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Note 2 - Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2026
Notes to Financial Statements |
Significant Accounting Policies [Text Block] | Note 2 – Summary of Significant Accounting Policies Risks and Uncertainties – Global economic challenges, including the impact of the war in Ukraine and Iran, rising inflation supply-chain disruptions, and adverse labor market conditions could cause economic uncertainty and volatility. The aforementioned risks and their respective impacts on the Unmanned Aerial Vehicle (UAV) industry and the Company’s operational and financial performance remain uncertain and outside of the Company’s control. Specifically, because of the aforementioned continuing risks, the Company’s ability to access components and parts needed in order to manufacture its proprietary drones and sensors, and to perform quality testing have been, and continue to be, impacted. If either the Company or any of its third parties used in our manufacturing and assembly processes continue to be adversely impacted by these matters, the Company’s supply chain may be disrupted, limiting its ability to manufacture and assemble products. The Company expects inflation and supply-chain disruptions and its effects to continue to have a significant negative impact on its business for an extended period of time. The company continues to monitor developments in trade policy and is evaluating alternatives to mitigate the impact of these tariffs, including supplier diversification. However, additional or sustained tariff actions could materially and adversely affect our operations, financial condition, and results of operations. Use of Estimates – The preparation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the reserve for obsolete inventory and fair value of deemed dividends resulting from the triggering of down round provisions embedded in our equity-linked instruments. Accounts Receivable and Credit Policy – ﻿ Trade receivables due from customers are uncollateralized customer obligations due under normal and customary trade terms. Trade receivables are stated at the amount billed to the customer. As of March 31, 2026 , December 31, 2025, and January 1, 2025, the Company had an accounts receivable balance of approximately $0.75 million, $3.4 million and $1.4 million, respectively. The Company generally does not charge interest on overdue customer a ccount balances. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices. Allowance for Credit Losses - We establish allowances for credit losses on accounts receivable, under Accounting Standards Codification ("ASC") 326-20-55-37. The adequacy of these allowances is assessed quarterly through consideration of factors such as customer credit ratings, age of the receivable, expected loss rates and general economic conditions. It is reasonably possible that the Company’s estimate of the allowance for credit losses will change. As of March 31, 2026, December 31, 2025 and January 1, 2025, the Company had an allowance for credit losses balance of $0.04 million, $0.04 million and $0.02 million, respectively. Investments in Equity Securities, at Fair Value - During the three months ended March 31, 2026, the Company acquired an investment in a marketable equity security with a readily determinable fair value. We have applied the provisions of ASC 321, Investments - Equity Securities as our interest is less than a twenty percent and we do not have the ability to exercise significant influence over operating and financial policies of the investee. Equity investments within the scope of ASC 321 are carried at fair value with unrealized gains or losses recorded as net unrealized gain (loss) on equity investments, a component of other income, in the accompanying condensed consolidated statements of operations. Realized gains and losses are determined on a specific identification basis which is recorded in earnings or loss as a net realized gain (loss) on equity investments in the condensed consolidated statements of operations. The investment is classified within current assets on the condensed consolidated balance sheets based on management's ability to hold or dispose of portions or all of the marketable security within the next twelve months. Fair value is determined based on the quoted market price of the security on the principal exchange on which it trades as of the balance sheet date and is classified as Level 1 within the fair value hierarchy established by ASC 820, Fair Value Measurement, as the valuation is based on unadjusted quoted prices in active markets for identical assets. The Company reviews investments in equity securities, at fair value, for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. Fair Value of Financial Instruments - The Company measures the fair value of financial instruments in accordance with U.S. GAAP, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. U.S. GAAP 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. U.S. GAAP 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. U.S. GAAP 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). See Note 6 for details of assets and liabilities recorded at fair value on a recurring basis. Revenue Recognition – Most of the Company’s revenues are derived primarily through the sales of drones, sensors and related accessories. The Company utilized ASC Topic 606 and the related amendments, Revenue from Contracts with Customers, which requires revenue to be recognized in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company recognizes revenue on sales to customers, dealers, and distributors upon satisfaction of performance obligations which occurs once control transfers to customers, which is when product is shipped or delivered depending on specific shipping terms and, where applicable, a customer acceptance has been obtained. The fee is not considered to be fixed or determinable until all material contingencies related to the sales have been resolved. The Company records revenue in the consolidated statements of operations and comprehensive loss, net of any sales, use, value added, or certain excise taxes imposed by governmental authorities on specific sales transactions and net of any discounts, allowances and returns. Therefore, revenue is recognized at a point in time. Pursuant to ASC 606, we have the following revenue recognition policies:
| ● | Sensor Sales – sales are recognized on products when the related goods have been shipped, title has passed to the customer, and there are no undeliverable elements or uncertainties. Amounts incurred related to shipping and handling are included in cost of sales.
| ● | Drone Sales - sales are recognized on products when the related goods have been shipped, title has passed to the customer, and there are no undeliverable elements or uncertainties. Amounts incurred related to shipping and handling are included in cost of sales.
