UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of small business issuer as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Company’s telephone number, including area code)
_____________________________________________________________
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
None |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a smaller reporting company) | Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 6, 2026, the Company had
TABLE OF CONTENTS
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| F-1 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
CONDENSED BALANCE SHEETS
ASSETS |
| June 30, 2026 |
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| December 31, 2025 |
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Current Assets |
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Cash |
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Prepaid expenses |
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Amount receivable from lender |
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Total Current Assets |
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Long-term Assets |
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Right of use lease asset |
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Fixed assets, net |
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Intangible assets, net |
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Goodwill |
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Deferred offering costs |
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Total Non-current Assets |
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Total Assets |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Convertible notes, net of unamortized discount |
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Interest payable |
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Lease liability, current portion |
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Due to related parties |
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Derivative financial instruments |
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Total Current Liabilities |
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Stockholders’ Equity |
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Series A Preferred Stock, par value $ |
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Series A.1 Preferred Stock, par value $ |
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Series B Preferred Stock, par value $ |
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Series C Preferred Stock, par value $ |
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Series D Preferred Stock, par value $ |
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Series D.1 Preferred Stock, par value $ |
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Series E Preferred Stock, par value $ |
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Common Stock, par value $ |
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Class B Common Stock, par value $ |
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Equity issuable |
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Additional paid in capital |
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Accumulated deficit |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
| $ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-1 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
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| Three Months Ended June 30, |
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| Six Months Ended June 30, |
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| 2026 |
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Operating expenses |
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Professional fees |
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Salaries and benefits |
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Depreciation and amortization |
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Other general and administrative costs |
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Total operating expenses |
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Loss from operations |
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Other income and expense |
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Financing cost |
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Change in fair value of derivative financial instruments |
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Amortization of debt discount |
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Interest and other expense (income) |
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Other expense net |
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Net loss before income tax |
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Provision for income taxes (benefit) |
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Net loss |
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Net Loss Per Common Stock - basic and fully diluted |
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Weighted-average number of shares of Common |
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Stock outstanding - basic and fully diluted |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-2 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
|
| Six Months Ended June 30, |
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| 2026 |
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| 2025 |
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Cash Flows from Operating Activities |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Amortization |
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Amortization of debt discount |
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Stock based compensation expense |
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Financing cost |
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Change in fair value of derivative financial instruments |
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Changes in assets and liabilities |
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Prepaid Expenses |
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Right of use lease asset |
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Accounts payable |
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Accrued interest |
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Lease liability |
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Due to related party |
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Net cash used in operating activities |
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Cash Flows from Investing Activities |
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Acquisition of fixed assets |
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Net cash used in investing activities |
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Cash Flows from Financing Activities |
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Proceeds from the issuance of common shares for cash |
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Proceeds from the issuance of preferred shares for cash |
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Proceeds from issuance of convertible notes and promissory notes |
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Repayment of promissory notes |
