ParaZero Technologies Ltd 6-K, filed Aug 28, 2025
ParaZero Technologies Ltd. (PRZO)
About this 6-K
ParaZero Technologies Ltd filed this 6-K on August 28, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of August
Commission file number:
(Translation of registrant’s name into English)
1 Hatachana Street
Kfar Saba, 4453001, Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of the Registrant’s (i) Condensed Interim Financial Statements as of June 30, 2025, which is attached hereto as Exhibit 99.1; (ii) Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2025, which is attached hereto as Exhibit 99.2; and (iii) press release issued on August 28, 2025, titled “ParaZero Announces First Half of 2025 Financial Results”, which is attached hereto as Exhibit 99.3.
This Form 6-K, including Exhibit 99.1, Exhibit 99.2 and the first paragraph and the sections entitled “Key Highlights of ParaZero’s Achievements in the First Half of 2025 & Recent Updates”, “First Half 20025 Financial Highlights” and “Forward-Looking Statements” in the press release attached as Exhibit 99.3 attached hereto, is incorporated by reference into the Registrant’s Registration Statements on Form S-8 (File No. 333-278268 and 333-285054) and Form F-3 (File Nos. 333-281443 and 333-275351), filed with the Securities and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
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EXHIBIT INDEX
| Exhibit No. | ||
| 99.1 | ParaZero Technologies Ltd.’s Interim Condensed Financial Statements as of June 30, 2025. | |
| 99.2 | ParaZero Technologies Ltd.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2025. | |
| 99.3 | Press release titled: “ParaZero Announces First Half of 2025 Financial Results” | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ParaZero Technologies Ltd. | |||
| Date: August 28, 2025 | By: | /s/ Ariel Alon | |
| Name: | Ariel Alon | ||
| Title: | Chief Executive Officer | ||
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Exhibit 99.1
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2025
(UNAUDITED)
INDEX
- - - - - - - - - - - -
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM BALANCE SHEETS (Unaudited)
U.S. dollars
| June 30, | December 31, | |||||||||
| Note | 2025 | 2024 | ||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | ||||||||||
| Short term deposits | ||||||||||
| Trade receivables | ||||||||||
| Other current assets | 3 | |||||||||
| Inventories | ||||||||||
| TOTAL CURRENT ASSETS | ||||||||||
| NON-CURRENT ASSETS: | ||||||||||
| Restricted deposit | 4 | |||||||||
| Prepaid expenses | ||||||||||
| Operating lease right-of-use asset | 5 | |||||||||
| Property and equipment, net | ||||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||||
| TOTAL ASSETS | ||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM BALANCE SHEETS (Unaudited)
U.S. dollars
| June 30, | December 31, | |||||||||
| Note | 2025 | 2024 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Trade payables | ||||||||||
| Operating lease liabilities | 5 | |||||||||
| Other current liabilities | 6 | |||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||
| NON-CURRENT LIABILITIES: | ||||||||||
| Operating lease liabilities, net of current portion | 5 | |||||||||
| Derivative warrant liabilities | 7 | |||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||||
| COMMITMENTS AND CONTINGENCIES | 9 | |||||||||
| SHAREHOLDERS’ DEFICIT | 8 | |||||||||
| Ordinary shares, NIS | ||||||||||
| Additional paid-in capital | ||||||||||
| Accumulated losses | ( | ) | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | ( | ) | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
U.S. dollars
| Six months ended June 30, | Six months ended June 30, | |||||||
| 2025 | 2024 | |||||||
| U.S. dollars | ||||||||
| Sales | ||||||||
| Cost of Sales | ||||||||
| GROSS PROFIT (LOSS) | ( | ) | ||||||
| Research and development expenses | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| Change in fair value of derivative warrant liabilities | ||||||||
| Other finance income, net | ||||||||
| NET LOSS AND COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||
| Net loss per ordinary share, basic and diluted | ( | ) | ( | ) | ||||
| Weighted average number of ordinary shares outstanding, basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT (Unaudited)
U.S. dollars
| Ordinary shares | Additional | |||||||||||||||||||
| Number | paid-in | Accumulated | ||||||||||||||||||
| of shares | Amount | capital | losses | Total | ||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2023 | ( | ) | ||||||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2024: | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Exercise of pre-funded warrants and consultant warrants (Note 8B and 8E) | ( | ) | ||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| BALANCE AS OF JUNE 30, 2024 | ( | ) | ||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2024 | ( | ) | ( | ) | ||||||||||||||||
| CHANGES DURING SIX MONTHS ENDED JUNE 30, 2025: | ||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net of issuance costs (Note 8D) | ||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Issuance of ordinary shares from vested restricted share units | ( | ) | ||||||||||||||||||
| Exercise of series A warrants (Note 8B) | ||||||||||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ||||||||||||||||
| BALANCE AS OF JUNE 30, 2025 | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
U.S. dollars
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Stock based compensation | ||||||||
| Inventory write-down | ||||||||
| Changes in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Loss from exchange differences on cash and cash equivalents | ||||||||
| Finance (expenses) income | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables, net | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Prepaid expenses | ||||||||
| Inventories | ( | ) | ( | ) | ||||
| Operating lease right-of use asset | ||||||||
| Trade payables | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in short term deposits | ( | ) | ||||||
| Change in restricted deposit | ( | ) | ( | ) | ||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from exercise of series A warrants (Note 8B) | ||||||||
| Issuance of ordinary shares and prefunded warrants, net of issuance costs (Note 8D) | ||||||||
| Net cash from financing activities | ||||||||
| Effect of exchange rate changes on cash, cash equivalents | ( | ) | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS: | ||||||||
| Cash received from interest | ||||||||
| Supplemental disclosure of non-cash investment and financing activities: | ||||||||
| Derivative warrants liabilities exercised into ordinary shares | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
Note 1 – General
| A. | PARAZERO TECHNOLOGIES LTD. (the “Company”) was incorporated in Israel on
The Company’s ordinary shares began trading on the Nasdaq Capital Market under the ticker symbol “PRZO” on July 27, 2023, following its initial public offering transaction. See Note 8.A below. |
| B. | The Company has funded its operations substantially through issuances of its equity securities in public and private offerings.
The Company is in its early commercialization stage and has not generated significant revenues at this stage.
As of June 30, 2025, the Company had $
Subsequent to the balance sheet date, the Company closed a registered direct offering and received gross proceeds of approximately $
Considering the above, the Company’s management estimates, based on its operating plan, its cash position, together with anticipated revenue from existing customers pursuant to existing purchase orders, it will be sufficient to fund its current operations and satisfy its obligations through for a period of at least 12 months, from the date of issuance of these interim financial statements. |
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PARAZERO TECHNOLOGIES LTD.
Note 2 – Basis for Presentation and Significant Accounting Policies
| A. | Basis for Presentation |
The Company’s accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements.
The condensed interim financial statements reflect all adjustments considered necessary for a fair presentation of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature.
