Balance Sheets

9 Months Ended

12 Months Ended

Sep. 30, 2023

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheets

Note 3 – Balance Sheets

Accounts Receivable, Net

As of September 30, 2023 and December 31, 2022, accounts receivable, net consist of the following: 

	September 30, 2023			December 31, 2022
Accounts receivable	$	2,110,725		$	2,229,840
Less: Provision for doubtful accounts		(95,680	)		(16,800	)
Accounts receivable, net	$	2,015,045		$	2,213,040

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

Note 3 – Balance Sheets – Continued

Inventories, Net

As of September 30, 2023 and December 31, 2022, inventories, net consist of the following:

	September 30, 2023			December 31, 2022
Raw materials	$	4,334,765		$	5,288,206
Work-in process		714,596			1,106,056
Finished goods		1,412,710			614,400
Gross inventories		6,462,071			7,008,662
Less: Provision for excess and obsolescence reserve		(398,136	)		(322,815	)
Inventories, net	$	6,063,935		$	6,685,847

Prepaid and Other Current Assets

As of September 30, 2023 and December 31, 2022, prepaid and other current assets, consist of the following:

	September 30, 2023		December 31, 2022
Prepaid inventories	$	171,017	$	281,484
Prepaid software licenses and annual fees		244,628		184,429
Prepaid rent		98,751		234,691
Prepaid insurance		199,046		167,794
Prepaid VAT charges		41,030		99,558
Prepaid other and other current assets		77,716		61,592
Prepaid and other current assets	$	832,188	$	1,029,548

Property and Equipment, Net

As of September 30, 2023 and December 31, 2022, property and equipment, net consist of the following:

	Estimated
	Useful Life		September 30,			December 31,
Type	(Years)		2023			2022
Leasehold improvements		3-5	$	106,837		$	106,837
Production tools and equipment		5		730,565			632,514
Computer and office equipment		3-5		514,613			507,637
Furniture		5		73,452			77,799
Drone equipment		3		170,109			170,109
Property and equipment				1,595,576			1,494,896
Less: Accumulated depreciation				(997,612	)		(703,741	)
Property and equipment, net			$	597,964		$	791,155

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

Note 3 – Balance Sheets – Continued

Property and Equipment Depreciation Expense

Classification within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Type	2023		2022		2023		2022
Cost of sales	$	—	$	61,747	$	—	$	199,555
General and administrative		93,614		48,429		293,538		138,271
Depreciation expense	$	93,614	$	110,176	$	293,538	$	337,826

Intangible Assets, Net

As of September 30, 2023 and December 31, 2022, intangible assets, net, other than goodwill, consist of the following:

Name	Estimated Life (Years)		Balance as of December 31, 2022		Additions		Amortization			Balance as of September 30, 2023
Intellectual property/technology		5-7	$	4,473,861	$	—	$	(606,726	)	$	3,867,135
Customer base		3-10		2,885,657		—		(853,248	)		2,032,409
Tradenames and trademarks		5-10		1,757,891		—		(155,958	)		1,601,933
Non-compete agreement		2-4		335,933		—		(335,933	)		—
Platform development costs		3		1,332,516		297,596		(529,378	)		1,100,734
Internal use software costs		3		721,795		171,516		(252,863	)		640,448
Intangibles assets, net			$	11,507,653	$	469,112	$	(2,734,106	)	$	9,242,659

As of September 30, 2023, the weighted average remaining amortization period in years is 4.07 years. For the three and nine months ended September 30, 2023 and 2022, amortization expense was $919,774 and $932,880, respectively, and $2,734,106 and $2,549,418, respectively.

For the following years ending, the future amortization expenses consist of the following:

	For the Years Ending December 31,
Name	(rest of year) 2023		2024		2025		2026		2027		Thereafter		Total
Intellectual property/technology	$	202,242	$	808,968	$	808,968	$	808,968	$	808,968	$	429,021	$	3,867,135
Customer base		284,417		889,364		141,145		141,145		141,145		435,193		2,032,409
Tradenames and trademarks		51,986		207,944		207,944		207,944		207,944		718,171		1,601,933
Platform development costs		190,040		586,950		281,613		42,131		—		—		1,100,734
Internal use software costs		83,192		355,947		180,461		20,848		—		—		640,448
Intangible assets, net	$	811,877	$	2,849,173	$	1,620,131	$	1,221,036	$	1,158,057	$	1,582,385	$	9,242,659

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

Note 3 – Balance Sheets - Continued

Accrued Liabilities

As of September 30, 2023 and December 31, 2022, accrued liabilities consist of the following:

	September 30, 2023		December 31, 2022
Accrued purchases and customer deposits	$	220,784	$	102,319
Accrued compensation and related liabilities		406,739		774,916
Provision for warranty expense		279,394		288,807
Accrued dividends		342,873		172,596
Accrued interest		236,172		—
Accrued professional fees		138,250		262,737
Other		26,397		79,331
Total accrued liabilities	$	1,650,609	$	1,680,706

Note 3 - Balance Sheet Accounts

Accounts Receivable, net

As of December 31, 2022 and 2021, accounts receivable, net consisted of the following:

	December 31, 2022			December 31, 2021
Accounts receivable	$	2,229,840		$	2,918,435
Less: Provisions for doubtful accounts		(16,800	)		(29,556	)
Accounts receivable, net	$	2,213,040		$	2,888,879

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 3 - Balance Sheet Accounts– Continued

Inventories, Net

As of December 31, 2022 and 2021, inventories, net consisted of the following:

	December 31,
	2022			2021
Raw materials	$	5,288,206		$	2,862,293
Work-in process		1,106,056			647,829
Finished goods		614,400			833,785
Gross inventories		7,008,662			4,343,907
Less: Provision for obsolescence		(322,815	)		(305,399	)
Inventories, net	$	6,685,847		$	4,038,508

Property and Equipment, Net

As of December 31, 2022 and 2021, property and equipment, net consisted of the following:

	Estimated Useful Life	December 31,
Type	(Years)	2022			2021
Leasehold improvements	3	$	106,837		$	81,993
Production tools and equipment	5		632,514			417,779
Computer and office equipment	3-5		507,637			559,110
Furniture	5		77,799			77,971
Drone equipment	3		170,109			95,393
Total Property and equipment		$	1,494,896		$	1,232,246
Less: Accumulated depreciation			(703,741	)		(280,118	)
Total Property and equipment, net		$	791,155		$	952,128

For the years ended December 31, 2022 and 2021, depreciation expense is classified within the consolidated statements of operations and comprehensive loss as follows:

	For Year Ended December 31,
Type	2022		2021
Cost of sales	$	266,468	$	55,613
General and administrative		179,461		129,047
Total	$	445,929	$	184,660

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 3 - Balance Sheet Accounts– Continued

Accrued Expenses

As of December 31, 2022 and 2021, accrued expenses consisted of the following as of:

	December 31,
	2022		2021
Accrued compensation and related liabilities	$	774,916	$	1,039,979
Provision for warranty expense		288,807		286,115
Accrued professional fees		262,737		267,949
Other		354,246		307,598
Total accrued expenses	$	1,680,706	$	1,901,641