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Net cash provided by financing activities |
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Net (Decrease) Increase in Cash |
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Net Change in Cash |
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Cash at beginning of period |
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Cash at end of period |
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| Six Months Ended June 30, |
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| 2026 |
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| 2025 |
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Supplemental disclosure of cash flow information: |
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Cash paid during the period for interest |
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Cash paid during the period for income tax |
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Schedule of non-cash investing and financing activities: |
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Conversion of contingent equity consideration payable to equity |
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Conversion of Series A Preferred Stock to Common Stock |
| $ |
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Conversion of convertible debt to equity |
| $ |
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Recognition of operating lease: right of use asset and lease liability |
| $ |
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Fair value of warrants issued as deferred offering cost |
| $ |
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Fair value of convertible debt beneficial conversion feature allocated to proceeds of debt |
| $ |
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Fair value of warrants allocated to proceeds of debt |
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Fair value of common shares allocated to proceeds of debt |
| $ |
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Convertible note proceeds receivable from lender |
| $ |
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Contingent equity consideration payable from acquisition |
| $ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-3 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
SIX MONTHS ENDED JUNE 30, 2026
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| Series A |
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| Series A.1 |
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| Preferred Stock |
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Balance, December 31, 2025 |
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Sales of common stock pursuant to Equity Purchase Agreement |
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Sales of Series D.1 Preferred Stock |
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Conversion of Series A Preferred Stock to Common Stock |
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Conversion of Common Stock to Series A Preferred Stock |
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Conversion of Series C Preferred Stock to Common Stock |
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Conversion of Series D Preferred Stock to Common Stock |
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Cash received for Series E Preferred Stock to be issued |
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Shares issued for debt conversion |
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Shares issued to consultants |
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Employee stock compensation |
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Net Loss |
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| - |
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Balance, March 31, 2026 |
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Reclassification of share from Series D.1 to Series D |
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| - |
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| - |
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| - |
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Sales of common stock pursuant to Equity Purchase Agreement |
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| - |
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| - |
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| - |
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Sales of common stock pursuant to private placements |
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| - |
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| - |
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| - |
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Warrants attached to common stock sales |
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| - |
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| - |
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| - |
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Issuance of equity issuable |
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| - |
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| - |
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| - |
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| - |
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| - |
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Conversion of Common Stock to Class A.1 Preferred Stock |
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| - |
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| - |
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| - |
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Conversion of Series A Preferred Stock to Common Stock |
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| - |
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| - |
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Shares issued for debt conversion |
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| - |
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|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||||
Shares attached to convertible note |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||||
Warrants attached to convertible note |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||||
Shares issued to consultants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||||
Employee stock compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||||
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| |||||
Balance, June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(continued)
| F-4 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
SIX MONTHS ENDED JUNE 30, 2026
|
| Series D.1 |
|
| Series E |
|
|
|
|
| Class B |
|
|
|
|
| Additional |
|
|
|
|
| Total |
| ||||||||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Common Stock |
|
| Common Stock |
|
| Equity |
|
| Paid-in |
|
| Accumulated |
|
| Stockholders’ |
| ||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Issuable |
|
| Capital |
|
| Deficit |
|
| Equity |
| ||||||||||||
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||||||||
Balance, December 31, 2025 |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of common stock pursuant to Equity Purchase Agreement |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Sales of Series D.1 Preferred Stock |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Conversion of Series A Preferred Stock to Common Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||||||||