These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2024 and notes thereto that are included in the Company’s Form 20-F, filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2025. The preparation of financial statements in conformity with U.S. GAAP requires the Company 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 those estimates. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2025.
| B. | Significant Accounting Policies |
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements except for the following:
| C. | Short term deposits |
Bank deposits with maturities of more than three months but less than one year are included in short-term bank deposits. Such short-term bank deposits are stated at cost which approximates fair market value.
| D. | Stock based compensation |
The Company accounts for restricted share units (“RSUs”) under ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees, non-employee consultants and directors, based on the fair value of the awards on the date of grant based on the closing trading price of the underlying shares at the date of grant.
The expense for RSUs cost is recognized over the requisite service period of each individual grant using the straight-line basis.
8
PARAZERO TECHNOLOGIES LTD.
Note 3 – Other Current Assets:
| June 30 | December 31 | |||||||
| 2025 | 2024 | |||||||
| Governmental institutions | ||||||||
| Prepaid expenses | ||||||||
| Deferred contract costs (1) | ||||||||
| Other current assets | ||||||||
(1)
| June 30 | December 31 | |||||||
| 2025 | 2024 | |||||||
| Balance at the beginning of the period | ||||||||
| Contract costs recognized during the period | ( | ) | ( | ) | ||||
| Contract costs relating to new sales | ||||||||
| Balance at the end of the period | ||||||||
Note 4 – Restricted Deposits:
The restricted deposits consist of funds
that are contractually restricted as to usage or withdrawal due to guarantees made with regard to lease payments for the Company’s
office space. The bank deposit bears an annual interest rate of
Note 5 – Leases:
On February 1, 2024, the Company entered
into a three-year lease agreement commencing on March 15, 2024 (the “Lease Agreement”), to move its corporate headquarters,
including the offices and research and development facility, to 1 Hatahana Street, Menivim Tower, Kfar Saba 4453001 Israel where it occupies
approximately
In addition, the Company provided a
bank guarantee in the amount of approximately NIS
Previously, the Company had a two-year
lease agreement for its office in Kiryat Ono, Israel that began in 2020, and was renewed in 2022 for an additional two years that
ended in February 2024 and further extended by one month that ended in March 2024. The facility occupied approximately
The Company’s lease expenses were as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Lease expense | $ | $ | ||||||
Other information related to the new operating leases as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term — operating leases (years) | ||||||||
| Weighted-average discount rate — operating leases (%) | ||||||||
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PARAZERO TECHNOLOGIES LTD.
Undiscounted maturities of operating lease payments are summarized as follows:
| June 30, 2025 | ||||
| 2025 | $ | |||
| 2026 | $ | |||
| 2027 | $ | |||
| Total undiscounted cash flows | $ | |||
| Imputed interest | $ | |||
| Operating lease liabilities | $ | |||
Note 6 – Other Current Liabilities:
| June 30 | December 31 | |||||||
| 2025 | 2024 | |||||||
| Accrued employee compensation | ||||||||
| Deferred Revenue (1) | ||||||||
| Warranty provision | ||||||||
| Advances from customers | ||||||||
| Accrued expenses | ||||||||
| Other current liabilities | ||||||||
(1)
| June 30 | December 31 | |||||||
| 2025 | 2024 | |||||||
| Balance at the beginning of the period | ||||||||
| Deferred revenue relating to new sales | ||||||||
| Revenue recognized during the period | ( | ) | ( | ) | ||||
| Balance at the end of the period | ||||||||
Remaining Performance Obligations (“RPO”) represents contracted
revenue that has not yet been recognized, which includes deferred revenue and amounts that will be recognized as revenue in future periods.
As of June 30, 2025, the total RPO amounted to $
10
PARAZERO TECHNOLOGIES LTD.
Note 7 – Derivatives Warrant Liabilities:
Private Placement Warrants
The Company issued pre-funded warrants,
series A warrants and series B warrants as part of the PIPE (as defined in Note 8.B below) from October 2023. The pre-funded warrants
and series B warrants have been fully exercised. As of June 30, 2025,
The fair value of the series A warrants as of June 30, 2025 was calculated by an independent valuation expert, performing numerous iterations using the Black–Scholes option price model, based on a probability of an adjustment event and using the following assumptions:
| June 30, 2025 | December 31, 2024 | |||||||
| Expected volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected Life (years) | ||||||||
| Value per share | $ | $ | ||||||
| Exercise price (U.S. dollars per share) | $ | $ | ||||||
The following table sets forth the changes in the number of outstanding series A warrants during the six months ended June 30, 2025:
| Balance as of December 31, 2024 | ||||
| Exercise of warrants | ( | ) | ||
| Balance as of June 30, 2025 |
The following table sets forth the fair value changes of the series A warrants during the six months ended June 30, 2025:
| Balance as of December 31, 2024 | ||||
| Change in fair value | ( | ) | ||
| Exercise of warrants | ( | ) | ||
| Balance as of June 30, 2025 |
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PARAZERO TECHNOLOGIES LTD.
Note 8 – Shareholders’ Equity:
| A. | Initial public offering (the “IPO”) |
| On July 31, 2023, the Company closed an initial public offering of its ordinary shares (the “IPO”). The Company issued and sold |
| B. | Private investment |
| On October 30, 2023, the Company raised gross proceeds of approximately $
During 2023, certain warrant holders exercised
During January and February 2024, certain warrant holders exercised
During December 2024, certain warrant holders exercised
As of December 31, 2024, the pre-funded warrants and series B warrants have been exercised in full.
During January 2025, certain warrant holders exercised
As of June 30, 2025, there were |
| C. | Form F-3 (the “Form F-3”) | |
| On August 9, 2024, the Company filed a Shelf Registration Statement on Form F-3 (the “Form F-3”) with the SEC for the registration under the Securities Act of 1933, as amended, of such indeterminate number of ordinary shares, warrants to purchase ordinary shares, and units, in one or more offerings for an aggregate initial offering price of up to $50,000,000 on Form F-3. The Form F-3 was declared effective by the SEC on August 16, 2024. |
13
PARAZERO TECHNOLOGIES LTD.
| D. | Registered direct offering - February 13, 2025 |
| On February 13, 2025, the Company closed a registered direct offering utilizing the Form F-3. The Company issued and sold |
| E. | Equity Warrants |
During April 2024, certain consultants exercised
As of June 30,2025, the remaining outstanding equity warrants (excluding series A warrants) are summarized in the table below:
| Issuance date | In connection with | Expiry date | No. of warrants issued | Exercise price per ordinary share | No. of Ordinary shares underlying warrants | |||||||||||
| 2022 | $ | |||||||||||||||
| 2023 | $ | |||||||||||||||
| 2023 | $ | |||||||||||||||
| * | Warrants issued as part of the Delta Drone transaction with the Former Parent Company and upon the IPO completion. |
| F. | Stock-based Compensation |
The Company’s Global Share Incentive Plan (2022) (the “Plan”) was adopted by Company’s Board of Directors (the “Board”) on March 28, 2022. The Plan provides for the grant of options to purchase ordinary shares, restricted share units representing ordinary shares and ordinary shares (collectively, the “Awards”) to the Company’s employees, officers, directors, advisors and consultants in order to promote a close identity of interests between those individuals and us.
On February 19, 2025 the Company’s pool
of shares under the Plan was increased by
14
PARAZERO TECHNOLOGIES LTD.
For the six months ended June 30, 2025,
the Board approved the grant of an aggregate of
A summary of the stock option activity for the six months ended June 30, 2025 is as follows:
| Number of Options | Weighted Average Exercise Price | |||||||
| Options outstanding as of December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Forfeited | $ | |||||||
| Options outstanding as of June 30, 2025 | $ | |||||||
| Options exercisable as of June 30, 2025 | $ | |||||||
As of June 30, 2025, the Company had
As of June 30, 2025, the unrecognized
compensation cost related to all unvested options of $
The Company used the Black-Scholes option-pricing model to determine the fair value of options granted during 2023 - 2025. The following assumptions were applied in determining the options’ fair value on their grant date:
| 2025 | 2024 | ||||||
| Risk-free interest rate | % | $ | % | ||||
| Expected option term (years) | $ | ||||||
| Expected share price volatility | |||||||
| Dividend yield |
| G. | Restricted Share Units Grant |
On February 19, 2025, the Board resolved
to approve the grant of an aggregate of
15
PARAZERO TECHNOLOGIES LTD.
The Company calculates the fair value of RSUs based on the fair value on the closing trading price of the underlying shares at the date of grant. Each RSU vests based on continued service to the Company, between 12 – 36 months. The grant date fair value of the award is recognized as stock-based compensation expense over the requisite service period.
The fair value of this grant was $
A summary of the RSUs activity for the six months ended June 30, 2025 is as follows:
| Amount of RSUs | Weighted Average Grant date Fair Value per Share | |||||||
| Outstanding as of December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Forfeited | $ | |||||||
| Vested | $ | |||||||
| Unvested and Outstanding as of June 30, 2025 | $ | |||||||
Note 9 – Commitments and Contingencies
| A. | Israel Innovation Authority |
The Company has received royalty-bearing
grants from the Israel Innovation Authority (the “IIA”), for approved research and development projects. The programs include
grants for: wages, materials, subcontractors and miscellaneous. The Company is required to pay royalties at the rate of
As of December 31, 2019, the research
and development projects funded by the IIA were completed. The total amount of the IIA grant received was $
As of June 30, 2025, the maximum
obligation with respect to the grants received from the IIA, including accrued interest, contingent upon entitled future sales, is $
When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. There is no certainty that the Company would obtain such approvals.
16
PARAZERO TECHNOLOGIES LTD.
| B. | Liens |
The Company’s long-term restricted
deposits held in a bank in the amount of NIS
NOTE 10 — SEGMENT REPORTING
Segment information is prepared on the same basis
that the chief executive officer, who is the Company’s chief operating decision maker, manages the business, makes business decisions
and assesses performance. The Company has
The chief executive officer assesses performance for this segment and decides how to allocate resources based on operating expenses excluding non-cash items and net loss. The measure of segment assets is reported on the balance sheet as cash and cash equivalents. The chief executive officer performs the assessment of segment performance by using the reported measure of segment profit or loss to monitor budget versus actual results.
The table below summarizes the significant expense categories regularly reviewed by the chief operating decision maker for the period ended June 30, 2025 and December 31, 2024:
| June 30 | June 30 | |||||||
| 2025 | 2024 | |||||||
| Sales | ||||||||
| Cost of Sales (*) | ||||||||
| Payroll and payroll related | ||||||||
| Others | ||||||||
| Research and Development expenses (*) | ||||||||
| Payroll and payroll related | ||||||||
| Material, subcontractors, consultants and other | ||||||||
| Selling and Marketing expenses (*) | ||||||||
| Payroll and payroll related | ||||||||
| Professional services, tradeshows and others | ||||||||
| General and Administrative expenses (*) | ||||||||
| Payroll and payroll related | ||||||||
| Professional services and Facility related and other | ||||||||
| Other segment items: (*) | ( | ) | ( | ) | ||||
| Net loss | ||||||||
| (*) |
Note 11 – Subsequent Events
| A. | On July 3, 2025, the Company’s shareholders resolved the following:
1. To extend the shareholders resolution from July 24, 2024, to approve a reverse share split of the Company’s issued and outstanding ordinary shares, NIS
2. To approve the terms of employment of the Company’s new Chief Executive Officer |
| B. | On August 4, 2025, the Company closed a registered direct offering utilizing Form F-3 (the “Form F-3”). The Company issued and sold |
17
Exhibit 99.2
PARAZERO TECHNOLOGIES
LTD.’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE
30, 2025
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Form 6-K and our Annual Report on Form 20-F for the year ended December 31, 2024 (the “Annual Report”).
Unless the context requires otherwise, the terms “ParaZero,” “we,” “us,” “our,” “the Company,” and similar designations refer to ParaZero Technologies Ltd. References to “ordinary shares”, “warrants” and “share capital” refer to the ordinary shares, warrants and share capital, respectively, of ParaZero.
References to “U.S. dollars” and “$” are to currency of the United States of America. References to “ordinary shares” are to our ordinary shares, par value NIS 0.02 per share. Our financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate our expected results for any future periods.
Forward Looking Statements
The following discussion contains “forward-looking statements,” including statements regarding expectations, beliefs, intentions or strategies for the future. These statements may identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:
| ● | our lack of operating history; |
| ● | our current and future capital requirements and our belief that our existing cash will be sufficient to fund our operations for more than one year from the date that the financial statements are issued; |
| ● | our ability to obtain necessary regulatory approvals from the U.S. Federal Aviation Administration or other governmental agencies, or limitations put on the use of small unmanned aerial systems (“UASs”) in response to public privacy concerns; |
| ● | our ability to manufacture, market and sell our products and to generate revenues; |
| ● | our ability to maintain our relationships with key partners and grow relationships with new partners; |
| ● | our ability to maintain or protect the validity of our U.S. and other patents and other intellectual property; |
| ● | our ability to launch and penetrate markets in new locations and new market segments; |
| ● | our ability to retain key executive members and hire additional personnel; |
| ● | our ability to maintain and expand intellectual property rights; |
| ● | interpretations of current laws and the passages of future laws; |
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| ● | our ability to achieve greater regulatory compliance needed in existing and new markets; |
| ● | the overall demand for drone safety systems and counter unmanned aerial systems (“C-UAS”); |
| ● | our ability to achieve key performance milestones in our planned operational testing; |
| ● | our ability to establish adequate sales, marketing and distribution channels; |
| ● | acceptance of our business model by investors |
| ● | our ability to maintain the listing of our ordinary shares on The Nasdaq Capital Market |
| ● | security, political and economic instability in the Middle East that could harm our business, including due to the current security situation in Israel; and |
| ● | those factors referred to under the headings “Risk Factors” and “Operating and Financial Review and Prospects” in our Annual Report, as well as in our Annual Report generally. |
The preceding list is not intended to be an exhaustive list of any forward-looking statements and are based on our beliefs, assumptions and expectations of future performance, taking into account the information available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results to differ materially from the results expressed or implied by the forward-looking statements.
The forward-looking statements contained herein are based upon information available to our management as of the date hereof and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. Except as required by law, we undertake no obligation to update publicly any forward- looking statements after the date hereof to conform these statements to actual results or to changes in our expectations.
Risk Factors
There are no material changes to the risk factors previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2024.
Operating Results.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and the related notes included in our Final Prospectus, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2025, included elsewhere in this Report on Form 6-K. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties.
The following financial data in this narrative are expressed in U.S. dollars, except as otherwise noted.
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Overview
We are a leading aerospace technology company specializing in advanced safety systems for unmanned aerial systems (UAS), with solutions serving both the commercial drone industry and defense applications, including counter-UAS (C-UAS) technologies and military-grade logistics systems.
With a strong foundation in aviation safety and innovation, our mission is to enable the safe and effective integration of unmanned aerial vehicles (UAVs) into complex airspaces worldwide. Our comprehensive product portfolio supports a wide range of operational requirements from commercial drone operations in urban environments to tactical military deployments, positioning us as a key enabler in the evolving global aerospace ecosystem.
We were founded in 2014 in Be’er Sheva, Israel by a group of aviation professionals and entrepreneurs who recognized the urgent need for robust safety solutions in the emerging drone industry. We were established in response to a near-accident that highlighted the risks associated with the rapid proliferation of UAVs.
Since our inception, we have focused on the development of autonomous safety technologies that mitigate those risks, ensuring safe and scalable drone operations. Today, we are headquartered in Kfar Saba, Israel, where we maintain our core, in-house research, development, manufacturing, and assembly capabilities, which together with our collaborations and partnership with third parties, give us a global distribution footprint.
Commercial UAV Safety Systems
Our flagship commercial product line is the SafeAir system—an autonomous parachute recovery solution designed to detect critical failures and deploy a parachute to safely ground UAVs. SafeAir is available as a commercially off-the-shelf solution for widely used drone platforms, such as DJI’s Matrice and Mavic series, as well as custom-integrated variants for enterprise, industrial, and specialized UASs, including those used in urban air mobility, logistics, and infrastructure inspection.
SafeAir integrates directly with a drone’s onboard systems, offering real-time anomaly detection and automated deployment. The system is compliant with global safety standards, including ASTM, and is recognized by regulators, such as the U.S. Federal Aviation Administration (FAA), the European Union Aviation Safety Agency (EASA), the Australian Civil Aviation Safety Authority (CASA) and other civil aviation authorities across the word, which enables operators to meet operational requirements for beyond-visual-line-of-sight (BVLOS) flights and missions conducted over people.
With over 10,000 systems deployed globally across North America, LATAM, EMEA, APAC, and Australia, we support both individual operators and enterprise clients. We maintain close collaborations with global aviation authorities to support certification and ensure safe integration of drones into national airspaces.
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Expansion into Defense and Security Markets
In 2023, we expanded into the defense and homeland security sectors with a portfolio of UAV solutions tailored for military-grade applications. This strategic move reflects the growing need for reliable, field-ready drone technologies in modern tactical environments.
DefendAir is our proprietary C-UAS system, designed to autonomously detect, track and intercept unauthorized drones using an integrated net-launch mechanism. Compact, lightweight, and fully autonomous, DefendAir is optimized for critical infrastructure protection and urban security operations.
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DropAir is a high-precision aerial delivery system developed by us at the request of the Israeli Ministry of Defense and the Israel Defense Forces (IDF) Medical Corps. Originally designed to enable the rapid delivery of blood transfusion units to the battlefield, DropAir has since evolved into a versatile system capable of transporting medical supplies, ammunition and other critical payloads in denied or hard-to-reach areas. The system integrates our proprietary guidance, stabilization and release technologies, and has been successfully integrated with both commercial and military-grade UAVs. In 2025, DropAir received export approval from Israel’s Ministry of Defense.
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Israeli-Based Development and Manufacturing
Our entire product development, system design and final assembly activities take place in Israel, leveraging the country’s advanced aerospace, defense and high-tech ecosystems. This domestic vertical integration ensures strict quality control, faster innovation cycles and resilient supply chains. We also maintain close partnerships with leading Israeli defense corporates and global aerospace integrators.
By combining deep engineering expertise with a commitment to global aviation safety and operational excellence, we continue to lead in both civilian and defense UAV markets. We remain focused on expanding our global footprint, advancing regulatory engagement, and delivering mission-critical technologies for the next generation of uncrewed flight.
Recent Offerings
Registered Direct Offering – February 2025
On February 13, 2025, we closed a registered direct offering, or the February 2025 RDO, with investors for the purchase and sale of (i) 2,518,182 of our ordinary shares and (ii) pre-funded warrants to purchase up to 300,000 ordinary shares at a purchase price of $1.10 per ordinary share and $1.09999 per pre-funded warrant. The pre-funded warrants were immediately exercisable at an exercise price of $0.00001 per ordinary share, subject to adjustment as set forth therein, and will not expire until exercised in full. The aggregate gross proceeds to us from the February 2025 RDO were approximately $3.1 million.
As of the date hereof, the pre-funded warrants issued in the February 2025 RDO have been exercised in full into 300,000 ordinary shares. In connection with the February 2025 RDO, we paid an aggregate of $232,500 in placement agent fees and reimbursed the placement agent’s actual out-of-pocket expenses up to $55,000.
Registered Direct Offering – August 2025
On August 4, 2025, we closed a registered direct offering, or the August 2025 RDO, with investors for the purchase and sale of (i) 1,700,001 of our ordinary shares and (ii) pre-funded warrants to purchase up to 300,000 ordinary shares at a purchase price of $1.10 per ordinary share and $1.09999 per pre-funded warrant. The pre-funded warrants were immediately exercisable at an exercise price of $0.00001 per ordinary share, subject to adjustment as set forth therein, and will not expire until exercised in full. The aggregate gross proceeds from the August 2025 RDO were approximately $2.2 million.
As of the date hereof, 200,000 pre-funded warrants issued in the August 2025 RDO have been exercised in fully into 200,000 ordinary shares. In connection with the August 2025 RDO, we paid an aggregate of $100,000 in financial advisory fees.
Impact of the War in Israel
In October 2023, Israel was attacked by a terrorist organization and entered a state of war on several fronts. In June 2025, a new round of direct hostilities broke out between Israel and Iran, involving significant missile and drone strikes exchanged between the two countries. This escalation has heightened regional instability, increased security risks across Israel, resulted in significant travel restrictions, facility closures and shelter-in-place orders, including remote work measures, in various locations, and may further impact critical infrastructure, supply chains, and the broader Israeli economy. While a ceasefire was reached between Israel and Iran after 12 days of hostilities, the situation remains volatile. A broader regional conflict involving additional state and non-state actors remains a significant risk. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. Such clashes may escalate in the future into greater regional conflict. Our operations have not been adversely affected by this situation, and we have not experienced disruptions to our business operations. However, the intensity and duration of the current security situation in Israel is difficult to predict at this stage, as are such war’s economic implications on our business and operations and on Israel’s economy in general.
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We are closely monitoring the developments of this war. See “Item 3.D Risk Factors— Risks Related to Our Incorporation, Location and Operations in Israel– Our headquarters, research and development and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel including the recent war with Hamas and other terrorist organizations from the Gaza Strip.” in the Annual Report for additional information.
