EXYN 10-Q/A
Exyn Technologies, Inc. (EXYN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ |
Commission File Number
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
The | ||||
The |
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | | ☐ | | Accelerated filer | | ☐ |
☒ | Smaller reporting company | |||||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
The number of shares of Registrant’s common stock outstanding as of August 5, 2026 was
EXPLANATORY NOTE
Exyn Technologies, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to amend the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, originally filed with the Securities and Exchange Commission on August 19, 2026 (the “Original Filing”), to (i) correct errors in the narrative disclosure contained in Part II, Item 1A (Risk Factors) and Part II, Item 5 (Other Information) of the Original Filing regarding the departure of the Company's former Chief Executive Officer and Chairman of the Board of Directors of the Company, Brandon Torres Declet, and (ii) to identify the Company's current Interim Chief Executive Officer as the Company's Chief Operating Decision Maker in Note 15 - Segment Reporting. This Amendment corrects the description of Mr. Declet's departure in each of the affected items in Part II to accurately reflect his resignation from his positions at the Company.
No changes have been made to the condensed consolidated financial statements or the related notes included in the Original Filing, and this Amendment does not affect any financial information previously reported by the Company.
Other than the amendments described above, this Amendment does not modify or update any other disclosures set forth in the Original Filing and does not otherwise reflect events occurring after the date of the Original Filing.
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TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, included or incorporated in this report regarding, among other things, our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, are forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements contained in this Quarterly Report on Form 10-Q may include, but are not limited to, statements about:
| ● | our market opportunity and the potential growth of that market; |
| ● | our strategy, outcomes, and growth prospects; |
| ● | trends in our industry and markets; and |
| ● | the competitive environment in which we operate. |
Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:
| ● | our failure to manage our growth effectively and our ability to achieve and maintain profitability; |
| ● | our management transition; |
| ● | our failure to raise substantial additional funds in the future; |
| ● | our inability to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements; |
| ● | our failure to penetrate new markets; |
| ● | commercial operational risks because of our reliance on technology; |
| ● | the potential for design or manufacturing defects with respect to our products; |
| ● | uncertain global macro-economic and political conditions, including the implementation of tariffs; |
| ● | disruptions in U.S. government operations and funding and budgetary priorities of the U.S. government; |
| ● | the failure of our information technology systems, physical or electronic security protections to prevent security breaches or unauthorized access; |
| ● | the scarcity or unavailability of critical components or raw materials used to manufacture our products; |
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| ● | the fluctuation of our operating results; |
| ● | adverse publicity stemming from any incident involving us, our competitors, or our customers; |
| ● | the failure to adequately protect our proprietary intellectual property rights; |
| ● | our inability to comply with our contractual obligations; |
| ● | evolving government laws and regulations; |
| ● | our inability to generate sufficient cash to service all of our indebtedness; |
| ● | our inability to attract and retain qualified personnel, including top technical talent; and |
| ● | the other factors set forth below under Item 1A. “Risk Factors.” |
There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These important factors include those set forth in the “Risk Factors” sections of this Quarterly Report on Form 10-Q and our Registration Statement on Form S-1 (File No. 333-297134) filed on June 29, 2026 and declared effective by the SEC on July 2, 2026, and in our other disclosures and filings with the SEC. These factors and the other cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all related forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.
In addition, any forward-looking statements represent our estimates only as of the date that this Quarterly Report on Form 10-Q is filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. All forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof and are expressly qualified in their entirety by this cautionary notice. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by law.
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
EXYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | | December 31, | |||
2026 | 2025 | |||||
Assets | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use assets |
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Other assets |
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Total assets | $ | | $ | | ||
Liabilities and Stockholders’ Equity (Deficit) |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities |
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SAFE liabilities |
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Deferred revenues |
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Current portion of operating lease liabilities |
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Current portion of notes payable, net |
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Total current liabilities |
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Long-term liabilities: |
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Operating lease liabilities, net of current portion |
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Total long-term liabilities |
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Total liabilities |
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Stockholders’ Equity (Deficit) |
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Preferred Stock, $ |
| — |
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Common Stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Accumulated other comprehensive loss |
| ( |
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Total stockholders’ equity (deficit) |
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| ( | ||
Total liabilities and stockholders’ equity (deficit) | $ | | $ | | ||
See accompanying notes to these unaudited condensed consolidated financial statements.
1
EXYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||
2026 | | 2025 | | 2026 | | 2025 | ||||||
Revenues, net | $ | | $ | | $ | | $ | | ||||
Cost of revenues |
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Gross profit |
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Operating expenses: |
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Selling, general, and administrative expenses |
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Research and development expenses |
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Stock-based compensation |
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Total operating expenses |
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Operating loss |
| ( |
| ( | ( | ( | ||||||
Non-operating income (expense): |
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Interest expense |
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| ( | ( | ( | ||||||
Interest income |
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Noncash change in fair value of SAFE liabilities |
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| ( | | ( | ||||||
Debt modification expense | ( | — | ( | — | ||||||||
Debt settlement expense | ( | — | ( | — | ||||||||
Other expense |
| ( |
| ( | ( | ( | ||||||
Total non-operating income (expense) |
| ( |
| ( | ( | ( | ||||||
Net loss before income tax benefit |
| ( |
| ( | ( | ( | ||||||
Income Tax Benefit |
| — |
| — | — | — | ||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income (loss): |
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Foreign currency translation | $ | | $ | ( | $ | | $ | ( | ||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share: basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted-average number of common shares outstanding - basic and diluted |
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See accompanying notes to these unaudited condensed consolidated financial statements.
2
EXYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
Three and Six Months Ended June 30, 2026
| | | | | | | Accumulated | | ||||||||||||||
Additional | Other | Total | ||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||
Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Loss | | Deficit | ||||||||
Balance - December 31, 2025 | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||||
Issuance of preferred stock upon conversion of warrants |
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Foreign currency translation |
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Stock-based compensation |
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Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Balance – March 31, 2026 | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||||
Issuance of common stock and warrants, net of expenses and underwriting fees of $ | — | — | | | | — | — | | ||||||||||||||
Issuance of equity kicker shares | — | — | | | | — | — | | ||||||||||||||
Issuance of warrants in connection with conversion of debt | — | — | — | — | | — | — | | ||||||||||||||
Conversion of SAFE liabilities into common stock | — | — | | | | — | — | | ||||||||||||||
Conversion of notes payable into common stock | — | — | | | | — | — | | ||||||||||||||
Conversion of preferred stock and warrants to common stock | ( | ( | | | | — | — | — | ||||||||||||||
Foreign currency translation | — | — | — | — | — | — | | | ||||||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
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| ( | ||||||
Balance – June 30, 2026 |
| — | $ | — |
| | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Three and Six Months Ended June 30, 2025
| | | | | | | Accumulated | | ||||||||||||||
Additional | Other | Total | ||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||
Shares | | Amount | Shares | | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||
Balance - December 31, 2024 |
| | $ | |
| | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Foreign currency translation |
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Stock-based compensation | — | — | — | — | | — | — | | ||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||
Balance - March 31, 2025 | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||||
Foreign currency translation | — | — | — | — | — | — | ( | ( | ||||||||||||||
Stock-based compensation |
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Net loss |
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| — |
| ( |
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Balance – June 30, 2025 |
| | $ | |
| | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
3
EXYN TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | |||||
2026 | | 2025 | ||||
Cash flows from operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in | ||||||
Operating activities: | ||||||
Depreciation and amortization |
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Amortization of debt issuance costs |
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Amortization of right of use assets |
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Debt modification expenses | | — | ||||
Stock payments made for settlement of debt | | — | ||||
Noncash change in fair value of SAFE liabilities |
| ( |
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Stock-based compensation |
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Change in provision for credit losses |
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Changes in assets and liabilities: | ||||||
Accounts receivable |
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Inventories |
| ( |
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Prepaid expenses and other current assets |
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Accounts payable |
| ( |
| ( | ||
Accrued expenses and other current liabilities |
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Operating lease liabilities |
| ( |
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Net cash used in operating activities |
| ( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
| ( |
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Net cash used in investing activities |
| ( |
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Cash flows from financing activities: |
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Proceed from the issuance of common stock, net of expenses and underwriting fees of $ |
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Net borrowings under notes payable | | | ||||
Net repayments under notes payable | ( | — | ||||
Net borrowings under SAFE liabilities |
| — |
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Net cash provided by financing activities |
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Net change in cash |
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| ( | ||
Cash, beginning of period: |
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Cash, end of period: | $ | | $ | | ||
Supplemental disclosure of cash flow information: | ||||||
Cash paid for interest | $ | | $ | | ||
Cash paid for income taxes | $ | — | $ | — | ||
Non-cash investing and financing activity |
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Issuance of warrants in connection with conversion of debt | $ | | $ | — | ||
Issuance of equity kicker shares | $ | | $ | — | ||
Conversion of debt into common stock | $ | | $ | — | ||
Conversion of SAFE liabilities into common stock | $ | | $ | — | ||
See accompanying notes to these unaudited condensed consolidated financial statements.
4
EXYN TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Exyn Technologies, Inc. (“Exyn” or the “Company”) was incorporated in the State of Delaware on May 12, 2014. The Company is a pioneer in fully adaptive and cognitive mission-level autonomous robotics and artificial intelligence. The Level 4B autonomy platform allows aerial and ground robotic systems to navigate safely and efficiently in complex, GPS-denied environments. Its full-stack solution enables flexible deployment of single or multi-robot fleets that can intelligently navigate and dynamically adapt to challenging environments in real time.