Conversion of Common Stock to Series A Preferred Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Conversion of Series C Preferred Stock to Common Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Conversion of Series D Preferred Stock to Common Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Cash received for Series E Preferred Stock to be issued |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Shares issued for debt conversion |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Shares issued to consultants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Employee stock compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
Balance, March 31, 2026 |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of share from Series D to Series D.11 |
|
| ( | ) |
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Sales of common stock pursuant to Equity Purchase Agreement |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Sales of common stock pursuant to private placements |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Warrants attached to common stock sales |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Issuance of equity issuable |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| ||||||||
Conversion of Common Stock to Series A.1 Preferred Stock |
|
| - |
|
|
| |
|
|
| - |
|
|
| |
|
|
| ( |
|
|
| ( |
|
|
| - |
|
|
| |
|
|
| |
|
|
| |
|
|
| - |
|
|
| - |
|
Conversion of Series A Preferred Stock to Common Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||||||||
Shares issued for debt conversion |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Shares attached to convertible note |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Warrants attached to convertible note |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Shares issued to consultants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
| ||||||||
Employee stock compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
Balance, June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-5 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDER’S DEFICIT (EQUITY)
SIX MONTHS ENDED JUNE 30, 2025
|
| Series A |
|
| Series C |
|
| Series D |
|
| Class A |
|
| Class B |
|
| Equity |
|
| Additional |
|
|
|
|
| Total |
| |||||||||||||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Preferred Stock |
|
| Common Stock |
|
| Common Stock |
|
| Consideration |
|
| Paid-in |
|
| Accumulated |
|
| Stockholders’ |
| |||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Payable |
|
| Capital |
|
| Deficit |
|
| (Deficit) Equity |
| ||||||||||||||
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| # |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||||||||||
Balance, December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||||||||
Beneficial conversion feature of note discount |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
Balance, March 31, 2025 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||||
Beneficial conversion feature of note discount |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Shares issued for debt conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Employee stock compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Class B Common Stock issuable for earned Contingent Equity Consideration |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Fair value of warrants issued as deferred offering cost |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||||
Balance, June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| F-6 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS
Dynamic Aerospace Systems Corporation (formerly BrooQLy Inc.) (the “Company”) was incorporated in Nevada on February 19, 2021, as “MyTreat, Inc.” On May 12, 2021, the Company changed its name to BrooQLy Inc. in Nevada pursuant to an amendment to its Articles of Incorporation. Since February 25, 2025, the Company has been doing business as Dynamic Aerospace Systems Corporation (“Dynamic Aerospace Systems”). In January 2026, the Company filed an amendment to its Articles of Incorporation to change the name of the Company to Dynamic Aerospace Systems Corporation.
On April 1, 2025, the Company completed the acquisitions of certain assets of (i) Vayu (US) Inc. (“Vayu”), a developer of high-performance vertical take-off and landing (“VTOL”) unmanned aerial vehicles (“UAVs”), (ii) Impossible Aerospace Corporation (“IAC”) a developer of UAVs prioritizing battery life over traditional propulsion systems, and (iii) Global Autonomous Corporation (“GAC” and, together with Vayu and IAC, the “Acquired Entities”), a developer of autonomous delivery solutions licensed to provide an Autonomous Mesh Fulfillment Network in Dubai. See Note 4, Business Combinations, for further discussion of the asset acquisitions.
Following the asset acquisitions, the Company operates in two business segments: the Dynamic Aerospace Systems segment (“DAS”) and the Dynamic Deliveries segment.
The DAS segment is based in Ann Arbor, Michigan, and is an original equipment manufacturer (“OEM”) of UAVs. DAS seeks to help pioneer the future of unmanned flight, logistics, and public safety through advanced UAV platforms, intelligent delivery networks, and globally compliant flight systems. Built on a foundation of proprietary technology and mission-specific engineering, The DAS segment manufactures versatile, long-endurance UAVs tailored for real-world applications in both commercial and governmental sectors.
The Dynamic Deliveries segment is a division focused on building autonomous mesh logistics networks. A mesh logistics network is a decentralized approach to managing the flow of goods, where each node (e.g., a warehouse, distribution center, or delivery vehicle) is directly connected to multiple other nodes, forming a network that allows for flexible and efficient routing of shipments. These systems have numerous advantages, including decentralization. with no single central point of failure; direct connections, where different nodes are connected to several other nodes; and dynamic routing, allowing the network to adapt to changing conditions by finding the most efficient route for each shipment. Dynamic Deliveries uses its proprietary autonomous mesh fulfillment network to leverage DAS’s long-range UAVs to enable high-frequency, last-mile delivery through a geofenced network of takeoff and recovery nodes. The Dynamic Deliveries system is purpose-built for use in urban and semi-rural environments, allowing for the automated delivery of goods, medicine, and supplies at scale particularly where road-based logistics are constrained or inefficient.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These condensed financial statements should be read in conjunction with the financial statements in the Company’s 2025 Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2026. The balance sheet as of December 31, 2025, was derived from the Company’s audited 2025 financial statements contained in the above referenced 2025 Annual Report.
The results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the full year ended December 31, 2026.
| F-7 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Prior period financial statements were presented on a consolidated basis; however, as the Company has not had subsidiaries during the periods presented, the Company has revised the presentation to remove references to consolidation. This change had no impact on the financial statements.
