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What changed in AgEagle Aerial Systems Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AgEagle Aerial Systems Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+290 added−229 removedSource: 10-K (2024-04-01) vs 10-K (2023-04-04)

Top changes in AgEagle Aerial Systems Inc.'s 2023 10-K

290 paragraphs added · 229 removed · 167 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

54 edited+30 added−8 removed128 unchanged
Biggest changeOn June 21, 2022, the Company announced that the eBee X was the first drone in its class to receive design verification essential for BVLOS and OOP from the European Union Aviation Safety Agency, enabling drone operations to seek Specific Operations Risk Assessment (“SORA”) authorization to fly BVLOS and OOP with eBee X in 27 European Union member states, as well as Iceland, Lichtenstein, Norway and Switzerland.
Biggest changeOn June 21, 2022, the Company announced that the eBee X was the first drone in its class to receive design verification essential for BVLOS and OOP from the European Union Aviation Safety Agency, enabling drone operations to seek Specific Operations Risk Assessment (“SORA”) authorization to fly BVLOS and OOP with eBee X in 27 European Union member states, as well as Iceland, Lichtenstein, Norway and Switzerland. 7 In October 2022, the eBee X series of fixed wing unmanned aircraft systems, including the eBee X , eBee Geo and eBee TAC , were the first and only drones on the market to comply with Category 3 of the Operations of Small Unmanned Aircraft Systems Over People rules published in the Federal Registry by the FAA in March 2021.
On January 27, 2021 (“MicaSense Acquisition Date”), we entered into a stock purchase agreement (the "MicaSense Purchase Agreement”) with Parrot Drones S.A.S. and Justin B. McAllister (the "MicaSense Sellers”) pursuant to which the Company acquired 100% of the issued and outstanding capital stock of MicaSense, Inc. from the MicaSense Sellers (the “MicaSense Acquisition”).
On January 27, 2021 (“MicaSense Acquisition Date”), we entered into a stock purchase agreement (the “MicaSense Purchase Agreement”) with Parrot Drones S.A.S. and Justin B. McAllister (the “MicaSense Sellers”) pursuant to which the Company acquired 100% of the issued and outstanding capital stock of MicaSense, Inc. from the MicaSense Sellers (the “MicaSense Acquisition”).
Torres Declet”), in his capacity as representative of the sellers, and the sellers named in the Measure Purchase Agreement (the "Measure Sellers”) pursuant to which the Company acquired 100% of the issued and outstanding capital stock of Measure Global, Inc. (“Measure”) from the Measure Sellers (the “Measure Acquisition”).
Torres Declet”), in his capacity as representative of the sellers, and the sellers named in the Measure Purchase Agreement (the “Measure Sellers”) pursuant to which the Company acquired 100% of the issued and outstanding capital stock of Measure Global, Inc. (“Measure”) from the Measure Sellers (the “Measure Acquisition”).
With the aim of empowering AgEagle’s customers to readily extend their reach and human capability through adoption of scalable autonomous drone programs, Ground Control users can: · plan missions via Keyhole Markup Language (“KML”) files or build a grid or waypoint flight; check airspace for Low Altitude Authorization and Notification Capability (“LAANC”) authorization and confirm local weather conditions are favorable. · fly with GPS-aided manual control or automated grid and waypoint patterns, and push web-based flight plans to mobile devices for ground-based in-field control – all with a simple, easy-to-use flight interface. · capture raw data and live streaming field images with multispectral cameras, like AgEagle’s RedEdge-P and Altum-PT, and automatically convert into organized map indices and composites; or fly an RTK-enabled drone for improved post-flight processing. · process captured imagery into high-quality data products and photogrammetry, and create orthomosaics, digital surface models and contour maps; or upload ground control points (“GCPs”) with user’s maps for increased accuracy. · analyze drone data or view orthomosaics and other 2D data files on an interactive, account-wide map. · collaborate and support operations with detailed information about missions, including flight logs with screen shots, playbacks and incident flagging; and efficiently manage equipment and workflows with automatic usage tracking capabilities. · benefit from Ground Control ’s obsession to deliver industry-leading, customer-centric support and service.
With the aim of empowering AgEagle’s customers to readily extend their reach and human capability through adoption of scalable autonomous drone programs, Ground Control users can: ● plan missions via Keyhole Markup Language (“KML”) files or build a grid or waypoint flight; check airspace for Low Altitude Authorization and Notification Capability (“LAANC”) authorization and confirm local weather conditions are favorable. 10 ● fly with GPS-aided manual control or automated grid and waypoint patterns, and push web-based flight plans to mobile devices for ground-based in-field control – all with a simple, easy-to-use flight interface. ● capture raw data and live streaming field images with multispectral cameras, like AgEagle’s RedEdge-P and Altum-PT, and automatically convert into organized map indices and composites; or fly an RTK-enabled drone for improved post-flight processing. ● process captured imagery into high-quality data products and photogrammetry, and create orthomosaics, digital surface models and contour maps; or upload ground control points (“GCPs”) with user’s maps for increased accuracy. ● analyze drone data or view orthomosaics and other 2D data files on an interactive, account-wide map. ● collaborate and support operations with detailed information about missions, including flight logs with screen shots, playbacks and incident flagging; and efficiently manage equipment and workflows with automatic usage tracking capabilities. ● benefit from Ground Control ’s obsession to deliver industry-leading, customer-centric support and service.
Patent Date REFLECTANCE PANELS FEATURING MACHINE-READABLE SYMBOL AND METHODS OF USE US NP-Filed 62/160732 5/13/15 REFLECTANCE PANELS FEATURING MACHINE-READABLE SYMBOL AND METHODS OF USE US Granted 15/154719 5/13/16 20170352110 12/7/17 10467711 11/5/19 THERMAL CALIBRATION OF AN INFRARED IMAGE SENSOR US Granted 15/620627 6/12/17 20170358105 12/14/17 10518900 12/31/19 THERMAL CALIBRATION OF AN INFRARED IMAGE SENSOR US NP-Filed 62/350116 6/14/16 MULTI-SENSOR IRRADIANCE ESTIMATION PCT Converted US2017/066524 12/14/17 WO2018/136175 7/26/18 MULTI-SENSOR IRRADIANCE ESTIMATION US Granted 16/037952 7/17/18 20180343367 11/29/18 11290623 3/29/22 MULTI-SENSOR IRRADIANCE ESTIMATION China Published 201780083888.1 12/14/17 CN110291368A 9/27/19 MULTI-SENSOR IRRADIANCE ESTIMATION Europe Published 17892899.0 12/14/17 3571480 11/27/19 MULTI-SENSOR IRRADIANCE ESTIMATION Japan Published 2019-529189 12/14/17 2020-515809 5/28/20 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD Europe Published 19892185.0 12/3/19 3890466 10/13/21 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD China Allowed 201980079714.7 12/3/19 CN113226007A 8/6/21 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD US Published 17/299258 6/2/21 20220038644 2/3/22 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD PCT Converted US2019/064296 12/3/19 WO2020/117847 6/11/20 DIFFUSER FOR IRRADIANCE SENSOR US Published 17/720093 4/13/22 20220333979 10/20/22 DIFFUSER FOR LIGHT SENSOR US NP-Filed 63/174929 4/14/21 AERIAL IMAGING SYSTEM AND METHOD HAVING MULTISPECTRAL AND PANCHROMATIC SENSORS PCT Pending US2022/075938 9/2/22 AERIAL IMAGING SYSTEM AND METHOD HAVING MULTISPECTRAL AND PANCHROMATIC SENSORS US NP-Filed 63/240730 9/3/21 CAMERA US Granted 29/691510 5/16/19 D907099 1/5/21 CAMERA US Granted 29/691512 5/16/19 D907100 1/5/21 LIGHT SENSOR US Granted 29/691513 5/16/19 D906845 1/5/21 LENS HOUSING US Granted 29/691516 5/16/19 D907102 1/5/21 20 Table of Contents Where You Can Find Additional Information The Company is subject to the reporting requirements under the Exchange Act.
Patent Date REFLECTANCE PANELS FEATURING MACHINE-READABLE SYMBOL AND METHODS OF USE US NP-Filed 62/160732 5/13/15 REFLECTANCE PANELS FEATURING MACHINE-READABLE SYMBOL AND METHODS OF USE US Granted 15/154719 5/13/16 20170352110 12/7/17 10467711 11/5/19 THERMAL CALIBRATION OF AN INFRARED IMAGE SENSOR US Granted 15/620627 6/12/17 20170358105 12/14/17 10518900 12/31/19 THERMAL CALIBRATION OF AN INFRARED IMAGE SENSOR US NP-Filed 62/350116 6/14/16 MULTI-SENSOR IRRADIANCE ESTIMATION PCT Converted US2017/066524 12/14/17 WO2018/136175 7/26/18 MULTI-SENSOR IRRADIANCE ESTIMATION US Granted 16/037952 7/17/18 20180343367 11/29/18 11290623 3/29/22 MULTI-SENSOR IRRADIANCE ESTIMATION China Published 201780083888.1 12/14/17 CN110291368A 9/27/19 MULTI-SENSOR IRRADIANCE ESTIMATION Europe Published 17892899.0 12/14/17 3571480 11/27/19 MULTI-SENSOR IRRADIANCE ESTIMATION Japan Published 2019-529189 12/14/17 2020-515809 5/28/20 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD Europe Published 19892185.0 12/3/19 3890466 10/13/21 22 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD China Allowed 201980079714.7 12/3/19 CN113226007A 8/6/21 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD US Published 17 /299258 6/2/21 20220038644 2/3/22 IMAGE SENSOR AND THERMAL CAMERA DEVICE, SYSTEM AND METHOD PCT Converted US2019/064296 12/3/19 WO2020/117847 6/11/20 DIFFUSER FOR IRRADIANCE SENSOR US Published 17 /720093 4/13/22 20220333979 10/20/22 DIFFUSER FOR LIGHT SENSOR US NP-Filed 63 /174929 4/14/21 AERIAL IMAGING SYSTEM AND METHOD HAVING MULTISPECTRAL AND PANCHROMATIC SENSORS PCT Pending US2022/075938 9/2/22 AERIAL IMAGING SYSTEM AND METHOD HAVING MULTISPECTRAL AND PANCHROMATIC SENSORS US NP-Filed 63/240730 9/3/21 CAMERA US Granted 29/691510 5/16/19 D907099 1/5/21 CAMERA US Granted 29/691512 5/16/19 D907100 1/5/21 LIGHT SENSOR US Granted 29/691513 5/16/19 D906845 1/5/21 LENS HOUSING US Granted 29/691516 5/16/19 D907102 1/5/21 Where You Can Find Additional Information The Company is subject to the reporting requirements under the Exchange Act.
Being the first company to receive this DVR from EASA for M2 mitigation is a milestone for AgEagle and our industry in the European Union and will be key to fueling growth of our international customer base. · Our global reseller network currently has more than 200 drone solutions providers in 75+ countries – By leveraging our relationships with the specialty retailers that comprise our global reseller network, AgEagle benefits from enhanced brand-building, lower customer acquisition costs and increased reach, revenues and geographic and vertical market penetration.
Being the first company to receive this DVR from EASA for M2 mitigation is a milestone for AgEagle and our industry in the European Union and will be key to fueling growth of our international customer base. 16 ● Our global reseller network currently has more than 200 drone solutions providers in 75+ countries – By leveraging our relationships with the specialty retailers that comprise our global reseller network, AgEagle benefits from enhanced brand-building, lower customer acquisition costs and increased reach, revenues and geographic and vertical market penetration.
Safe, ultra-light and easy to use, these autonomous drones are utilized by thousands of customers around the world in agriculture, government/defense, engineering, and construction, among other industry verticals, to collect actionable aerial data intelligence. 2022 Integration Activities In 2022, the Company built an enterprise architecture designed to seamlessly integrate the acquisitions completed in 2021, thereby unifying four disparate brands under one global brand: AgEagle.
Safe, ultra-light and easy to use, these autonomous drones are utilized by thousands of customers around the world in agriculture, government/defense, engineering, and construction, among other industry verticals, to collect actionable aerial data intelligence. 5 2022 Integration Activities In 2022, the Company built an enterprise architecture designed to seamlessly integrate the acquisitions completed in 2021, thereby unifying four disparate brands under one global brand: AgEagle.
Tough Stump is actively engaged in training military ground forces based in the U.S. and in Central Europe on the use of eBee TAC for mid-range tactical mapping and reconnaissance missions. · Our eBee X series of fixed wing UAS, including the eBee X, eBee Geo and eBee TAC , are the first and only drones on the market to comply with Category 3 of the sUAS Over People rules published by the FAA .
Tough Stump is actively engaged in training military ground forces based in the U.S. and in Central Europe on the use of eBee TAC for mid-range tactical mapping and reconnaissance missions. ● Our eBee X series of fixed wing UAS, including the eBee X and eBee TAC , are the first and only drones on the market to comply with Category 3 of the sUAS Over People rules published by the FAA .
Registration Date Status (RE)DEFINING AGRICULTURAL DRONE SENSING US 88/521832 7/18/2019 6078193 6/16/2020 Registered ALTUM US 88/412439 5/2/2019 6823409 8/23/2022 Registered ALTUM-PT US 97/174411 12/15/2021 6918181 12/6/2022 Registered Canada 2198057 6/15/2022 Pending China 6/15/2022 1672211 6/15/2022 Registered European Union 6/15/2022 1672211 6/15/2022 Registered Japan 6/15/2022 Pending Mexico 6/15/2022 Pending Madrid Protocol A0124015 6/15/2022 1672211 6/15/2022 Registered MICASENSE US 86/659942 6/11/2015 4922111 3/22/2016 Registered REDEDGE US 88/749873 1/7/2020 6344611 5/11/2021 Registered REDEDGE-MX US 88/749880 1/7/2020 6359035 5/25/2021 Registered REDEDGE-P US 97/105307 11/2/2021 6917109 12/6/2022 Registered Canada 2189471 4/29/2022 Pending European Union 4/29/2022 1664529 4/29/2022 Registered Japan 4/29/2022 Pending Mexico 4/29/2022 Pending Madrid Protocol A0122452 4/29/2022 1664529 4/29/2022 Registered THE SENSOR THAT DOESN'T COMPROMISE US 88/521846 7/18/2019 6062427 5/26/2020 Registered AGEAGLE US 68/08302 7/20/2021 90837274 8/2/2022 Registered THE DRONE AGE US 88/946058 6/3/2020 Pending Canada 2068393 12/3/2020 Pending SENSEFLY, A KAMBILL COMPANY AND DESIGN India 12/16/2021 5249406 8/1/2022 Registered EBEE Australia 3/13/2013 1553690 3/13/2013 Registered Brazil 3/25/2013 840461313 1/12/2016 Registered Brazil 3/25/2013 840461305 3/6/2018 Registered Canada TMA932233 3/15/2013 1618501 3/21/2016 Registered China 3/13/2013 1156183 12/24/2013 Registered European Union 3/13/2013 1156183 3/13/2017 Registered Russia 3/13/2013 1156183 11/13/2014 Registered South Africa 2013/06574 3/14/2013 Pending South Africa 2013/06573 3/14/2013 Pending Switzerland 61158/2012 9/18/2012 638841 1/21/2013 Registered US 79128567 3/13/2013 4503673 4/1/2014 Registered WIPO 3/13/2013 7/8/5065 3/13/2013 Registered EXOM Australia 1/22/2015 1241930 1/22/2015 Registered Brazil 1/30/2015 908933975 Registered China 1/22/2015 1241930 1/22/2015 Registered European Union 1/22/2015 1241930 1/22/2015 Registered Russia 1/22/2015 1241930 1/22/2015 Registered South Africa 1/23/2015 2015/01806 Pending Switzerland 59684/2014 8/20/2014 663964 9/24/2014 Registered WIPO 1/22/2015 1241930 1/22/2015 Registered United Kingdom 1/22/2015 UK00801241930 2/11/2016 Registered SENSEFLY Australia 11/8/2011 1100123 11/8/2011 Registered Brazil 3/4/2016 910715637 4/17/2018 Registered Brazil 3/4/2016 910715580 4/17/2018 Registered Canada TMA1013798 2/25/2016 1769512 1/24/2019 Registered China 11/8/2011 1100123 11/8/2011 Registered European Union 11/8/2011 1100123 11/8/2011 Registered Russia 11/8/2011 1100123 11/8/2011 Registered Switzerland 62950/2010 5/8/2011 615741 5/26/2011 Registered US 79106546 11/8/2011 4166369 7/3/2012 Registered WIPO 1100123 11/8/2011 Registered ALBRIS Australia 9/9/2016 1814255 9/9/2016 Registered China 1322220 9/9/2016 Registered European Union 132220 9/9/2016 Registered Russia 132220 9/9/2016 Registered Switzerland 53355/2016 3/16/2016 685791 3/30/2016 Registered US 79197603 9/9/2016 5178765 4/11/2017 Registered WIPO 132220 9/9/2016 Registered EBEE TAC Switzerland 15306/2020 10/29/2020 754619 11/6/2020 Registered WIPO 4/21/2021 1615756 4/21/2021 Registered 19 Table of Contents Patents and Pending Patents Invention Name Country Code Status Application No.
Registration Date Status (RE)DEFINING AGRICULTURAL DRONE SENSING US 88 /521832 7/18/2019 6078193 6/16/2020 Registered ALTUM US 88 /412439 5/2/2019 6823409 8/23/2022 Registered US 97 /174411 12/15/2021 6918181 12/6/2022 Registered Canada 2198057 6/15/2022 Pending China 6/15/2022 1672211 6/15/2022 Registered ALTUM-PT European Union 6/15/2022 1672211 6/15/2022 Registered Japan 6/15/2022 Pending Mexico 6/15/2022 Pending Madrid Protocol A0124015 6/15/2022 1672211 6/15/2022 Registered MICASENSE US 86 /659942 6/11/2015 4922111 3/22/2016 Registered REDEDGE US 88 /749873 1/7/2020 6344611 5/11/2021 Registered REDEDGE-MX US 88 /749880 1/7/2020 6359035 5/25/2021 Registered US 97 /105307 11/2/2021 6917109 12/6/2022 Registered Canada 2189471 4/29/2022 Pending 20 REDEDGE-P European Union 4/29/2022 1664529 4/29/2022 Registered Japan 4/29/2022 Pending Mexico 4/29/2022 Pending Madrid Protocol A0122452 4/29/2022 1664529 4/29/2022 Registered THE SENSOR THAT DOESN’T COMPROMISE US 88 /521846 7/18/2019 6062427 5/26/2020 Registered AGEAGLE US 68 /08302 7/20/2021 90837274 8/2/2022 Registered THE DRONE AGE US 88 /946058 6/3/2020 Pending Canada 2068393 12/3/2020 Pending SENSEFLY, A KAMBILL COMPANY AND DESIGN India 12/16/2021 5249406 8/1/2022 Registered Australia 3/13/2013 1553690 3/13/2013 Registered Brazil 3/25/2013 840461313 1/12/2016 Registered Brazil 3/25/2013 840461305 3/6/2018 Registered Canada TMA932233 3/15/2013 1618501 3/21/2016 Registered China 3/13/2013 1156183 12/24/2013 Registered European Union 3/13/2013 1156183 3/13/2017 Registered EBEE Russia 3/13/2013 1156183 11/13/2014 Registered South Africa 2013/06574 3/14/2013 Pending South Africa 2013/06573 3/14/2013 Pending Switzerland 61158/2012 9/18/2012 638841 1/21/2013 Registered US 79128567 3/13/2013 4503673 4/1/2014 Registered WIPO 3/13/2013 7/8/5065 3/13/2013 Registered Australia 1/22/2015 1241930 1/22/2015 Registered Brazil 1/30/2015 908933975 Registered China 1/22/2015 1241930 1/22/2015 Registered European Union 1/22/2015 1241930 1/22/2015 Registered EXOM Russia 1/22/2015 1241930 1/22/2015 Registered South Africa 1/23/2015 2015/01806 Pending Switzerland 59684/2014 8/20/2014 663964 9/24/2014 Registered WIPO 1/22/2015 1241930 1/22/2015 Registered United Kingdom 1/22/2015 UK00801241930 2/11/2016 Registered Australia 11/8/2011 1100123 11/8/2011 Registered Brazil 3/4/2016 910715637 4/17/2018 Registered Brazil 3/4/2016 910715580 4/17/2018 Registered Canada TMA1013798 2/25/2016 1769512 1/24/2019 Registered China 11/8/2011 1100123 11/8/2011 Registered SENSEFLY European Union 11/8/2011 1100123 11/8/2011 Registered Russia 11/8/2011 1100123 11/8/2011 Registered Switzerland 62950/2010 5/8/2011 615741 5/26/2011 Registered US 79106546 11/8/2011 4166369 7/3/2012 Registered WIPO 1100123 11/8/2011 Registered Australia 9/9/2016 1814255 9/9/2016 Registered China 1322220 9/9/2016 Registered European Union 132220 9/9/2016 Registered ALBRIS Russia 132220 9/9/2016 Registered Switzerland 53355/2016 3/16/2016 685791 3/30/2016 Registered US 79197603 9/9/2016 5178765 4/11/2017 Registered WIPO 132220 9/9/2016 Registered EBEE TAC Switzerland 15306/2020 10/29/2020 754619 11/6/2020 Registered WIPO 4/21/2021 1615756 4/21/2021 Registered 21 Patents and Pending Patents Invention Name Country Code Status Application No.
AgEagle also offers a wide range of drone cameras to suit every mapping job, from land surveying and topographic mapping to urban planning, crop mapping, thermal mapping and more. · Aeria X – a compact drone photogrammetry sensor that offers the ideal blend of size, weight and DSLR-like image quality.
AgEagle also offers a wide range of drone cameras to suit every mapping job, from land surveying and topographic mapping to urban planning, crop mapping, thermal mapping and more. 9 ● Aeria X – a compact drone photogrammetry sensor that offers the ideal blend of size, weight and DSLR-like image quality.
Acquisition Date), AgEagle Aerial and the Company entered into a stock purchase agreement (the "senseFly Inc. Purchase Agreement”) with Parrot Inc. pursuant to which AgEagle Aerial agreed to acquire 100% of the issued and outstanding capital stock of senseFly Inc. from Parrot Inc.
Acquisition Date), AgEagle Aerial and the Company entered into a stock purchase agreement (the “senseFly Inc. Purchase Agreement”) with Parrot Inc. pursuant to which AgEagle Aerial agreed to acquire 100% of the issued and outstanding capital stock of senseFly Inc. from Parrot Inc.
We further believe it will improve the business applications made possible by our drone platform for a wide range of commercial enterprises which stand to benefit from adoption of drones in their businesses – particularly those in industries such as insurance for assessment of storm damage, telecommunications for network coverage mapping and energy for powerline and pipeline inspections, just to name a few. 14 Table of Contents · Our eBee X series of drones are the world’s first UAS in its class to receive design verification for BVLOS and OOP from European Union Aviation Safety Agency (“EASA”).
We further believe it will improve the business applications made possible by our drone platform for a wide range of commercial enterprises which stand to benefit from adoption of drones in their businesses – particularly those in industries such as insurance for assessment of storm damage, telecommunications for network coverage mapping and energy for powerline and pipeline inspections, just to name a few. ● Our eBee X series of drones are the world’s first UAS in its class to receive design verification for BVLOS and OOP from European Union Aviation Safety Agency (“EASA”).
In 2022, the Company successfully integrated all three acquired companies with AgEagle to form one global company focused on taking autonomous flight performance to a higher level. 4 Table of Contents Our core technological capabilities include robotics and robotics systems autonomy; advanced thermal and multispectral sensor design and development; embedded software and firmware; secure wireless digital communications and networks; lightweight airframes; small UAS (“sUAS”) design, integration and operations; power electronics and propulsion systems; controls and systems integration; fixed wing flight; flight management software; data capture and analytics; human-machine interface development and integrated mission solutions.
In 2022, the Company successfully integrated all three acquired companies with AgEagle to form one global company focused on taking autonomous flight performance to a higher level. 4 Our core technological capabilities include robotics and robotics systems autonomy; advanced thermal and multispectral sensor design and development; embedded software and firmware; secure wireless digital communications and networks; lightweight airframes; small UAS (“sUAS”) design, integration and operations; power electronics and propulsion systems; controls and systems integration; fixed wing flight; flight management software; data capture and analytics; human-machine interface development and integrated mission solutions.
Senate. 8 Table of Contents On the military/defense front, drone technologies are providing numerous tactical advantages to warfighters worldwide, including conducting surveillance and mapping missions; relaying crucial real-time information on enemy movements, locations and positions of strategic targets; and transporting valuable supplies and equipment to remote or far-forward areas, among other tactical capabilities.
Senate. 8 On the military/defense front, drone technologies are providing numerous tactical advantages to warfighters worldwide, including conducting surveillance and mapping missions; relaying crucial real-time information on enemy movements, locations and positions of strategic targets; and transporting valuable supplies and equipment to remote or far-forward areas, among other tactical capabilities.
Suppliers In 2022, we maintained strong relationships established with companies that provide many of the parts and services necessary to construct our advanced fixed-wing drones and sensors. As our Company grows, we expect to pursue additional supplier relationships from which we can source less costly and better supplies to stay ahead of the needs of the market.
Suppliers In 2023, we maintained strong relationships established with companies that provide many of the parts and services necessary to construct our advanced fixed-wing drones and sensors. As our Company grows, we expect to pursue additional supplier relationships from which we can source less costly and better supplies to stay ahead of the needs of the market.
Additional demonstrations with other military forces in the United States and NATO countries are being scheduled for the first quarter of 2023. Market Opportunity for UAVs Drones have transformed from being freelance videographer toys to mission critical inspection tools for enterprise businesses like construction, energy and agriculture, and for military/defense applications worldwide.
Additional demonstrations with other military forces in the United States and NATO countries are being scheduled for the first quarter of 2024. Market Opportunity for UAVs Drones have transformed from being freelance videographer toys to mission critical inspection tools for enterprise businesses like construction, energy and agriculture, and for military/defense applications worldwide.
On April 19, 2021 (the “Measure Acquisition Date”), the Company entered into a stock purchase agreement (the "Measure Purchase Agreement”) with Brandon Torres Declet (“Mr.
On April 19, 2021 (the “Measure Acquisition Date”), the Company entered into a stock purchase agreement (the “Measure Purchase Agreement”) with Brandon Torres Declet (“Mr.
Today, AgEagle’s multispectral sensors are distributed in over 75 countries worldwide and help customers use drone-based imagery to make better and more informed business decisions. Measure Global, Inc . In April 2021, AgEagle acquired Measure Global, Inc. ("Measure”), a company founded in 2020.
Today, AgEagle’s multispectral sensors are distributed in over 75 countries worldwide and help customers use drone-based imagery to make better and more informed business decisions. Measure Global, Inc . In April 2021, AgEagle acquired Measure Global, Inc. (“Measure”), a company founded in 2020.
Moreover, the number of use cases for drones has also grown as drone hardware has become more advanced, safe and reliable. Advanced aerial mapping, crop monitoring, publicly safety uses, disaster response and consumer drone deliveries have all become available as the commercial drone industry has matured.
Moreover, the number of use cases for drones has also grown as drone hardware has become more advanced, safer and more reliable. Advanced aerial mapping, crop monitoring, publicly safety uses, disaster response and consumer drone deliveries have all become available as the commercial drone industry has matured.
Becoming the first and only UAS approved for OOP and over moving vehicles in the U.S. is expected to have material impact on AgEagle’s growth and standing as a recognized leader in the industry in the years to come. 7 Table of Contents · eBee VISION – in December 2022, AgEagle announced its latest innovation in commercial and tactical drone technology with the unveiling of its new eBee VISION Intelligence, Surveillance and Reconnaissance (“ISR”) UAS .
Becoming the first and only UAS approved for OOP and over moving vehicles in the U.S. is expected to have material impact on AgEagle’s growth and standing as a recognized leader in the industry in the years to come. ● eBee VISION – in December 2022, AgEagle announced its latest innovation in commercial and tactical drone technology with the unveiling of its new eBee VISION Intelligence, Surveillance and Reconnaissance (“ISR”) UAS .
The SEC maintains an Internet website, www.sec.gov, which contains reports and information statements and other information regarding issuers.
The SEC maintains an Internet website, www.sec.gov, which contains reports and information statements and other information regarding issuers. 23
Connecting wirelessly to a user’s drone, to industry cloud solutions, to survey-grade base stations and to airspace and live weather data, eMotion is advanced, scalable drone software that anyone can use. 10 Table of Contents HempOverview As one of the agriculture industry’s leading pioneers of advanced aerial-image-based data collection and analytics solutions, AgEagle leveraged our expertise to champion the use of proven, advanced web- and map-based technologies as the means to streamline and ultimately standardize hemp cultivation in the United States.
Connecting wirelessly to a user’s drone, to industry cloud solutions, to survey-grade base stations and to airspace and live weather data, eMotion is advanced, scalable drone software that anyone can use. 11 HempOverview As one of the agriculture industry’s leading pioneers of advanced aerial-image-based data collection and analytics solutions, AgEagle leveraged our expertise to champion the use of proven, advanced web- and map-based technologies as the means to streamline and ultimately standardize hemp cultivation in the United States.
The aggregate purchase price for the shares of MicaSense was $23,000,000, less any debt, and subject to a customary working capital adjustment. MicaSense became a wholly-owned subsidiary of the Company as a result of the MicaSense Acquisition.
The aggregate purchase price for the shares of MicaSense was $23 million less any debt, and subject to a customary working capital adjustment. MicaSense became a wholly-owned subsidiary of the Company as a result of the MicaSense Acquisition.
We expect to accomplish this goal by first bringing three core values to life in our day-to-day operations and aligning them with our efforts to earn the trust and continued business of our customers and industry partners: 12 Table of Contents · Curiosity – this pushes us to find value where others aren’t looking.
We expect to accomplish this goal by first bringing three core values to life in our day-to-day operations and aligning them with our efforts to earn the trust and continued business of our customers and industry partners: ● Curiosity – this pushes us to find value where others aren’t looking.
Moreover, eMotion ’s built-in Flight Data Manager automatically handles the georeferencing and preparation of images requires for post-processing in software such as Pix4Dmapper .
Moreover, eMotion ’s built-in Flight Data Manager automatically handles the georeferencing and preparation of images required for post-processing in software such as Pix4Dmapper .
Former President Donald Trump issued an executive order just before leaving office that said the U.S. government would seek to prevent “the use of taxpayer dollars to procure UAS that present unacceptable risks and are manufactured by, or contain software or critical electronic components from, foreign adversaries, and to encourage the use of domestically produced UAS.” As a result, the General Services Administration works to ensure that only drones approved by the DoD’s Defense Innovation Unit are permitted under Multiple Award Schedule contracts.
Former President Donald Trump issued an executive order before leaving office stating that the U.S. government would seek to prevent “the use of taxpayer dollars to procure UAS that present unacceptable risks and are manufactured by, or contain software or critical electronic components from, foreign adversaries, and to encourage the use of domestically produced UAS.” As a result, the General Services Administration works to ensure that only drones approved by the Department of Defense’s Defense Innovation Unit are permitted under Multiple Award Schedule contracts.
Scheduled for global commercial release during the first half of 2023, the eBee VISION delivers high resolution, medium-range video imagery made possible by its 32x zoom and powerful thermal observation capabilities. Its sensor payloads are capable of detecting, tracking and geo-locating objects in both day and night conditions.
Scheduled for global commercial release during the first quarter of 2024, the eBee VISION delivers high resolution, medium-range video imagery made possible by its 32x zoom and powerful thermal observation capabilities. Its sensor payloads are capable of detecting, tracking and geo-locating objects in both day and night conditions.
In a July 2022 report published by Allied Market Research, the firm’s market analysts reported that the global drone software market was valued at $5.96 billion in 2021, and is now projected to reach $21.93 billion by 2031, growing at a CAGR of 14.5% from 2022 to 2031. 11 Table of Contents Market Opportunity for U.S.
In a July 2022 report published by Allied Market Research, the firm’s market analysts reported that the global drone software market was valued at $5.96 billion in 2021, and is now projected to reach $21.93 billion by 2031, growing at a CAGR of 14.5% from 2022 to 2031. 12 Market Opportunity for U.S.
It produces stunning image detail and clarity in virtually all light conditions, allowing users to map for more hours per day. 9 Table of Contents · Duet M – a high resolution RGB and multispectral mapping camera rig used to create geo-accurate multispectral maps and high resolution digital surface models quickly and easily.
It produces stunning image detail and clarity in virtually all light conditions, allowing users to map for more hours per day. ● Duet M – a high resolution RGB and multispectral mapping camera rig used to create geo-accurate multispectral maps and high resolution digital surface models quickly and easily.
ITEM 1. BUSINESS Overview AgEagle ™ Aerial Systems Inc. ("AgEagle” or the "Company”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones, sensors and software that solve important problems for our customers.
ITEM 1. BUSINESS Overview AgEagle ™ Aerial Systems Inc. (“AgEagle” or the “Company”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones, sensors and software that solve important problems for our customers.
Critical to the success of the integration and integral to the Company’s ability to stay disciplined, structurally organized and rooted in its core values was: 5 Table of Contents · implementation of a new enterprise resource planning (“ERP”) system; · collapse of all acquired websites and the creation and launch of one website, found at www.ageagle.com, showcasing the Company’s full suite of products and capabilities; · creation of an Intranet employee portal to support and promote enterprise-wide communication and connectivity; · consolidation of the Company’s business and manufacturing operations in the United States from multiple offices spread across the country in Kansas, North Carolina, Texas, Washington and Washington, D.C. to three centralized locations in Wichita, Kansas, Raleigh, North Carolina and Lausanne, Switzerland – an initiative which commenced in late 2022 and is expected to be completed in 2023; · commitment to customer-centric product development roadmaps designed to best leverage the right combination of process, tools, training and project management to effectively meet product enhancement and new product launch deadlines and achieve post-launch sales and marketing key performance indicators; and · shifts in the responsibilities of senior and mid-level management to optimize strengths and squarely align functional and cross-functional goals and objectives.
Critical to the success of the integration and integral to the Company’s ability to stay disciplined, structurally organized and rooted in its core values was: ● implementation of a new enterprise resource planning (“ERP”) system and ongoing optimization will be in process through 2024; ● collapse of all acquired websites and the creation and launch of one website, found at www.ageagle.com, showcasing the Company’s full suite of products and capabilities and was completed in 2023; ● creation of an Intranet employee portal to support and promote enterprise-wide communication and connectivity and was completed in 2023; ● consolidation of the Company’s business and manufacturing operations in the United States from multiple offices spread across the country in Kansas, North Carolina, Texas, Washington and Washington, D.C. to three centralized locations in Wichita, Kansas, Raleigh, North Carolina and Lausanne, Switzerland – an initiative which commenced in late 2022 and was completed in 2023; ● commitment to on-going customer-centric product development roadmaps designed to best leverage the right combination of process, tools, training and project management to effectively meet product enhancement and new product launch deadlines and achieve post-launch sales and marketing key performance indicators; and ● shifts in the responsibilities of senior and mid-level management to optimize strengths and squarely align functional and cross-functional goals and objectives, which we monitor continually as an ongoing initiative.
The aggregate purchase price for the shares of Measure is $45,000,000, less the amount of Measure’s debt and transaction expenses, and subject to a customary working capital adjustment. Measure became a wholly-owned subsidiary of the Company as a result of the Measure Acquisition. 17 Table of Contents On October 18, 2021 (the “senseFly S.A.
The aggregate purchase price for the shares of Measure is $45 million, less the amount of Measure’s debt and transaction expenses, and subject to a customary working capital adjustment. Measure became a wholly-owned subsidiary of the Company as a result of the Measure Acquisition. On October 18, 2021 (the “senseFly S.A.
The small size, lightweight, ease-of-use, autonomy, range and sensor capabilities make it a promising drone for tactical ISR missions.” As a result of the tests, European military units have ordered multiple eBee VISION prototypes, with delivery expected in early 2023. Commercial production of eBee VISION is planned for worldwide availability in mid-2023 worldwide.
The small size, lightweight, ease-of-use, autonomy, range and sensor capabilities make it a promising drone for tactical ISR missions.” As a result of the tests, European military units have ordered multiple eBee VISION prototypes, with delivery having occurred in late 2023. Commercial production of eBee VISION is planned for worldwide availability in early-2024 worldwide.
As of March 15, 2023, our trademark portfolio includes 63 registered and/or pending in various countries and 21 patents in various stages of the patent granting process.
As of December 31, 2023, our trademark portfolio includes 63 registered and/or pending in various countries and 21 patents in various stages of the patent granting process.
National Airspace System went into effect, providing safety rules for small UAS (under 55 pounds) conducting non-recreational operations. These rules limit flights to visual-line-of-sight daylight operation, unless the UAS has anti-collision lights in which case twilight operation is permitted.
In August 2016, the FAA’s final rules for routine use of certain small UAS in the U.S. National Airspace System went into effect, providing safety rules for small UAS (under 55 pounds) conducting non-recreational operations. These rules limit flights to visual-line-of-sight daylight operation, unless the UAS has anti-collision lights in which case twilight operation is permitted.
We also consider our UAV and sensor manufacturing processes to be trade secrets and have non-disclosure agreements with current employees and business partners to protect those and other trade secrets held by the Company. Risks related to the protection and exploitation of IP rights are set forth in “Item 1A—Risk Factors”. 18 Table of Contents Trademarks Mark Country Application No.
We also consider our UAV and sensor manufacturing processes to be trade secrets and have non-disclosure agreements with current employees and business partners to protect those and other trade secrets held by the Company. Risks related to the protection and exploitation of IP rights are set forth in “Risk Factors.” Trademarks Mark Country Application No. Filing Date Registration No.
Key Growth Strategies We intend to materially grow our business by leveraging our proprietary, best-in-class, full-stack drone solutions, industry influence and deep pool of talent with specialized expertise in robotics, automation, custom manufacturing and data science to achieve greater penetration of the global UAS industry – with near-term emphasis on capturing larger market share of the agriculture, energy/utilities, infrastructure and government/military verticals.
The QMS was developed over a two-year period, outlining a framework of policies, processes and procedures to help achieve the Company’s high-performance objectives. 13 Key Growth Strategies We intend to materially grow our business by leveraging our proprietary, best-in-class, full-stack drone solutions, industry influence and deep pool of talent with specialized expertise in robotics, automation, custom manufacturing and data science to achieve greater penetration of the global UAS industry – with near-term emphasis on capturing larger market share of the agriculture, energy/utilities, infrastructure and government/military verticals.
For this reason, we aspire to be an employer that is known for cultivating a positive and welcoming work environment and one that fosters growth, provides a safe place to work, supports diversity and embraces inclusion.
We acknowledge that our employees are the Company’s most valued asset and the driving force behind our success. For this reason, we aspire to be an employer that is known for cultivating a positive and welcoming work environment and one that fosters growth, provides a safe place to work, supports diversity and embraces inclusion.
This rule permits routine operations of small unmanned aircraft over people, moving vehicles and at night under certain conditions, provided that the operation meets the requirements of one of four operational categories. 15 Table of Contents On October 27, 2022, AgEagle announced that the Company’s eBee X series of fixed wing UAS were the first and only drones on the market at that time to comply with Category 3 (as defined below) of the Operations of Small Unmanned Aerial Systems Over People rules published by the FAA.
On October 27, 2022, AgEagle announced that the Company’s eBee X series of fixed wing UAS were the first and only drones on the market at that time to comply with Category 3 (as defined below) of the Operations of Small Unmanned Aerial Systems Over People rules published by the FAA.
We may continue to experience potential supply chain disruptions in 2023 for the same reason. 16 Table of Contents Operating Segment Revenues The table below reflects our revenue by operating segment for the years indicated below: For the Year Ended December 31, Type 2022 2021 Drones $ 9,840,321 $ 2,428,858 Sensors 8,655,434 6,793,727 Software-as-a-Service (SaaS) 598,670 538,367 Total $ 19,094,425 $ 9,760,952 Research and Development Research and development activities are core components of our business, and we follow a disciplined approach to investing our resources to create new drone technologies and solutions.
Operating Segment Revenues The table below reflects our revenue by operating segment for the years indicated below: For the Year Ended December 31, Type 2023 2022 Drones $ 6,197,049 $ 9,840,321 Sensors 7,100,419 8,655,434 Software-as-a-Service (SaaS) 443,930 598,670 Total $ 13,741,398 $ 19,094,425 18 Research and Development Research and development activities are core components of our business, and we follow a disciplined approach to investing our resources to create new drone technologies and solutions.
For more information on state and tribal nation plan submissions, please visit https://www.ams.usda.gov/rules-regulations/hemp/state-and-tribal-plan-review. As of January 15, 2023, 42 states, two U.S. territories and 53 tribal nations have had their hemp production plans approved by the USDA; and eight states and seven tribal nations require hemp growers to seek a USDA Hemp Producer License in order to operate.
For more information on state and tribal nation plan submissions, please visit https://www.ams.usda.gov/rules-regulations/hemp/state-and-tribal-plan-review. As of December 31, 2023 all 50 states, 3 U.S. territories and 63 tribal nations have had their hemp production plans approved by the USDA.
("MicaSense”), a company that has been at the forefront of advanced drone sensor development since its founding in 2014.
Strategic Acquisitions in 2021(the “2021 Acquisitions”) MicaSense ™ , Inc. In January 2021, AgEagle acquired MicaSense™, Inc. (“MicaSense”), a company that has been at the forefront of advanced drone sensor development since its founding in 2014.
Combined with the Company’s purpose-built Sensor Optimized for Drone Applications (“S.O.D.A”) , users are assured of sharp, accurate mapping outputs – even in the harshest conditions. 6 Table of Contents · eBee TAC ™ – Designed specifically for government and military mapping and mission planning applications, the eBee TAC operates in disconnected environments, providing a higher accuracy mobile solution to map and locally share aerial imagery data on rapidly changing field conditions to analyze and provide near real-time situational awareness to ground forces.
Enhancements were made to the eBee X to use as a replacement for this product. ● eBee TAC ™ – Designed specifically for government and military mapping and mission planning applications, the eBee TAC operates in disconnected environments, providing a higher accuracy mobile solution to map and locally share aerial imagery data on rapidly changing field conditions to analyze and provide near real-time situational awareness to ground forces.
For example, certain aspects of our U.S. business are subject to regulation by the Federal Aviation Administration (“FAA”), which regulates airspace for all air vehicles in the U.S. National Airspace System. In August 2016, the FAA’s final rules for routine use of certain small UAS in the U.S.
Government Regulation UAV Regulation AgEagle is subject to industry-specific regulations due to the nature of the products we sell to our customers. For example, certain aspects of our U.S. business are subject to regulation by the Federal Aviation Administration (“FAA”), which regulates airspace for all air vehicles in the U.S. National Airspace System.
An available endurance battery increases flight times up to 55 minutes — allowing the drone to cover more than 160 hectares (395 acres) in a single flight and save precious time and money when compared with conventional crop scouting. · eBee Geo – an affordable fixed-wing mapping drone designed to meet the highest demands of surveyors, civil engineers and GIS professionals worldwide.
An available endurance battery increases flight times up to 55 minutes — allowing the drone to cover more than 160 hectares (395 acres) in a single flight and save precious time and money when compared with conventional crop scouting. It was announced on February 14, 2024 that the eBee Ag was placed on end-of-life and unavailable for sale.
We have established three Centers of Excellence that our leadership has challenged to cross-pollinate ideas, industry insights and interdisciplinary skillsets to generate intelligent autonomous solutions that efficiently leverage our expertise in robotics, automation and manufacturing to solve problems for our customers, irrespective of the industry sector in which they may operate. · We offer market-tested drones, sensors and software solutions that have earned the longstanding trust and fidelity of customers worldwide – through successful execution of our acquisition integration strategy in 2022, AgEagle is now delivering a unified line of industry trusted drones, sensors and software that have been vigorously tested and consistently proven across multiple industry verticals and use cases.
We have established three Centers of Excellence that our leadership has challenged to cross-pollinate ideas, industry insights and interdisciplinary skillsets to generate intelligent autonomous solutions that efficiently leverage our expertise in robotics, automation and manufacturing to solve problems for our customers, irrespective of the industry sector in which they may operate.
We believe that by investing in complementary acquisitions, we can accelerate our revenue growth and deliver a broader array of innovative autonomous flight systems and solutions that address specialized market needs within our current target markets and in emerging markets that can benefit from innovations in artificial intelligence-enabled robotics and data capture and analytics.
We believe that by investing in complementary acquisitions, we can accelerate our revenue growth and deliver a broader array of innovative autonomous flight systems and solutions that address specialized market needs within our current target markets and in emerging markets that can benefit from innovations in artificial intelligence-enabled robotics and data capture and analytics. 14 Competitive Strengths AgEagle believes the following attributes and capabilities provide us with long-term competitive advantages: ● Proprietary technologies, in-house capabilities and industry experience – We believe our decade of experience in commercial UAS design and engineering; in-house manufacturing, assembly and testing capabilities; and advanced technology development skillset serve to differentiate AgEagle in the marketplace.
With eBee Geo, a user can map up to 160 ha (395 ac) at 120 m (400 ft) with a maximum flight time of 45 minutes. eBee Geo is also available with RTK positioning.
With eBee Geo, a user can map up to 160 ha (395 ac) at 120 m (400 ft) with a maximum flight time of 45 minutes. eBee Geo is also available with RTK positioning. Combined with the Company’s purpose-built Sensor Optimized for Drone Applications (“S.O.D.A”) , users are assured of sharp, accurate mapping outputs – even in the harshest conditions.
Domestic Hemp Production and Prevailing Regulatory Changes With the passing of the 2018 Farm Bill in December 2018, industrial hemp is now recognized as an agricultural commodity, such as corn, wheat, or soybeans.
Our non-U.S. operations are subject to the laws and regulations of foreign jurisdictions, which may include regulations that are more stringent than those imposed by the U.S. government on our U.S. operations. 17 Domestic Hemp Production and Prevailing Regulatory Changes With the passing of the 2018 Farm Bill in December 2018, industrial hemp is now recognized as an agricultural commodity, such as corn, wheat, or soybeans.
The aggregate purchase price for the shares of senseFly Inc. is $2,000,000, less the amount of senseFly Inc.’s debt and subject to a customary working capital adjustment. senseFly Inc. became a wholly-owned subsidiary of the Company as a result.
The aggregate purchase price for the shares of senseFly Inc. is $2 million , less the amount of senseFly Inc.’s debt and subject to a customary working capital adjustment. senseFly Inc. became a wholly-owned subsidiary of the Company as a result. 19 Our Headquarters Our principal executive offices are located at 8201 E. 34 th Street North, Suite 1307, Wichita, Kansas 67226 and our telephone number is 620-325-6363.
The certification was achieved following an extensive audit across AgEagle’s drone operations, led by the Company’s dedicated in-house quality management team. The QMS was developed over a two-year period, outlining a framework of policies, processes and procedures to help achieve the Company’s high-performance objectives.
The certification was achieved following an extensive audit across AgEagle’s drone operations, led by the Company’s dedicated in-house quality management team.
The Company is currently headquartered in Wichita, Kansas, where we house our sensor manufacturing operations, and we operate our business and drone manufacturing in Raleigh, North Carolina and Lausanne, Switzerland which supports our international business activities. Strategic Acquisitions in 2021(the “2021 Acquisitions”) MicaSense ™ , Inc. In January 2021, AgEagle acquired MicaSense™, Inc.
Ensuring the security of data transmission and control systems has been and continue to be critical in preventing unauthorized access and misuse. The Company is currently headquartered in Wichita, Kansas, where we house our sensor manufacturing operations, and we operate our business and drone manufacturing in Raleigh, North Carolina and Lausanne, Switzerland which supports our international business activities.
We have included our website address in this Annual Report solely as an inactive textual reference. Human Capital Resources As of March 15, 2023, we employed 92 full-time employees and one part-time employee. We acknowledge that our employees are the Company’s most valued asset and the driving force behind our success.
Our website address is www.ageagle.com. The information contained on, or that can be accessed through, our website is not a part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference. Human Capital Resources As of March 31, 2024, we employed 64 full-time employees and 2 part-time employees.
On the same day, the final rule for operation of small UAS over people also went into effect.
On the same day, the final rule for operation of small UAS over people also went into effect. This rule permits routine operations of small unmanned aircraft over people, moving vehicles and at night under certain conditions, provided that the operation meets the requirements of one of four operational categories.
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In October 2022, the eBee X series of fixed wing unmanned aircraft systems, including the eBee X , eBee Geo and eBee TAC , were the first and only drones on the market to comply with Category 3 of the Operations of Small Unmanned Aircraft Systems Over People rules published in the Federal Registry by the FAA in March 2021.
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As the Company pursues its strategy to pursue new initiatives that improve its operations and cost structure, the Company is also expanding and improving its information technologies, resulting in a larger technological presence, utilization of “cloud” computing services, and corresponding exposure to cybersecurity risk.
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Competitive Strengths AgEagle believes the following attributes and capabilities provide us with long-term competitive advantages: 13 Table of Contents · Proprietary technologies, in-house capabilities and industry experience – We believe our decade of experience in commercial UAS design and engineering; in-house manufacturing, assembly and testing capabilities; and advanced technology development skillset serve to differentiate AgEagle in the marketplace.
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Certain technologies, such as use of autonomous vehicles, remote-controlled equipment, virtual reality, automation and artificial intelligence, present new and significant cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity risks associated with new initiatives, we may become increasingly vulnerable to such risks.
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In November 2022, we partnered with government contractor W.S. Darley & Co. (“Darley”) to expand the market reach of AgEagle’s high performance fixed wing drones and sensors to the U.S. first responder and tactical defense markets.
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As such, the Company is developing and securing technology that aims to secure against hacking and malicious attacks. As the software that drives our drones and cameras become more autonomous and interconnected, they become potential targets for cyber threats.
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Distinguished as one of the nation’s longest standing government contracting organizations, Darley is expected to become a key contributor to AgEagle’s success in delivering best-in-class UAS solutions to a wide range of state and federal agencies.
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Enhancements were made to the eBee X to use as a replacement for this product. 6 ● eBee Geo – an affordable fixed-wing mapping drone designed to meet the highest demands of surveyors, civil engineers and GIS professionals worldwide.
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Providing our best-in-class autonomous flight solutions for public safety applications through trusted resellers like Darley represents an entirely new market opportunity for AgEagle and one we intend to vigorously pursue in the coming year. Government Regulation UAV Regulation AgEagle is subject to industry-specific regulations due to the nature of the products we sell to our customers.
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It was announced on February 14, 2024 that the eBee Geo was placed on end-of-life and unavailable for sale.
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Category 3 aircraft also require FAA-accepted means of compliance and FAA-accepted declaration of compliance. Our non-U.S. operations are subject to the laws and regulations of foreign jurisdictions, which may include regulations that are more stringent than those imposed by the U.S. government on our U.S. operations.
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In December 2022, we unveiled our new eBee™ VISION , a small, fixed-wing UAS designed to provide real-time, enhanced situational awareness for critical intelligence, surveillance and reconnaissance missions; and in April 2023, were awarded a federal contract from the U.S.
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In 2022, we experienced some supply chain delays due primarily to logistical issues relating to COVID-19 shutdown mandates.
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Department of Defense’s Defense Innovation Unit (“DIU”) to produce and deliver eBee™ VISION fixed-wing drones and customized command and control software that proves compatible and is in full compliance with the DoD Robotic and Autonomous System-Air Interoperability Profile (“RAS-A IOP”). In addition, three branches of European military forces have taken delivery of eBee VISION drones in 2023.
Removed
Our Headquarters Our principal executive offices are located at 8863 E. 34 th Street North, Wichita, Kansas 67226 and our telephone number is 620-325-6363. Our website address is www.ageagle.com. The information contained on, or that can be accessed through, our website is not a part of this Annual Report.
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In anticipation of achieving commercial production of eBee VISION s later this year, we have teams hosting live demonstrations of eBee VISION prototypes for officials of government and military agencies in Austria, the Baltics, France, Germany, Italy, Poland, Spain, the Middle East and across the United States.
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In May 2023, we released the new RedEdge-P™ dual high resolution and RGB composite drone sensor, representing yet another AgEagle technological advancement in aerial imaging cameras, seamlessly integrating the power and performance of the RedEdge-P and the new RedEdge-P blue cameras in a single solution. The RedEdge-P dual doubles analytical capabilities with the benefit of a single camera workflow.
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Its coastal blue band – the first of its kind in the market – was specifically designed for vegetation analysis of water bodies; environmental monitoring; water management; habitat monitoring, protection and restoration; and vegetation species and weeds identification, including differentiating and counting plants, trees, invasive species and weeds.
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In April 2023, AgEagle released Field Check for the Measure Ground Control mobile app. Measure Ground Control is a complete Software-as-a-Service solution for drone program management that is available as a web app and mobile app for both iOS and Android devices.
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The software’s capabilities include mission and equipment management, flight control, data processing and analysis, secure data storage and sharing, online collaboration and reporting. Field Check’s unique feature set enables users to review and validate the quality of their drone-captured imagery on-site.
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Capturing target imagery right the first time in one trip to a project site allows users to eliminate time loss and costs associated with project reworks by ensuring data capture is complete and ready for processing into high-resolution outputs before leaving a site.
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Reflecting our software development team’s superb problem-solving capabilities, Field Check provides our clients with a competitive edge in their drone operations and across the industries they serve by avoiding project repeats and downtime due to data processing errors or poor image quality. ● AgEagle was awarded a Multiple Award Schedule (“MAS”) Contract by the U.S. federal government’s General Services Administration (“GSA”) – In April 2023, the centralized procurement arm of the federal government, the GSA, awarded us with a five-year MAS contract.
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The GSA Schedule Contract is a highly coveted award in the government contracting space and is the result of a rigorous proposal process involving the demonstration of products and services in-demand by government agencies, and the negotiation of their prices, qualifications, terms and conditions.
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Contractors selling through the GSA Contract are carefully vetted and must have a proven track record in the industry.
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We believe that this will serve to advance our efforts to achieve deeper penetration of the government sector over the next five years. 15 ● We offer market-tested drones, sensors and software solutions that have earned the longstanding trust and fidelity of customers worldwide – through successful execution of our acquisition integration strategy in 2022, AgEagle is now delivering a unified line of industry trusted drones, sensors and software that have been vigorously tested and consistently proven across multiple industry verticals and use cases.
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Category 3 aircraft also require FAA-accepted means of compliance and FAA-accepted declaration of compliance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe stock markets have historically experienced substantial price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of companies. These broad market and industry factors could reduce the market price of our securities, regardless of our actual operating performance. We do not intend to pay cash dividends.
Biggest changeOn March 28, 2024, the closing price of our common stock as per post-split, as reported on NYSE American was $0.79. Many of these factors are beyond our control. The stock markets have historically experienced substantial price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of companies.
Our securities may experience substantial volatility as a result of a number of factors, including, among others: ● sales or potential sales of substantial amounts of our Common Stock; ● announcements about us or about our competitors or new product introductions; ● developments concerning our product manufacturers; ● the loss or unanticipated underperformance of our global distribution channel; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● conditions in the UAV, domestic hemp cultivation and drone-enabled package delivery industries; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; ● changes in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; ● foreign currency values and fluctuations; and ● overall political and economic conditions, including Russia’s invasion of Ukraine.
Our securities may experience substantial volatility as a result of a number of factors, including, among others: ● sales or potential sales of substantial amounts of our Common Stock; ● potential stock splits; ● announcements about us or about our competitors or new product introductions; ● developments concerning our product manufacturers; ● the loss or unanticipated underperformance of our global distribution channel; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● conditions in the UAV, domestic hemp cultivation and drone-enabled package delivery industries; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; ● changes in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; ● foreign currency values and fluctuations; and ● overall political and economic conditions, including Russia’s invasion of Ukraine.
A significant portion of our revenues is currently derived in the local currencies of the foreign jurisdictions in which our products are sold. Accordingly, we are subject to risks relating to fluctuations in currency exchange rates. In the future, and especially as we further expand our sales efforts in international markets, our customers will increasingly make payments in non-U.S. currencies.
A significant portion of our revenues are currently derived in the local currencies of the foreign jurisdictions in which our products are sold. Accordingly, we are subject to risks relating to fluctuations in currency exchange rates. In the future, and especially as we further expand our sales efforts in international markets, our customers will increasingly make payments in non-U.S. currencies.
Furthermore, we cannot assure you that we will be able to issue shares or other securities in any offering at a price per share that is equal to or greater than the price per share paid by investors or the then current market price. FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities.
Furthermore, we cannot assure you that we will be able to issue shares or other securities in any offering at a price per share that is equal to or greater than the price per share paid by investors or the current market price. FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our securities.
We face competition for qualified personnel from other companies with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our business to succeed. If our proposed marketing efforts are unsuccessful, we may not earn enough revenue to become profitable.
We face competition for qualified personnel from other companies with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our business to succeed. 29 If our proposed marketing efforts are unsuccessful, we may not earn enough revenue to become profitable.
If they are not, revenue may not be sufficient to cover our fixed costs and we may not become profitable. Our operating margins may be negatively impacted by reduction in sales or an increase in the cost of products sold. Expectations regarding future sales and expenses are largely fixed in the short term.
If they are not, revenue may not be sufficient to cover our fixed costs and we may not become profitable. Our operating margins may be negatively impacted by a reduction in sales or an increase in the cost of products sold. Expectations regarding future sales and expenses are largely fixed in the short term.
We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by employees or competitors. Furthermore, our competitors may independently develop technologies and products that are substantially equivalent or superior to our technologies and products, which could result in decreased revenues.
We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by employees or competitors. 27 Furthermore, our competitors may independently develop technologies and products that are substantially equivalent or superior to our technologies and products, which could result in decreased revenues.
Any unforeseen technical obstacles and challenges that we encounter in the research and development process could result in delays in or the abandonment of product commercialization, may substantially increase development costs, and will likely negatively affect our results of operations. Successful technical development of our products does not guarantee successful commercialization.
Any unforeseen technical obstacles and challenges that we encounter in the research and development process could result in delays in or the abandonment of product commercialization, may substantially increase development costs, and will likely negatively affect our results of operations. 26 Successful technical development of our products does not guarantee successful commercialization.
Interruptions in international relationships such as the exit by the U.K., commonly referred to as “Brexit” from the EU, or the rapidly evolving conflict between Russia and Ukraine, and trade disputes such as the current trade negotiations between the U.S. and China, could result in changes to regulations governing our products and our intellectual property, disruption of our manufacturing or commercial operations, our inability to timely engage with and collect payment from customers in Russia and other affected regions, or otherwise affect our ability to do business.
Interruptions in international relationships such as the exit by the U.K., commonly referred to as “Brexit” from the EU, or the rapidly evolving conflict between Russia and Ukraine, Isarael and Hamas and trade disputes such as the current trade negotiations between the U.S. and China, could result in changes to regulations governing our products and our intellectual property, disruption of our manufacturing or commercial operations, our inability to timely engage with and collect payment from customers in Russia and other affected regions, or otherwise affect our ability to do business.
To date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, resulted in a material adverse effect on our business, operating results and financial condition.
To date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in aggregate, resulted in a material adverse effect on our business, operating results and financial condition.
These provisions include: 33 Table of Contents ● the inability of stockholders to call special meetings; and ● the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could include the right to approve an acquisition or other change in our control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.
These provisions include: ● the inability of stockholders to call special meetings; and ● the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could include the right to approve an acquisition or other change in our control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.
We maintain raw materials and finished goods at a volume we feel is necessary for anticipated distribution and sales. Therefore, we may not be able to reduce costs in a timely manner to compensate for any unexpected shortfalls between forecasted and actual sales.
We maintain raw materials and finish goods at a volume we feel is necessary for anticipated distribution and sales. Therefore, we may not be able to reduce costs in a timely manner to compensate for any unexpected shortfalls between forecasted and actual sales.
In particular, these types of events could impact our product supply chain from or to the impacted region and could impact our ability to operate. In addition, these types of events could negatively impact consumer spending in the impacted regions. Disasters occurring at our manufacturing facilities could impact our reputation and our customers’ perception of our brands.
In particular, these types of events could impact our product supply chain from or to the impacted region and could impact our ability to operate. In addition, these types of events could negatively impact consumer spending in the impacted regions. Disasters occurring at our facilities could impact on our reputation and our customers’ perception of our brands.
On May 25, 2021, the Company entered into an at-the-market Sales Agreement (the "ATM Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated and Raymond James & Associates, Inc. as sales agents (the "Agents”), in connection with the offer and sale from time to time of shares of the Company’s Common stock, having an aggregate offering price of up to $100,000,000 (the "ATM Shares”), through an at-the-market equity offering program (the "ATM Offering”).
On May 25, 2021, the Company entered into an at-the-market Sales Agreement (the “ATM Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated and Raymond James & Associates, Inc. as sales agents (the “Agents”), in connection with the offer and sale from time to time of shares of the Company’s Common stock, having an aggregate offering price of up to $100,000,000 (the “ATM Shares”), through an at-the-market equity offering program (the “ATM Offering”).
These estimates, judgments, and assumptions are inherently uncertain, and, if they prove to be wrong, then we face the risk that charges to income will be required. 29 Table of Contents Our results of operations can be significantly affected by foreign currency fluctuations and regulations.
These estimates, judgments, and assumptions are inherently uncertain, and, if they prove to be wrong, then we face the risk that charges to income will be required. Our results of operations can be significantly affected by foreign currency fluctuations and regulations.
Any accident, even if fully covered or insured, could negatively affect our reputation among our customers and the public, and make it more difficult for us to compete effectively. 25 Table of Contents We may incur substantial product liability claims relating to our products.
Any accident, even if fully covered or insured, could negatively affect our reputation among our customers and the public, and make it more difficult for us to compete effectively. We may incur substantial product liability claims relating to our products.
Our failure to compete effectively could have a material adverse effect on our business, prospects, financial condition or future operating results. 24 Table of Contents If we fail to protect our intellectual property rights, we could lose our ability to compete in the marketplace.
Our failure to compete effectively could have a material adverse effect on our business, prospects, financial condition or future operating results. If we fail to protect our intellectual property rights, we could lose our ability to compete in the marketplace.
Product development is a long, expensive, and uncertain process. 23 Table of Contents The development of UAV systems is a costly, complex and time-consuming process, and investments in product development often involve a long wait until a return, if any, can be achieved on such investment.
The development of UAV systems is a costly, complex and time-consuming process, and investments in product development often involve a long wait until a return, if any, can be achieved on such investment.
Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, the price of our securities could decline.
Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, the price of our securities could decline. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Our products are subject to export control and import laws, tariffs, and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. Exports of our products must be made in compliance with these laws, tariffs, and regulations.
Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. Exports of our products must be made in compliance with these laws, tariffs, and regulations.
If the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company could default on obligations; and could be required to discontinue or significantly reduce the scope of its operations if no other means of financing options are available.
The Company is evaluating strategies to obtain the required additional funding for future operations and the restructuring of operations to grow revenues and reduce expenses. 25 If the Company is unable to generate significant sales growth in the near term and raise additional capital, there is a risk that the Company could default on obligations; and could be required to discontinue or significantly reduce the scope of its operations if no other means of financing options are available.
Risks Associated with Our Securities 32 Table of Contents The market price of our securities may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
The market price of our securities may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
The Additional Warrant is exercisable upon issuance and has a three-year term. Despite the foregoing, we will require additional financing in the future. If we are unable to raise additional capital, we may have to delay, curtail or eliminate commercializing, marketing and selling one or more of our solutions.
Despite the foregoing, we will require additional financing in the future. If we are unable to raise additional capital, we may have to delay, curtail, or eliminate commercializing, marketing and selling one or more of our solutions.
Future acquisitions or joint ventures may not result in their anticipated benefits and we may not be able to properly integrate acquired products, technologies or businesses with our existing products and operations or successfully combine personnel and cultures. Failure to do so could deprive us of the intended benefits of those acquisitions.
Future acquisitions or joint ventures may not result in their anticipated benefits and we may not be able to properly integrate acquired products, technologies or businesses with our existing products and operations or successfully combine personnel and cultures.
Other remedial measures could include further changes or enhancements to our procedures, policies, and controls and potential personnel changes and/or disciplinary actions, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.
Other remedial measures could include further changes or enhancements to our procedures, policies, and controls and potential personnel changes and/or disciplinary actions, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity. We could also be adversely affected by any allegation that we violated such laws.
If we fail to address these and other challenges, risks and uncertainties successfully, our business, results of operations and financial condition would be materially harmed.
If we fail to address these and other challenges, risks and uncertainties successfully, our business, results of operations and financial condition would be materially harmed. Product development is a long, expensive, and uncertain process.
On March 10, 2023, the Company issued and sold to the Investor an additional 3,000 shares of Series F convertible into 2,381 shares of the Company’s common stock, per $1,000 Stated Value per share of Preferred Stock, at a conversion price of $0.42 per share and associated common stock warrant to purchase up to 7,142,715 shares of common stock at the exercise price of $0.42 per share warrant (the “Additional Warrant”) in a private placement and raised $3,000,000 in gross proceeds.
The Warrant is not exercisable for the first six months after issuance and has a five-year term from the initial exercise date of June 6, 2023. 24 On March 10, 2023, the Company issued and sold to the Investor an additional 3,000 shares of Series F convertible into 2,381 shares of the Company’s common stock, per $1,000 Stated Value per share of Preferred Stock, at a conversion price of $0.42 per share and associated common stock warrant to purchase up to 7,142,715 shares of common stock at the exercise price of $0.42 per share warrant (the “Additional Warrant”) in a private placement and raised $3,000,000 in gross proceeds.
Furthermore, we expect our revenues and operating results to fluctuate in the future due to a number of factors, including the following: ● the timing of sales or subscription of our products; ● unexpected delays in introducing new products and services; ● increased expenses, whether related to sales and marketing or administration; and ● costs related to possible acquisitions of businesses. 27 Table of Contents Rapid technological changes may adversely affect the market acceptance of our products and could adversely affect our business, financial condition, and results of operations.
Furthermore, we expect our revenues and operating results to fluctuate in the future due to a number of factors, including the following: ● the timing of sales or subscription of our products; ● unexpected delays in introducing new products and services; ● increased expenses, whether related to sales and marketing or administration; and ● costs related to possible acquisitions of businesses.
Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions in service. We use many third-party systems and software, which are also subject to supply chain and other cyberattacks.
We also use computer systems to deliver our products and services and operate our businesses. Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access and our computer systems are subject to cyberattacks that may result in disruptions in service.
We develop and maintain an information security program to identify and mitigate cyber risks, but the development and maintenance of this program is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.
We use many third-party systems and software, which are also subject to supply chain and other cyberattacks. We develop and maintain an information security program to identify and mitigate cyber risks, but the development and maintenance of this program is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.
For our business to be successful, we need to attract and retain highly qualified executive, technical and sales personnel. The failure to recruit additional key personnel when needed, with specific qualifications, on acceptable terms and with an ability to maintain positive relationships with our partners, might impede our ability to continue to develop, commercialize and sell our products and services.
The failure to recruit additional key personnel when needed, with specific qualifications, on acceptable terms and with an ability to maintain positive relationships with our partners, might impede our ability to continue to develop, commercialize and sell our products and services.
For example, on March 10, 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC. Additionally, on March 15, 2023, Credit Suisse announced that it would borrow up to 50 billion Swiss francs, or $53.7 billion, from the Swiss National Bank to address its liquidity concerns.
Additionally, on March 15, 2023, Credit Suisse announced that it would borrow up to 50 billion Swiss francs, or $53.7 billion, from the Swiss National Bank to address its liquidity concerns.
We may increase our deposits at Credit Suisse in the future however; and there can be no assurance that we will be able to effectively mitigate the risk of loss should a similar event impact Credit Suisse in the future or any other bank at which we maintain deposits.
We have historically maintained deposits less than $1 million euros at Credit Suisse and have now lowered our funds as part of our risk mitigation plan in connection with the foregoing, we may increase our deposits at Credit Suisse in the future however there can be no assurance that we will be able to effectively mitigate the risk of loss should a similar event impact Credit Suisse in the future or any other bank at which we maintain deposits.
As the Company will require additional liquidity to continue its operations and meet its financial obligations over the next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern. The Company is evaluating strategies to obtain the required additional funding for future operation and the restructuring of operations to grow revenues and reduce expenses.
As the Company will require additional liquidity to continue its operations and meet its financial obligations over the next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern.
In addition, defects in our products may lead to other potential life, health and property risks. Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management and other resources. We are unable to predict if we will be able to obtain or maintain product liability insurance for any of our products.
In addition, defects in our products may lead to other potential life, health and property risks. Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management and other resources.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our officers, directors or control persons, the SEC has advised that such indemnification is against public policy and is therefore unenforceable.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our officers, directors or control persons, the SEC has advised that such indemnification is against public policy and is therefore unenforceable. 34 Risks Associated with Our Securities Our executive officers and directors may sell shares of their stock, and these sales could adversely affect our stock price.
Should our relationships fail to materialize into significant agreements, or should we fail to work efficiently with these companies, we may lose sales and marketing opportunities and our business, results of operations and financial condition could be adversely affected. 28 Table of Contents These activities, if successful, create risks such as, among others: (i) the need to integrate and manage the businesses and products acquired with our own business and products; (ii) additional demands on our resources, systems, procedures and controls; (iii) disruption of our ongoing business; (iv) potential unknown or unquantifiable liabilities associated with the target company; and (v) diversion of management’s attention from other business concerns.
These activities, if successful, create risks such as, among others: (i) the need to integrate and manage the businesses and products acquired with our own business and products; (ii) additional demands on our resources, systems, procedures and controls; (iii) disruption of our ongoing business; (iv) potential unknown or unquantifiable liabilities associated with the target company; and (v) diversion of management’s attention from other business concerns.
International trade disruptions or disputes could adversely affect our business and operating results. Significant portions of our business are conducted in Europe, Asia, and other international geographies.
To the extent any of these events occur, our operations and financial results could be adversely affected. 32 International trade disruptions or disputes could adversely affect our business and operating results. Significant portions of our business are conducted in Europe, Asia, and other international geographies.
Moreover, even if we achieve profitability, given the competitive and evolving nature of the industries in which we operate, we may be unable to sustain or increase profitability and failure to do so would adversely affect our business, including our ability to raise additional funds. 21 Table of Contents We will need additional funding and may be unable to raise capital when needed, which would force us to delay, curtail or eliminate one or more of our research and development programs or commercialization efforts.
Moreover, even if we achieve profitability, given the competitive and evolving nature of the industries in which we operate, we may be unable to sustain or increase profitability and failure to do so would adversely affect our business, including our ability to raise additional funds.
Cyberattacks and other security breaches of network or information technology security could have an adverse effect on our business. We maintain information necessary to conduct our business, including confidential and proprietary information as well as personal information regarding our customers and employees, in digital form. We also use computer systems to deliver our products and services and operate our businesses.
Failure to do so could deprive us of the intended benefits of those acquisitions. 31 Cyberattacks and other security breaches of network or information technology security could have an adverse effect on our business. We maintain information necessary to conduct our business, including confidential and proprietary information as well as personal information regarding our customers and employees, in digital form.
The markets in which we compete are subject to technological changes, introduction of new products, change in customer demands and evolving industry standards.
Rapid technological changes may adversely affect the market acceptance of our products and could adversely affect our business, financial condition, and results of operations. The markets in which we compete are subject to technological changes, introduction of new products, change in customer demands and evolving industry standards.
FINRA requirements will likely make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may have the effect of reducing the level of trading activity in the shares, resulting in fewer broker-dealers being willing to make a market in our shares, potentially reducing a stockholder’s ability to resell our securities.
FINRA requirements will likely make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may have the effect of reducing the level of trading activity in the shares, resulting in fewer broker-dealers being willing to make a market in our shares, potentially reducing a stockholder’s ability to resell our securities. 36 If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, the price of our securities and trading volume could decline.
Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our drone solutions to commercial and industrial customers in the United States.
If the release dates of our new products or enhancements are delayed or, if when released, they fail to achieve market acceptance, our business, operating results, and financial condition may be adversely affected. 30 Failure to obtain necessary regulatory approvals from the FAA or other governmental agencies, or limitations put on the use of small UAS in response to public privacy concerns, may prevent us from expanding the sales of our drone solutions to commercial and industrial customers in the United States.
Provisions in our articles of incorporation, our by-laws and Nevada law might discourage, delay or prevent a change in control of our Company or changes in our management and, therefore, depress the trading price of our Common Stock.
As a result, capital appreciation, if any, from the sale of our Common Stock will be your sole source of gain for the foreseeable future. 35 Provisions in our articles of incorporation, our by-laws and Nevada law might discourage, delay or prevent a change in control of our Company or changes in our management and, therefore, depress the trading price of our Common Stock.
As a result we cannot guarantee when we can expect to generate sufficient cash flows from operations to be adequate to cover our operating business.
We are currently still incurring significant net losses as we continue to invest in our business strategy and grow our business as a result, we cannot guarantee that when we expect to generate sufficient cash flows from operations to be adequate to cover our operating business.
We could also be adversely affected by any allegation that we violated such laws. 30 Table of Contents We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.
We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws. Our products are subject to export control and import laws, tariffs, and regulations, including the U.S. Export Administration Regulations, U.S.
Such events may have a material adverse effect on our business, operating results, financial condition and prospects. 22 Table of Contents Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” As of December 31, 2022, the Company had $4,349,837 of cash on hand and working capital of $9,079,091.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” As of December 31, 2023, the Company had $0.8 million of cash on hand and working capital of negative $0.5 million.
Disruptions of our manufacturing operations would ensue if we were required to obtain components from alternative sources, which would have an adverse effect on our business, results of operations and financial condition. 26 Table of Contents If we are unable to recruit and retain key management, technical and sales personnel, our business would be negatively affected.
In addition, we may not be able to continue to obtain such components from these suppliers on satisfactory commercial terms. Disruptions of our manufacturing operations would ensue if we were required to obtain components from alternative sources, which would have an adverse effect on our business, results of operations and financial condition.
To the extent any of these events occur, our operations and financial results could be adversely affected. For instance, Russia’s military conflict in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia.
Although these global problems transcend our company and afflict companies across industries and borders, these and similar events could adversely affect us, or our business partners or customers. Russia’s military conflict in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia.
During the year ended December 31, 2022, the Company incurred a net loss of $58,253,723, and used cash in operating activities of $20,107,670. While the Company has historically been successful in raising capital to meet its working capital needs, the ability to continue raising such capital to enable the Company to continue its growth is not guaranteed.
While the Company has historically been successful in raising capital to meet its working capital needs, the ability to continue raising such capital to enable the Company to continue its growth is not guaranteed.
Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts on product and software development. We will require additional funds to support our continued research and development activities, as well as the costs of commercializing, marketing and selling any existing and new products and/or services resulting from those activities.
We will require additional funds to support our continued research and development activities, as well as the costs of commercializing, marketing and selling any existing and new products and/or services resulting from those activities. Until such time, that we can generate sufficient revenue and achieve profitability, we will need to meet our future cash needs through equity or debt financings.
As a result, capital appreciation, if any, will be your sole source of gain. We intend to retain future earnings, if any, to fund the development and growth of our business. In addition, the terms of existing and future debt agreements may preclude us from paying dividends.
These broad market and industry factors could reduce the market price of our securities, regardless of our actual operating performance. We do not intend to pay cash dividends. As a result, capital appreciation, if any, will be your sole source of gain. We intend to retain future earnings, if any, to fund the development and growth of our business.
We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance. We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks, which exceed the FDIC insurance limits.
We are unable to predict if we will be able to obtain or maintain product liability insurance for any of our products. 28 We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.
The Warrant is not exercisable for the first six months after issuance and has a five-year term from the initial exercise date of June 6, 2023.
The Warrant is for a term of 5.5 years commencing on the closing date but is not exercisable for the first six months after closing.
We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies. Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints.
Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC.
As of December 31, 2022, we had an accumulated deficit of approximately $111,553,444 which included net losses of approximately $58,253,723 and $30,108,680 for the years ended December 31, 2022 and 2021, respectively. We are currently still incurring significant net losses as we continue to invest in our business strategy and grow our business.
As of December 31, 2023, we had an accumulated deficit of approximately $165.58 million which included net losses of approximately $42.42 million and $58.25 million for the years ended December 31, 2023 and 2022, respectively.
However, these effects could have a material impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely. We will continue to monitor the situation closely. Worldwide and domestic economic trends and financial market conditions, including an economic decline in the industries we serve, may adversely affect our operating performance.
Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition and results of operations. 33 Worldwide and domestic economic trends and financial market conditions, including an economic decline in the industries we serve, may adversely affect our operating performance.
Until such time, if ever, that we can generate sufficient revenue and achieve profitability, we will need to meet our future cash needs through equity or debt financings. There can be no assurance that we will be successful in our capital raising efforts.
There can be no assurance that we will be successful in our capital raising efforts.
Our Common Stock closed as high as $1.76 and as low as $0.31 per share between January 1, 2022 and December 31, 2022 on NYSE American. On March 15, 2023, the closing price of our common stock, as reported on NYSE American was $0.37. Many of these factors are beyond our control.
Our Common Stock closed as high as $0.58 and as low as $0.10 per share between January 1, 2023 and December 31, 2023 on NYSE American. On February 9, 2024, the Company performed an approved 20 for 1 reverse stock split, which would reflect a high stock price of $11.60 and a low price of $2.04 through fiscal 2023.
Removed
We have historically maintained deposits less than $1 million euros at Credit Suisse and have now lowered our bank balances as part of our risk mitigation plan in connection with the foregoing.
Added
We will need additional funding and may be unable to raise capital when needed, which would force us to delay, curtail or eliminate one or more of our research and development programs or commercialization efforts. Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts on product and software development.
Removed
In addition, we may not be able to continue to obtain such components from these suppliers on satisfactory commercial terms.
Added
The Additional Warrant is exercisable upon issuance and has a three-year term. On June 5, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”).
Removed
If release dates of our new products or enhancements are delayed or, if when released, they fail to achieve market acceptance, our business, operating results, and financial condition may be adversely affected.
Added
Pursuant to the terms of the Purchase Agreement, the Company has agreed to issue and sell to Investors (i) 16,720,000 shares of Common Stock (the “Offering Shares”) at $0.25 per share and (ii) warrants to purchase up to 25,080,000 shares of common stock (the “Warrants”), exercisable at $0.38 per share (the “Warrant Shares” together with the Warrants and Offering Shares, the “Securities”) and raised gross sales proceeds of $4,180,000.
Removed
Although these global problems transcend our company and afflict companies across industries and borders, these and similar events could adversely affect us, or our business partners or customers.
Added
As a result, pursuant to the Purchase Agreement the Company issued 16,720,000 shares of Common Stock for proceeds of $3,817,400, net of issuance costs from the offering and warrants to purchase up to 25,080,000 shares of common stock exercisable at $0.38 per share.
Removed
Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition and results of operations. Our business may be adversely affected by the ongoing coronavirus pandemic. In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China.
Added
On November 15, 2023, the Company and Investors, which included Alpha, entered into the Assignment Agreement, pursuant to which, among other things, (i) Alpha transferred and assigned to certain institutional and accredited investors (the “Assignees”), the rights and obligations to purchase up to $1,850,000 or 1,850 shares at a price of $1,000 per share of Series F Preferred pursuant to the Additional Investment Right provided in the Series F Agreement (the “Assigned Rights”), (ii) the Series F Agreement was amended so that the Assignees are party thereto and have the same rights and obligations thereunder as the investor to the extent of the Assigned Rights, (iii) the time period during which the investor can provide an Investor Notice was extended from August 3, 2024 until February 3, 2025; and (iv) Alpha and the Company agreed to a one-time waiver of the Minimum Subscription Requirement to allow exercise of the Assigned Rights.
Removed
On March 11, 2020, the World Health Organization declared the outbreak a pandemic.
Added
The foregoing description of the Assignment Agreement does not purport to be complete and is qualified in its entirety by reference to the Assignment Agreement , filed as Exhibit 10.2 to this Current Report and incorporated by reference herein.
Removed
The COVID-19 pandemic is affecting the United States and global economies and is likely to continue to affect our operations and those of third parties on which we rely, including by causing disruptions in our global supply chain, our ability to obtain raw materials, the manufacturing of and short-term demand for our products.
Added
Pursuant to the Investor Notices received by the Company from the Investor and the Assignees on November 15, 2023, delivered in connection with the Assignment, the Investor and the Assignees have provided notices of their desire to purchase 1,850 shares of Preferred Stock (the “November Additional Series F Preferred”) convertible into 14,835,605 shares of Common Stock (the “November Conversion Shares”) at a conversion price of $0.1247 per share and warrants (the “November Additional Warrants”) to purchase up to 14,835,605 shares of our Common Stock an exercise price of $0.1247 per share for an aggregate purchase price of $1,850,000.
Removed
The spread of the coronavirus, which has caused a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, had a material economic effect on our business.
Added
The November Additional Warrants will be exercisable upon issuance and have a three-year term.
Removed
While the potential economic impact brought on by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruptions of global financial markets, which may reduce our ability to access capital either at all or on favorable terms.
Added
Pursuant to the Investor Notice received by the Company from Alpha, the Company sold to Alpha 650 shares of November Additional Series F Preferred, which are part of the 1,850 shares and are convertible into 5,212,510 shares of Common Stock at a conversion price of $0.1247 per share (which was adjusted to $0.10 per share as a result of the Common Stock Offering) and November Additional Warrants to purchase up to 5,212,510 shares of our Common Stock an initial exercise price of $0.1247 per share (which was adjusted to $0.10 per warrant as a result of the Common Stock Offering) for an aggregate purchase price of $650,000.
Removed
In addition, a recession, depression or other sustained adverse market event resulting from the spread of the coronavirus could materially and adversely affect our business and the value of our Common Stock.
Added
Such events may have a material adverse effect on our business, operating results, financial condition and prospects.
Removed
In addition, as a result of the pandemic, our ability to access components and parts needed to manufacture drones and sensors, and to perform quality testing have been impacted.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES As of December 31, 2022, the Company is a party to the following non-cancellable operating leases for manufacturing facilities and office space: Location Purpose Initial Term (months) Lease Expiration Date 8863 E. 34 th Street, North Wichita, Kansas Manufacturing Facility & Corporate Headquarters 36 October 31, 2023 Route de Genève 38 1033 Cheseaux-sur-Lausanne, Switzerland Distribution & Assembly Facility & Offices 60 April 30, 2028 10107 Division Drive Raleigh, North Carolina Distribution & Offices 60 June 14, 2023 600 Congress Avenue Austin, Texas Offices 17 December 31, 2022 1701 Rhode Island Avenue NW Washington, DC Offices 15 December 31, 2022 1300 N.
Biggest changePROPERTIES As of December 31, 2023, the Company is a party to the following non-cancellable operating leases for manufacturing facilities and office space: Location Purpose Initial Term (months) Lease Expiration Date 8201 E. 34 th Cir N Suite 1307 Wichita, Kansas Manufacturing Facility & Corporate Headquarters 36 October 31, 2026 Route de Genève 38 1033 Cheseaux-sur-Lausanne, Switzerland Distribution & Assembly Facility & Offices 60 April 30, 2028 1300 N.
Northlake Way Seattle, Washington Offices 60 January 2026 As of December 31, 2022, the Company held properties in Lausanne, Switzerland; Raleigh, NC; Austin, TX; Washington, DC; Seattle, WA represent non-cancelable lease obligations assumed by the Company as a result of its 2021 business acquisitions of senseFly S.A., senseFly Inc. Measure Global Inc, and MicaSense, Inc., respectively.
Northlake Way Seattle, Washington (Subleased) Offices 60 January 2026 As of December 31, 2023, the Company held properties in Wichita, KS, Lausanne, Switzerland; and Seattle, WA and represent non-cancellable lease obligations assumed by the Company as a result of its 2021 business acquisitions of senseFly S.A., senseFly Inc., Measure Global Inc., and MicaSense, Inc., respectively.
Starting late 2022, the Company has started to consolidate its business and manufacturing operations from multiple offices to three centralized locations in Wichita, Kansas, Raleigh, North Carolina and Lausanne, Switzerland. We expect to complete our consolidation efforts before the end of 2023.
Starting late 2022, the Company has been engaged in consolidating its business and manufacturing operations from multiple offices to two centralized locations in Wichita, Kansas and Lausanne, Switzerland. We expect to complete our consolidation efforts before the end of 2024. We vacated our offices in Seattle, Washington and subleased the offices to a third party in May 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLiabilities in excess of our insurance coverage, including coverage for professional liability and certain other claims, could have a material adverse effect on our business, financial condition and results of operations.
Biggest changeLiabilities in excess of our insurance coverage, including coverage for professional liability and certain other claims, could have a material adverse effect on our business, financial condition and results of operations. As of March 31, 2024, there are no pending, nor to our knowledge threatened, legal proceedings against us.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock is currently quoted on the NYSE American under the symbol “UAVS.” The following table sets forth, for the period indicated, the quarterly high and low closing sales prices per share of our Common Stock for each quarter during our last two fiscal years, as well as a large portion of our first quarter in 2023, as reported by the New York Stock Exchange. 2023 High Low First Quarter (through March 15, 2023) $ 0.58 $ 0.35 2022 High Low First Quarter $ 1.76 $ 0.91 Second Quarter $ 1.19 $ 0.58 Third Quarter $ 0.79 $ 0.46 Fourth Quarter $ 0.58 $ 0.31 2021 High Low First Quarter $ 15.69 $ 5.47 Second Quarter $ 8.35 $ 4.06 Third Quarter $ 5.01 $ 2.94 Fourth Quarter $ 3.05 $ 1.53 As of March 15, 2023, we had approximately 327 individual shareholders of record of our Common Stock.
Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock is currently quoted on the NYSE American under the symbol “UAVS.” The following table sets forth, for the period indicated, the quarterly high and low closing sales prices per share of our Common Stock for each quarter during our last three fiscal years, as reported by the New York Stock Exchange.
Any future determination related to our dividend policy will be made at the discretion of our Board of Directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board of Directors may deem relevant. 36 Table of Contents Equity Compensation Plan The following table provides information as of December 31, 2022 about our equity compensation plan and arrangements: Plan category Number of securities to be issued upon exercise of outstanding options and restricted stock units Weighted-average exercise price of outstanding options, and restricted stock units Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 3,590,191 $ 1.56 3,957,102 Equity compensation plans not approved by security holders — — — Total 3,590,191 $ 1.56 3,957,102 Recent Sales of Unregistered Securities On December 6, 2022, the Company issued and sold to an institutional investor (the “Investor”) a Common Stock Purchase Warrant (the “Warrant”) to purchase up to 5,000,000 shares of the Company’s Common Stock (the “Shares”) at an exercise price of $0.44 per share, subject to adjustments pursuant to the Purchase Agreement.
Plan Category Number of shares to be issued upon exercise of outstanding options, and restricted stock units Weighted-average exercise price of outstanding options and restricted stock units Number of shares remaining available for future issuance under equity compensation plans Equity compensation plans approved by stockholders 5,558,732 $ 0.90 5,959,773 Equity compensation plans not approved by stockholders — — — 5,558,732 $ 0.90 5,959,773 Recent Sales of Unregistered Securities On December 6, 2022, the Company issued and sold to an institutional investor a Common Stock Purchase Warrant to purchase up to 5,000,000 shares of the Company’s Common Stock at an exercise price of $0.44 per share, subject to adjustments pursuant to the Common Stock Purchase Warrant.
Issuer Purchases of Securities There were no repurchases of the Company’s securities during the year ended December 31, 2022. Purchases of Equity Securities by Issuer and Its Affiliates None.
Issuer Purchases of Securities There were no repurchases of the Company’s securities during the year ended December 31, 2023 by or on behalf of the Company or any “affiliated purchaser,” as defined in § 240.10b-18(a)(3) of the Exchange Act. Purchases of Equity Securities by Issuer and Its Affiliates None. ITEM 6. [RESERVED]
Removed
The Warrant is not exercisable for the first six months after issuance and has a five-year term from the exercise date.
Added
The table represents the price closures for fiscal year 2023, prior to the approved reverse stock split as of February 9, 2024, as well as the adjusted 20 for 1 reverse stock split on an historical basis for comparison. 2024 High Post Split Low Post Split First Quarter (through March 28, 2024) (post split as of February 9, 2024) $ 11.60 $ 0.68 2023 High Pre Split High Post Split Low Pre Split Low Post Split First Quarter $ 0.58 $ 11.60 $ 0.35 $ 7.00 Second Quarter $ 0.50 $ 10.00 $ 0.22 $ 4.40 Third Quarter $ 0.26 $ 5.20 $ 0.16 $ 3.20 Fourth Quarter $ 0.18 $ 3.60 $ 0.10 $ 2.00 2022 High Pre Split High Post Split Low Pre Split Low Post Split First Quarter $ 1.76 $ 35.20 0.91 $ 18.20 Second Quarter $ 1.19 $ 23.80 0.58 $ 11.60 Third Quarter $ 0.79 $ 15.80 0.46 $ 9.20 Fourth Quarter $ 0.58 $ 11.60 0.31 $ 6.20 As of March 31, 2024, we had approximately 285 individual shareholders of record of our Common Stock.
Removed
If at the time of the exercise, there is no effective registration statement registering, or the prospectus contained therein, is not available for the issuance of the Shares, then the Warrant may be exercised, in whole or in part, by means of a “cashless exercise.” The Shares issuable to the Investor upon exercise of the Warrant will be issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder.
Added
Any future determination related to our dividend policy will be made at the discretion of our Board of Directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board of Directors may deem relevant. 40 Equity Compensation Plan The following table sets forth information as of the fiscal year ended December 31, 2023 about our equity compensation plan and arrangements.
Removed
Neither the Shares nor the Warrant has been registered under the Securities Act, or applicable state securities laws, and none may be offered or sold in the United States absent registration under the Securities Act or an exemption from such registration requirements.
Added
On March 9, 2023, the Company received an Investor Notice to purchase 3,000 Additional Series F Preferred, with each Additional Series F Preferred convertible into 2,381 shares of the Company’s common stock at a conversion price of $0.42 per share and associated common stock warrant to purchase up to 7,142,715 Additional Warrants for an aggregate purchase price of $3,000,000 pursuant to a Series F Agreement dated June 26, 2022.
Added
The Additional Warrant is exercisable upon issuance and has a three-year term. On March 10, 2023, the Company issued and sold the Additional Series F Preferred and the Additional Warrant.
Added
On June 5, 2023, the Company issued and sold to three institutional investors 16,720,000 shares of the Company’s common stock at $0.25 per share and associated common stock warrant to purchase up to 25,080,000 shares at an exercise price of $0.38 per share, subject to adjustments pursuant to the Common Stock Purchase Warrants.
Added
On November 15, 2023, the Company issued and sold to investors the November Additional Warrants to purchase 14,835,605 shares of our Common Stock at initial exercise price of $0.1247 per share, subject to adjustments pursuant to the November Additional Warrants, for an aggregate purchase price of $1,850,000 .
Added
The Company also sold 1,500,000 shares of Common Stock at $0.10 per share, raising an additional $150,000 in gross proceeds.
Added
On November 15, 2023, the Company issued to Dawson warrants to purchase 1,483,560 shares of our Common Stock at the exercise price of $0.1247 per warrant, and 1,281,796 of the 1,483,560 warrants were subsequently assigned by Dawson to certain Selling Shareholders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis increase was offset by a $6,463,101 non-cash gain on debt extinguishment associated with reductions of holdback liabilities in connection with our acquisitions of senseFly and MicaSense realized in the third quarter of 2022.
Biggest changeThis was offset with an increase of $0.9 million in interest expense, and due to the third quarter 2022 recognition of $6.5 million non-cash gain on debt extinguishment associated with reductions of holdback liabilities in connection with our acquisitions of senseFly and MicaSense that was not recognized in 2023, plus the loss on the debt extinguishment and interest on the Promissory Note amounting to $1.9 million. 50 Cash Flows Twelve Months Ended December 31, 2023 as Compared to the Twelve Months Ended December 31, 2022 As of December 31, 2023, cash on hand was $0.8 million, a decrease of $3.5 million or 81.4%, as compared to $4.3 million as of December 31, 2022.
It inspires us to see around corners for our customers, understanding the problems they currently face or will be facing in the future, and delivering them solutions best suited for their unique needs. · Passion – this fuels our obsession with excellence, our desire to try the difficult things and tackle big problems, and our commitment to meet our customers’ needs – and then surpass them. · Integrity – this is not optional or situational at AgEagle – it is the foundation for everything we do, even when no one is watching.
It inspires us to see around corners for our customers, understanding the problems they currently face or will be facing in the future, and delivering them solutions best suited for their unique needs. 42 ● Passion – this fuels our obsession with excellence, our desire to try the difficult things and tackle big problems, and our commitment to meet our customers’ needs – and then surpass them. ● Integrity – this is not optional or situational at AgEagle – it is the foundation for everything we do, even when no one is watching.
We may be required to record additional inventory write-downs if actual market conditions are less favorable than those projected by our management. Goodwill and Intangible Assets The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition.
We may be required to record additional inventory write-downs if actual market conditions are less favorable than those projected by our management. 47 Goodwill and Intangible Assets The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition.
If we or any of the third-parties in the supply chain for materials used in our manufacturing and assembly processes continue to be adversely impacted, our supply-chain may be further disrupted, limiting its ability to manufacture and assemble products.
If either we or any of our third parties in the supply chain for materials used in our manufacturing and assembly processes continue to be adversely impacted, our supply chain may be further disrupted, limiting its ability to manufacture and assemble products.
We believe that by investing in complementary acquisitions, we can accelerate our revenue growth and deliver a broader array of innovative autonomous flight systems and solutions that address specialized market needs within our current target markets and in emerging markets that can benefit from innovations in artificial intelligence-enabled robotics and data capture and analytics. 39 Table of Contents Competitive Strengths AgEagle believes the following attributes and capabilities provide us with long-term competitive advantages: · Proprietary technologies, in-house capabilities and industry experience – We believe our decade of experience in commercial UAS design and engineering; in-house manufacturing, assembly and testing capabilities; and advanced technology development skillset serve to differentiate AgEagle in the marketplace.
We believe that by investing in complementary acquisitions, we can accelerate our revenue growth and deliver a broader array of innovative autonomous flight systems and solutions that address specialized market needs within our current target markets and in emerging markets that can benefit from innovations in artificial intelligence-enabled robotics and data capture and analytics. 43 Competitive Strengths AgEagle believes the following attributes and capabilities provide us with long-term competitive advantages: ● Proprietary technologies, in-house capabilities and industry experience – We believe our decade of experience in commercial UAS design and engineering; in-house manufacturing, assembly and testing capabilities; and advanced technology development skillset serve to differentiate AgEagle in the marketplace.
Tough Stump is actively engaged in training military ground forces based in the U.S. and in Central Europe on the use of eBee TAC for mid-range tactical mapping and reconnaissance missions. 40 Table of Contents · Our eBee ™ X series of fixed wing UAS, including the eBee X, eBee Geo and eBee TAC , are the first and only drones on the market to comply with Category 3 of the sUAS Over People rules published by the FAA .
Tough Stump is actively engaged in training military ground forces based in the U.S. and in Central Europe on the use of eBee TAC for mid-range tactical mapping and reconnaissance missions. ● Our eBee ™ X series of fixed wing UAS, including the eBee X, eBee Geo and eBee TAC , are the first and only drones on the market to comply with Category 3 of the sUAS Over People rules published by the FAA .
Off-Balance Sheet Arrangements On December 31, 2022, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off-Balance Sheet Arrangements On December 31, 2023, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
In November 2022, we partnered with government contractor Darley to expand the market reach of AgEagle’s high performance fixed wing drones and sensors to the U.S. first responder and tactical defense markets.
In late 2022, we partnered with government contractor Darley to expand the market reach of AgEagle’s high performance fixed wing drones and sensors to the U.S. first responder and tactical defense markets.
Customer deposits represent customer prepayments and are recognized as revenue when the term of the sale or performance obligation is completed. 42 Table of Contents The Company’s software subscriptions to its platforms, HempOverview and Ground Control , are offered on a subscription basis. These subscription fees are recognized ratably over each monthly membership period as the services are provided.
Customer deposits represent customer prepayments and are recognized as revenue when the term of the sale or performance obligation is completed. The Company’s software subscriptions to its platforms, HempOverview and Ground Control , are offered on a subscription basis. These subscription fees are recognized ratably over each monthly membership period as the services are provided.
New Accounting Pronouncements There were certain updates recently issued by the Financial Accounting Standards Board (“FASB”), most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
There were certain updates recently issued by the Financial Accounting Standards Board, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
Contractual Obligations Material contractual obligations arising in the normal course of business primarily consist of business acquisition related liabilities, principal and interest payments for loans made under the COVID program in Switzerland, defined benefit plan obligations, principal and interest payments for operating leases and other purchase obligations.
Contractual Obligations Material contractual obligations arising in the normal course of business primarily consist of principal and interest payments for loans made under the COVID program in Switzerland, defined benefit plan obligations, principal and interest payments for operating leases and other purchase obligations.
In addition, the Company operates business and manufacturing operations in Lausanne, Switzerland in support of our international business activities. 38 Table of Contents Key Growth Strategies We intend to materially grow our business by leveraging our proprietary, best-in-class, full-stack drone solutions, industry influence and deep pool of talent with specialized expertise in robotics, automation, custom manufacturing and data science to achieve greater penetration of the global UAS industry – with near-term emphasis on capturing larger market share of the agriculture, energy/utilities, infrastructure and government/military verticals.
Key Growth Strategies We intend to materially grow our business by leveraging our proprietary, best-in-class, full-stack drone solutions, industry influence and deep pool of talent with specialized expertise in robotics, automation, custom manufacturing and data science to achieve greater penetration of the global UAS industry – with near-term emphasis on capturing larger market share of the agriculture, energy/utilities, infrastructure and government/military verticals.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
AgEagle is led by a proven management team with years of drone industry experience and is currently headquartered in Wichita, Kansas, where we house our sensor manufacturing operations, and we operate our business and drone manufacturing operations in Raleigh, North Carolina.
AgEagle is led by a proven management team with years of drone industry experience and is currently headquartered in Wichita, Kansas, where we house our sensor manufacturing operations, and we operate our business and drone manufacturing operations in Raleigh, North Carolina. In addition, the Company operates business and manufacturing operations in Lausanne, Switzerland in support of our international business activities.
See Notes 5, 8, 10, 11 and 13 to the consolidated financial statements for amounts outstanding as of December 31, 2022 for these contractual obligations. 47 Table of Contents Inflation During the year ended December 31, 2022, inflation has had a negative impact on the unmanned aerial vehicle systems industry, our customers, and our business globally.
See Notes 7, 10, 12 and 13 to the consolidated financial statements for amounts outstanding as of December 31, 2023, for these contractual obligations. 51 Inflation During the year ended December 31, 2023, inflation has had a negative impact on the unmanned aerial vehicle systems industry, our customers, and our business globally.
The decrease in cash provided by our financing activities was due to less sales of our Common Stock through an at-the-market (“ATM”) offering and exercise of warrants in the prior year while raising capital through the sale of a new series of Preferred Stock, the Series F 5% Preferred Convertible Stock.
The decrease in cash provided by our financing activities was due to less sales of our Common stock through an at-the-market (“ATM”) offering and exercise of warrants in the prior year offset by the sale of Series F Preferred stock issuance of Common Stock and Warrant.
As of December 31, 2022, the Company recorded an aggregate goodwill impairment charge of $41,687,871 on the two impaired reporting units. This impairment charge is based on the excess carrying value of the reporting units over their fair values. As of December 31, 2021, we performed our annual goodwill and finite-lived intangible assets impairment tests for our three reporting units.
As of December 31, 2023, the Company recorded an aggregate goodwill impairment charge of $15.8 million on the two impaired reporting units. This impairment charge is based on the excess carrying value of the reporting units over their fair values. As of December 31, 2022, we performed our annual goodwill impairment tests for our three reporting units.
Impact of the War in Ukraine and COVID-19 On Our Business Operations Global economic challenges, including the impact of the war in Ukraine, the COVID-19 pandemic, rising inflation and supply-chain disruptions, adverse labor market conditions could cause economic uncertainty and volatility.
Impact of the Risks and Uncertainties on Our Business Operations Global economic challenges, including the impact of the war, pandemics, rising inflation and supply-chain disruptions, regulatory investigations adverse labor and capital market conditions could cause economic uncertainty and volatility.
In addition, we have championed the development of end-to-end software solutions which power autonomous flight and deliver actionable, contextual data and analytics for numerous Fortune 500 companies, government agencies and a wide range of businesses in agriculture, energy and utilities, construction and other industry sectors. · Our eBee TAC ™ UAS has been approved by the Defense Innovation Unit (DIU) for procurement by the Department of Defense – We believe that the eBee TAC is ideally positioned to become an in-demand, mission critical tool for the U.S. military, government and civil agencies and our allies worldwide; and expect that this will prove to be a major growth catalyst for our Company in 2022, positively impacting our financial performance in the years ahead. eBee TAC is available for purchase by U.S. government agencies and all branches of the military on GSA Schedule Contract #47QTCA18D003G, supplied by Hexagon US Federal and partner Tough Stump Technologies as a standalone solution or as part of the Aerial Reconnaissance Tactical Edge Mapping Imagery System (“ARTEMIS”).
We believe that this will serve to advance our efforts to achieve deeper penetration of the government sector over the next five years. ● Our eBee TAC ™ UAS has been approved by the Defense Innovation Unit (DIU) for procurement by the Department of Defense – We believe that the eBee TAC is ideally positioned to become an in-demand, mission critical tool for the U.S. military, government and civil agencies and our allies worldwide; and expect that this will prove to be a major growth catalyst for our Company in 2022, positively impacting our financial performance in the years ahead. eBee TAC is available for purchase by U.S. government agencies and all branches of the military on GSA Schedule Contract #47QTCA18D003G, supplied by Hexagon US Federal and partner Tough Stump Technologies as a standalone solution or as part of the Aerial Reconnaissance Tactical Edge Mapping Imagery System (“ARTEMIS”).
As of December 31, 2022 and 2021, our goodwill balance was $23.2 million and $64.9 million, respectively. We perform an annual impairment test of our goodwill at least annually in the fourth quarter or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may be impaired.
We perform an annual impairment test of our goodwill at least annually in the fourth quarter or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may be impaired.
During the period from May 29, 2021, through December 31, 2021, we raised $30,868,703 by utilizing our ATM Offering with co-agents Stifel, Nicolaus & Company, Incorporated and Raymond James & Associates. Our primary need for liquidity is to fund working capital requirements of our business, capital expenditures, acquisitions, debt service, and for general corporate purposes.
For the twelve months ended December 30, 2022, we raised approximately $4.6 million of net proceeds from our ATM offering with co-agents Stifel, Nicolaus & Company, Incorporated and Raymond James & Associates. Our primary need for liquidity is to fund working capital requirements of our business, capital expenditures, acquisitions, debt service, and for general corporate purposes.
We believe the following critical accounting estimates affect the more significant judgments and estimates used in preparing our consolidated financial statements. Please see Note 2 to our consolidated financial statements, which are included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report, for our Summary of Significant Accounting Policies.
Please see Note 2 to our consolidated financial statements, which are included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report, for our Summary of Significant Accounting Policies. There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements.
Specifically, as a result of the aforementioned continuing risks, our ability to access components and parts needed in order to manufacture our proprietary drones and sensors, and to perform quality testing have been, and continue to be, impacted.
The aforementioned risks and their respective impacts on the UAV industry and our operational and financial performance remain uncertain and outside of our control. Specifically, because of the aforementioned continuing risks, our ability to access components and parts needed in order to manufacture its proprietary drones and sensors, and to perform quality testing have been, and continue to be, impacted.
If the asset group’s carrying amount exceeds the sum of the undiscounted future cash flows, we would determine the fair value of the asset group and record an impairment loss in net earnings. As of December 31, 2022, we performed our annual goodwill impairment tests for our three reporting units.
If the asset group’s carrying amount exceeds the sum of the undiscounted future cash flows, we would determine the fair value of the asset group and record an impairment loss in net earnings. Intangible assets balance as of December 31, 2023 and 2022 was $2.6 million and $11.5 million, respectively.
For the year ended December 31, 2022, cash provided by financing activities was $17,862,691, a decrease of $27,748,293, or 60.8% as compared to cash provided of $45,610,984 for twelve months ended December 31, 2021.
For the year ended December 31, 2023, cash provided by financing activities was $8.6 million a decrease of $8.9 million, or 50.9% as compared to cash provided of $17.5 million for twelve months ended December 31, 2022.
All share-based awards are expensed on a straight-line basis over the vesting period of the options. Results of Operations Year Ended December 31, 2022 as Compared to Year Ended December 31, 2021 Revenues For the year ended December 31, 2022, revenues were $19,094,425 as compared to $9,760,952 during the year ended December 31, 2021, an increase of $9,333,473, or 95.6%.
All share-based awards are expensed on a straight-line basis over the vesting period of the options. 48 Results of Operations Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022 Revenues For the year ended December 31, 2023, revenues were $13.7 million as compared to $19.1 million during the year ended December 31, 2022, a decrease of $5.4 million, or 28.3%.
The cash flows employed in the DCF analysis are based on our best estimate of future sales, earnings, and cash flows after considering factors such as general market conditions, existing firm orders, expected future orders, changes in working capital, long term business plans and recent operating performance. 43 Table of Contents Finite-lived intangibles are amortized to expense over the applicable useful lives, ranging from five to ten years, based on the nature of the asset and the underlying pattern of economic benefit as reflected by future net cash inflows.
The cash flows employed in the DCF analysis are based on our best estimate of future sales, earnings, and cash flows after considering factors such as general market conditions, existing firm orders, expected future orders, changes in working capital, long term business plans and recent operating performance.
This increase was primarily attributable to the goodwill impairment related to our SaaS and drones reporting units recorded in the fourth quarter of 2022.
For the twelve months ended December 31, 2022, the company record a goodwill impairment of $41.7 million, which was primarily attributable to the goodwill impairment related to our SaaS and drones reporting units recorded in the fourth quarter of 2022.
For the year ended December 31, 2022, cash used in investing activities was $8,359,759, a decrease of $34,137,865, as compared to $42,497,624 for the year ended December 31, 2021.
For the year ended December 31, 2023, cash used in investing activities was $0.8 million, a decrease of $7.6 million as compared to $8.4 million for the year ended December 31, 2022.
All contracts and agreements are a fixed price and are accounted for in accordance with ASC Topic 606, Revenue from Contracts with Customers .
Revenue Recognition Most of the Company’s revenues are derived primarily through the sales of drones, sensors and related accessories, and software subscriptions. All contracts and agreements are a fixed price and are accounted for in accordance with ASC Topic 606, Revenue from Contracts with Customers .
In addition, the eventual implications of higher government deficits and debt, tighter monetary policies and potentially higher, long-term interest rates may drive a higher cost of raising capital in the future. Climate Change Our opinion is that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.
In addition, the eventual implications of higher government deficits and debt, tighter monetary policies and potentially higher, long-term interest rates may drive a higher cost of raising capital in the future.
("AgEagle” or the "Company”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones, sensors and software that solve important problems for our customers. Founded in 2010, AgEagle was originally formed to pioneer proprietary, professional-grade, fixed-winged drones and aerial imagery-based data collection and analytics solutions for the agriculture industry.
Founded in 2010, AgEagle was originally formed to pioneer proprietary, professional-grade, fixed-winged drones and aerial imagery-based data collection and analytics solutions for the agriculture industry.
Sales and Marketing For the twelve months ended December 31, 2022, sales and marketing expenses were $4,935,601 as compared to $3,150,886 for the twelve months ended December 31, 2021, an increase of $1,784,715, or 56.6%.