As of June 30, 2026, Exyn had
| ● | Exyn Latin America SPA, Inc. (“Exyn Latam”): Formed in April 2023 to focus on business development and sales in the Latin America region. |
| ● | Exyn Defense: Formed in October 2024 to focus on business development and sales in the defense industry in the US and internationally. This subsidiary had no activity during the three and six months ended June 30, 2026. |
Unless otherwise indicated, references to “Exyn” or the “Company” herein collectively refer to Exyn Technologies, Inc. and its subsidiaries.
On May 15, 2026, the Company effected a reverse stock split of the Company’s issued and outstanding shares of common stock and preferred stock. All common share amounts, preferred share amounts, per share amounts, exercise prices, conversion ratios and other share-related information presented in these condensed consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.
On May 18, 2026, the Company completed its initial public offering (“IPO”) of
Basis of Presentation. The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements as certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to fairly present the results of the interim periods. The results of operations for three and six months ended and cash flows for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2026 or any other future period. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Registration Statement on Form S-1/A (File No. 333-294453) filed with the SEC on May 11, 2026 and declared effective by the SEC on May 14, 2026 (the “IPO Registration Statement”).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Company’s significant estimates used in these consolidated financial statements include, but are not limited to, revenue recognition, fair value of stock-based compensation, fair value of SAFE instruments, warrants, and the determination of the economic useful life of depreciable property and equipment. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.
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Cash and Cash Equivalents. The Company considers all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents.
Accounts Receivable. Accounts receivable are carried at their contractual amounts, less an estimated allowance for credit losses. Credit is granted in the normal course of business without collateral. The typical payment term is
Inventories. Inventory is recorded at the lower of cost or net realizable value on an average cost basis. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow moving based on a review of recent sales trends and expected future demand.
Property and Equipment. Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows:
Deferred revenue. The Company classifies amounts billed to customers for which the related services or performance obligations have not yet been satisfied as deferred revenue, which represents contract liabilities under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606. These amounts are recorded as a contract liability until the Company fulfills its obligations under the contract.
Deferred revenue activity as of June 30, 2026 is summarized as follows:
| 2026 | ||
Balance at December 31, 2025 | $ | | |
Billings in advance of revenue recognition |
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Revenue recognized from beginning balance |
| ( | |
Balance at June 30, 2026 | $ | | |
All deferred revenue outstanding as of June 30, 2026 is expected to be recognized within the following twelve months. Because the Company’s contracts have an original expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations.
Contingent Liabilities. The Company, from time to time, may be involved in certain legal proceedings. Based upon consultation with outside counsel handling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arising from such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its consolidated financial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptions and judgments, reflects the most likely outcome, is recorded as a contingent liability in the consolidated financial statements. In situations where none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company records the low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these types of contingencies are recognized in the period in which the litigation services were provided.
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Stock-based Payments. The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The fair value of restricted stock awards is estimated by the market price of the Company’s common stock at the date of grant. Restricted stock awards are being amortized to expense over the shorter of the requisite service period or the actual vesting period. The Company estimates the fair value of option and warrant awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the shorter of the requisite service period or the actual vesting period, using the straight-line method. In June 2018, the FASB issued Accounting Standard Update (“ASU”) No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee stock-based Payment Accounting (the “2018 Update”). The amendments in the 2018 Update expand the scope of Topic 718 to include stock-based payment transactions for acquiring goods and services from non-employees. Prior to the 2018 Update, Topic 718 applied only to share- based transactions to employees. Consistent with the accounting requirement for employee stock-based payment awards, nonemployee stock-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The Company has elected to account for forfeiture of stock-based awards as they occur.
Warrants. The Company classifies a warrant to purchase shares of its common stock as equity on its consolidated balance sheets as this warrant is a free-standing financial instrument that is indexed to the Company’s own stock and meets the criteria for equity classification. Each warrant is initially recorded within equity at the date of grant, net of issuance costs, and is not subsequently re-measured. Changes in the fair value of the warrant are not recognized after the initial measurement. The warrants will remain classified in equity until they are exercised or expire.
Revenue Recognition. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for fulfilling those performance obligations. The Company’s primary revenue streams include sales of aerial robotic systems and related software solutions, service revenue and subscription revenue generated through the Company’s installment program.
Product Sales
Beginning in August 2024, revenue for product sales is recognized upon shipment, which is the point in time when control of the product transfers to the customer. Prior to August 2024, revenue was recognized upon customer receipt.
Subscription Revenue Installment Program
The Company offers customers an installment-based subscription program under which a drone is delivered to the customer at the outset, and the customer pays fixed monthly subscription fees usually over a
Under ASC 606, the Company has determined that the installment program represents a series of monthly performance obligations to provide the customer with access to and use of the drone for as long as the customer continues to participate in the program. Revenue is recognized monthly, as invoices are issued and the Company’s right to consideration for each installment becomes unconditional. A trade receivable is recorded only for amounts invoiced. The total monthly subscription fees over the 24-month period equal the cash selling price of the drone. The Company evaluated whether the installment program includes a significant financing component and concluded that it does not, as the absence of interest represents a sales incentive.
Service Revenue
Service revenue is recognized over time as the related services are performed, based on the nature of the underlying service arrangement.
Remaining Performance Obligations
As of June 30, 2026 and December 31, 2025, deferred revenue totaled $
7
Concentration
Revenue from
Cost of Revenues. Cost of revenues includes materials, wages, freight charges, depreciation and inspection costs.
Comprehensive income (loss). The Company follows Accounting Standards Codification ASC 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Other comprehensive income is limited to foreign currency translation adjustments. Therefore, total comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments.
Foreign Currency Transactions and Translation. Exyn’s functional currency is the United States Dollar (“USD”) and Exyn Latam’s functional currency is the Chilean Peso (“CLP”).
For the purpose of presenting these consolidated financial statements the reporting currency is USD. The Company’s assets and liabilities are expressed in USD at the exchange rate on the balance sheet date, equity accounts are translated at historical rates, and income and expense items are translated at the weighted average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income in the stockholders’ equity section of the balance sheets.
Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction.
Exchange rate used for the translation are as follows:
| Three Months | | Three Months | | Six Months | | Six Months | |||||
Ended | Ended | Ended | Ended | |||||||||
June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||
CLP to USD |
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| | ||||||
Spot | $ | | $ | | $ | | $ | | ||||
Average | $ | | $ | | $ | | $ | | ||||
Earnings Per Share. The Company follows ASC 260 when reporting Earnings Per Share (“EPS”) resulting in the presentation of basic and diluted earnings per share. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of vested common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of vested common shares outstanding, plus the effect of potentially dilutive common stock equivalents, if any. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
For the three and six months ended June 30, 2026 and 2025, the Company had net losses and therefore all potentially dilutive securities were excluded from the diluted EPS calculation, as their inclusion would have been anti-dilutive.
For the three and six months ended June 30, 2026 and 2025, the Company excluded the following common stock equivalents from its calculation of diluted EPS, as their effect would have been anti-dilutive.
| Three Months | | Three Months | | Six Months | | Six Months | |
Ended | Ended | Ended | Ended | |||||
June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||
Convertible Preferred Stock | — | | — | | ||||
Options | | | | | ||||
Warrants for equity investors and placement agent |
| |
| | | | ||
Total Common Stock Equivalents |
| |
| | | |
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During the three and six months ended June 30, 2025, the Company issued $
Deferred Financing Costs. Deferred financing costs include debt discounts and debt issuance costs related to a recognized debt liability and are presented in the balance sheet as a direct deduction from the carrying value of the debt liability. Amortization of deferred financing costs are included as a component of interest expense. Deferred financing costs are amortized using the straight-line method over the term of the recognized debt liability which approximates the effective interest method.
Income Taxes. The Company accounts for income taxes under the provisions of the FASB ASC Topic 740 “Income Taxes”. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements as of June 30, 2026 and December 31, 2025. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated statements of comprehensive income. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
Fair Value Measurements. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)
There were
The following tables show the fair value measurements used by level as of December 31, 2025:
December 31, 2025 | ||||||||||||
Quoted Prices | Significant | |||||||||||
in Active | Other | Significant | ||||||||||
Markets for | Observable | Unobservable | ||||||||||
Identical Assets | Inputs | Inputs | ||||||||||
| (Level 1) | | (Level 2) | | (Level 3) | | Total | |||||
SAFE Liabilities | $ | — | $ | — | $ | | $ | | ||||
Total Liabilities | $ | — | $ | — | $ | | $ | | ||||
The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and other current liabilities approximate fair values due to the short-term nature of these instruments The estimated fair value of the Company’s long-term debt approximates the carrying value of these instruments, due to the interest rates on this debt approximating current market interest rates.
9
During the year ended December 31, 2025, the Company issued SAFEs, with gross proceeds totaling $
Measurement
As there are no quoted prices or observable market inputs available for these instruments, the SAFEs are classified within Level 3 of the fair value hierarchy. The Company engaged a third-party valuation specialist to assist in the estimation of fair value at each reporting date using a Probability-Weighted Expected Return Method to probability-weight discrete outcomes (including equity financing, liquidity event, termination, and dissolution) and an Option Pricing Model to value the option-like conversion features within the applicable scenarios.
