquidity Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $912,219 | $1,970,719 | | Working Capital | $613,628 | $1,856,203 | - Net cash used in operating activities for Q1 2025 was **$941,751**, primarily due to a net loss of **$3.97 million**, partially offset by non-cash expenses like stock-based compensation of **$2.44 million**[178](index=178&type=chunk) - Net cash used in investing activities was **$123,359** in Q1 2025 for the purchase of property, equipment, and intangible technologies[180](index=180&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies include segment-specific revenue recognition, goodwill impairment testing, and stock-based compensation valuation - Revenue recognition policies are tailored to each business segment: Safe-Pro USA (goods shipped), Airborne Response (services completed), and Safe Pro AI (SaaS model based on usage)[187](index=187&type=chunk)[188](index=188&type=chunk)[190](index=190&type=chunk) - Goodwill is not amortized but is tested for impairment at least annually, while intangible assets with finite lives are amortized[192](index=192&type=chunk)[193](index=193&type=chunk) - Stock-based compensation is accounted for under ASC 718, requiring measurement at the grant-date fair value and recognition over the service period[195](index=195&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203%2E%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Safe Pro Group Inc. is not required to provide the information for this item - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[198](index=198&type=chunk) [Controls and Procedures](index=38&type=section&id=ITEM%204%2E%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were deemed ineffective due to a material weakness in internal controls related to limited resources - Management concluded that **disclosure controls and procedures were ineffective** as of March 31, 2025[200](index=200&type=chunk) - A **material weakness was identified** in internal control over financial reporting due to a lack of segregation of duties and issues with inventory management, attributed to limited resources[202](index=202&type=chunk) - The company plans to remediate the material weakness by engaging a third party to conduct a full assessment of controls and procedures once resources become available[204](index=204&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=ITEM%201%2E%20LEGAL%20PROCEEDINGS) The company is not currently a party to any legal proceedings that would materially impact its business or financial condition - The company is not currently involved in any material pending legal proceedings[207](index=207&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A%2E%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There have been no material changes to the company's risk factors from those set forth in its Annual Report on Form 10-K filed on March 31, 2025[209](index=209&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=ITEM%202%2E%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In March 2025, the company issued 12,500 restricted shares for professional fees under a Securities Act exemption - On March 20, 2025, the Company issued **12,500 restricted shares valued at $36,625** for professional fees, outside of its 2022 Equity Plan, pursuant to Section 4(a)(2) of the Securities Act[210](index=210&type=chunk) [Defaults Upon Senior Securities](index=40&type=section&id=ITEM%203%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon its senior securities during the period - None[211](index=211&type=chunk) [Mine Safety Disclosures](index=40&type=section&id=ITEM%204%2E%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - Not applicable[212](index=212&type=chunk) [Other Information](index=40&type=section&id=ITEM%205%2E%20OTHER%20INFORMATION) No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[213](index=213&type=chunk) [Exhibits](index=40&type=section&id=ITEM%206%2E%20EXHIBITS) Lists all filed exhibits, including documents for the May 2025 private offering and Sarbanes-Oxley certifications - The report includes several exhibits, notably documents related to the **May 9, 2025, private offering** (Series C Preferred Stock, Warrants, Purchase Agreement) and Sarbanes-Oxley certifications[214](index=214&type=chunk) [Signatures](index=41&type=section&id=SIGNATURES) The report was duly authorized and signed on May 15, 2025, by the CEO and CFO - The report was signed on May 15, 2025, by Daniyel Erdberg (CEO) and Theresa Carlise (CFO)[217](index=217&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ______________to _______________. Commission File Number 001-42261 SAFE PRO GROUP INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | |--------------------------------- ...

[Form 8-K Current Report (November 14, 2024)](index=1&type=section&id=Form%208-K%20Current%20Report) This report details Safe Pro Group Inc.'s third-quarter 2024 financial results and associated exhibits, filed on November 14, 2024 [Results of Operations and Financial Condition](index=1&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition.) Safe Pro Group Inc. announced its Q3 2024 financial and operational results via a press release, furnished but not filed under Section 18 of the Exchange Act - Safe Pro Group Inc. reported its third-quarter 2024 financial and operating results via a press release on November 14, 2024[2](index=2&type=chunk) - The earnings release, Exhibit 99.1, is incorporated by reference into the Form 8-K[2](index=2&type=chunk) - Information furnished in this item is not considered "filed" under Section 18 of the Exchange Act, limiting liability for misleading statements[3](index=3&type=chunk) [Financial Statements and Exhibits](index=2&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits.) This section details the exhibits accompanying the Form 8-K filing, primarily the Q3 2024 earnings release Exhibit List | Exhibit Number | Exhibit Description | | :--- | :--- | | 99.1 | Earnings Release issued by Safe Pro Group Inc., dated November 14, 2024 | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | [Signatures](index=3&type=section&id=SIGNATURES) The report is officially signed by Daniyel Erdberg, Chief Executive Officer of Safe Pro Group Inc., on November 14, 2024 - The Form 8-K was duly authorized and signed by Daniyel Erdberg, Chief Executive Officer, on November 14, 2024[4](index=4&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Delaware 87-4227079 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.0001 SPAI The Nasdaq Stock Market Inc. FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR ☐ TRANSITION REPORT UNDER SECTIO ...

[Form 8-K: Current Report](index=1&type=section&id=Form%208-K%3A%20Current%20Report) This Form 8-K reports significant events, including the company's Q2 2024 financial results and related exhibits [Item 2.02. Results of Operations and Financial Condition](index=1&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) Safe Pro Group Inc. reported its Q2 2024 financial and operating results via a press release furnished under the Securities Exchange Act - Safe Pro Group Inc. issued a press release on September 26, 2024, to report its financial and operating results for the second quarter of 2024[2](index=2&type=chunk) - The Earnings Release is attached as Exhibit 99.1 to the Form 8-K and is incorporated by reference[2](index=2&type=chunk) - The information provided under this item is not considered "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, meaning it has reduced legal liability compared to other filed information[3](index=3&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=2&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section details the exhibits accompanying the Form 8-K filing, including the Q2 2024 Earnings Release Exhibits to Form 8-K | Exhibit Number | Exhibit Description | | :--- | :--- | | 99.1 | Earnings Release issued by Safe Pro Group Inc., dated September 26, 2024 | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |