AgEagle(UAVS) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements The financial statements for June 30, 2025, reflect improved financial position, net income, and revenue growth, alongside increased cash used in operations and going concern doubts Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows significant improvement, with increased assets, reduced liabilities, and a shift from stockholders' deficit to equity Condensed Consolidated Balance Sheet Highlights (in $) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | 14,096,172 | 10,947,505 | | Total Assets | 23,182,410 | 20,581,554 | | Total Current Liabilities | 4,990,894 | 7,886,891 | | Total Liabilities | 6,901,753 | 26,323,513 | | Warrant Liabilities | 128,000 | 16,400,000 | | Total Stockholders' Equity (Deficit) | 16,280,657 | (5,741,959) | Condensed Consolidated Statements of Operations For the six months ended June 30, 2025, the company achieved net income of $5.8 million, driven by a non-cash gain on warrant liabilities, alongside revenue and gross profit growth Statement of Operations Summary (Six Months Ended June 30) | Metric | 2025 (unaudited) | 2024 (unaudited) | | :--- | :--- | :--- | | Revenues | $7,846,970 | $7,286,985 | | Gross Profit | $4,473,695 | $3,508,997 | | Loss from Operations | ($3,070,172) | ($4,934,356) | | Gain on change in fair value of warrant liabilities | $8,506,000 | $0 | | Net Income (Loss) | $5,779,663 | ($9,245,295) | | Net Income (Loss) Attributable to Common Stockholders | $925,832 | ($14,613,733) | | Net Income (Loss) per Share - Basic | $0.07 | ($71.01) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Stockholders' equity shifted from a deficit to a surplus of $16.3 million by June 30, 2025, driven by net income, preferred stock issuance, and warrant reclassification - The company transitioned from a stockholders' deficit of $(5,741,959) at the end of 2024 to a positive stockholders' equity of $16,280,657 as of June 30, 2025[12] - Key financing activities in the first six months of 2025 included issuing $4.5 million in Series F Preferred Stock, receiving $2.1 million from the exercise of Series B Warrants, and converting $1.4 million of a convertible note into common stock[12] - A significant non-cash event was the reclassification of amended Series B warrants from liability to stockholders' equity, adding $7.77 million to additional paid-in capital[12] Condensed Consolidated Statements of Cash Flows Cash flows for the six months ended June 30, 2025, show increased cash used in operations, offset by significant cash provided by financing activities, leading to a net cash increase Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 (unaudited) | 2024 (unaudited) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($4,039,685) | ($2,983,430) | | Net Cash Used in Investing Activities | ($23,882) | ($92,995) | | Net Cash Provided by Financing Activities | $5,945,746 | $3,289,258 | | Net Change in Cash | $1,888,588 | $158,184 | | Cash at End of Period | $5,502,584 | $977,208 | Notes to Condensed Consolidated Financial Statements The notes detail business operations, accounting policies, and significant financing events, including a going concern warning and segment reporting for Drones and Sensors - The company designs and delivers drones and sensors for various industries including energy, infrastructure, agriculture, and government[19] - Management has expressed substantial doubt about the Company's ability to continue as a going concern, as it will require additional liquidity to meet its financial obligations for the next 12 months[28] - The company operates in two primary segments: Drones and Sensors; the SaaS segment ceased operations in 2024[126] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses business, growth strategies, and financial results, noting revenue growth, a shift to net income, but also a working capital deficit and going concern doubts - The company's growth strategy focuses on leveraging its proprietary drone solutions, delivering new innovations, fostering an entrepreneurial culture, and pursuing strategic acquisitions[151][153] - Competitive strengths include proprietary technologies, in-house manufacturing, a global reseller network, and numerous regulatory approvals and certifications, such as the GSA MAS Contract and EASA design verifications[152][154][155] - As of June 30, 2025, the company does not have sufficient cash to meet its financial obligations for the next twelve months, leading to substantial doubt about its ability to continue as a going concern[179][180] Results of Operations For the first six months of 2025, revenues increased by 7.7%, gross profit by 27.5%, and the company achieved a net income of $5.8 million, largely due to a non-cash gain Revenue Comparison (Six Months Ended June 30) | Period | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $7,846,970 | $7,286,985 | +7.7% | Gross Profit Comparison (Six Months Ended June 30) | Period | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gross Profit | $4,473,695 | $3,508,997 | +27.5% | Operating Expense Comparison (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | General & Administrative | $4,506,980 | $5,041,763 | -10.6% | | Research & Development | $1,547,401 | $2,212,236 | -30.1% | | Sales & Marketing | $1,489,486 | $1,189,354 | +25.2% | Cash Flows Cash flows for the six months ended June 30, 2025, show increased cash used in operations, offset by a significant rise in cash provided by financing activities - Cash used in operations increased by 35.4% YoY for the six months ended June 30, 2025, primarily due to a reduction in outstanding accounts payable[175] - Cash provided by financing activities increased by 80.8% YoY, mainly due to higher net proceeds from the exercise of Series B warrants and the issuance of Series F preferred stock[177][178] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, AgEagle is exempt from providing quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company[182] Item 4. Controls and Procedures The CEO and CFO concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[183] - No material changes were made to the company's internal control over financial reporting during the six months ended June 30, 2025[184] PART II OTHER INFORMATION Item 1. Legal Proceedings The company reports no legal proceedings during the period - There are no legal proceedings to report[186] Item 1A. Risk Factors As a smaller reporting company, AgEagle is exempt from providing risk factor disclosures in this report - The company is exempt from providing risk factor disclosures in this report as it is a smaller reporting company[187] Item 2. Recent Sales of Unregistered Equity Securities and Use of Proceeds The company reports no recent sales of unregistered equity securities - There were no recent sales of unregistered equity securities to report[188] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL data - The report includes a list of exhibits, such as corporate governance documents, certifications by the CEO and CFO, and interactive data files (XBRL)[192] Signatures Signatures of Officers The report is signed and authorized by the Chief Executive Officer and Chief Financial Officer on August 14, 2025 - The Form 10-Q was signed on August 14, 2025, by William Irby (Chief Executive Officer) and Alison Burgett (Chief Financial Officer)[195][196]