Components of Operating Results
Sales
Revenue is recognized when (or as) control of the promised goods or services is transferred to the customer, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. The Company follows five steps to record revenue: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) we satisfy our performance obligations.
The Company’s revenues consist of sales of drone safety systems with a one-year warranty, directly to customers via direct sales to system manufactures, resellers and an online store. The payment terms are usually an advance payment through a credit card or a bank wire or 30 to 60 days credit upon delivery of the product for certain existing clients.
The Company recognizes revenue from the sale of its products at the point of time when control is transferred to its customers. Once the Company’s products have been physically delivered to the agreed location, the Company no longer has a physical holding but has a present right to receive payment without retaining any significant risks or benefits.
The Company’s products include warranties which require the Company to either replace or repair defective products during the warranty period if the products fail to comply with their described specifications. Such warranties are not accounted for as separate performance obligations and hence no revenue is allocated to them. Instead, a provision is made for the costs of satisfying the warranties.
Each transaction of a product sale (including a warranty) consists of one performance obligation.
The Company recognizes revenue from customization agreements at a point in time for agreements that consist of single combined performance obligation of design of services and supply of a customized product that is satisfied at a point in time once the prototype is delivered to the customer and can be integrated into its equipment.
With the commencement of development and customization contracts during year ended December 31, 2024, in which the performance obligation is satisfied over time, the Company measures the progress of the project using the input method based on the company’s efforts to satisfy the performance obligation.
Cost of Sales
Cost of sales consists primarily of expenses related to the purchase of materials of products sold, salary and related. It also consists of write down charges of obsolete inventory items, warranty on product sold and royalties to the Israel Innovation Authority (“IIA”) on sales.
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The Government of Israel, through the IIA, encourages research and development projects by providing grants. We may receive grants from the IIA at the rates that range from 20% to 50% of the research and development expenses, as prescribed by the research committee of the IIA. Our research and development efforts relating to our product have been financed in part through royalty-bearing grants in an aggregate amount of approximately $748,000 received from the IIA, as of June 30, 2025, none of which were received during the six months ended June 30, 2025. As of the same date, our contingent liabilities regarding IIA grants received by us were in an aggregate amount of approximately $587,000. With respect to the royalty-bearing grants we are committed to pay royalties at a rate of 3% to 3.5% on sales proceeds from our products that were developed in whole or in part using these IIA grants. For information regarding our obligations in connection with the grants received from the IIA under the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and related regulations, or the Research Law, see “Government Grants and Related Royalties” below.
Operating expenses
Our current operating expenses consist of three components: (i) research and development expenses; (ii) sales and marketing expenses and (iii) general and administrative expenses. Labor costs are the most significant component of operating expenses and consist of salaries including benefits.
Research and development expenses
Research and development, or R&D, expenses consist primarily of labor costs, subcontractors, material and costs associated with patent-related expenses. Costs are expensed as they are incurred.
We anticipate that our research and development expenses will increase in the future as we increase our development headcount and infrastructure to support our continued research and development programs and the potential commercialization of our products.
Sales and marketing expenses
Sales and marketing expenses consist primarily of labor costs and consultants.
General and administrative expenses
General and administrative expenses consist primarily of labor costs, professional service fees and facilities.
As a public company whose ordinary shares are listed in the United States, we incur significant expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance premiums, director compensation, and other costs associated with being a public company.
Finance income and expenses
Finance income consists of interest received on short term deposits and finance expenses consist of changes in the fair value of convertible notes, changes in fair value of derivative warrant liability, and other finance expenses and income which mainly included currency exchange rate differences and bank charges.
Income Taxes
We have yet to generate taxable income in Israel. As of June 30, 2025, our net operating loss carryforwards for tax purposes were approximately $24.7 million. We anticipate that we will continue to generate losses for the foreseeable future and that we will be able to carry forward these losses for tax purposes indefinitely to future taxable years. Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses.
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Results of Operations
Our results of operations have varied in the past and can be expected to vary in the future due to numerous factors. We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance.
Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024
Results of Operations
| Six months ended June 30, | ||||||||
| (in USD, except share and per share data) | 2025 | 2024 | ||||||
| Statements of Operations Data: | ||||||||
| Sales | 357,979 | 282,693 | ||||||
| Cost of sales | (431,888 | ) | (209,529 | ) | ||||
| Gross profit | (73,909 | ) | 73,164 | |||||
| Research and development expenses | (1,155,436 | ) | (662,440 | ) | ||||
| Sales and marketing expenses | (752,420 | ) | (516,401 | ) | ||||
| General and administrative expenses | (1,670,513 | ) | (1,122,759 | ) | ||||
| Operating loss | (3,652,278 | ) | (2,228,436 | ) | ||||
| Change in fair value of derivative warrant liabilities | (1,253,042 | ) | (67,227 | ) | ||||
| Other finance income, net | 103,281 | 135,115 | ||||||
| Net loss and comprehensive loss | (2,295,955 | ) | (2,026,094 | ) | ||||
| Basic and diluted loss per share | (0.14 | ) | (0.19 | ) | ||||
| Weighted average number of shares outstanding used in computing basic and diluted loss per share | 16,018,334 | 10,940,958 | ||||||
Sales
Sales increased by $75,286, or 26.6%, to $357,979 for the six months ended June 30, 2025, compared to $282,693 for the six months ended June 30, 2024. This increase was mainly attributed to the company shifting towards sales of newly developed products, mainly in the defense sector, and original equipment manufacturer integrations that contributed to a higher volume of sales rather than to the aftermarket segment.
Cost of sales
Cost of sales increased by $222,359, or 106.1%, to $431,888 for the six months ended June 30, 2025, compared to $209,529 for the six months ended June 30, 2024. The increase was mainly due to the increase in the volume of sales and product mix during the six months ended June 30, 2025, an inventory write-off of $81,677 and higher overhead costs and personnel related to the new lease for our corporate offices and headquarters.
Research and Development Expenses
R&D expenses for the six months ended June 30, 2025, amounted to $1,155,436, an increase of $492,996, or 74.4%, compared to $662,440 for the six months ended June 30, 2024. The increase resulted mainly from labor costs due to the increased number of employees and contractors’ costs.
Selling and marketing expenses
Our selling and marketing expenses totaled $752,420 for the six months ended June 30, 2025, an increase of $236,019 or 45.7%, compared to $516,401 for the six months ended June 30, 2024. The increase resulted mainly from labor costs of $122,231, marketing services of $70,639 accompanied by an increase in travel and conferences participation costs of $19,832.
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General and administrative expenses
Our general and administrative expenses totaled $1,670,513 for the six months ended June 30, 2025, an increase of $547,754. or 48.8%, compared to $1,122,759 for the six months ended June 30, 2024. The increase resulted mainly from non-cash expenses of $456,035 related to grants pursuant to our equity incentive plan and certain filing services.
Change in fair value of derivative warrant liabilities
In connection with our private placement in October 2023, or the PIPE, the Company issued warrants that are classified as liabilities and were measured at fair value upon issuance and revalued as of June 30, 2025. Non-cash incomes of $1,253,042 were recorded as the change in fair value for the six months ended June 30, 2025 reflecting the change in the fair value of the outstanding warrants and warrants that were exercised during the six months ended June 30, 2025.
Other finance income, net
Other finance income, net for the six months ended June 30, 2025, was $103,281, out of which $127,596 was interest income on short term deposits, partly offset by bank fees and other non-cash expenses of $24,315, compared to finance income, net of $135,115 for the six months ended June 30, 2024, out of which $161,032 was interest income on short term deposits, partly offset by bank fees and other non-cash expenses of $25,917.
Net loss and comprehensive loss
Net loss and comprehensive loss increased by $269,861, or 13.3%, to $2,295,955 for the six months ended June 30, 2025, compared to a net loss of $2,026,094 for the six months ended June 30, 2024. The increase was the result of changes in fair value of derivative warrant liabilities, along with an increase in expenses related to grants pursuant to our equity incentive plan along with an increase of operating expenses, as described above.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s). A comprehensive discussion of our critical accounting policies is disclosed in our Annual Report, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2025, included elsewhere in this Report Form 6-K.
Liquidity and Capital Resources.
Overview
We are in our early commercialization stage and do not generate significant revenue in this stage. Therefore, we have suffered recurring losses from operations and negative cash flows from operations since inception in June 2013. Since our inception through the date of this this Report on Form 6-K, our operations have been funded substantially through issuances of our equity securities in public and private offerings, including in our initial public offering in July 2023, our private placement in October 2023, our registered direct offerings in February 2025 and August 2025, loans from related parties, SAFEs and government grants for research and development projects received from the IIA. As of June 30, 2025, we had approximately $4.8 million in cash, cash equivalents and short term deposits.
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The table below presents our cash flows for the periods indicated:
| Six months ended June 30, | ||||||||
| (in USD) | 2025 | 2024 | ||||||
| Operating activities | (3,069,751 | ) | (2,003,481 | ) | ||||
| Investing activities | (2,529,181 | ) | (132,969 | ) | ||||
| Financing activities | 3,791,288 | - | ||||||
| Net (decrease) in cash and cash equivalents | (1,813,284 | ) | (2,139,300 | ) | ||||
Operating Activities
Net cash used in operating activities during the six months ended June 30, 2025 was $3,069,751. Net cash used in operating activities during the six months ended June 30, 2024 was $2,003,481. The increase in the negative cash flow is consistent with the increase in the operational loss for the period compared
Investing Activities
Net cash used in investing activities increased by $2,396,212 to $2,529,181 for the six months ended June 30, 2025, compared to $132,969 for six months ended June 30, 2024. With respect to the increase, $2,500,000 was invested in short term bank deposits and $20,818 was used to purchase computers, general equipment and office equipment and $8,363 used to increase existing long-term restricted deposit, pledged as security in respect of guarantees granted by the bank to the Company’s landlords pursuant to the Company’s new lease agreement for its corporate offices and headquarters
Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2025 was $3,791,288, which consisted of funds received from issuance of ordinary shares and pre-funded warrants, net of issuance costs in registered direct offering completed in February 2025, in an aggregate amount net of issuance costs of $2,532,495 and proceeds from exercise of series A warrants of $1,258,793 issued in our private placement in October 2023. Net cash provided by financing activities during the six months ended June 30, 2024 was $0.
Current Outlook
We have financed our operations to date primarily through proceeds from issuance of our ordinary shares and other equity securities in public and private offerings, loans from related parties and grants from the IIA, and more recently, we have begun to generate some revenues from sale of our products as we are in our early commercialization stage. We have incurred losses and generated negative cash flows from operations since inception in June 2013.
While management expects that we will require additional financing in the future to fund its operations until hawse have generated significant revenues, we expect that our existing cash and cash equivalents as of June 30, 2025, together with our anticipated revenue from existing customers pursuant to existing purchase orders, will be sufficient to fund our current operations and satisfy our obligations through the end of August 2026.
We expect to need additional capital to develop and commercialize our next-generation products, including apt detection and targeting systems for the new DefendAir products, as well as research and development in the field of precise and silent parachutes (DropAir) to differentiate and launch our products.
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In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | our ability to market and sell our products and to generate more significant revenues; |
| ● | the progress and costs of our research and development activities; |
| ● | the costs of manufacturing our products; |
| ● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
| ● | the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and |
| ● | the magnitude of our general and administrative expenses. |
Until we can generate significant recurring revenues and profit, we expect to satisfy our future cash needs through debt or equity financings, through the utilization of our current financial resources and sales of our products. We cannot be certain that additional funding will be available to us when needed, on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for commercialization efforts with respect to our products.
Government Grants and Related Royalties
We have developed drone safety systems, at least in part, with funds from IIA grants, and, accordingly, we would be obligated to pay these royalties on sales of the aforementioned products. Below is a description of our obligations in connection with the grants received from the IIA under the Research Law:
Local Manufacturing Obligation
As long as the manufacturing of our product candidates takes place in Israel and no technology funded with IIA grants is sold or out licensed to a non-Israeli entity, the maximum aggregate royalties paid would generally be up to the total amount of grants received, linked to the U.S. dollar and bearing interest. Until December 31, 2023, the interest was calculated at a rate based on an annual application of the LIBOR, applicable to U.S. dollar deposits, however, pursuant to the latest IIA regulations, as of January 31, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%.
We believe that this change would not have material impact on our results or our financial position.
Further, when a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. We may not receive those approvals. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel.
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Under the terms of the Research Law, the products may be manufactured outside of Israel by us or by another entity only if prior approval is received from the IIA (such approval is not required for the transfer of up to 10% of the manufacturing capacity in the aggregate, in which case a notice must be provided to the IIA and not be objected to by the IIA within 30 days of such notice).
Know-How Transfer Limitation
The Research Law restricts the ability to transfer know-how funded by the IIA outside of Israel. Transfer of IIA funded know-how outside of Israel requires prior approval of the IIA and may be subject to payments to the IIA, calculated according to formulae provided under the Research Law. The redemption fee is subject to a cap of six times the total amount of the IIA grants, plus interest accrued thereon (i.e. the total liability to the IIA, including accrued interest, multiplied by six). If we wish to transfer IIA funded know-how, the terms for approval will be determined according to the nature of the transaction and the consideration paid to us in connection with such transfer.
Approval of transfer of IIA funded know-how to another Israeli company may be granted only if the recipient abides by the provisions of the Research Law and related regulations, including the restrictions on the transfer of know-how and manufacturing rights outside of Israel.
Change of Control
Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of our share capital or voting rights, (ii) is entitled to appoint our directors or our chief executive officer or (iii) serves as one of our directors or as our chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.
Approval to manufacture products outside of Israel or consent to the transfer of IIA funded know-how, if requested, is within the discretion of the IIA. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer IIA funded know-how or manufacturing out of Israel.
The consideration available to our shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA.
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Exhibit 99.3
ParaZero Announces First Half of 2025 Financial Results
Sales increased by approximately 27% compared to the same period in 2024
Kfar Saba, Israel, Aug. 28, 2025 (GLOBE NEWSWIRE) -- ParaZero Technologies Ltd. (Nasdaq: PRZO) (the “company” or “ParaZero”), an aerospace defense company pioneering smart, autonomous solutions for the global manned and unmanned aerial systems (UAS) industry, reported today its financial results for the six months ended June 30, 2025.
Key Highlights of ParaZero’s Achievements in the First Half of 2025 & Recent Updates:
Financial and Corporate Updates:
| ● | Sales increased by 26.6% to $357,979 for the six months ended June 30, 2025. |
| ● | ParaZero raised approximately $3.1 million and $2.2 million in gross proceeds from registered direct offerings in February 2025 and August 2025, respectively |
| ● | Appointed Ariel Alon, a senior UAV executive, as company’s CEO. |
Counter-Drone Systems:
| ● | ParaZero bolstered its counter-drone technology with approval from the Israeli Defense Export Controls Agency (DECA) under the Israeli Ministry of Defense approval to market DefendAir globally, targeting a high-growth market. |
| ● | Showcased DefendAir Hand-Held Net Launcher in two field tests with a select group of Israeli security and defense professionals, each demonstrating a 100% interception success rate, effectively neutralizing every fast-incoming multirotor drone threat in real-time scenarios. |
| ● | Conducted several field trials of updated configurations to provide solutions to different evolving drone threat scenarios, at the discretion of defense entities, which further strengthened its market position. The company quickly reshaped its strategy, technology, and IP assets to address one of the world’s biggest commercial, homeland security, and defense challenges: the threats posed by drones. |
Airdrop Systems:
| ● | Enhanced its portfolio with successful DropAir precise airdrop system tests for critical supply delivery. Integrated with military and several commercial drones, DropAir enabled rapid autonomous and accurate supply through drones in the most challenging terrains in general, and the supplement of blood transfusions in combat specifically, as shown in a defense demo. |
| ● | Progressed to Phase II with the Israeli Ministry of Defense, focusing on delivering pilot systems for implementation and additional operational testing in various scenarios. |
| ● | Secured global marketing approvals from DECA under the Israeli Ministry of Defense for collaborations with Heven Drones and Stedicopter after full integration with their platforms. |
Ariel Alon, CEO of ParaZero, commented: “As the newly appointed CEO of ParaZero Technologies, I am thrilled to lead a company with such immense potential in the rapidly growing counter-drone and defense markets. We believe that our recent successes, including securing approvals from DECA under the Israeli Ministry of Defense for the global marketing of our DefendAir counter-UAS system and achieving a 100% interception rate in live field demonstrations, position us well at the forefront of a market projected to grow from USD 3.10 billion in 2025 to USD 12.24 billion by 2032, with a CAGR of 21.62%. Our advancements in precision airdrop systems like DropAir, coupled with our strategic partnerships, demonstrate our capability to deliver cutting-edge solutions. I see tremendous potential opportunities to drive innovation and capture market share in this dynamic, high-growth sector.”
First Half 2025 Financial Highlights:
| ● | Sales totaled to $357,979 for the six months ended June 30, 2025, compared to $282,693 for the six months ended June 30, 2024. This increase was mainly attributed to the company shifting towards sales of newly developed products, mainly in the defense sector, and original equipment manufacturer integrations that contributed to a higher volume of sales rather than to the aftermarket segment. |
| ● | Cost of sales amounted to $431,888 for the six months ended June 30, 2025, compared to $209,529 for the six months ended June 30, 2024. The increase was mainly due to the increase in the volume of sales and product mix during the six months ended June 30, 2025, an inventory write-off and higher overhead costs and personnel related to the new lease for our corporate offices and headquarters. |
| ● | Research and development expenses for the six months ended June 30, 2025, amounted to $1,155,436, compared to $662,440 for the six months ended June 30, 2024. The increase resulted mainly from labor costs due to the increased number of employees and contractors’ costs. |
| ● | Selling and marketing expenses totaled $752,420 for the six months ended June 30, 2025, compared to $516,401 for the six months ended June 30, 2024. The increase resulted mainly from labor costs and marketing services, accompanied by an increase in travel and conferences participation costs. |
| ● | General and administrative expenses totaled $1,670,513 for the six months ended June 30, 2025, compared to $1,122,759 for the six months ended June 30, 2024. The increase resulted mainly from non-cash expenses related to grants pursuant to our equity incentive plan and certain filing services. |
| ● | Comprehensive and net loss amounted to $2,295,955 for the six months ended June 30, 2025, compared to a net loss of $2,026,094 for the six months ended June 30, 2024. The increase was the result of changes in fair value of derivative warrant liabilities, along with an increase in expenses related to grants pursuant to our equity incentive plan along with an increase of operating expenses, as described above. |
| ● | Net loss per share for the six months of 2025 was $0.14 compared to net loss per share of $0.19 for the six months ended June 30, 2024. |
| ● | As of June 30, 2025, the Company’s cash, cash equivalents and short-term deposits were $4.86 million and approximately $6.2 million as of August 27, 2025. |
About ParaZero Technologies
ParaZero Technologies Ltd. (Nasdaq: PRZO) is an aerospace defense company pioneering smart, autonomous solutions for the global manned and unmanned aerial systems (UAS) industry. Founded in 2014 by aviation professionals and drone industry veterans, ParaZero is a recognized leader in advanced drone technologies, supporting commercial, industrial, and governmental operations worldwide. The company’s product portfolio includes SafeAir, an autonomous parachute recovery system designed for aerial safety and regulatory compliance; DefendAir, a counter-UAS net-launching platform for protection against hostile drones in both battlefield and urban environments; and DropAir, a precision aerial delivery system. ParaZero’s mission is to redefine the boundaries of aerial operations with intelligent, mission-ready systems that enhance safety, scalability, and security. For more information, visit https://parazero.com.
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Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act and other securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. For example, ParaZero is using forward-looking statements when it discusses the potential of the company, the rapidly growing counter-drone and defense markets, it belief that its recent successes position it to be at the forefront of the growth in the global anti-drone market and its potential opportunities to drive innovation and capture market share. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. For a more detailed description of the risks and uncertainties affecting the Company, reference is made to the Company’s reports filed from time to time with the Securities and Exchange Commission (“SEC”), including, but not limited to, the risks detailed in the Company’s Annual Report on Form 20-F filed with the SEC on March 21, 2025. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. ParaZero is not responsible for the content of third-party websites.
Investor Relations Contact:
Michal
Efraty
Investor Relations
michal@efraty.com
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ParaZero Technologies Ltd.