Additionally, customer payments or deposits received in advance of the Company completing performance obligations are recorded as contract liabilities. As of March 31, 2026, December 31, 2025, and January 1, 2025 we have $83,279, $127,874 and $148,054 of advanced customer payments presented as contract liabilities on the accompanying condensed consolidated balance sheets, respectively. Contract liabilities are short term in nature and are expected to be recognized in the next fiscal year. During the three months ended March 31, 2026, we recognized $125,923 of revenue that was deferred as a contract liability as of December 31, 2025. Summary of Significant Accounting Policies - A description of all of the Company’s significant accounting policies and other financial information is included in the Company’s audited consolidated financial statements filed on March 31, 2026, with the SEC on Form 10-K for the year ended December 31, 2025. These policies have been applied consistently in these unaudited condensed interim consolidated financial statements. Income (Loss) Per Common Share and Potentially Dilutive Securities – Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus Common Stock (as defined below), equivalents (if dilutive) related to unvested restricted stock units ("RSUs"), warrants, and convertible instruments. When the Company reports a net loss, the calculation of diluted net loss per share excludes potential common shares as their effect would be anti-dilutive. The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income (loss) per share of common stock attributable to common stockholders for three months ended March 31, 2026 and 2025:
|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
Numerator: |  |  |  |  |  |  |  |
Net income |  | $ | 1,420,362 |  |  | $ | 7,060,039 |
Accrued dividends on Series F Preferred Stock |  |  | (30,997 | ) |  |  | (67,651 | )
Deemed dividends |  |  | (1,349,483 | ) |  |  | (1,056,332 | )
Numerator for basic EPS - net income (loss) available to common stockholders |  |  | 39,882 |  |  |  | 5,936,056 |
Effect of convertible securities and liability classified equity instrument: |  |  |  |  |  |  |  |
Accrued dividends on Series F Preferred Stock |  |  | 30,997 |  |  |  | 67,651 |
Interest expense on convertible note payable |  |  | — |  |  |  | 18,802 |
Loss (gain) on change in fair value of warrant liabilities |  |  | 5,000 |  |  |  | (7,780,000 | )
Numerator for diluted EPS - net income (loss) available to common stockholders |  | $ | 75,879 |  |  | $ | (1,757,491 | )
Denominator: |  |  |  |  |  |  |  |
Denominator for basic EPS - weighted average shares |  |  | 53,366,403 |  |  |  | 11,649,682 |
Effect of dilutive securities: |  |  |  |  |  |  |  |
Incremental shares for outstanding warrants (Series A, B and F) |  |  | 985,344 |  |  |  | 3,510,206 |
Convertible note and accrued interest |  |  | — |  |  |  | 572,054 |
Convertible Series F Preferred Stock |  |  | 2,197,712 |  |  |  | 4,392,119 |
Convertible Series G Preferred Stock |  |  | 500,000 |  |  |  | — |
Incremental unvested restricted stock units |  |  | 191,037 |  |  |  | 70,400 |
Denominator for diluted EPS - weighted average shares |  |  | 57,240,496 |  |  |  | 20,194,461 |
Net loss per common share - basic |  | $ | 0.00 |  |  | $ | 0.51 |
Net loss per common share - diluted |  | $ | 0.00 |  |  | $ | (0.09 | )
Segment Reporting – In accordance with ASC Topic 280, Segment Reporting, the Company identifies operating segments as components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker in making decisions regarding resource allocation and performance assessment. The Company defines the term “chief operating decision maker” to be its chief executive officer. The Company has determined that it operates in two segments:
| ● | Drones, which comprises revenues earned from contractual arrangements to develop, manufacture and /or modify complex drone related products, and to provide associated engineering, technical and other services according to customer specifications.
| ● | Sensors, which comprises the revenue earned through the sale of sensors, cameras, and related accessories.
| ● | Corporate, which comprises corporate costs only, and is not considered an operating segment.
Recently Issued Accounting Pronouncements Not Yet Adopted – In March 2024, the Securities and Exchange Commission (“SEC”) released a final rule that requires registrants to provide comprehensive climate-related disclosures in their annual reports and registration statements, including those for IPOs, beginning with annual reports for the year ending December 31, 2027, for smaller reporting companies (“SRC”). Registrants must disclose climate-related financial metrics and impacts on their financial estimates and assumptions in a footnote to the audited financial statements. The disclosures will also need to be addressed as part of management’s internal control over financial reporting (“ICFR”) and will be subject to the financial statement and ICFR audit (if applicable) of an independent registered public accounting firm. We are currently evaluating the impact of the improvements to our disclosure. In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Disaggregation of Income Statement Expenses (“DISE”), a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is evaluating the disclosure requirements related to the new standard and its impact on our consolidated financial statements. Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present and future condensed consolidated financial statements.

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