The accompanying financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, “Disaggregation of Income Statement Expenses” which requires disaggregated disclosure of income statement expenses into specified categories in disclosures within the footnotes to the financial statements. The standard is effective for annual reporting periods beginning after December 15, 2026. The Company is currently evaluating the effect of this ASU on the consolidated financial statements and disclosures.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. For the six months ended June 30, 2026, the Company generated no revenue and reported a net loss from operations of $
While the Company closed on the acquisition of certain aerospace assets on April 1, 2025, transactions that are expected to contribute to future revenues, there is no assurance that these assets will generate sufficient income in the next 12 months to offset operating expenses. In addition, although the Company has received financial support from its largest shareholder, Aerospace Capital Partners, LLC (“ACP”), and is working with its investment bank to raise capital, there can be no guarantee that such efforts will result in adequate funding on acceptable terms, or at all.
Management expects that the Company will continue to rely on external capital sources to meet its short-term obligations and support ongoing operations. The Company’s ability to continue as a going concern is dependent on its success in raising capital, executing its business strategy, and generating sustainable revenues from commercial activities. If the Company is unable to raise additional funds or achieve its revenue objectives in a timely manner, it may be forced to delay or curtail operations, which raises substantial doubt about its ability to continue as a going concern.
| F-8 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 – BUSINESS COMBINATIONS
On April 1, 2025 the Company entered into two asset purchase agreements with Alpine 4 Holdings, Inc. (“Alpine 4”), and certain of Alpine 4’s subsidiaries, Vayu (US) Inc. and Impossible Aerospace Corporation (collectively “Vayu”), and Global Autonomous Corporation (“GAC”). The acquisitions were accounted for as business combinations in accordance with ASC 805, Business Combinations. For additional information regarding the transactions, including the initial purchase price allocation and valuation methodologies, see Note 4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
During the measurement period, the Company refined its estimates of the fair values of the assets acquired and liabilities assumed based on additional information obtained about facts and circumstances that existed as of the acquisition date. As of June 30, 2026, the Company has completed its accounting for these acquisitions and the purchase price allocation is final. The final allocation did not result in any material adjustments to the preliminary amounts previously reported.
Goodwill recognized in connection with the acquisitions reflects the excess of consideration transferred over the fair value of identifiable net assets acquired and is not deductible for income tax purposes. During the year ended December 31, 2025, the Company recorded impairment charges related to goodwill associated with these acquisitions. See Notes 7 and 8 to the Company’s Annual Report on Form 10-K for additional information.
The following table represents the pro forma revenue and net loss as if the Vayu and GAC assets had been included in the results of the Company for the six months ended June 30, 2026 and 2025:
|
| Six months ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
Revenue |
| $ |
|
| $ |
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Vayu and GAC to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied on January 1, 2025 for the six month period ended June 30, 2025. There are no pro forma adjustments in the six months ended June 30, 2026, as the results of Vayu and GAC were included in the Company’s financial results for the entire period.
