NASDAQ: SPAI

Currently,
our patented software blends AI, machine learning and computer vision capabilities that enable rapid, automated cloud-based or local/edge-based
processing of drone imagery for small object detection of threats such as landmines, unexploded ordnance (“UXO”), and other
remnants of war at scale. This current cloud system is called SpotlightAITM and as of March 2026, powered by AWS, has processed
over 2.4 million drone images and detected over 45,000 real-world explosive threats in Ukraine. Our software ecosystem supports a wide
array of applications and use cases where the ability to rapidly analyze drone-based imagery at scale can significantly improve geospatial
situational awareness, operational effectiveness and safety such as:

●
Integrating with military
mobile devices, vehicle displays, and tactical networks used by soldiers to provide access to real-time threat alerts, providing
unmatched precision in navigating hazardous environments;

●
Route planning supporting
autonomous/unmanned ground vehicle (UGV) operations utilizing orthomosaics, vegetation height maps, terrain slope maps and digital
surface maps and 3D terrain modeling;

●
Allowing security and first
responder personnel to detect items of interest including contraband or weapons at an incident location;

●
Providing enhanced border
security through integrating with mobile devices, vehicle displays, and tactical networks used by border agents to provide access
to real-time threat alerts, providing unmatched precision in navigating hazardous environments;

●
Detecting items of interest
in applications where hazardous items and contraband can be detected on critical infrastructure such as roads or bridges which can
indicate potentially hazardous conditions; and

●
Analyzing agricultural
vegetation for growth or signs of crop damage, as well as collecting data to generate topographical maps

1

Bullet
and Blast Resistant Personal Protection Equipment.

Through
our subsidiary, Safe-Pro USA LLC, we are a specialist in the manufacturer of ultra-premium bullet and blast resistant protection equipment
utilized by domestic and international customers in the military, law enforcement, and humanitarian/peacekeeping markets. We offer a
full array of bullet and blast resistant personal protection equipment including complete Explosive Ordnance Disposal (“EOD”)
Systems, demining aprons and bomb blankets, body armor & ballistic plates to government, security, law enforcement and first responders,
as well as armor systems for ground vehicles and aircrafts, including helicopters. We have more than 30 years of combined experience
in the U.S. defense industry with a proven expertise and strength in the design, engineering, and manufacturing of advanced armor composites.
All bullet and blast resistant protection equipment are designed, engineered, and manufactured in the United States and meet or exceed
the United States Government and NATO standards including the latest U.S. National Institute of Justice (“NIJ”) and STANAG
standards.

Aerial
Managed Services and Mission-Critical Uncrewed Solutions.

Through
our subsidiary, Airborne Response Corp., we provide a wide range of contracted aerial platform-based technology services predominantly
using small Uncrewed Aircraft Systems (“UAS”) — commonly referred to as “drones.” This includes Drone as
a First Responder (DFR), critical infrastructure inspection, storm and emergency response and other customized aerial remote sensing,
sometimes combined with machine learning and artificial intelligence (“AI”) processing, to provide comprehensive data-driven
insights and detailed reporting to allow our customers to improve decision making surrounding their core operations. Services offered
include:

●
Drone as a First Responder
(“DFR”) solutions providing autonomous drone operations in support of public safety, emergency management, security,
critical infrastructure, and other rapid incident response and assessment needs.

●
Critical infrastructure
inspection (ex: telecommunications networks and power grids) utilizing visual and/or IR thermal sensors.

●
Data capture, analytics
and processing powered by machine learning and artificial intelligence (“AI”) to provide customers with comprehensive
data-driven insights and reporting.

●
Aerial mapping of ground-based
infrastructure and other targeted assets.

●
UAS-related training and
consultation services.

●
Other customized and/or
specialized services upon request by key customers.

●
Drone-based, aerial services
are provided to customers across multiple industries including critical infrastructure, enterprises such as insurance, public utilities,
and telecommunication network operators, state and local/municipal governments and agencies, and first responders including police,
fire, and other public safety organizations.

Our
Operating Units

Through
a series of acquisitions, we and our operating subsidiaries have expanded our service offerings and geographic reach over the past two
years. Due to our acquisitions, we are comprised of three principal operating units, each of which was acquired because they possess
emerging technologies that can be leveraged together to create innovative new approaches to the development and sale of security and
protective solutions for customers. On December 23, 2025, we formed SPAI Ventures LLC, a wholly owned subsidiary of Safe Pro Group, that
was established to pursue both strategic collaborations and investments with Ukrainian and other international tech developers. Through
SPAI Ventures, Safe Pro Group Inc. will evaluate opportunities in which to invest or to commercialize technologies that it believes could
complement the capabilities of its portfolio of AI and ballistic protective solutions. SPAI Ventures has not made any investments or
entered into any agreements, and is currently not an actively operating unit of the Company.

2

Safe-Pro
USA LLC

On
June 7, 2022, we completed the acquisition of Safe-Pro USA LLC (“Safe-Pro USA”). Safe-Pro USA was formed in Florida in November
of 2008 and develops an array of unique products marketed to, government, law enforcement and international humanitarian aid organizations
seeking high performance personal protective gear. As a manufacturer of bullet and blast resistant personal protection equipment, Safe-Pro
USA LLC can rapidly prototype and customize solutions designed to meet mission requirements and budgets for a full array of personal
protection equipment (“PPE”) including complete Explosive Ordnance Disposal (“EOD”) systems, demining aprons
and bomb blankets to lightweight and body armor and ballistic plates. Safe-Pro USA LLC currently serves multiple domestic and international
customers including a U.S. Government Contractor operating in support of the US Department of State landmine and explosive ordnance remediation
initiatives in the Indo-Asia Pacific region, Humanitarian Aid organizations and multiple U.S. government and law enforcement end-users.

Airborne
Response Corp.

On
August 29, 2022, we acquired the operations of Airborne Response LLC, a Florida limited liability company originally formed in August
2016. Airborne Response LLC changed its name to Airborne Response Corp. (“Airborne Response”) and converted from a limited
liability company to a corporation. Airborne Response currently serves an existing base of enterprise customers, including Florida Power
& Light (“FPL”), Citizens Property Insurance Corporation, and Motorola Solutions under long-term contracts and was actively
engaged in supporting state and local agency response, relief, and recovery efforts in the aftermath of Category 4 Hurricane Ian in October
2022. In November 2023, Airborne Response was awarded its first Drone as a First Responder (“DFR”) services contract by a
city police department in South Florida under which, it provides operational support for law enforcement, public safety, and other first
responders, assisting them to utilize advanced, U.S.-friendly (Blue-UAS) drone technologies for both “Blue Sky” normal business
operations as well as “Gray Sky” rapid incident management and disaster response operations. During 2025, Airborne Response
was awarded two aerial drone services contracts by two power utility customers serving millions of central Florida residents.

We
currently maintain a fleet of eleven drones through Airborne Response Corp. In the aftermath of natural disasters when our clients require
additional support, we bring on outside contractors that have obtained a Remote Pilot Certificate from the Federal Aviation Administration
(FAA). These outside contractors supply their own drones to complete fieldwork that is then reviewed by the Airborne Response team. Further,
we provide a system for imagery data from third-party drones operated by outside contractors to be uploaded and analyzed leveraging artificial
intelligence and machine learning.

Safe
Pro AI LLC

On
March 9, 2023, we acquired the assets and intellectual property of Demining Development LLC, a New York limited liability company formed
on February 22, 2021. On August 30, 2023, the Company changed its name to Safe Pro AI LLC (“Safe Pro AI”). Safe Pro AI is
a developer of patented artificial intelligence (“AI”), machine learning (“ML”) and computer vision systems technologies
for the rapid processing and analysis of drone-based imagery. Safe Pro AI’s capabilities enable the rapid, automated processing
of aerial imagery (collectively referred to as “Safe Pro Object Threat Detection” or “SPOTD”) making it an ideal
solution for several photogrammetry applications including demining, military, law enforcement and security as well as critical infrastructure
inspection and agriculture. Powered by the Amazon Web Services (“AWS”) Cloud, Safe Pro AI’s technology is initially
being applied to the identification, classification, and clearance of landmines. The SPOTD technology is also integrated into a real-time,
locally processed Windows-based personal computer application called ONSIGHT which enables real-time visual indications and alerts of
threats. ONSIGHT is also being incorporated into a turnkey, standalone hardware/software solution called NODE (“Navigation, Observation
& Detection Engine”) which provides local /edge computing and processing of drone-based imagery to create maps without requiring
connectivity to the internet. Built with an extensive proprietary landmine and unexploded ordnance (“UXO”) dataset, Safe
Pro AI and its SPOTD technology can rapidly detect and identify threats present in drone imagery, plot detections on maps, and relay
precise GPS location and actionable reporting information to decision makers and ground personnel. This capability greatly increases
situational awareness for soldiers and helps address the scale and improve the efficacy of remediation efforts versus existing human
and dog-based identification methods. Through the combination of AI, ML, and drone technologies, Safe Pro AI’s new solutions directly
address the limitations of current mine/UXO threat detection and clearance methodologies which can be slow, expensive, and dangerous.

3

The
Company intends to utilize its AI, ML and computer vision analysis and reporting technology to create and analyze large datasets for
a number of uses outside of demining where it can uniquely be utilized to rapidly analyze imagery collected from drones to provide actionable
intelligence on the area of interest through the creation of detailed, high resolution orthomosaic maps and real-time visual threat indications.
The Company is currently building on over three years of real-world experience in Ukraine, expanding SPOTD into a broad array of military
and defense markets where its integration into existing tactical hardware platforms (e.g., the US Army’s Tactical Assault Kit or
TAK system) can be used in force protection applications. For example, the Company’s SPOTD technology can integrate seamlessly
with military communication systems, ground vehicles, and C6ISR (Command, Control, Communications, Computers, Cyber, Combat systems,
Intelligence, Surveillance, and Reconnaissance) frameworks enabling soldiers to access real-time threat alerts on mobile devices, vehicle
displays, and tactical networks, providing unmatched precision in navigating hazardous environments. Additionally, its comprehensive
mapping capabilities enable route planning featuring 3D terrain modeling in support of safe autonomous, unmanned ground vehicle (UGV)
operations.

Our
Growth Strategy

Safe
Pro Group was created to invest in safety and security businesses and technologies that can be layered together to dramatically improve
effectiveness of operations and provide actionable intelligence. Through this layered approach to the development and integration of
advanced technologies in artificial intelligence, personal protective gear, and drone-based remote sensing technologies and services,
Safe Pro Group can provide government/military/defense, NGOs and enterprises with innovative solutions designed to respond to emerging
threats. Today, Safe Pro Group is targeting multiple markets where its AI, personal protective gear, and aerial/drone-based services
can synergistically support customers in government/military/defense, commercial, law enforcement and humanitarian aid sectors.

Highlighted
Market Opportunities

Artificial
Intelligence and Dataset Development

The
Company intends to utilize Safe Pro AI’s technology, which enables the capture and rapid processing of large amounts of visual
imagery to create new high-fidelity maps and data outputs utilizing AI and proprietary datasets for customers to analyze their existing
data. These AI datasets and related software tools and reporting capabilities would help enterprise and government customers quickly
assess the situation in agriculture fields, around critical infrastructure, sensitive facilities or any location of interest (ex: borders,
ports, runways, etc.). Safe Pro AI’s product is specialized application of artificial intelligence in the large AI image analysis
and recognition market, specifically focused on applying machine learning to the processing of drone-based imagery for object identification.

Landmine
Detection and Remediation

The
threat of anti-personnel landmines and/or unexploded ordnance is present in approximately 60 countries across Africa, the Middle East,
South America, Southeast Asia, and throughout mainland China and Russia (source: Statista). The current methodology for the detection
and remediation of landmines and UXO requires the use of specially trained personnel using handheld detectors and dogs which can be slow,
expensive, and dangerous.

The
Ukraine Crisis: In Ukraine, The World Bank, The Ukraine Rapid Damage and Needs Assessment, February 2025, estimates that more
than 138,500 km2 or nearly 53,000 square miles, will require a non-technical survey to determine the level of contamination
with land mines and unexploded ordnance. The non-technical survey is the first step in analyzing an area for contamination.

The
Safe Pro Solution: To address this scale and scope of the demining challenge in both conflict and non-conflict zones, we utilize
AI, ML and computer vision capabilities and drones to enable the rapid, automated processing of aerial and ground-based imagery to detect
threats including landmines and UXO. Safe Pro AI’s software, called SpotlightAITM provides an efficient and scalable
solution to detect, map, and categorize different types of landmines, UXO, and sub-munitions and other ERW (“Explosive Remnants
of War”) on the surface, greatly enhancing the speed and accuracy with which a non-technical survey can be produced. This visual
dataset can be uploaded to the Cloud or processed locally on a portable Windows-based personal computer, to provide ground personnel
with detailed, actionable intelligence about the location and type of hazard present, dramatically improving the efficiency, speed, and
safety of any operation. As of March 2026, SpotlightAITM, powered by AWS, has processed over 2.4 million drone images and
detected over 45,000 real-world explosive threats in Ukraine. Additionally, ground personnel can be equipped with an array of advanced
personal ballistic protective equipment, thereby providing customers with a complete solution for the remediation of landmines and other
hazardous remnants of war. Once an area is cleared, an additional survey can be done to evaluate the clearance efforts. We have been
providing Safe Pro AI’s technology to customers on a limited trial basis. As of March 2026, SpotlightAI™ has analyzed more
than 2,470,927 drone images from Ukraine, identifying more than 45,689 landmines and unexploded remnants of war across 12,111 hectares
(29,914 acres) of Ukrainian territory.

