AgEagle(UAVS) - 2024 Q4 - Annual Report

Company Transition and Acquisitions - AgEagle has transitioned from manufacturing fixed-wing farm drones to offering a full-stack drone solution, culminating in the acquisition of three market-leading companies in 2021[17]. - AgEagle has integrated its acquisitions into a single global company focused on enhancing autonomous flight performance[17]. - The company acquired MicaSense, Measure Global, and senseFly for a total of $90 million, enhancing its product offerings and market position[55][56][57][58]. Product Development and Innovations - The eBee line of professional drones has logged over 500,000 flight hours and more than one million successful missions over the past decade[26]. - The eBee TAC was the first drone approved for the U.S. Department of Defense's Blue UAS Cleared List, allowing immediate procurement without a waiver[26]. - The eBee X has achieved BVLOS operations permission in Brazil and has been approved for OOP and BVLOS operations in Canada[27]. - The eBee VISION, launched in December 2022, has been successfully tested by European Armed Forces and is now in commercial production[29]. - The Altum-PT sensor, launched in early 2022, offers twice the spatial resolution of its predecessor, enabling deeper analytical capabilities and broader applications in agriculture and land management[34]. - The RedEdge-P sensor, also launched in early 2022, provides three times the capture speed and twice the spatial resolution of the RedEdge-MX, enhancing data collection efficiency for agricultural and forestry applications[39]. - AgEagle's eBee X series drones are the first in their class to comply with Category 3 of the FAA's Operations of Small Uncrewed Aerial Systems Over People rules, facilitating broader commercial applications[48]. - The new RedEdge-P™ dual high-resolution drone sensor was released in May 2023, enhancing aerial imaging capabilities with a coastal blue band for vegetation analysis[190]. Financial Performance - In 2024, total revenue was $13,392,777, a decrease of approximately 2.5% from $13,741,398 in 2023[52]. - Drone segment revenue increased to $6,410,305 in 2024 from $6,197,049 in 2023, reflecting a growth of about 3.4%[52]. - Sensor segment revenue decreased to $6,663,196 in 2024 from $7,100,419 in 2023, representing a decline of approximately 6.2%[52]. - Software-as-a-Service (SaaS) revenue fell to $319,276 in 2024 from $443,930 in 2023, a decrease of about 28.1%[52]. - The company recorded a goodwill impairment charge of $2.9 million in 2024 and $15.8 million in 2023, indicating challenges in its Sensor and SaaS reporting units[205][208]. - As of December 31, 2024, the company had an accumulated deficit of approximately $218.4 million, with net losses of approximately $35.0 million and $42.4 million for the years ended December 31, 2024 and 2023, respectively[73]. - The company incurred a net loss of approximately $35.0 million during the year ended December 31, 2024, and used cash in operating activities of approximately $6.6 million[92]. Market and Industry Insights - The global military drone market is projected to grow from USD 24.25 billion in 2025 to USD 56.69 billion by 2033, with a CAGR of 11.20%[33]. - The Drone Infrastructure Inspection Grant Act proposes $100 million in grants for using domestically manufactured drones for critical infrastructure projects[32]. - The company faces competition from larger firms with greater resources, which may lead to lower contract payments and adversely affect margins[98]. - Regulatory approvals for UAS use in the U.S. are uncertain, which may limit the company's ability to expand sales to commercial customers[114]. Research and Development - The company has made significant investments in research and development to create new drone technologies, although the exact level of capital expenditures remains uncertain[53]. - The company is focused on innovation and customer needs, establishing three Centers of Excellence to drive the development of autonomous robotic solutions[42]. - The company is exploring new product developments in the field of thermal imaging and sensor technology, as evidenced by its recent patent grants and applications[68]. Intellectual Property and Patents - The company holds several registered trademarks and patents for its proprietary technologies, indicating a strong focus on intellectual property protection[65]. - The company registered multiple patents across various countries, including the US, Canada, and Australia, with application numbers such as 62/160732 and 15/154719[67]. - The company has a strong focus on expanding its patent portfolio, with multiple applications filed in various jurisdictions, including Europe and Japan[68]. Operational Challenges - The company experienced supply delays in 2023 due to high interest rates and tighter borrowing requirements, which may continue into 2025[51]. - The company may face challenges in generating sufficient revenue to achieve sustainable profitability in rapidly evolving markets[94]. - The company has a history of operating losses and expects to incur significant additional operating expenses as it continues to invest in its business strategy[73]. - The company may need to delay, curtail, or eliminate one or more of its research and development programs or commercialization efforts if it is unable to raise additional capital[75]. Funding and Capital Structure - The company raised $3,000,000 in gross proceeds from the issuance of 3,000 shares of Series F convertible preferred stock on March 10, 2023[76]. - On June 5, 2023, the company raised gross sales proceeds of $4,180,000 from the issuance of 16,720 shares of common stock and warrants to purchase up to 25,080 shares of common stock[77]. - The company is evaluating strategies to obtain additional funding for future operations and restructuring to grow revenues and reduce expenses[92]. Cybersecurity and Risk Management - The company has established a cybersecurity risk management program to protect critical systems and information[147]. - The Audit Committee oversees the implementation of the cybersecurity risk management program and receives updates at least annually[153]. - Cybersecurity risks remain significant, with potential unauthorized access to sensitive data, which could lead to reputational damage and operational disruptions[118]. Shareholder and Stock Information - The company's Common Stock is quoted on the NYSE American under the symbol "UAVS," with significant price fluctuations observed in the past two fiscal years[166]. - The highest closing price for Common Stock in Q1 2024 was $2.25 pre-split, equating to $112.40 post 50:1 reverse stock split[167]. - As of March 31, 2025, the company had approximately 285 individual shareholders of record, with a greater number of beneficial owners[167].