Sales and Marketing For the twelve months ended December 31, 2023, sales and marketing expenses were $3.7 million as compared to $4.9 million for the twelve months ended December 31, 2022, a decrease of $1.2 million, or 24.5%.
General and Administrative Expenses For the year ended December 31, 2022, general and administrative expenses were $17,757,708 as compared to $14,957,410 for the prior year ended December 31, 2021, resulting in an increase of $2,800,298, or 18.7%.
General and Administrative Expenses For the year ended December 31, 2023, general and administrative expenses were $13.6 million as compared to $17.8 million for the prior year ended December 31, 2022, resulting in a decrease of $4.2 million, or 23.6%.
Gross Profit For the twelve months ended December 31, 2022, gross profit was $8,218,117 as compared to $4,256,244 for the twelve months ended December 31, 2021, an increase of $3,961,873, or 93.1%. For the twelve months ended December 31, 2022, gross profit margin was 43.0% as compared to 43.6% for the twelve months ended December 31, 2021.
For the twelve months ended December 31, 2023, gross profit margin was 39.8% as compared to 43.0% for the twelve months ended December 31, 2022.
Being the first company to receive this DVR from EASA for M2 mitigation is a milestone for AgEagle and our industry in the European Union and will be key to fueling growth of our international customer base. · Our global reseller network currently has more than 200 drone solutions providers in 75+ countries – By leveraging our relationships with the specialty retailers that comprise our global reseller network, AgEagle benefits from enhanced brand-building, lower customer acquisition costs and increased reach, revenues and geographic and vertical market penetration.
Currently, only eBee drones possess both the C2 and C6 marking, affirming their status as the safest choice for flying over people and conducting BVLOS operations. ● Our global reseller network currently has more than 200 drone solutions providers in 75+ countries – By leveraging our relationships with the specialty retailers that comprise our global reseller network, AgEagle benefits from enhanced brand-building, lower customer acquisition costs and increased reach, revenues and geographic and vertical market penetration.
The results of these tests indicated that for our reporting units no impairment charges were necessary related to our finite-intangibles assets of $13.6 million. Share-Based Compensation Awards The value we assign to the options that we issue is based on the fair market value as calculated by the Black-Scholes pricing model.
Additionally, as of December 31, 2023 the Company recorded an aggregate intangible assets impairment of $5.9 million, no intangible impairment was recorded for the same period on 2022. Share-Based Compensation Awards The value we assign to the options that we issue is based on the fair market value as calculated by the Black-Scholes pricing model.
The increase was primarily due to a $6,463,101 non-cash gain on debt extinguishment associated with reductions of holdback liabilities in connection with our acquisitions of senseFly and MicaSense realized in the third quarter of 2022, offset mainly by foreign exchange realized losses along with interest expense and loss on disposal of fixed assets.
The fluctuation of $9.3 million was primarily due to the third quarter 2022 recognition of $6.5 million non-cash gain on debt extinguishment associated with reductions of holdback liabilities in connection with our acquisitions of senseFly and MicaSense that was not recognized in 2023, plus the loss on the debt extinguishment and interest on the Promissory Note amounting to $1.9 million and an increase in interest expense in current year 2023 of $0.9 million from the prior year.
Liquidity and Capital Resources As of December 31, 2022, we had working capital of $9,079,091. For the year ended December 31, 2022, we incurred a loss from operations of $64,276,837, inclusive of $41,687,871 for goodwill impairment, an increase of $33,984,064, as compared to $30,292,772 for the year ended December 31, 2021.
Liquidity and Capital Resources As of December 31, 2023, we had a working capital deficit of $0.5 million. For the year ended December 31, 2023, we incurred a loss from operations of $42.4 million, a decrease of $15.9 million, as compared to $58.3 million for the year ended December 31, 2022.
We have established three Centers of Excellence that our leadership has challenged to cross-pollinate ideas, industry insights and interdisciplinary skillsets to generate intelligent autonomous solutions that efficiently leverage our expertise in robotics, automation and manufacturing to solve problems for our customers, irrespective of the industry sector in which they may operate. · We offer market-tested drones, sensors and software solutions that have earned the longstanding trust and fidelity of customers worldwide – Through successful execution of our acquisition integration strategy in 2022, AgEagle is now delivering a unified line of industry trusted drones, sensors and software that have been vigorously tested and consistently proven across multiple industry verticals and use cases.
Reflecting our software development team’s superb problem-solving capabilities, Field Check provides our clients with a competitive edge in their drone operations and across the industries they serve by avoiding project repeats and downtime due to data processing errors or poor image quality. 44 ● We offer market-tested drones, sensors and software solutions that have earned the longstanding trust and fidelity of customers worldwide – Through successful execution of our acquisition integration strategy in 2022, AgEagle is now delivering a unified line of industry trusted drones, sensors and software that have been vigorously tested and consistently proven across multiple industry verticals and use cases.
Net Income (Loss) For the year ended December 31, 2022, the Company incurred a net loss of $58,253,723 as compared to a net loss of $30,108,680 for the year ended December 31, 2021, an increase of $28,145,043, or 93.5%.
Net Loss For the year ended December 31, 2023, the Company incurred a net loss of $42.4 million as compared to a net loss of $58.3 million for the year ended December 31, 2022, a decrease in loss of $15.9 million or 27.3%.
We perform an impairment test of finite-lived intangibles whenever events or changes in circumstances indicate their carrying value may be impaired.
Finite-lived intangibles are amortized to expense over the applicable useful lives, ranging from five to ten years, based on the nature of the asset and the underlying pattern of economic benefit as reflected by future net cash inflows. We perform an impairment test of finite-lived intangibles whenever events or changes in circumstances indicate their carrying value may be impaired.
For the year ended December 31, 2022, cash used in operations $20,107,670, an increase of $7,644,542, as compared to $12,463,127 for the year ended December 31, 2021.
For the year ended December 31, 2023, cash used in operations was $11.0 million, a decrease of $8.8 million, as compared to $19.8 million for the year ended December 31, 2022.
The increase in cash used in operating activities was mainly driven by greater operating expenses incurred in 2022 as a result of our 2021 Acquisitions, which included higher inventory purchases and prepayments, along with additional accounts payable, accrued expenses and other liabilities associated with the reporting units.
The decrease in cash used in operating activities was principally driven by lower sales and operating expenses which included significantly lower inventory purchases, prepaids, accounts payable, accrued expenses and contract liabilities.
Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. The operating results for the periods presented were not materially affected by inflation. Overview AgEagle ™ Aerial Systems Inc.
Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. 41 Overview AgEagle ™ Aerial Systems Inc. (“AgEagle” or the “Company”), through its wholly owned subsidiaries, is actively engaged in designing and delivering best-in-class drones, sensors and software that solve important problems for our customers.
Due to the lower than forecasted sales and profitability along with declining market conditions, decline stock price and changes in our technologies, the Company recorded an impairment charge to these two reporting units of $29,032,294 and $12,655,577, respectively, during the fourth quarter and for the year ended December 31, 2022. 45 Table of Contents Total Other Income For the year ended December 31, 2022, other income, net was $6,023,114 as compared to $184,092 for the year ended December 31, 2021.
The Company recorded an impairment charge to these two reporting units of $29.0 million and $12.7 million, respectively, during the fourth quarter and for the year ended December 31, 2022.
The decrease in cash used in our investing activities resulted from the 2021 Acquisitions, purchase of property and equipment and building improvements related to the new leased warehouse and corporate offices in Wichita, along with recording capitalized costs associated with the development of the Measure Ground Control platform.
The decrease in cash used in our investing activities resulted mainly from the business acquisition of MicaSense and senseFly that occurred in 2022 and a decrease in platform and internal use software costs along with purchases of property and equipment.
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As a result, we have earned ISO:9001 international certification for our Quality Management System. · AgEagle is more than just customer- and product-centric, we are obsessed with innovation and knowing the needs of our customers before they do – We are focused on capitalizing on our specialized expertise in innovating and commercializing advanced drone, sensor and software technologies to provide our existing and future customers with autonomous robotic solutions that meet the highest possible safety and operational standards and fit their specific business needs.
Added
We intend to grow our business and preserve our leadership position by developing new drones, sensors and software and capturing a significant share of the global drone market. In addition, we expect to accelerate our growth and expansion through strategic acquisitions of companies offering distinct technological and competitive advantages and have defensible IP protection in place, if applicable.
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During the year ended December 31, 2022, the COVID-19 pandemic and other supply chain disruptions continued to have a significant negative impact on the UAV industry, our customers and our business globally. The aforementioned risks and their respective impact on the UAV industry and our operational and financial performance remains uncertain and outside of our control.
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As a result, we have earned ISO:9001 international certification for our Quality Management System. ● In December 2022, we unveiled our new eBee™ VISION , a small, fixed-wing UAS designed to provide real-time, enhanced situational awareness for critical intelligence, surveillance and reconnaissance missions; to produce and deliver eBee™ VISION fixed-wing drones and customized command and control software that proves compatible and is in full compliance with the DoD Robotic and Autonomous System-Air Interoperability Profile (“RAS-A IOP”).
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We expect the pandemic, inflation and supply chain disruptions and its effects to continue to have a significant negative impact on our business for the duration of the pandemic and during the subsequent economic recovery, which could be for an extended period. 41 Table of Contents For the year ended December 31, 2022, our supply chain was adversely impacted by the COVID-19 pandemic and other global economic challenges, causing material delays in the delivery of critical components associated with production of our Altum-PT ™ and RedEdge-P ™ multispectral sensors, that we began to sell in early 2022.
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In addition, three branches of European military forces have taken delivery of eBee VISION drones in 2023.
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These delays resulted in a significant backlog of purchase orders for our sensors. Steps taken in early 2022 to expand our supply sources has allowed us to resolve the majority of our backlogged sensor orders and be better positioned to meet ongoing global market demand in the foreseeable future.
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In support of its sales and pre-order efforts, AgEagle’s team has been engaged in numerous live demonstrations and intensive training sessions with officials from government and military agencies across the world seeking to leverage the power of eBee VISION in their respective drone operations.
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While we believe we have largely overcome our supply chain challenges, this is an ongoing situation we will continue to monitor closely.
Added
In July 2023 alone, we completed a comprehensive training session with our first European military customers, who were confirmed as eBee VISION operators and qualified trainers of new users.
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There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements. Revenue Recognition Most of the Company’s revenues are derived primarily through the sales of drone, sensors and related accessories, and software subscriptions.
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These new customers confirmed with AgEagle’s technical teams that all operational capabilities of the eBee VISION continue to meet and exceed performance benchmarks in scouting, surveillance, usability, fast deployment and flight time, among other use case criteria specified by the international military community.
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The results of these tests indicated that the Company’s sensors and software reporting units exceeded their respective carrying amounts, while the fair value of the SaaS reporting unit was less than the amount reflected in the consolidated balance sheet. Accordingly, the Company recorded a $12,357,921 goodwill impairment charge on its SaaS reporting unit during the fourth quarter of 2021.
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We have also been working in close collaboration with our network of valued added reselling partners in France, United Kingdom, Poland, Italy and Spain, among other countries, to conduct live demonstrations and technical exchanges with prospective new customers, with emphasis on showcasing use of eBee VISION UAS for public safety and first responder missions, border patrol and a wide range of commercial applications.
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The increase was attributable to the revenues derived from sales of our e Bee drone products acquired in the senseFly Acquisition in the fourth quarter of 2021, coupled with total sensor sales climbing 305% to $9,840,321 from $2,428,858.
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On September 6, 2023, the Company announced that commercial production of the eBee VISION had commenced and orders for the systems are now being accepted.
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Revenue growth was also positively impacted by continued strong demand for our Altum-PT and RedEdge-P multispectral sensors, which resulted in total sensor sales rising 27% to $8,655,434 from $6,793,727. In addition, SaaS subscriptions increased 11% to $598,670 for the twelve months ended December 31, 2022, compared to $538,367 for the same period in the prior year.
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In May 2023, we released the new RedEdge-P™ dual high resolution and RGB composite drone sensor, representing yet another AgEagle technological advancement in aerial imaging cameras, seamlessly integrating the power and performance of the RedEdge-P and the new RedEdge-P blue cameras in a single solution. The RedEdge-P dual doubles analytical capabilities with the benefit of a single camera workflow.
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The COVID-19 pandemic and its effects continue to have a negative impact on our business due to global supply chain constraints, inflation, and adverse labor market conditions, which could last for an extended period of time.
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Its coastal blue band – the first of its kind in the market – was specifically designed for vegetation analysis of water bodies; environmental monitoring; water management; habitat monitoring, protection and restoration; and vegetation species and weeds identification, including differentiating and counting plants, trees, invasive species and weeds.
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Although we understand that market conditions impacting supply chain are not predictable at this time, we do believe we have made material progress in addressing our backlog of orders for our sensors in the third quarter of 2022 and will continue to monitor the situation on an on-going basis.
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In April of this year, AgEagle released Field Check for the Measure Ground Control mobile app. Measure Ground Control is a complete Software-as-a-Service solution for drone program management that is available as a web app and mobile app for both iOS and Android devices.
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Cost of Sales 44 Table of Contents For the year ended December 31, 2022, cost of sales was $10,876,308 as compared to $5,504,708 during 2021, an increase of $5,371,600, or 97.6%.
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The software’s capabilities include mission and equipment management, flight control, data processing and analysis, secure data storage and sharing, online collaboration and reporting. Field Check’s unique feature set enables users to review and validate the quality of their drone-captured imagery on-site.
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The increase in our cost of sales was attributable to new sales of eBees, acquired in the senseFly Acquisition in October 2021, and an increase in sensor sales, as well as higher costs associated with the effects of supply chain constraints, including shortages in electronic components and inflation caused by higher costs to acquire electronic components, increased labor expenses and higher freight-in costs.
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Capturing target imagery right the first time in one trip to a project site allows users to eliminate time loss and costs associated with project reworks by ensuring data capture is complete and ready for processing into high-resolution outputs before leaving a site.
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The decrease in gross profit margin was mainly due to a slight decline in our drone and sensor margins as a result of higher component and labor costs along with increased shipping expenses over the twelve-month period.
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In addition, we have championed the development of end-to-end software solutions which power autonomous flight and deliver actionable, contextual data and analytics for numerous Fortune 500 companies, government agencies and a wide range of businesses in agriculture, energy and utilities, construction and other industry sectors. ● AgEagle was awarded a Multiple Award Schedule (“MAS”) Contract by the U.S. federal government’s General Services Administration (“GSA”) – In April 2023, the centralized procurement arm of the federal government, the GSA, awarded us with a five-year MAS contract.
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Operating Expenses For the year ended December 31, 2022, operating expenses were $72,494,954, as compared to $34,549,016 during 2021, an increase of $37,945,938, or 109.8%. Operating expenses comprise of general and administrative expenses, research and development, sales and marketing, along with goodwill impairment costs.
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The GSA Schedule Contract is a highly coveted award in the government contracting space and is the result of a rigorous proposal process involving the demonstration of products and services in-demand by government agencies, and the negotiation of their prices, qualifications, terms and conditions.
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The increase was primarily due to costs associated with the senseFly acquisition which can be mainly attributed to additional payroll, bonus, and social charges along with the office rents for Raleigh, North Carolina and Lausanne, Switzerland.
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Contractors selling through the GSA Contract are carefully vetted and must have a proven track record in the industry.
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Also contributing to the increase was ERP costs offset by a reduction in stock compensation expenses related to employees and directors and additional amortization expense associated with the intangibles acquired as part of the 2021 Acquisitions and platform development costs.

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