During
2025, the Company entered multiple Memoranda of Understanding (MOUs) with government, commercial and university entities in Ukraine including
its National Mine Action Center of Excellence, the country’s leading grain export and agricultural organization NIBULON Ltd., and
the Igor Sikorsky Kyiv Polytechnic Institute, Ukraine’s largest technical university. Through these relationships, the Company
will conduct research and collaborate on the development of new technologies, education and training programs incorporating cutting-edge
AI technology for applications including demining, environmental safety, agricultural and rare earth geology projects as well as infrastructure
reconstruction.

4

Force
Protection for the Military

Operations
by ground personnel (i.e., soldiers) are inherently dangerous. Troop movement, on foot or by vehicle, exposes soldiers and assets to
the risk of a wide array of explosive threats including landmines, anti-personnel mines and improvised explosive devices (IEDs). Currently,
we believe there are no well-adapted real-time systems fielded to alert personnel to the presence of potentially deadly small threats.

The
Safe Pro Solution: To address this gap in force protection and safety, we are utilizing our AI, ML and computer vision capabilities
with drones to enable the real-time, automated processing of aerial imagery to detect and identify possible threats and use that information
to provide enhanced force protection through better situational awareness. Utilizing our “Safe Pro Object Threat Detection”
or “SPOTD” technology, we are seeking to provide potentially lifesaving “know before you go” information on discrete
threats which may be present in the area of operations. The Company’s SPOTD technology can integrate seamlessly with military communication
systems, ground vehicles, and C6ISR (Command, Control, Communications, Computers, Cyber, Combat systems, Intelligence, Surveillance,
and Reconnaissance) frameworks. Acting like a back-up camera in modern automobiles, with SPOTD, soldiers can gain access to real-time
threat alerts on mobile devices, vehicle displays, and tactical networks, providing unmatched precision in navigating hazardous environments.
The capability is immediately synergistic with the increased utilization of technologies such as the Tactical Assault Kit (TAK) for restricted
US Army/military users or Team Awareness Kit (TAK) for non-restricted government users, which facilitate real-time coordination between
team members including the sharing of video feeds and/or mapping applications. Additionally, in response to end-user demand for a solution
that could enable the rapid collection and processing of drone-based imagery to identify emerging surface-level threats on the modern
battlefield, creating 2D and 3D interactive, high-resolution maps locally at the tactical edge without requiring internet connectivity,
the Company recently introduced and demonstrated its newly created SPOTD NODE (Navigation, Observation & Detection Engine). Based
upon preliminary feedback received by potential end users, the Company believes there is demand for this unique solution within the U.S.
armed forces and with international governments.

To
address this opportunity, the Company intends to leverage industry relationships to access current and future contracting opportunities.
As such, through Memoranda of Understanding (MOUs) with Ondas Holdings Inc. (Ondas), Unusual Machines Inc. (Unusual Machines), and Red
Cat Holdings, Inc. (Red Cat), leaders in the U.S. drone industry, signed in August and September 2025, the Company intends to collaborate
on the development and integration of the Company’s patented AI-powered drone imagery analysis and computer vision technologies
into their respective hardware and software offerings.

Finally,
during 2025, the Company conducted a series of presentations and demonstrations with U.S. Government and military potential end users
and has been invited to participate in several U.S. Army exercises in 2026 where its technology solutions will be showcased as a potential
tool for supporting force protection and mission planning operations.

Aerial
Managed Services

The
adoption of drone-based remote sensing technology has been rapid, enabled by its ability to quickly capture and relay high-resolution
visual information and data quickly and accurately. Beyond the use of drones in military applications, technology has increasingly been
utilized in applications including by government and commercial enterprise markets. These commercial markets include a wide array of
sectors including agriculture, real estate, insurance, and the inspection of critical infrastructure such as telecommunications towers,
rail and roadways, bridges, and power and utility grids

In
response to greater use of drones in security, law enforcement and public safety applications, the Company’s Airborne Response
is developing Drone as a First Responder (“DFR”), a new service that can provide autonomous drone operations in support of
public safety agencies, critical infrastructure providers, security firms, and other mission-critical sectors that will garner substantial
value from the gathering of information and/or carriage of cargo via advanced uncrewed aerial platforms. Once fully deployed, this advanced
network will offer rapid incident response and assessment, capturing, and relaying real-time video and other relevant information to
first responders for use in efficiently allocating resources and developing a response plan. We are currently under contract with a city
police department in South Florida and are completing operational training ahead of expected system deployment and routine operations.