NOTE 5 – LEASES
Effective in May 1, 2025, the Company entered into a lease agreement for its Vayu office and warehouse space expiring in April 2026. In connection with the lease extension, the Company recognized a right-of-use (“ROU”) lease asset and lease liability each in the amount of $
The table below summarizes the Company’s lease-related assets and liabilities as of June 30, 2026, and December 31, 2025:
|
| June 30, |
|
| December 31, |
| ||
|
| 2026 |
|
| 2025 |
| ||
Lease assets (current) |
| $ |
|
| $ |
| ||
Lease liabilities (current) |
| $ |
|
| $ |
| ||
Lease expense was $
| F-9 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 – INTANGIBLE ASSETS
Identifiable intangible assets as of June 30, 2026 and December 31, 2025, were as follows:
|
| June 30, |
|
| December 31, |
| ||
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
| ||
Vayu intellectual property |
| $ |
|
| $ |
| ||
GAC intellectual property |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total intellectual property |
|
|
|
|
|
| ||
Less: accumulated amortization |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Intangible assets, net |
| $ |
|
| $ |
| ||
Amortization expense related to intangible assets was $
Future amortization expense of intangible assets is expected to be as follows:
2026 (July to December) |
| $ |
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
|
|
|
|
|
Total future amortization expense |
| $ |
|
NOTE 7 – RELATED PARTY TRANSACTIONS
On September 10, 2025, the Company entered into a promissory note with its CEO, Kent Wilson, in the amount of $
The Company has related party transactions with two of the executive officers, who have paid expenses on behalf of the Company. As of June 30, 2026 and December 31, 2025, the Company had due to related party an amount of $
The Company had related party transactions with its shareholder Aerospace Capital Partners, LLC (“ACP”), for two Convertible Promissory Notes totaling $
| F-10 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 – RELATED PARTY TRANSACTIONS (CONTINUED)
Additionally, as of June 30, 2025, there was a payable due to ACP of $
NOTE 8 – NOTES PAYABLE AND PROMISSORY NOTES
As of June 30, 2026 and December 31, 2025, the Company had the following outstanding debt instruments, which are recorded at their carrying value on the balance sheet:
|
| June 30, |
|
| December 31, |
| ||
|
| 2026 |
|
| 2025 |
| ||
Secured Convertible Note dated July 1, 2025 |
| $ |
|
| $ |
| ||
Secured Convertible Note dated September 23, 2025 |
|
|
|
|
|
| ||
Promissory Note, dated September 2, 2025 |
|
|
|
|
|
| ||
Promissory Note, dated September 10, 2025 |
|
|
|
|
|
| ||
Convertible Note, dated October 16, 2025 |
|
|
|
|
|
| ||
Secured Convertible Note dated December 30, 2025 |
|
|
|
|
|
| ||
Secured Convertible Note dated February 12, 2026 |
|
|
|
|
|
| ||
Convertible Note, dated April 6, 2026 |
|
|
|
|
|
| ||
Convertible Note, dated April 9, 2026 |
|
|
|
|
|
| ||
Convertible Note, dated April 27, 2026 |
|
|
|
|
|
| ||
Short term loan, dated June 23, 2026 |
|
|
|
|
|
| ||
Convertible Note, dated June 29, 2026 |
|
|
|
|
|
| ||
Face value of notes payable |
|
|
|
|
|
| ||
Less: unamortized discounts |
|
| ( | ) |
|
| ( | ) |
Notes payable, current portion |
| $ |
|
| $ |
| ||
The Company’s convertible notes generally include conversion features that allow the holder to convert the outstanding principal into shares of the Company’s common stock or preferred stock. Certain of these instruments contain variable conversion terms based on a discount to market prices, which resulted in the recognition of embedded derivative liabilities accounted for at fair value.
Convertible Note Conversions
During January 2026, a promissory note with a third-party investor in the principal and interest amount of $
During April 2026, the principal amount of $
| F-11 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 – NOTES PAYABLE AND PROMISSORY NOTES (CONTINUED)
New Promissory and Convertible Note Issuances
On February 12, 2026, the Company issued a Secured Convertible Promissory Note to a third-party investor in the principal amount of $
On February 26, 2026, the Company entered into a short-term loan agreement with a third-party investor for a principal amount of $
On March 30, 2026, the Company entered into a second short-term loan agreement with the same third-party investor for a principal amount of $
On April 6, 2026, the Company issued a Convertible Promissory Note to a third-party investor with a stated principal amount of $
| F-12 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 – NOTES PAYABLE AND PROMISSORY NOTES (CONTINUED)
On April 9, 2026, the Company issued a second Convertible Promissory Note to a separate third-party investor with a stated principal amount of $
On April 27, 2026, the Company issued a second Convertible Promissory Note to a separate third-party investor with a stated principal amount of $
On June 23, 2026, the Company entered into a short-term loan agreement with a third-party investor for a principal amount of $
On June 29, 2026, the Company issued a second Convertible Promissory Note to a separate third-party investor with a stated principal amount of $
| F-13 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 – NOTES PAYABLE AND PROMISSORY NOTES (CONTINUED)
Amortization of debt discounts in the three and six months ended June 30, 2026 and 2025, was as follows:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Convertible Note, dated February 25, 2025 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Convertible Note, dated March 7, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated April 9, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated May 20, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated May 25, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated May 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated May 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated June 2, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Secured Convertible Note dated July 1, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Secured Convertible Note dated September 23, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Promissory Note, dated September 10, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated October 16, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Secured Convertible Note dated December 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Secured Convertible Note dated February 12, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short term loan, dated February 26, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short term loan, dated March 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated April 6, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated April 9, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated April 27, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Short term loan, dated June 23, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Convertible Note, dated June 29, 2026 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total amortization of debt discount |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Interest expense on debt instruments for the three months ended June 30, 2026 and 2025, was $
For additional information regarding the Company’s convertible notes and promissory notes, including detailed terms, valuation of embedded features, and prior period activity, see Note 10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
NOTE 9 – DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are comprised of the fair value of conversion features embedded in convertible promissory notes for which the conversion rate is not fixed but instead is adjusted based on a discount to the market price of the Company’s common stock. The fair market value of the derivative liabilities was calculated at inception of each convertible promissory notes for which the conversion rate is not fixed and allocated to the respective convertible notes. The derivative financial instruments are then revalued at the end of each period, with the change in value recorded to “Change in fair value of on derivative financial instruments.”
| F-14 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 9 – DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Derivative financial instruments and changes thereto recorded in the three and six months ended June 30, 2026 and 2025, include the following:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance, beginning of period |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Inception of derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Change in fair value of derivative financial instruments |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Conversion or extinguishment of derivative financial instruments |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
| $ | 771,242 |
|
| $ | - |
|
| $ |
|
| $ |
| ||
Fair market value of the derivative financial instruments is measured using the following range of assumptions:
|
| Six Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
|
|
|
|
|
|
| ||
Pricing model utilized |
| Black Scholes |
|
|
| - |
| |
Risk free rate range |
|
|
|
| - |
| ||
Expected life range (in years) |
|
|
|
| - |
| ||
Volatility range |
|
|
|
| - |
| ||
Dividend yield |
|
| % |
|
| - |
| |
The entire amount of derivative instrument liabilities is classified as current due to the fact that settlement of the derivative instruments could be required within twelve months of the balance sheet date. The Company had no derivative financial instruments in the three or six months ended June 30, 2025.
NOTE 10 – STOCKHOLDERS’ EQUITY
The Company’s authorized capital structure and the rights and preferences of its equity securities are described in Note 12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
As of June 30, 2026, the Company had multiple series of preferred stock outstanding.
During the three months ended June 30, 2026, the Company approved the creation of two new series of preferred stock designated as the Series A.1 Preferred Stock and the Series D.1 Preferred Stock. The Certificates of Designation for Series A.1 Preferred Stock and Series D.1 Preferred Stock, which created the Series A.1 Preferred Stock and Series D.1 Preferred Stock, were filed with the State of Nevada on January 30, 2026. A detailed discussion of the rights and preferences of the Series A.1 Preferred Stock and Series D.1 Preferred Stock can be found in the Company’s Current Report on Form 8-K, filed with the SEC on January 30, 2026.
Subsequent to the three months ended June 30, 2026, the Company approved the creation of a new series of preferred stock designated as Series E Preferred Stock. The Certificate of Designation for Series E Convertible Preferred Stock was filed with the State of Nevada on April 30, 2026. A detailed discussion of the rights and preferences of the Series E Preferred Stock can be found in the Company’s Current Report on Form 8-K, filed with the SEC on April 30, 2026.
| F-15 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)
Sales and Other Issuances of Preferred Stock
During January 2026, the Company entered into a short-term consulting arrangement with a third-party consultant for advisory services. As consideration for the services provided, the Company issued
During January 2026, a promissory note with a third-party investor in the principal and interest amount of $
During January 2026, the Company entered into agreements where the Company agreed to issue
During January 2026, the Company entered into agreements where the Company agreed to issue
Sales of Common Stock
During May 2026, the Company entered into a consulting arrangement with a third-party consultant for advisory services. As consideration for the services provided, the Company issued
During June 2026, the Company sold
Equity Purchase Agreement
The Company has an Equity Line of Credit (“ELOC”) arrangement with a third-party investor, as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During the six months ended June 30, 2026, the Company issued
| F-16 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)
Warrants
Transactions involving our stock warrants during the six months ended June 30, 2026 and 2025, are summarized as follows:
|
| 2026 |
|
| 2025 |
| ||||||||||
|
|
|
|
| Weighted |
|
|
|
|
| Weighted |
| ||||
|
|
|
|
| Average |
|
|
|
|
| Average |
| ||||
|
|
|
|
| Exercise |
|
|
|
|
| Exercise |
| ||||
|
| Number |
|
| Price |
|
| Number |
|
| Price |
| ||||
Outstanding at beginning of the period |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted during the period |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercised during the period |
|
| - |
|
| $ |
|
|
| - |
|
| $ |
| ||
Expired during the period |
|
| - |
|
| $ |
|
|
| - |
|
| $ |
| ||
Outstanding at end of the period |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of the period |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining life |
|
|
|
| years |
|
|
|
|
|
|
|
|
| ||
The aggregate grant date fair value of warrants granted during the six months ended June 30, 2026 and 2025, was $
The following table summarizes information about the Company’s stock warrants outstanding as of June 30, 2026:
Warrants Outstanding |
|
| Warrants Exercisable |
| ||||||||||||||||
|
|
|
|
| Weighted- |
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
| Average |
|
| Weighted- |
|
|
|
|
| Weighted- |
| |||||
|
|
|
|
| Remaining |
|
| Average |
|
|
|
|
| Average |
| |||||
Exercise |
| Number |
|
| Contractual |
|
| Exercise |
|
| Number |
|
| Exercise |
| |||||
Prices |
| Outstanding |
|
| Life (years) |
|
| Price |
|
| Exercisable |
|
| Price |
| |||||
$ 0.0001 to 0.10 |
|
|
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||
$ 0.11 to 1.00 |
|
|
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||
$ 1.01 to 1.50 |
|
|
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||
$ 0.05 to 1.50 |
|
|
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||
For additional information regarding the Company’s equity transactions, including detailed terms of preferred stock, warrants, and prior period activity, see Note 12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
RSU Plans
On April 12, 2025, the Company adopted the Dynamic Aerospace Systems Corporation Restricted Stock Unit (RSU) Executive Plan (the “Executive RSU Plan”) and the Dynamic Aerospace Systems Corporation Restricted Stock Unit (RSU) Plan (the “Non-Executive RSU Plan” and, together with the Executive RSU Plan, the “RSU Plans”). As of the date of this Quarterly Report, the Company did not have a stock option plan in favor of any director, officer, consultant, or employee.
| F-17 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)
The purpose of the RSU Plans is to provide an equity compensation program to attract, retain, and incentivize key employees. Each Restricted Stock Unit (“RSU”) is a promise to deliver one share of the Company’s common stock upon vesting, subject to certain terms. The Company has the right to determine the specific grant details for each executive.