BALANCE SHEET
(U.S. dollars in thousands, except share data and per share data)
| June 30, | December 31, | |||||||||||
| Note | 2025 | 2024 | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | 2,365,582 | 4,178,866 | ||||||||||
| Short term deposits | 2,500,000 | — | ||||||||||
| Trade receivables | 36,675 | 114,564 | ||||||||||
| Other current assets | 3 | 550,044 | 421,919 | |||||||||
| Inventories | 340,461 | 394,193 | ||||||||||
| TOTAL CURRENT ASSETS | 5,792,762 | 5,109,542 | ||||||||||
| NON-CURRENT ASSETS: | ||||||||||||
| Restricted deposit | 4 | 76,364 | 68,001 | |||||||||
| Prepaid expenses | 15,728 | 33,333 | ||||||||||
| Operating lease right-of-use asset | 5 | 332,449 | 418,790 | |||||||||
| Property and equipment, net | 114,962 | 107,906 | ||||||||||
| TOTAL NON-CURRENT ASSETS | 539,503 | 628,030 | ||||||||||
| TOTAL ASSETS | 6,332,265 | 5,737,572 | ||||||||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands, except share data and per share data)
| June 30, | December 31, | |||||||||
| Note | 2025 | 2024 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Trade payables | 182,322 | 184,247 | ||||||||
| Operating lease liabilities | 5 | 218,985 | 202,563 | |||||||
| Other current liabilities | 6 | 835,830 | 933,995 | |||||||
| TOTAL CURRENT LIABILITIES | 1,237,137 | 1,320,805 | ||||||||
| NON-CURRENT LIABILITIES: | ||||||||||
| Operating lease liabilities, net of current portion | 5 | 141,169 | 216,917 | |||||||
| Derivative warrant liabilities | 7 | 1,424,033 | 4,511,491 | |||||||
| TOTAL NON-CURRENT LIABILITIES | 1,565,202 | 4,728,408 | ||||||||
| COMMITMENTS AND CONTINGENCIES | 9 | |||||||||
| SHAREHOLDERS’ DEFICIT | 8 | |||||||||
| Ordinary shares, NIS 0.02 par value: Authorized 200,000,000 as of June 30, 2025 and December 31, 2024; Issued and outstanding 17,063,630 and 12,817,092 shares as of June 30, 2025 and as of December 31, 2024, respectively | 95,782 | 72,061 | ||||||||
| Additional paid-in capital | 35,207,386 | 29,093,585 | ||||||||
| Accumulated losses | (31,773,242 | ) | (29,477,287 | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 3,529,926 | (311,641 | ) | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 6,332,265 | 5,737,572 | ||||||||
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STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars in thousands, except share data and per share data)
| Six months ended June 30, | Six months ended June 30, | |||||||
| 2025 | 2024 | |||||||
| U.S. dollars | ||||||||
| Sales | 357,979 | 282,693 | ||||||
| Cost of Sales | 431,888 | 209,529 | ||||||
| GROSS PROFIT (LOSS) | (73,909 | ) | 73,164 | |||||
| Research and development expenses | 1,155,436 | 662,440 | ||||||
| Selling and marketing expenses | 752,420 | 516,401 | ||||||
| General and administrative expenses | 1,670,513 | 1,122,759 | ||||||
| OPERATING LOSS | (3,652,278 | ) | (2,228,436 | ) | ||||
| Change in fair value of derivative warrant liabilities | 1,253,042 | 67,227 | ||||||
| Other finance income, net | 103,281 | 135,115 | ||||||
| NET LOSS AND COMPREHENSIVE LOSS | (2,295,955 | ) | (2,026,094 | ) | ||||
| Net loss per ordinary share, basic and diluted | (0.14 | ) | (0.19 | ) | ||||
| Weighted average number of ordinary shares outstanding, basic and diluted | 16,018,334 | 10,940,958 | ||||||
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STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(U.S. dollars in thousands, except share data and per share data)
| Ordinary shares | Additional | |||||||||||||||||||
| Number | paid-in | Accumulated | ||||||||||||||||||
| of shares | Amount | capital | losses | Total | ||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2023 | 10,073,956 | 56,227 | 24,471,888 | (18,423,057 | ) | 6,105,058 | ||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2024: | ||||||||||||||||||||
| Stock based compensation | - | - | 26,434 | - | 26,434 | |||||||||||||||
| Exercise of pre-funded warrants and consultant warrants (Note 8B and 8E) | 1,088,590 | 5,792 | (5,792 | ) | - | - | ||||||||||||||
| Comprehensive loss | - | - | - | (2,026,094 | ) | (2,026,094 | ) | |||||||||||||
| BALANCE AS OF JUNE 30, 2024 | 11,162,546 | 62,019 | 24,492,530 | (20,449,151 | ) | 4,105,398 | ||||||||||||||
| BALANCE AS OF DECEMBER 31, 2024 | 12,817,092 | 72,061 | 29,093,585 | (29,477,287 | ) | (311,641 | ) | |||||||||||||
| CHANGES DURING SIX MONTHS ENDED JUNE 30, 2025: | ||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net of issuance costs (Note 8D) | 2,818,182 | 15,762 | 2,516,733 | 2,532,495 | ||||||||||||||||
| Stock based compensation | 511,818 | 511,818 | ||||||||||||||||||
| Issuance of ordinary shares from vested restricted share units | 283,999 | 1,611 | (1,611 | ) | - | |||||||||||||||
| Exercise of series A warrants (Note 8B) | 1,144,357 | 6,348 | 3,086,861 | 3,093,209 | ||||||||||||||||
| Comprehensive loss | (2,295,955 | ) | (2,295,955 | ) | ||||||||||||||||
| BALANCE AS OF JUNE 30, 2025 | 17,063,630 | 95,782 | 35,207,386 | (31,773,242 | ) | 3,529,926 | ||||||||||||||
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STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands, except share data and per share data)
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | (2,295,955 | ) | (2,026,094 | ) | ||||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 13,762 | 10,448 | ||||||
| Stock based compensation | 511,818 | 26,434 | ||||||
| Inventory write-down | 81,677 | — | ||||||
| Changes in fair value of derivative liabilities | (1,253,042 | ) | (67,227 | ) | ||||
| Loss from exchange differences on cash and cash equivalents | 5,640 | 2,850 | ||||||
| Finance (expenses) income | 27,015 | (14,104 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables, net | 77,889 | (89,622 | ) | |||||
| Other current assets | (128,125 | ) | (34,221 | ) | ||||
| Prepaid expenses | 17,605 | — | ||||||
| Inventories | (27,945 | ) | (113,261 | ) | ||||
| Operating lease right-of use asset | 86,341 | 53,863 | ||||||
| Trade payables | (1,925 | ) | 134,346 | |||||
| Operating lease liabilities | (86,341 | ) | (53,279 | ) | ||||
| Other current liabilities | (98,165 | ) | 166,386 | |||||
| Net cash used in operating activities | (3,069,751 | ) | (2,003,481 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in short term deposits | (2,500,000 | ) | — | |||||
| Change in restricted deposit | (8,363 | ) | (68,603 | ) | ||||
| Purchase of property and equipment | (20,818 | ) | (64,366 | ) | ||||
| Net cash used in investing activities | (2,529,181 | ) | (132,969 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from exercise of series A warrants (Note 8B) | 1,258,793 | — | ||||||
| Issuance of ordinary shares and prefunded warrants, net of issuance costs (Note 8D) | 2,532,495 | — | ||||||
| Net cash from financing activities | 3,791,288 | — | ||||||
| Effect of exchange rate changes on cash, cash equivalents | (5,640 | ) | (2,850 | ) | ||||
| Net decrease in cash and cash equivalents | (1,813,284 | ) | (2,139,300 | ) | ||||
| Cash and cash equivalents at beginning of period | 4,178,866 | 7,428,405 | ||||||
| Cash and cash equivalents at end of period | 2,365,582 | 5,289,105 | ||||||
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