Personal
Protective Gear

In
July 2023, Safe-Pro Group was awarded a Multiple Award Schedule (“MAS”) contract by the U.S. General Services Administration
(“GSA”) for its Safe-Pro USA ballistic protection products. This contract will allow Federal, State and Local government
customers and agencies to easily purchase its Explosive Ordnance Disposal (“EOD”) and Personal Protective Equipment (“PPE”)
products through the GSA Schedule for their safety and security needs. The Government contract was awarded with an initial five (5) year
term with three (3) extensions for five (5) years each for a maximum of twenty (20) years. The PPE market includes an array of product
types including hard and soft products including plates and vests, each offering different levels of protection, primarily level IIA,
level II, level IIIA, level III, level IV as determined by government and industry standards. Currently, the GSA has made one purchase
of EOD and PPE. In October 2023, Safe-Pro USA was certified as a HUBZone small business concern by the U.S. Small Business Administration.
The Historically Underutilized Business Zone (HUBZone) program’s purpose is to provide Federal contracting assistance for qualified
small business concerns located in historically underutilized business zones, in an effort to increase employment opportunities, investment,
and economic development. The HUBZone program includes unique access to certain federal government contracts, set-aside opportunities,
and priority consideration in competitive procurements for certified companies in compliance with the Federal Acquisition Regulation
(FAR). In late 2024 and through 2025, Safe-Pro USA has been designing and producing a series of new ultra-light and ultra-thin high-performance
body armor plate products designed in compliance with the latest National Institute of Justice (NIJ) publication, Ballistic Resistance
of Body Armor, NIJ Standard 0101.07, which specifies minimum performance requirements and test methods for the ballistic resistance
of body armor used by U.S. law enforcement that is intended to protect the torso against handgun and rifle ammunition. It is a revision
of National Institute of Justice (NIJ) Standard 0101.06, Ballistic Resistance of Body Armor, published in 2008. As of January
2026, Safe-Pro USA has multiple high performance, ultra-lightweight and ultra-thin hard armor plates undergoing certification testing
by the NIJ for compliance with NIJ 0101.07 ballistic standard with certifications expected throughout 2026.

5

With
respect to each of the above referenced product areas our market penetration is minimal. However, we believe that in each product area
we are able to differentiate our services from our competitors such that we will be able to increase our market penetration.

Our
Customers

We
manufacture and sell our products and services globally to commercial/enterprise, government, military, and humanitarian aid organizations.

Airborne
Response (Aerial Services): Our Airborne Response business provides uncrewed aerial systems (“UAS”) services to electric
utilities, insurance carriers, technology companies, public safety organizations as well as state and municipal governments and agencies.
Our customers include Florida Power & Light, Citizen’s Insurance and Motorola Solutions, and various State and municipal governments
and agencies. We support customers under both multi-year contracts as well as individual purchase orders.

Under
our contracts with Florida Power & Light (FPL), the principal electric utility in Florida, we, through our operating subsidiary,
Airborne, provide UAS services related to the inspection of power poles and lines. The first contract is for the provision of UAS teams
to inspect power lines and poles after a storm. This contract has a term beginning on March 25, 2024, and goes through December 30, 2026.
Under this contract, FPL will call upon Airborne to respond and provide UAS teams after a storm. Airborne will be paid for having a team
on standby, for one half day of work, or a full day of work. They are not obliged to call upon Airborne Response and there is no assurance
that we will derive any income from this agreement. Under a previous version of this agreement, we were called upon and provided services
to FPL in the aftermath of storms.

We
also have contracts with FPL to provide UAS teams to inspect power lines and poles with respect to regular maintenance. Under this contract
we receive a fee per pole inspected or per mile of power line inspected. The fee can vary depending upon the level of service selected.
We have 4 such contracts with FPL covering 4 regions of Florida in FPL’s coverage areas. Pursuant to these contracts FPL is not
obligated to call upon us and there is no assurance that we will derive any income from this agreement. The terms of these agreements
are from August 25, 2023, through August 24, 2026 with a right to renew until August 24, 2028.

Additionally,
in 2025, Airborne Response was awarded two aerial drone services contracts by two power utility customers serving millions of central
Florida residents.

Safe-Pro
USA (Ballistic Protection): Our customers include a U.S. Government Contractor operating in support of the US Department of State
landmine and explosive ordnance remediation initiatives in the Indo-Asia Pacific region, as well government, military, law enforcement
and public safety organizations.

Safe
Pro AI (AI Software and Image Analysis): Our Safe Pro AI business provides AI-enabled drone imagery analysis software designed to
support the identification and location of unexploded ordnance (“UXO”) and other threats. We believe that the scale and scope
of the conflict in Ukraine has created a significant near-term opportunity for several of our products and services, in particularly,
our AI-powered, drone-based solution for the identification and locating of UXO and personal protective equipment (“PPE”)
such as our Explosive Ordnance Disposal and Blast and Fragmentation protective suits. We believe our AI-powered capabilities and experience
in the design and manufacture of PPE have positioned our company to compete effectively for a number of projects currently being proposed
by various governmental organizations involved with land reclamation, remediation and reconstruction efforts in Ukraine including units
of that country’s government as well as international humanitarian aid organizations such as the United Nations Development Programme,
the HALO Trust and Norwegian People’s Aid, among others.