The following table summarizes the changes in SAFE liabilities as of June 30, 2026:
| 2026 | ||
Beginning Balance, January 1 | $ | | |
Change in fair value recognized in earnings | ( | ||
Conversion of SAFE liabilities at close of IPO |
| ( | |
Ending Balance, June 30 | $ | — | |
As a Level 3 fair value measurement, the estimated fair value of the SAFE liabilities is sensitive to changes in significant unobservable inputs, including the assumed probability and timing of future equity financings and liquidity events, the Company’s implied equity value, volatility, and the discount rate. Changes in these inputs may increase or decrease the estimated fair value depending on their effect on the probability-weighted expected payoff to SAFE holders. For example, a decrease in the discount rate generally increases the estimated fair value; however, changes in event probabilities or volatility may have different directional effects depending on the contractual terms and modeled outcomes.
Concentration of Credit Risks. Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents and accounts receivable. Cash and cash equivalents are invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents. In regard to trade receivables, the Company performs ongoing evaluations of its customers’ financial condition as well as general economic conditions and, generally, requires no collateral from its customers.
Leases. The Company leases certain facilities and office space. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using an incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The Company has operating lease arrangements with lease and non-lease components. The non-lease components in these arrangements are not significant when compared to the lease components. For all operating leases, the Company accounts for the lease and non-lease components as a single component in the calculation of the lease asset and corresponding liability.
Variable lease payments are generally expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases is recognized on a straight-line basis over the lease term. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Recent Accounting Pronouncements Not Yet Adopted. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). The new guidance requires disaggregated information about certain income statement expense line items on an annual and interim basis. This guidance will be effective for annual periods beginning the year ended December 31, 2027 and for interim periods thereafter. The new standard permits early adoption and can be applied prospectively or retrospectively. The Company is evaluating the impact of this ASU on its consolidated financial statements disclosures.
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Segment Reporting. The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker (“CODM”) is the Interim Chief Executive Officer (“CEO”) of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company’s primary revenue stream includes the sale of aerial robotic systems and related software solutions that enable data collection, mapping, and inspection. Based on the CODM’s evaluation and internal reporting, the Company has
3. GOING CONCERN
The condensed consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for 12 months from the date the condensed consolidated financial statements were available to be issued. The Company has negative cash flows from operations and net losses for the three and six months ended June 30, 2026 and further losses are anticipated in the development of its business. These factors raise substantial doubts about the Company’s ability to continue as a going concern for a period of 12 months from the date the consolidated financial statements were available to be issued.
As of June 30, 2026, the Company had $
The Company expects to need additional capital in order to increase revenues above current levels, and is actively pursuing additional funding through various sources, including potential debt, equity or other capital-raising alternatives, to meet its future operating and capital needs. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. Management has concluded that substantial doubt is not alleviated by its plans. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on its business, financial condition and results of operations. The financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
4. ACCOUNTS RECEIVABLE
Accounts receivable consists of the following as of June 30, 2026 and December 31, 2025:
| 2026 | | 2025 | |||
Trade accounts receivable | $ | | $ | | ||
Less: allowance for credit losses |
| ( |
| ( | ||
Total accounts receivable | $ | | $ | | ||
5. INVENTORIES
Inventories, net consists of the following as of June 30, 2026 and December 31, 2025:
| 2026 | | 2025 | |||
Raw materials | $ | | $ | | ||
Finished goods |
| |
| | ||
Inventories, gross |
| |
| | ||
Obsolescence reserve |
| ( |
| ( | ||
Total inventories, net | $ | | $ | | ||
During the three months ended June 30, 2026 and 2025 the Company recorded an inventory write-off of $
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6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Other current assets consist of the following as of June 30, 2026 and December 31, 2025:
| 2026 | | 2025 | |||
Prepaid expenses | $ | | $ | | ||
Deferred financing costs |
| — |
| | ||
Other |
| |
| | ||
Total prepaid expenses and other current assets | $ | | $ | | ||
7. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following as of June 30, 2026 and December 31, 2025:
| 2026 | | 2025 | |||
Lab, office and computer equipment | $ | | $ | | ||
Furniture and fixtures |
| |
| | ||
Leasehold improvements |
| |
| | ||
Computer software |
| — |
| | ||
| |
| | |||
Less: accumulated depreciation |
| ( |
| ( | ||
Total property and equipment, net | $ | | $ | | ||
Depreciation expense was $
8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following as of June 30, 2026 and December 31, 2025:
| 2026 | | 2025 | |||
Accrued payroll and related benefits | $ | | $ | | ||
Accrued expenses |
| |
| | ||
Accrued other taxes |
| |
| | ||
Other |
| |
| | ||
Total accrued expenses and other current liabilities | $ | | $ | | ||
9. SAFE LIABILITIES
In April 2025, the Company issued SAFEs for gross proceeds of $
In August and December 2025, the Company issued SAFEs for aggregate gross proceeds of $
Concurrently with the closing of its IPO of its stock on May 18, 2026, the April, August and December 2025 SAFEs automatically converted into the number of shares of the series of preferred stock issued in such financing determined by dividing the investment amount by the lower of (i)
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The SAFEs also contained customary provisions for mandatory conversion upon a qualified equity event, liquidity event, or dissolution event prior to the expiration date. Repayment of the SAFEs in an amount equal to the purchase amount would have been required upon a dissolution event. The investor could have also opted for repayment upon termination of the agreement.
The Company’s SAFEs were classified as liabilities, as they failed equity classification per ASC 815-40 due to the possibility that repayment of the purchase amount may be required or may be elected upon dissolution of the Company or termination of the agreement. In addition, the conversion features provided for a variable number of shares based on the lower of a discount to the price per share in a future financing or a valuation cap, and therefore the instruments do not qualify for equity classification under ASC 815-40. The SAFEs were re-measured to fair value at each reporting date, with changes in fair value recognized in earnings. See Note 2, Summary of Significant Accounting Policies — Fair Value Measurements, for additional detail regarding the Company’s fair value hierarchy classification and the valuation techniques and significant unobservable inputs used to measure the SAFE liabilities.
10. NOTES PAYABLE
Principal due under notes payable was as follows as of June 30, 2026 and December 31, 2025:
| 2026 | | 2025 | |||
Notes payable | $ | | $ | | ||
Less: debt discount |
| — |
| ( | ||
Notes payable, net |
| |
| | ||
Less: current portion |
| ( |
| ( | ||
Total: non-current portion | $ | — | $ | — | ||
For the three months ended June 30, 2026 and 2025, the Company recognized total interest expense of approximately $
Western Alliance Bank Term Loan
On September 27, 2023, the Company entered into a Loan and Security Agreement (“LSA”) with Western Alliance Bank (San José, California), pursuant to which the Company obtained a term loan of up to $
On November 19, 2025, the Company entered into an amendment to the Loan and Security Agreement extending the interest-only period through March 10, 2026, with equal monthly principal and interest installments commencing April 10, 2026. As amended, Tranche B was eliminated from the LSA, resulting in a maximum term loan of up to $
On December 23, 2025, the Company entered into a forbearance and amendment agreement whereby the maturity date changed from September 27, 2027 to April 28, 2026. Due to this agreement, the loan was reclassified as a current liability. This agreement also extended the interest-only period through April 10, 2026, with all unpaid principal and accrued interest due on the maturity date.
On April 28, 2026, the maturity date was extended to May 1, 2026. On April 30, 2026, the maturity date was further extended to May 6, 2026. On May 6, 2026, the maturity date was extended again to June 12, 2026.
Upon the closing of the Company’s IPO on May 18, 2026, the Company used a portion of the net proceeds from the offering to repay the outstanding balance of the WAB Loan in full. Accordingly,
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Western Alliance Warrants
In connection with the LSA, the Company issued warrants to Western Alliance Bank to purchase
HSBC Standby Letter of Credit
On May 30, 2025, HSBC Bank (acting through its Chennai branch) issued an irrevocable standby letter of credit (No. SDNBGE890972) in favor of Exyn Technologies Inc. for a maximum amount of USD $
The standby letter of credit has a fixed expiry date of November 14, 2025, is governed by International Standby Practices (ISP98), allows partial drawings, and has been assigned to Western Alliance Bank as security for the Company’s senior credit facility. As of the date of this report,
The standby letter of credit was further renewed in May 2026, with an expiration date of June 30, 2026. Upon the closing of the Company’s IPO on May 18, 2026, the WAB loan was repaid using a portion of the net proceeds from the offering, and the related standby letter of credit was terminated. Accordingly, the standby letter of credit was
NeoLync Senior Convertible Promissory Note
On May 20, 2025, the Company issued a $
NeoLync Holdings, Inc. Term Loan
On December 23, 2025, the Company signed a term loan with NeoLync Holdings, Inc. for $
Maximcash Solutions LLC Loan
On December 26, 2025, Maximcash Solutions LLC (“Maximcash”) issued a loan to Exyn Technologies Inc. for $
On May 18, 2026, the Company used proceeds from its IPO to repay in full the outstanding loan with Maximcash Solutions LLC in the amount of $
On May 21, 2026, the Company issued
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On June 17, 2026, the Company issued an additional
NCH Ventures LLC Convertible Promissory Note
On March 13, 2026, the Company issued a $
Evergreen Capital Management, LLC Convertible Promissory Notes
On April 30, 2026, and May 6, 2026, the Company issued senior secured convertible promissory notes to Evergreen Capital Management, LLC (“Evergreen”) with an aggregate principal amount of approximately $
On May 8, 2026, the Company and Evergreen amended the senior secured convertible promissory notes to mandatorily convert upon an IPO, in exchange for warrants and
The senior secured convertible notes automatically converted to
Pursuant to that certain Confidential Side Letter Agreement dated May 18, 2026, between the Company and Evergreen (the “Evergreen Side Letter”), the Company agreed to pay a total installment amount of $
11. INCOME TAXES
The Company’s income tax provision for the interim period was determined using an estimated annual effective tax rate, adjusted for discrete items recognized during the period, if any. The effective tax rate for the three and six months ended June 30, 2026 and 2025 was
Management evaluates the realizability of deferred tax assets on a quarterly basis and continues to maintain a full valuation allowance against all of its deferred tax assets as of June 30, 2026. There were no material changes in the Company’s assessment of the realizability of its deferred tax assets during the three and six months ended June 30, 2026.
As of June 30, 2026, the Company had
There were no material changes to the Company’s uncertain tax positions, valuation allowance, or other income tax matters from those disclosed in the notes to the audited financial statements for the year ended December 31, 2025 included in the IPO Registration Statement.
15
12. STOCKHOLDERS’ EQUITY
Common Stock
As of June 30, 2026, the Company is authorized to issue
On May 18, 2026, the Company closed the IPO, in which
Preferred Stock
As of June 30, 2026, pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue
Employee Incentive Stock Option Plan
The Company maintains equity incentive plans under which stock-based awards may be granted to employees, directors and consultants. Effective May 15, 2026, the Company adopted the 2026 Equity Incentive Plan (the “2026 Plan”), which authorizes the issuance of up to
The following table summarizes stock option activity as of June 30, 2026:
Options Outstanding | |||||||
Weighted Average | |||||||
Weighted Average | Remaining Term | ||||||
| Number of Shares | | Exercise Price | | (years) | ||
Balance at December 31, 2025 |
| | $ | |
| ||
Granted |
| — |
| — |
| — | |
Exercised |
| — |
| — |
| — | |
Expired/Cancelled |
| ( | $ | |
| — | |
Balance at June 30, 2026 |
| | $ | |
| ||
Exercisable at June 30, 2026 |
| | $ | |
| ||
Exercisable at June 30, 2026 and expected to vest thereafter |
| | $ | |
| ||
As of June 30, 2026, there was $
Stock-based compensation expense of $
16
Warrants
The following table summarizes stock warrant activity for the six months ended June 30, 2026.
|
| Weighted Average | |||||
Weighted Average | Remaining Term | ||||||
| Number of Warrants | | Exercise Price | | (years) | ||
Balance at December 31, 2025 |
| | $ | | |||
Granted |
| | $ | | |||
Exercised |
| ( | $ | | — | ||
Forfeited/Expired |
| — | — | — | |||
Balance at June 30, 2026 |
| | $ | | |||
Exercisable at June 30, 2026 |
| | $ | | |||
During the six months ended June 30, 2026, the Company issued an aggregate of
The Company issued an aggregate of
In connection with the Company’s IPO, the Company issued an aggregate of
In connection with the Company’s IPO, the Company issued
The decrease in outstanding warrants during the six months ended June 30, 2026 was primarily attributable to the exercise of
13. LEASES
The Company has operating leases for office space and equipment. Lease terms generally range from
The components of lease expense were as follows for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30, |
| Six Months Ended June 30, | ||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
Operating lease costs | $ | | $ | | $ | | $ | | ||||
Total lease cost | $ | | $ | | $ | | $ | | ||||
The Company does not have any finance leases, short-term leases, or variable lease payment arrangements.
17
The components of operating lease assets and liabilities as of June 30, 2026 and December 31, 2025 were as follows:
| June 30, 2026 | | December 31, 2025 | |||
Operating lease right of use assets | $ | | $ | | ||
Current portion of operating lease liability |
| |
| | ||
Operating lease liability, net of current portion |
| |
| | ||
Total operating lease liabilities | $ | | $ | | ||
The weighted-average remaining lease term and weighted-average discount rate as of June 30, 2026 and December 31, 2025 were as follows:
| June 30, 2026 | | December 31, 2025 |
| |
Weighted average lease term |
|
| |||
Weighted average discount rate |
| | % | | % |
Future minimum lease payments under non-cancelable operating leases as of June 30, 2026 are as follows:
| Operating Leases | ||
2026 | $ | | |
2027 |
| | |
Total lease payments |
| | |
Less: imputed interest |
| ( | |
Total present value of lease liabilities | $ | | |
14. COMMITMENTS AND CONTINGENCIES
Litigation and Claims
From time to time, the Company is subject to claims, litigation, investigations, and other legal proceedings arising in the ordinary course of business. The Company records a liability for loss contingencies when it is both probable that a liability has been incurred and the amount can be reasonably estimated. As of June 30, 2026,
Management has evaluated all known and potential matters and believes that the ultimate resolution of any currently pending proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. However, the outcome of legal proceedings is inherently uncertain, and adverse resolutions could occur. An unfavorable outcome in one or more matters could materially affect the Company’s operating results or cash flows in the period in which it is resolved.
Other Commitments
Other than standard operating leases and purchase commitments entered into in the ordinary course of business, the Company has no material off-balance-sheet arrangements or long-term commitments as of June 30, 2026.
15. SEGMENT REPORTING
The Company operates as a single operating and reportable segment. The Company’s Chief Operating Decision Maker (“CODM”) has been identified as the Interim Chief Executive Officer, who reviews the consolidated operating results, including net revenues, cost of revenues, gross profit, and selling, general and administrative expenses, and net income (loss) to make decisions about resource allocation, including investments in personnel, marketing, and technology and product development, and to assess performance. The CODM does not evaluate performance or allocate resources at a disaggregated level below the consolidated entity.
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The Company’s revenue is derived principally from the sale of aerial robotic systems, service revenue and subscription revenue. The significant expense categories the CODM reviews regularly are personnel expenses, contractor expenses, and legal and professional expenses. See below for the summary of expenses reviewed for the three and six months ended June 30, 2026 and 2025.
Three Months Ended June 30, | | Six Months Ended June 30, | ||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
Personnel | $ | | $ | | $ | | $ | | ||||
Contractor |
| |
| |
| |
| | ||||
Legal and professional |
| |
| |
| |
| | ||||
Because the Company manages its business, allocates resources, and evaluates performance on a consolidated basis, the accompanying consolidated financial statements reflect the operations of
Segment information available with respect to the reportable business segment for the three and six months ended June 30, 2026 and 2025 was as follows:
For the Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
Revenue by type: |
| |
| | |
| | |||||
Systems | $ | | $ | | $ | | $ | | ||||
Services |
| |
| |
| |
| | ||||
Subscription |
| |
| |
| |
| | ||||
Total revenues | $ | | $ | | $ | | $ | | ||||
Cost of sales: |
| |
| |
| |
| | ||||
Gross profit: |
| |
| |
| |
| | ||||
Depreciation and amortization: |
| |
| |
| |
| | ||||
Revenues by geography |
|
|
|
| ||||||||
Canada |
| |
| |
| |
| | ||||
United States |
| |
| |
| |
| | ||||
Australia |
| |
| |
| |
| | ||||
Other |
| |
| |
| |
| | ||||
Total geography and consolidated revenues | $ | | $ | | $ | | $ | | ||||
| June 30, 2026 | | June 30, 2025 | |||
Long-lived assets by geography |
| |
| | ||
United States | $ | | $ | | ||
Latin America |
| |
| | ||
Total long-lived assets by geography | $ | | $ | | ||
16. SUBSEQUENT EVENTS
On July 17, 2026, the Company made the second of three installment payments in the amount of $
On August 3, 2026, the Board of Directors approved a stock option grant to the Company’s Chief Executive Officer to purchase
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Investigation of Former Chief Executive Officer
In August 2026, the Audit Committee of the Board of Directors completed an investigation regarding certain personal expenses incurred by the Company’s former Chief Executive Officer using a Company-issued credit card that had been recorded as business expenses in the Company’s financial records. The investigation identified approximately $
The Company determined that the amounts identified did not represent expenses incurred in the ordinary course of the Company’s operations and has classified the applicable amounts within other expense in the accompanying condensed statements of operations. Other expense for the three and six months ended June 30, 2026 includes approximately $
The Company has demanded repayment from its former Chief Executive Officer of the personal expenses identified by the investigation. As of June 30, 2026, the Company has not recognized a receivable for any amounts sought to be recovered.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of the Company’s financial condition and results of operations together with the sections entitled “Risk Factors,” and “Special Note Regarding Forward-Looking Statements,” our audited consolidated financial statements, and related notes included in our IPO Registration. This discussion and analysis contains forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.
Overview
We are a pioneer in fully adaptive and cognitive mission-level autonomous robotics and artificial intelligence. Our proprietary Level 4B autonomy platform allows aerial and ground robotic systems to navigate safely and efficiently in complex, GPS-denied environments. We generate revenue through hardware-enabled software sales, licensing of ExynAI software, service contracts, and support agreements. Our customers include mining companies, construction firms, infrastructure operators, defense agencies, and OEMs integrating ExynAI into their platforms. We believe adoption of autonomous robotics in these verticals is accelerating, driven by demand for safety, efficiency, and digitization.
Recent Developments
Reverse Stock Split
On May 15, 2026, we effected a 1-for-25 reverse stock split of our issued and outstanding shares of common stock and preferred stock. The reverse stock split became effective on May 15, 2026.
Initial Public Offering
On May 18, 2026, we completed our IPO of 2,500,000 units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock, at a public offering price of $7.75 per unit, which resulted in gross proceeds of approximately $19.4 million, before deducting underwriting discounts and commissions and offering expenses. Our common stock and warrants began trading on the Nasdaq Capital Market on May 15, 2026.
Key Factors Affecting Our Performance
Our results of operations are affected by the following factors:
| ● | Adoption of Autonomous Robotics and 3D mapping solutions in Industrial and Defense Markets. Our financial performance is tied to the rate of adoption of autonomous robotic and 3D mapping solutions within our target markets. Market acceptance is contingent upon our ability to educate customers on these benefits as well as broader market pressures driving technology adoption. Delays in broader technology adoption or a slower-than-anticipated shift towards automation and digitization in these key industrial and government sectors could adversely affect our revenue growth and financial results. |
| ● | Timing of OEM Integrations and Long-Term Licensing Contracts. A significant portion of our long-term strategy involves entering into extended licensing agreements and partnerships with OEMs to embed our technology into their platforms. Our revenue and results of operations are therefore highly dependent on the timing and successful execution of these complex agreements. The sales cycle for such integrations is often long and unpredictable, involving extensive evaluation, negotiation, and joint development phases. Any delays in finalizing these contracts or in the subsequent deployment and scaling of integrated solutions by our partners could result in significant fluctuations in our recognized revenue from period to period. Furthermore, our ability to convert pilot programs and initial deployments into large-scale, recurring revenue contracts is critical to our long-term financial success. |
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| ● | Ongoing Investment in Research and Development to Maintain Technology Leadership. The market for autonomous robotics is characterized by rapid technological advancement and intense competition. To maintain and extend our position as a market leader, we must continue to make substantial investments in R&D. Our R&D efforts are focused on enhancing our core intellectual property, including our proprietary SLAM algorithms, sensor fusion capabilities, and AI-driven navigation software. These investments are essential to improve the performance of our existing products, develop new applications and functionalities, and broaden the range of environments in which our systems can operate. |
| ● | Expansion of Our Sales, Marketing, and Distribution Capabilities. Our ability to grow our revenue is dependent on our capacity to effectively expand our sales, marketing, and distribution channels. We are actively investing in growing our direct sales force to target large enterprise and government customers, while also developing a network of strategic channel partners and resellers to broaden our market reach both domestically and internationally. These investments include hiring and training specialized sales and support personnel, increasing our marketing activities to build brand awareness, and establishing the infrastructure necessary to support a global customer base. The success of these expansion efforts, and the time it takes for new sales channels to become productive, will be a significant factor in our ability to acquire new customers and drive revenue growth. |
| ● | Ability to Secure and Efficiently Deploy Growth Capital. Our strategic plan requires significant capital to fund our operations, support our research and development efforts, and finance the expansion of our sales and marketing organization. Our future growth and ability to execute on our business plan are contingent upon our ability to secure additional growth capital through equity or debt financing on favorable terms. The proceeds from such financing will be deployed to invest in critical R&D, scale our manufacturing and support capabilities, and potentially pursue strategic acquisitions of complementary technologies or businesses. Our ability to raise sufficient capital and to allocate it efficiently toward initiatives that drive scalable growth and accelerate our path to profitability will be critical to our operational and financial success. |
Key Components of Our Results of Operations
Revenue
Revenue consists primarily of product sales, software licensing revenue, fees for consulting services, warranty sales, and after sale service and support. For the three months ended June 30, 2026, approximately 71% of our revenue was derived from Nexys product sales, of which approximately 63% of our revenue came from direct sales and approximately 37% of our revenue came from channel partners. For the six months ended June 30, 2026, approximately 77% of our revenue was derived from Nexys product sales, of which approximately 66% of our revenue came from direct sales and approximately 34% of our revenue came from channel partners.
Cost of Revenue
Cost of revenue includes materials, labor (including salary, benefits and taxes), and customer support.
Operating Expenses
Research and Development
R&D expenses consist primarily of personnel expenses, including salaries, benefits, costs of consulting, equipment and materials, manufacturing, supply chain, direct allocable overhead costs, including staff development cost, and travel and technology costs. We expect our R&D expenses to increase as we continue to invest in our infrastructure and technology and seek to develop new products and services. We also expect our R&D to fluctuate based on a number of factors including, among others, increased labor costs, availability and ability to obtain suitable drones and robots, availability and cost of supply chain components, such as sensors, inertial measurement units, motor controllers, and foreign currency exchange rates and tariffs.
Selling, General and Administrative
Selling, general and administrative expenses primarily consist of salaries, benefits and payroll taxes, commissions, advertising, trade shows, travel, consulting fees, costs associated with executive leadership, corporate governance, accounting and finance operations, and support functions, including human resources and information technology. We expect selling, general and administrative expenses to continue to increase as we expand our sales and marketing capabilities to acquire new customers and incur additional costs
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associated with operating as a public company, including costs related to certain consulting and incentive agreements that became effective.
Other Income (Expense)
Interest Expense, Net
Interest expense, net consists primarily of the interest expense from borrowings relating to revolving lines of credit with external banks and third-party notes, net of interest income earned on invested cash balances.
Other Income (Expense), Net
Other income (expense), net consists primarily of gain/loss on foreign exchange, deferred financing cost amortization, loss on disposable assets, and other nonoperating income.
Income Tax (Expense) Benefit
Income tax (expense) benefit primarily consists of income taxes in certain foreign jurisdictions in which we conduct business.
Results of Operations for the Three Months Ended June 30, 2026
Our operating results for the three months ended June 30, 2026 were characterized by lower revenue, relatively consistent gross margins, and higher operating expenses compared to the prior-year period. The decrease in revenue was primarily attributable to the timing of customer project activity and product deliveries, while lower costs incurred in delivering our products and services partially offset the impact of lower revenues on gross profit. The increase in operating expenses reflects continued investment in personnel, infrastructure, and activities supporting the growth and commercialization of our autonomous mapping and robotics solutions.
| Three Months Ended June 30, | | Period Over Period Change |
| ||||||||
2026 | | 2025 | | $ | | % |
| |||||
Revenues, net | $ | 949,604 | $ | 1,357,757 | $ | (408,153) | (30.1) | % | ||||
Cost of revenues |
| 504,451 |
| 805,878 |
| (301,427) | (37.4) | % | ||||
Gross profit |
| 445,153 |
| 551,879 | (106,726) | (19.3) | % | |||||
Operating expenses: |
|
| ||||||||||
Selling, general, and administrative expenses |
| 3,015,844 |
| 1,319,147 | 1,696,697 | 128.6 | % | |||||
Research and development expenses |
| 1,358,977 |
| 1,187,338 | 171,639 | 14.5 | % | |||||
Stock-based compensation |
| 197,785 |
| 201,734 | (3,949) | (2.0) | % | |||||
Total operating expenses |
| 4,572,606 |
| 2,708,219 | 1,864,387 | 68.8 | % | |||||
Operating loss |
| (4,127,453) |
| (2,156,340) | (1,971,113) | 91.4 | % | |||||
Non-operating income (expense): |
|
| ||||||||||
Interest expense |
| (446,179) |
| (87,844) | (358,335) | 407.9 | % | |||||
Interest income |
| 36,019 |
| 7,558 | 28,461 | 376.6 | % | |||||
Noncash change in fair value of SAFE liabilities |
| 565,576 |
| (677,000) | 1,242,576 | (183.5) | % | |||||
Debt modification expense | (679,514) | — | (679,514) | 100.0 | % | |||||||
Debt settlement expense | (1,917,165) | — | (1,917,165) | 100.0 | % | |||||||
Other expense |
| (325,159) |
| (8,341) | (316,818) | 3,798.3 | % | |||||
Total non-operating income (expense) |
| (2,766,422) |
| (765,627) | (2,000,795) | 261.3 | % | |||||
Net loss before income tax benefit |
| (6,893,875) |
| (2,921,967) | (3,971,908) | 135.9 | % | |||||
Income Tax Benefit |
| — |
| — | — | N/A | ||||||
Net loss | $ | (6,893,875) | $ | (2,921,967) | $ | (3,971,908) | 135.9 | % | ||||
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Revenues, Net
For the three months ended June 30, 2026, revenues decreased by approximately $0.4 million to $0.9 million from $1.3 million for the three months ended June 30, 2025. The decrease was primarily attributable to the timing of customer project activity and product deliveries during the period. Gross profit decreased from $0.6 million to $0.4 million primarily due to lower revenues, partially offset by lower costs incurred to deliver products and services.
Cost of Revenues
For the three months ended June 30, 2026, cost of revenues decreased by approximately $0.3 million to $0.5 million from $0.8 million for the three months ended June 30, 2025. The decrease was primarily attributable to lower direct labor, materials, and other costs associated with product and service delivery.
Operating Expenses
Selling, General and Administrative Expenses
For the three months ended June 30, 2026, selling, general and administrative expenses increased by approximately $1.7 million to $3.0 million from $1.3 million for the three months ended June 30, 2025. The increase was primarily attributable to higher personnel-related costs, professional fees, and other expenses associated with preparing to be and operating as a public company.
Research and Development Expenses
For the three months ended June 30, 2026, research and development expenses increased by approximately $0.2 million to $1.4 million from $1.2 million for the three months ended June 30, 2025. The increase was primarily attributable to higher product development and engineering expenditures.
Stock-based Compensation
For the three months ended June 30, 2026, stock-based compensation expense remained relatively consistent at $0.2 million compared to the three months ended June 30, 2025, decreasing by approximately $4 thousand. The slight decrease was primarily attributable to changes in the timing and mix of equity awards subject to amortization during the respective periods.
Interest Expense and Interest Income
For the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, interest expense increased by approximately $0.4 million from $0.1 million to $0.5 million. Interest income increased by approximately $28 thousand from $8 thousand for the three months ended June 30, 2025 to $36 thousand for the three months ended June 30, 2026.
Debt Modification Expense
Debt modification expense increased by approximately $0.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily attributable to the modification and extinguishment of the senior secured convertible promissory notes issued to Evergreen, including the write-off of the related debt discount.
Debt Settlement Expense
Debt settlement expense increased by approximately $1.9 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, attributable to the settlement with Evergreen pursuant to the Evergreen Side Letter.
Other Expense
For the three months ended June 30, 2026, other expense was approximately $0.3 million compared to approximately $8 thousand for the three months ended June 30, 2025. The change was primarily attributable to expenses related to the issuance of equity kicker shares and other non-operating expenses incurred during the period.
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Results of Operations for the Six Months Ended June 30, 2026
Our operating results for the six months ended June 30, 2026 were characterized by lower revenue, relatively consistent gross profit, and higher operating expenses compared to the prior-year period. The decrease in revenue was primarily attributable to the timing of customer project activity and product deliveries, while gross profit remained relatively consistent as lower revenues were partially offset by lower costs incurred in delivering our products and services. The increase in operating expenses reflects continued investment in personnel, infrastructure, and activities supporting the growth and commercialization of our autonomous mapping and robotics solutions.
| Six Months Ended June 30, | | Period Over Period Change |
| ||||||||
| 2026 | | 2025 | | $ | | % |
| ||||
Revenues, net | $ | 2,140,201 | $ | 2,575,810 | $ | (435,609) | (16.9) | % | ||||
Cost of revenues |
| 1,192,713 |
| 1,590,772 |
| (398,059) | (25.0) | % | ||||
Gross profit |
| 947,488 |
| 985,038 |
| (37,550) | (3.8) | % | ||||
Operating expenses: |
| |
| |
| | | |||||
Selling, general, and administrative expenses |
| 4,968,243 |
| 2,700,036 |
| 2,268,207 | 84.0 | % | ||||
Research and development expenses |
| 2,573,811 |
| 2,521,257 |
| 52,554 | 2.1 | % | ||||
Stock-based compensation |
| 397,594 |
| 403,468 |
| (5,874) | (1.5) | % | ||||
Total operating expenses |
| 7,939,648 |
| 5,624,761 |
| 2,314,887 | 41.2 | % | ||||
Operating loss |
| (6,992,160) |
| (4,639,723) |
| (2,352,437) | 50.7 | % | ||||
Non-operating income (expense): |
| |
| |
| | | |||||
Interest expense |
| (782,333) |
| (169,167) |
| (613,166) | 362.5 | % | ||||
Interest income |
| 39,847 |
| 15,074 |
| 24,773 | 164.3 | % | ||||
Noncash change in fair value of SAFE liabilities |
| 535,576 |
| (677,000) |
| 1,212,576 | (179.1) | % | ||||
Debt modification expense |
| (679,514) |
| — |
| (679,514) | 100.0 | % | ||||
Debt settlement expense | (1,917,165) | — | (1,917,165) | 100.0 | % | |||||||
Other expense |
| (336,911) |
| (30,810) |
| (306,101) | 993.5 | % | ||||
Total non-operating income (expense) |
| (3,140,500) |
| (861,903) |
| (2,278,597) | 264.4 | % | ||||
Net loss before income tax benefit |
| (10,132,660) |
| (5,501,626) |
| (4,631,034) | 84.2 | % | ||||
Income Tax Benefit |
| — |
| — |
| — | N/A | |||||
Net loss | $ | (10,132,660) | $ | (5,501,626) | $ | (4,631,034) | 84.2 | % | ||||
Revenues, Net
For the six months ended June 30, 2026, revenues decreased by approximately $0.4 million to $2.1 million from $2.5 million for the six months ended June 30, 2025. The decrease was primarily attributable to the timing of customer project activity and product deliveries during the period. Gross profit decreased from $1.0 million to $0.9 million primarily due to lower revenues, partially offset by lower costs incurred to deliver products and services.
Cost of Revenues
For the six months ended June 30, 2026, cost of revenues decreased by approximately $0.4 million to $1.2 million from $1.6 million for the six months ended June 30, 2025. The decrease was primarily attributable to lower direct labor, materials, and other costs associated with product and service delivery.
Operating Expenses
Selling, General and Administrative Expenses
For the six months ended June 30, 2026, selling, general and administrative expenses increased by approximately $2.3 million to $5.0 million from $2.7 million for the six months ended June 30, 2025. The increase was primarily attributable to higher personnel-related costs, professional fees, and other expenses associated with preparing to be and operating as a public company.
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Research and Development Expenses
For the six months ended June 30, 2026, research and development expenses remained relatively consistent at $2.6 million compared to $2.5 million for the six months ended June 30, 2025, increasing by approximately $53 thousand. The slight increase was primarily attributable to product development and engineering expenditures.
Stock-based Compensation
For the six months ended June 30, 2026, stock-based compensation expense remained relatively consistent at $0.4 million compared to the six months ended June 30, 2025, decreasing by approximately $6 thousand. The slight decrease was primarily attributable to changes in the timing and mix of equity awards subject to amortization during the respective periods.
Interest Expense and Interest Income
For the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, interest expense increased by approximately $0.6 million from $0.2 million to $0.8 million. Interest income increased by approximately $25 thousand from $15 thousand for the six months ended June 30, 2025 to $40 thousand for the six months ended June 30, 2026.
Debt Modification Expense
Debt modification expense increased by approximately $0.7 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily attributable to the modification and extinguishment of the senior secured convertible promissory notes issued to Evergreen, including the write-off of the related debt discount.
Debt Settlement Expense
Debt settlement expense increased by approximately $1.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, attributable to the settlement with Evergreen pursuant to the Evergreen Side Letter.
Other Expense
For the six months ended June 30, 2026, other expense was approximately $0.3 million compared to approximately $31 thousand for the six months ended June 30, 2025. The change was primarily attributable to expenses related to the issuance of equity kicker shares and other non-operating expenses incurred during the period.
Liquidity and Capital Resources
Since inception, we have incurred recurring net losses and negative cash flows from operating activities. As of June 30, 2026, we had cash and cash equivalents of approximately $7.8 million. On May 18, 2026, we completed our IPO of 2,500,000 units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock, at a public offering price of $7.75 per unit, which resulted in net proceeds of approximately $15.3 million. While the completion of our IPO strengthened our liquidity position, we expect to continue to incur operating losses and negative cash flows as we execute our business plan. Based on our current operating plan, management has concluded that substantial doubt exists regarding our ability to continue as a going concern.
Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our products and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant and increasing expenses for the foreseeable future as we expand our corporate infrastructure, including the costs associated with being a public company, further our research and development initiatives for our products, and incur costs associated with sales and marketing. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we may require additional funding in connection with our continuing operations.
Over the next twelve months, we expect to finance our operations primarily through cash generated from commercial operations and, as needed, through short-term debt arrangements, private placements of our equity securities, and proceeds from public offerings, if completed. Beyond the next twelve months, we expect our long-term liquidity and capital resource needs to be driven primarily by our plans to scale production, expand our sales and marketing capabilities, and continue to invest in research and development. We
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anticipate funding these long-term needs through a combination of cash generated from operations, additional equity or debt financings, and other capital-raising alternatives, although we cannot assure you that such funding will be available on acceptable terms, or at all.
Following the closing of our IPO, our liquidity position improved significantly as a result of the net proceeds received from the offering. While these proceeds are expected to support our near-term operating and capital needs, we may require additional financing in the future to support the continued growth of our business. We expect to fund our operations through a combination of existing cash balances, cash generated from operations, and, if necessary, additional debt or equity financings. If additional capital is required and is not available on acceptable terms, we may need to prioritize investments in the product lines and business activities that generate the greatest revenue and offer the most significant long-term growth opportunities.
Cash Flows
The following table summarizes our cash flows for the periods presented:
For the Six Months Ended | ||||||
| 2026 | | 2025 | |||
Net cash used in operating activities | $ | (7,075,863) | $ | (3,706,270) | ||
Net cash used in investing activities |
| (28,691) |
| (13,700) | ||
Net cash provided by financing activities |
| 14,127,555 |
| 3,000,000 | ||
Net Cash Used in Operating Activities
Net cash used in operating activities for the six months ended June 30, 2026 totaled approximately $7.1 million compared to approximately $3.7 million for the six months ended June 30, 2025, an increase of approximately $3.4 million. The increase was primarily driven by a higher net loss during the period, partially offset by noncash items, including debt modification expense, stock payments made for settlement of debt, stock-based compensation, depreciation and amortization, amortization of debt issuance costs, changes in the fair value of SAFE liabilities, and changes in working capital.