Our
personnel have spent extensive time supporting these efforts through on-site deployments, contractor support, and collaborative engagements
related to the evaluation and deployment of our SpotlightAI™ technology, as well as the assessment of related protective equipment.

6

We
believe our diversified potential customer base provides us with an opportunity to leverage our skills, experience and varied product
lines across markets and reduces our exposure to a single end market. Additionally, we believe the diversity of our potential customer
base is an important strength of our company.

Supplier
Concentration

During
the year ended December 31, 2025, we purchased 68.0% of our inventory from four suppliers, Avient Protective Materials, Lincoln Fabrics,
Skydio, Inc., and Hisco/Precision Converting. During the year ended December 31, 2024, we purchased 35.7% of our inventory from two suppliers,
Minelab Electronics and Southeast Drone Technologies. The loss of these suppliers may have a material adverse effect on our results of
operations and financial condition. However, we believe that, if necessary, alternative vendors could supply similar products in adequate
quantities to avoid material disruptions to operations.

Our
Competition

As
a combined, single organization, we compete in several industry segments including AI analysis, aerial managed services and body armor/personal
protective equipment. Additionally, through our Safe Pro AI operation, we compete in the rapidly emerging AI-driven analytics market.
Each of these industries are characterized by rapidly advancing technologies and material science, intense competition, and a strong
emphasis on proprietary products. While we believe that our technology, knowledge and proven expertise in conducting drone-based operations
and in the fabrication of protective gear utilizing advanced materials including composites and ceramics, provide competitive advantages,
we face potential competition from many different sources. These sources include both domestic and international manufacturers of body
armor and protective gear (such as Armor Express, MIRA Safety, RTS Tactical, Spartan Armor Systems), providers of drone services (such
as Phoenix Drone Services LLC, Cyberhawk, Sky-Futures, DroneDeploy, Terra Drone Corporation, AgEagle Aerial Systems Inc., Aerodyne Group,
Aerial Drone Services Inc., Sharper Shape Inc., Arch Aerial LLC, Australian UAV Pty Ltd., Drone Services Canada Inc., Dronegenuity, and
FlyGuys.) and a large number of software technology development organizations.

Many
of our competitors may have significantly greater financial resources, and expertise in research and development, manufacturing, government
contracting, obtaining regulatory approvals, and marketing than we do. These competitors may also compete with us in recruiting and retaining
qualified software programmers, material engineers and fabricators and management personnel, as well as in acquiring technologies complementary
to or necessary for our services. Smaller or early-stage companies may also prove to be significant competitors, particularly in regard
to software development and software analytics through collaborative arrangements with large and established companies.

7

The
key competitive factors affecting the success of our products vary by sector:

●
In body armor and protective
gear, efficacy, safety, convenience, and price are principal selection criterion. Product pricing can be a major competitive consideration
in certain international markets where customers may consider lower-cost/lower performance foreign-manufactured product options instead
of high-quality/higher-performance Made in America products. As such, we may not be able to compete solely on pricing and our ability
to compete in this market will be dependent on customers prioritizing what we believe are higher quality and higher performance products.

●
In aerial managed services,
proximity to infrastructure or location and flight crew availability are major competitive factors. We are currently focused solely
on providing these services in Florida and, as such, we may only compete in this market and not expand into new markets in the near
future.

●
In AI development, software
development expertise and system design can have a significant impact on customer selection. Additionally, expertise in dataset collection
and processing capabilities is critical. Our ability to compete in this market is dependent on our software continuing to stay current
with new technologies and developments, which will require continued research and development in this area. As a smaller company,
we may be unable to compete with larger and better financed entities in this market.

Research
and Development

Research
and Development expenses consist of costs associated with personnel and contractor fees associated with the design and development of
our products, product certification, travel, recruiting and information technology. We generally recognize research and development expenses
as incurred. Development costs incurred prior to establishment of technological feasibility are expensed as incurred. We expect our research
and development costs to continue to increase as we develop new products and modify existing products to meet the changes within our
markets.

We
continue to make significant investments in research and development relating to our technologies and products. Investments in new technology
and processes are inherently speculative. Technical obstacles and challenges we encounter in our research and development process may
result in delays in, or our abandonment of, product commercialization, substantially increase the costs of development and negatively
affect our results of operations.

Research
and Development expenses were $394,207 and $90,372 for the years ending December 31, 2025 and 2024, respectively, an increase of $303,835
or 336.2%. The increase is primarily attributable to expanded development efforts and the engagement of external contractors to support
enhancements to the artificial intelligence business.

Intellectual
Property

Our
success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we currently
rely on a combination of trade secrets, including know-how, employee and third-party non-disclosure agreements, and other contractual
rights to establish and protect our proprietary rights in our technology.

We
maintain a program designed to identify technology that is appropriate for patent and trade secret protection, and we file patent applications
in the United States and, when appropriate, certain other countries for inventions that we consider significant. On November 19, 2024,
we were granted our first patent from the United States Patent and Trademark Office (“USPTO”), for our technology that identifies,
locates and maps explosives. The newly issued patent, US Patent No. 12,146,729 includes all 21 claims made in the Company’s original
patent application entitled, “Systems and Methods for Detecting and Identifying Explosives.” These claims cover autonomous
detection, identification, and labeling of explosives in orthomosaic images using AI processing of drone imagery. The patent expires
in 2043. In December 2024, the Company filed a provisional patent application titled, “Object Detection Precision Enhancement Methods,
Tools and Systems” which seeks intellectual property (IP) protection for the Company’s technology which utilizes drones and
artificial intelligence and proprietary algorithms to reduce the false positive rate when identifying objects such as small explosives,
landmines and unexploded ordnances. The Company filed a formal patent application on this system in December 2025. We may acquire patents
through acquisitions or direct prosecution efforts and engage in licensing transactions to secure the right to use third parties’
patents. Although our business is not materially dependent upon any one patent, our patent rights and the products made and sold under
our patents, taken as a whole, are a significant element of our business.

8

We
also possess other intellectual property, including trademarks, know-how, trade secrets, design rights and copyrights. We control access
to and use of our software, technology and other proprietary information through internal and external controls, including contractual
protection with employees, contractors, customers and partners. Our software is protected by U.S. and international copyright, patent
and trade secret laws. Despite our efforts to protect our software, technology and other proprietary information, unauthorized parties
may still copy or otherwise obtain and use our software, technology and other proprietary information. In addition, we have expanded
our international operations, and effective patent, copyright, trademark and trade secret protection may not be available or may be limited
in foreign countries.

Companies
in the industry in which we operate frequently are sued or receive informal claims of patent infringement or infringement of other intellectual
property rights. We may receive such claims from companies, including from competitors and customers, some of which have substantially
more resources and have been developing relevant technology similar to ours. As and if we become more successful, we believe that competitors
will be more likely to try to develop products that are similar to ours and that may infringe on our proprietary rights. It may also
be more likely that competitors or other third parties will claim that our products infringe their proprietary rights. Successful claims
of infringement by a third party, if any, could result in significant penalties or injunctions that could prevent us from selling some
of our products in certain markets, resulting in settlements or judgments that require payment of significant royalties or damages or
require us to spend time and money developing non-infringing products. We cannot assure you that we do not currently infringe, or that
we will not in the future infringe upon any third-party patents or other proprietary rights but will not and have never done so intentionally.

Regulation

Each
of our operating subsidiaries is subject to different types of government regulation. We are not subject to any specific environmental
regulation and do not incur any costs associated with compliance with any environmental regulation.

Safe-Pro
USA LLC

Safe-Pro
USA sells body armor and related protective personnel equipment. Exporting body armor from the United States involves compliance with
various regulations governed by multiple federal agencies. These regulations are designed to control the distribution of military and
dual-use items to ensure national security and foreign policy interests. The primary regulatory frameworks include the International
Traffic in Arms Regulations (ITAR) the Export Administration Regulations (EAR) of the U.S. Department of Commerce, and trade sanctions
regulations administered by the Office of Foreign Assets Controls of the U.S. Treasury Department.

1.
International Traffic
in Arms Regulations (ITAR)

ITAR
is administered by the U.S. Department of State, Directorate of Defense Trade Controls (DDTC) and applies to defense articles and services
listed on the U.S. Munitions List (USML). Level IV body armor is classified as defense articles. They are listed under Category X (Protective
Personnel Equipment) of the USML. Exporting ITAR-controlled items requires a license from the DDTC.

Currently,
we do not export Level IV body armor. Our protective equipment is exported for the use of non-governmental organizations in humanitarian
demining efforts. While we are not currently subject to these export regulations, we are registered with DDTC.

2.
Export Administration
Regulations (EAR)

EAR
is administered by U.S. Department of Commerce, Bureau of Industry and Security (BIS) and regulates dual-use items (commercial items
with potential military applications) listed on the Commerce Control List (CCL). Body armor intended for civilian use or law enforcement
are classified as dual-use items. NIJ (National Institute of Justice) level III body armor formerly on the USML is now under ECCN 1A613
and is exempt from export licensing. The license requirements are dependent upon an item’s technical characteristics, the destination,
the end-use, and the end-user, and other activities of the end-user. Some exports may qualify for exceptions under specific conditions
(e.g., shipments to certain friendly countries or under specific value thresholds).