Net Cash Used in Investing Activities
Net cash used in investing activities for the six months ended June 30, 2026 totaled approximately $29 thousand compared to approximately $14 thousand for the six months ended June 30, 2025. The cash used in investing activities primarily related to purchases of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2026 totaled approximately $14.1 million compared to approximately $3.0 million for the six months ended June 30, 2025. Financing activities during the period were primarily driven by $15.3 million of net proceeds from the Company’s IPO which included an issuance of common stock, and $1.0 million of borrowings under notes payable, partially offset by approximately $2.2 million of repayments of notes payable.
Contractual Commitments
We enter into contractual obligations in the normal course of business. For additional discussion, see Note 13, “Leases” and Note 14, “Commitments and Contingencies,” to our condensed consolidated financial statements included elsewhere in this Form 10-Q.
Trends and Uncertainties
We operate in rapidly evolving markets. Key trends include the expanding adoption of autonomous data collection in mining and other geospatial applications; growing demand for autonomous systems in defense and contested environments; ongoing supply chain constraints affecting availability of LiDAR, sensors, and semiconductor components; increasing regulatory clarity from the FAA and international bodies on BVLOS operations; and competitive dynamics from both established defense contractors and emerging robotics companies. Collectively, these trends create both opportunities and risks. They may require increased investment in research and development, regulatory and security compliance, inventory and supplier diversification, and customer success resources. There can be no assurance that our strategies will successfully mitigate these uncertainties, that regulatory developments will proceed as anticipated,
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or that customer adoption will occur at the pace or scale we expect. See also “Risk Factors — Risks Related to Our Business Operations — If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our solutions may become less competitive” for risks related to technological disruption.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to reported revenue generated and reported expenses incurred during the reporting periods. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in the notes to our audited financial statements included in the IPO Registration Statement in connection with our IPO, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. Credit is granted in the normal course of business without collateral. Accounts receivable are stated net of credit losses, which represent estimated losses resulting from the inability of customers to make the required payments. Accounts that are outstanding longer than the contractual terms are considered past due. When determining the allowance for credit losses, the Company takes several factors into consideration, including macroeconomic factors, industry trends, the creditworthiness of counterparties, historical experience, the financial conditions of the customers, and the amount and age of past due accounts. The Company writes off accounts receivable when they become uncollectible. The allowance for credit losses was $248,326 and $203,960 as of June 30, 2026 and December 31, 2025, respectively. There was one customer in each period who represented in the aggregate 10% and 12% of total accounts receivable as of June 30, 2026 and December 31, 2025, respectively.
Revenue Recognition
We recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” issued by the FASB. This standard includes a comprehensive evaluation of factors to be considered regarding revenue recognition including (i) identifying the promised goods, (ii) evaluating performance obligations, (iii) measuring the transaction price, (iv) allocating the transaction price to the performance obligations if there are multiple components, and (v) recognizing revenue as each obligation is satisfied. Our primary revenue streams include sales of aerial robotic systems and related software solutions, service revenue and subscription revenue generated through the Company’s installment program.
Our contracts with customers may include multiple services. For example, some of our contracts include both hardware and software licenses and required integration. Determining whether the hardware sales, software licenses and the integration are distinct from each other, and therefore performance obligations to be accounted for separately, or not distinct from each other, and therefore part of a single performance obligation, may require significant judgment. We have concluded that the software licenses and integration services provided in subscription offerings are not distinct from each other and thus, should be considered a single performance obligation and the total revenue from the contract is recognized ratably over the subscription period of the software licenses. In reaching this conclusion, we considered that since the integration service requires integration of the software to function with the customer’s other processes, the integration and software license are not separately identifiable and should be combined into a single performance obligation.
Off-Balance Sheet Arrangements
As of June 30, 2026 and December 31, 2025, we have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
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Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). The new guidance requires disaggregated information about certain income statement expense line items on an annual and interim basis. This guidance will be effective for annual periods beginning the year ended December 31, 2027 and for interim periods thereafter. The new standard permits early adoption and can be applied prospectively or retrospectively. The Company is evaluating the impact of this ASU on its consolidated financial statements disclosures.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, we are not required to provide the information required by this Item 3.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our management, with the participation of our interim Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2026. Based on this evaluation, and because (i) the material weaknesses in our internal control over financial reporting previously disclosed in our Registration Statement on Form S-1 had not been fully remediated as of June 30, 2026, and (ii) a new material weakness was identified in connection with an internal investigation conducted by the Audit Committee of our Board of Directors, with the assistance of outside counsel, into allegations that Brandon Torres Declet, our former Chief Executive Officer and Chairman of the Board, used a Company-issued credit card to pay for personal travel and other personal expenses that were recorded as business expenses in our books and records, our interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of that date.
Management continues to implement remediation measures to address both the previously existing material weaknesses in our internal control over financial reporting disclosed in our Registration Statement on Form S-1 and the new material weakness identified in connection with the internal investigation described above. For the previously existing material weaknesses, these measures include enhancements to governance, accounting, and financial reporting processes. In connection with the internal investigation, management determined that our internal controls were ineffective because we did not maintain effective controls over (i) the review and approval of executive expense reports and credit card charges, (ii) the classification and recording of expenses charged by senior executives on Company-issued credit cards, and (iii) the operation of the Company’s control environment as it relates to the ethical conduct and oversight of senior management, including controls designed to address the risk of management override.
Management has commenced the development of a remediation plan to address the newly identified material weakness, which will include:
| ● | enhancing policies and procedures for Company-issued credit cards with independent review of executive officer charges, including additional segregation of duties requiring charges by the Chief Executive Officer to be reviewed by the Chief Financial Officer and the Audit Committee Chair; |
| ● | engaging an independent third party to perform a review and redesign of expense controls; |
| ● | ensuring that individuals responsible for internal controls receive mandatory periodic training to support control implementation and effectiveness; |
| ● | conducting a full review of the Company’s compliance and governance policies and procedures in order to assess and recommend potential changes, as appropriate, for the Board’s review and approval, including refreshing compliance policies and procedures, including the Company’s whistleblower and ethics reporting mechanisms, Code of Conduct and Corporate Governance Guidelines; and |
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| ● | ensuring proper tone at the top which mandates and supports clear, regular, and unambiguous reporting to senior management and the Audit Committee, which in turn will increase transparency and oversight with respect to audit findings, remediation state and control effectiveness metrics. |
Changes in Internal Control over Financial Reporting
Other than the remediation activities related to the previously identified material weaknesses and the commencement of remediation activities related to the newly identified material weakness described above, there were no changes in our internal control over financial reporting during the three and six months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Restatement
As previously disclosed, the Company restated its consolidated balance sheet as of December 31, 2025, to reclassify approximately $3.5 million of notes payable under the WAB Loan Agreement from long-term to current liabilities. The reclassification was required because a December 2025 modification and forbearance agreement accelerated the maturity of the obligation to June 2026, such that the Company no longer had the right to defer settlement for at least one year from the balance sheet date. The restatement had no effect on the Company’s previously reported consolidated statements of operations, stockholders’ deficit, total liabilities, or cash flows.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business. We are not currently a party to any material legal proceedings, and are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.
Item 1A. Risk Factors.
Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties discussed in Part II, Item 1A, “Risk Factors,” of our Registration Statement on Form S-1 (File No. 333-297134) filed on June 29, 2026 and declared effective by the SEC on July 2, 2026, together with all of the other information in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and related notes, before deciding whether to purchase any of our securities.
Except as set forth below, there have been no material changes to the risk factors previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and our Registration Statement.
We have identified a material weakness in our internal control over financial reporting, which could result in material misstatements in our financial statements.
As described in this Quarterly Report on Form 10-Q, we identified an additional material weakness in our internal control over financial reporting in connection with an internal investigation conducted by the Audit Committee. As a result of this investigation, we have concluded that the Company’s business expense controls (including travel and entertainment, corporate credit card usage, and employee reimbursement processes) were inadequate or did not sufficiently prevent or detect improper, unsupported, or misclassified business expenses on a timely basis by Company executives. The Company is implementing enhancements to its internal controls to remediate the identified material weaknesses in its internal controls over financial reporting related to the Company’s governance and accounting practices. While the Company believes that these efforts will improve its internal control over financial reporting, the Company will not be able to conclude whether the steps the Company is taking will remediate the material weaknesses in internal control over financial reporting until a sustained period of time has passed to allow management to test the design and operational effectiveness of the new and enhanced controls. As the Company’s management, under the oversight of the Audit Committee, continues to evaluate and improve the Company’s internal controls over financial reporting, management may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures identified. If our remediation measures are not effective, or if additional material weaknesses or significant deficiencies are identified in the future, we may not be able to accurately or timely report our financial condition or results of operations, which could cause investors to lose confidence in our financial reporting, negatively affect the trading price of our common stock, result in regulatory investigations or sanctions, and expose us to litigation.
Our former Chief Executive Officer has resigned following an internal investigation, and we may face additional risks and liabilities as a result.
As described in this Quarterly Report on Form 10-Q, our former Chief Executive Officer and Chairman of the Board has resigned following an Audit Committee investigation that determined he improperly used Company funds for personal travel and other personal expenses. We could possibly face regulatory inquiries or investigations from the Securities and Exchange Commission, Nasdaq, or other governmental agencies. In addition, we may be subject to shareholder litigation, including derivative claims. There can be no assurance that we will be able to recover amounts improperly charged by our former Chief Executive Officer. Management transition following the resignation may also cause operational disruption and uncertainty among employees, customers, vendors, and business partners.