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3.
Office of Foreign Assets
Control (OFAC) Regulations

OFAC
is administered by the U.S. Department of the Treasury and regulates economic, and trade sanctions based on U.S. foreign policy and national
security goals. OFAC limits or prohibits the export of certain items to countries, people and organizations. We do not export to Sanctioned
Countries or Specially Designated Nationals for which a license would be required.

Additional
Restrictions and Obligations

U.S.
regulators may also impose new restrictions on previously non-controlled emerging or foundational items and technologies for which exports
to countries such as China are deemed to present undesirable national security risks. Even without such legislative or regulatory action,
we would be prohibited from exporting our products to any foreign recipient if we have knowledge that a violation of U.S. export regulations
has occurred, is about to occur or is intended to occur in connection with the item. We maintain compliance with these various regulations
by employing consultants with specific knowledge of ITAR and EAR compliance.

Safe
Pro AI LLC

There
is currently no state or federal regulation regarding the development of artificial intelligence or machine learning tools. Safe Pro
AI does not collect personally identifiable information and is not subject to laws and regulations governing such information, such as
the California Consumer Privacy Act. Safe Pro AI’s primary product, SpotlightAI™, is accessed through the web on a subscription
basis. The subscription does not give a subscriber access to the code, only the right to the output of processed information. The code
is executed on servers located in the United States and is not exported.

Regulations
Relating to Drone Services

The
UAS-based services we offer to customers within the United States are limited by federal laws and rulemaking, including the commercial
drone regulations (Part 107) adopted by the U.S. Federal Aviation Administration (the “FAA”) at the end of August 2016. Our
ability to develop and provide new services for use in the United States will be limited by federal law and regulations, which can be
slow and subject to delays based on political turnover and disruptions in federal funding, among other reasons. The Part 107 rules limit
the altitude, available airspace and weight of a drone and also requires the certification of remote pilots that can operate a drone
for commercial purposes in the United States. We, or our customers, may seek waivers from the Part 107 rules for expanded operations;
however, the processing of waivers is lengthy and uncertain. Political limits on the ability to issue new regulations could slow the
growth of this market.

We
are also subject to various domestic and international anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act and similar
anti-bribery and anti-kickback laws and regulations in other places where we do business. These laws and regulations generally prohibit
companies and their intermediaries from offering or making improper payments to governmental, political and certain international organization
officials for the purpose of obtaining, retaining or directing business. Our exposure for violating these laws and regulations increases
as our international presence expands and as we increase sales and operations in foreign jurisdictions.

In
addition, we are subject to, or are expected to facilitate our customers’ compliance with, environmental, health and safety laws
and regulations in each of the jurisdictions in which we operate or sell our products. These laws and regulations govern, among other
things, the handling and disposal of hazardous substances and wastes, employee health and safety and the use of hazardous materials in,
and the recycling of, our products.

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Environmental
Matters

Our
operations are subject to a variety of federal, state and local laws and regulations relating to environmental protection, including
those governing the discharge, treatment, storage, transportation, remediation and disposal of hazardous materials and wastes; the restoration
of damage to the environment; and health and safety matters. We believe that our operations are in material compliance with these laws
and regulations. We incur expenses in complying with environmental requirements and could incur higher costs in the future as a result
of more stringent requirements that may be enacted.

Some
environmental laws, such as the U.S. federal Superfund law and similar state laws, can impose liability, without regard to fault, for
the entire cost of the cleanup of contaminated sites on current or former site owners and operators or parties who sent waste to such
sites. Based on currently available information, we do not believe that environmental matters will have a material adverse effect on
our business, operating results or financial condition; however, we could incur substantial additional costs in the future as a result
of any additional obligations imposed or conditions identified at these or other sites in the future.

Employees

As
of December 31, 2025, we employed fifteen full-time employees , and twenty-nine independent contractors. We have never had a work stoppage,
and none of our employees are represented by a labor organization or under any collective bargaining arrangements. We consider our employee
relations to be good. Certain employees are subject to contractual agreements that specify requirements regarding confidentiality and
restrictions on working for competitors, as well as other standard matters.

Certain
of our employees are licensed to fly our drones. Currently, two employees of our subsidiary, Airborne Response Corp., are licensed drone
operators with FAA Part 107 Remote Pilot Certificates. Employees of our remaining subsidiaries, Safe Pro AI LLC and Safe-Pro USA LLC,
are not required to be licensed pilots, as neither subsidiary operates drones.

Properties

We
do not own any real property. We currently rent our executive office space in Aventura, Florida, which also houses employees of our Airborne
Response business unit. We also lease a 7,000 square foot facility located in Hialeah, Florida that is used for the manufacturing operations
of our Safe-Pro USA business unit. We believe that our facilities are sufficient to meet our current needs and that suitable space will
be available as and when needed.