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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchase of Equity Securities.
Use of Proceeds from our Initial Public Offering
On May 18, 2026, we closed our IPO, in which we issued and sold 2,500,000 units, with each unit consisting of one share of our common stock and one warrant to purchase one share of our common stock, at a public offering price of $7.75 per unit, for aggregate gross proceeds of approximately $19.4 million, before deducting underwriting discounts and commissions and offering expenses payable by us. The shares of common stock and warrants comprising the units were immediately separable and were issued separately in the IPO. The warrants issued as part of the IPO were issued under a warrant agent agreement between us and Equiniti Trust Company, LLC, as warrant agent, exercisable immediately upon issuance, expire five years from the date of original issuance and have an exercise price of $9.69 per share.
Lucid Capital Markets, LLC acted as lead underwriter and representative for the offering. All of the securities issued and sold in the IPO were registered under the Securities Act pursuant to our IPO Registration, which was declared effective by the SEC on May 14, 2026. Following the sale of these securities, the offering terminated.
During the period covered by this report, we used a portion of the net proceeds from our IPO to repay in full the outstanding balances under our Loan and Security Agreement with Western Alliance Bank and our loan with Maximcash Solutions LLC, with the remaining net proceeds used for working capital and general corporate purposes. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
| (a) |
Internal Investigation
On August 11, 2026, the Audit Committee of the Board of Directors of the Company, with the assistance of independent outside counsel, commenced an internal investigation into allegations that Brandon Torres Declet, the Company’s then-Chief Executive Officer and Chairman of the Board, used a Company-issued credit card to pay for personal travel and other personal expenses that were recorded as business expenses in the Company’s financial records. The investigation has been completed. The investigation identified approximately $286,000 in aggregate personal expenses incurred over multiple periods, including periods subsequent to June 30, 2026.
The Company determined that the amounts identified did not represent expenses incurred in the ordinary course of the Company’s operations and has classified the applicable amounts within other expense in the accompanying condensed statements of operations. Other expense for the three and six months ended June 30, 2026 includes approximately $24,000 and $32,000, respectively, related to such expenses, compared with approximately $14,000 and $44,000, respectively, for the three and six months ended June 30, 2025. The Company determined that the amounts identified were not material, individually or in the aggregate, to any previously issued financial statements.
The Company has demanded repayment from its former Chief Executive Officer of the personal expenses identified by the investigation. As of June 30, 2026, the Company has not recognized a receivable for any amounts sought to be recovered.
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Material Weakness in Internal Control Over Financial Reporting
In connection with the internal investigation, the Company’s management determined that a material weakness existed in the Company’s internal control over financial reporting. Specifically, the Company did not maintain effective controls over (i) the review and approval of executive expense reports and credit card charges, (ii) the classification and recording of expenses charged by senior executives on Company-issued credit cards, and (iii) the operation of the control environment as it relates to the ethical conduct and oversight of senior management. As a result of the material weakness, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, has concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2026.
Remediation
Management has commenced the development of a remediation plan to address the newly identified material weakness, which will include:
| ● | enhancing policies and procedures for Company-issued credit cards with independent review of executive officer charges, including additional segregation of duties requiring charges by the Chief Executive Officer to be reviewed by the Chief Financial Officer and the Audit Committee Chair; |
| ● | engaging an independent third party to perform a review and redesign of expense controls; |
| ● | ensuring that individuals responsible for internal controls receive mandatory periodic training to support control implementation and effectiveness; |
| ● | conducting a full review of the Company’s compliance and governance policies and procedures in order to assess and recommend potential changes, as appropriate, for the Board’s review and approval, including refreshing compliance policies and procedures, including the Company’s whistleblower and ethics reporting mechanisms, Code of Conduct and Corporate Governance Guidelines; and |
| ● | ensuring proper tone at the top which mandates and supports clear, regular, and unambiguous reporting to senior management and the Audit Committee, which in turn will increase transparency and oversight with respect to audit findings, remediation state and control effectiveness metrics. |
The material weakness will not be considered remediated until the applicable controls have been implemented and operate effectively for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Financial Impact
The Company has determined that the misclassified personal expenses are not material to any previously reported financial statements, although the expenses have been reclassified in the Company’s books and records.
Departure of Chief Executive Officer
On August 19, 2026, Brandon Torres Declet resigned from his position as Chief Executive Officer and Chairman of the Board of Directors, effective immediately. Mr. Declet’s resignation followed an internal investigation conducted by the Audit Committee of the Board of Directors (the “Audit Committee”), with the assistance of independent outside counsel, into allegations that Mr. Declet used a Company-issued credit card to pay for personal travel and other personal expenses that were recorded as business expenses in the Company’s books and records. The investigation commenced on August 11, 2026 and concluded on August 19, 2026. Based on the findings of the investigation, the Audit Committee determined that Mr. Declet charged personal expenses to a Company-issued credit card, and that these charges were improperly classified and recorded as business expenses in the Company’s financial records. The Board accepted Mr. Declet’s resignation on August 19, 2026.
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In connection with the resignation, the Company has determined that Mr. Declet is not entitled to any severance payments or benefits under his employment agreement. The Company expects to recover the personal travel and other personal expenses improperly charged to the Company from Mr. Declet.
Appointment of Interim Chief Executive Officer
On August 19, 2026, the Board of Directors appointed Benjamin Williams, age 47, as Interim Chief Executive Officer of the Company, effective immediately. Mr. Williams has served as our Chief Operating Officer since May 2019. Mr. Williams also served as the interim Chief Executive Officer of the Company from June 2023 to November 2023. Mr. Williams has worked in large organizations, such as AT&T/Fullscreen Media, Lockheed Martin, and the U.S. Navy, as well as founded and led smaller startups, including Reelio, Zentropy, Open Sky Energy, and PennDSL. Prior to joining Exyn, Mr. Williams led Data & Platform Strategy and predictive analytics for Fullscreen Media as part of AT&T, following their acquisition of his startup company, Reelio Inc. In 2017, Mr. Williams was selected for Wharton’s 40 Under 40. Mr. Williams has built an expertise around innovation, operations, product development, technical management, product management, business strategy, and enterprise business development. Mr. Williams has a B.S.E. in Computer Science and Engineering from the University of Pennsylvania, and an M.B.A. from the Wharton School of Business at the University of Pennsylvania.
Mr. Williams’s compensation arrangements in connection with his appointment as Interim Chief Executive Officer have not yet been determined. Pursuant to Mr. Williams’s existing Offer Letter with the Company, dated May 8, 2019. Mr. Williams is entitled to a base salary (set at $285,000 for 2024 and 2025), eligible for a discretionary annual cash bonus as determined by management and approved by our board of directors or its compensation committee, and eligible to participate in our employee benefit plans. Mr. Williams’ employment is at-will and may be terminated at any time, by either party, with or without cause or advance notice. During his period of employment and for the six-month period thereafter, Mr. Williams is subject to a non-competition covenant and covenants with respect to the non-solicitation of customers and employees.
There are no arrangements or understandings between Mr. Williams and any other persons pursuant to which Mr. Williams was selected as Interim Chief Executive Officer. There are no family relationships between Mr. Williams and any director or executive officer of the Company. Mr. Williams has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Appointment of Non-Executive Chairman of the Board of Directors
On August 19, 2026, the Board of Directors appointed existing director Gregory McNeal as the Non-Executive Chairman of the Board of Directors, replacing Mr. Declet.
| (b) | Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements |
During the quarter ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
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Item 6. Exhibits.
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth in the Exhibit Index below, which is incorporated herein by reference.
EXHIBIT INDEX
Exhibit No. | | Description |
|---|---|---|
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3 | ||
10.1+ | ||
10.2+ | ||
10.3+ | ||
10.4+ | ||
10.5+ | ||
10.6+ | ||
10.7 | ||
10.8# | ||
10.9 | ||
10.10 | ||
10.11# | ||
10.12# | ||
10.13 |
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Exhibit No. | | Description |
|---|---|---|
10.14 | ||
10.15+ | ||
10.16+ | ||
10.17+ | ||
10.18+# | ||
10.19 | ||
10.20# | ||
10.21# | ||
10.22# | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31 |
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Exhibit No. | | Description |
|---|---|---|
10.32 | ||
10.33 | ||
10.34 | ||
10.35 | ||
10.36 | ||
10.37 | ||
10.38 | ||
10.39 | ||
10.40 | ||
10.41 | ||
10.42# | ||
10.43# | ||
10.44 | ||
10.45 | ||
10.46 | ||
10.47 | ||
10.48 | ||
10.49 |
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Exhibit No. | | Description |
|---|---|---|
10.50 | ||
10.51 | ||
10.52# | ||
10.53# | ||
10.54 | ||
10.55 | ||
10.56 | ||
10.57# | ||
31.1* | ||
31.2* | ||
32.1* |
* | Filed herewith. |
+ | Indicates management contract or compensatory plan. |
# | Certain confidential information — identified by a bracketed asterisk “[*]” — has been omitted from this exhibit pursuant to Item 601(b)(10) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of an unredacted copy to the SEC upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Exyn Technologies, Inc. | |||
Date: August 19, 2026 | By: | /s/ Benjamin Rigg Williams | |
Benjamin Rigg Williams | |||
Interim Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: August 19, 2026 | By: | /s/ Pedro Ricardo Sotelo | |
Pedro Ricardo Sotelo | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) | |||
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