The following table summarizes RSU Plans activity as of and for the six months ended June 30, 2026 and 2025:
|
| 2026 |
|
| 2025 |
| ||||||||||
|
|
|
|
| Weighted |
|
|
|
|
| Weighted |
| ||||
|
|
|
|
| Average |
|
|
|
|
| Average |
| ||||
|
|
|
|
| Grant Date |
|
|
|
|
| Grant Date |
| ||||
|
| Number |
|
| Fair Value |
|
| Number |
|
| Fair Value |
| ||||
Outstanding at beginning of period |
|
|
|
| $ |
|
|
| - |
|
| $ |
| |||
Granted during the period |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Exercised during the period |
|
| - |
|
| $ |
|
|
| - |
|
| $ |
| ||
Forfeited during the period |
|
| ( | ) |
| $ |
|
|
| - |
|
| $ |
| ||
Outstanding at end of period |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at period-end |
|
|
|
| $ |
|
|
| - |
|
| $ |
| |||
As of June 30, 2026, there was $
| F-18 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 11 – EARNINGS PER SHARE
The calculation of weighted average shares for basic and diluted net loss per common share is as follows:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding for basic net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Effect of dilutive stock options and other equity awards(1) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Weighted average shares outstanding for diluted net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common share: |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Diluted loss per common share: |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| (1) | Since the Company incurred a net loss from continuing operations in each of the three and six months ended June 30, 2026 and 2025, no dilutive stock options or other equity awards were included as diluted shares in those periods. As of June 30, 2026 and December 31, 2025, potentially dilutive securities were comprised of (i) |
NOTE 12 – INCOME TAXES
As of June 30, 2026, the Company had available for federal income tax purposes a net operating loss carryforward of approximately $
The Company recorded no income tax expense or benefit for the six months ended June 30, 2026 and 2025. The Company’s effective tax rate for the periods presented differs from the U.S. federal statutory rate primarily due to the full valuation allowance recorded against its net deferred tax assets.
The Company has evaluated its tax positions and has concluded that there are no uncertain tax positions requiring recognition in the financial statements. There were no material changes to the Company’s uncertain tax positions during the six months ended June 30, 2026.
For additional information regarding the Company’s income taxes, including deferred tax assets and valuation allowance, see Note 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
NOTE 13 – SEGMENT REPORTING
As of June 30, 2026,the Company operated in two business segments: Dynamic Aero Systems, a developer and OEM of UAVs, and Dynamic Deliveries, a developer of autonomous mesh logistics networks. The Company evaluates performance and allocates resources based on profit or loss from operations before income taxes. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.
| F-19 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 13 – SEGMENT REPORTING (CONTINUED)
Segment information for the three months ended June 30, 2026, was as follows:
|
| Three Months Ended June 30, 2026 |
| |||||||||
|
| Dynamic Aerospace Systems |
|
| Dynamic Deliveries |
|
| Total |
| |||
Revenue |
|
|
|
|
|
|
|
|
| |||
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
| |||
Salaries |
|
|
|
|
|
|
|
|
| |||
Depreciation and amortization |
|
|
|
|
|
|
|
|
| |||
Stock compensation expense |
|
|
|
|
|
|
|
|
| |||
Other general and administrative costs |
|
|
|
|
|
|
|
|
| |||
Total Operating Expenses |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Segment information for the three months ended June 30, 2025 was as follows:
|
| Three Months Ended June 30, 2025 |
| |||||||||
|
| Dynamic Aerospace Systems |
|
| Dynamic Deliveries |
|
| Total |
| |||
Revenue |
|
|
|
|
|
|
|
|
| |||
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
| |||
Depreciation and Amortization |
|
|
|
|
|
|
|
|
| |||
Stock compensation expense |
|
|
|
|
|
|
|
|
| |||
Other general and administrative costs |
|
|
|
|
|
|
|
|
| |||
Total Operating Expenses |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| F-20 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 13 – SEGMENT REPORTING (CONTINUED)
Segment information for the six months ended June 30, 2026, was as follows:
|
| Six Months Ended June 30, 2026 |
| |||||||||
|
| Dynamic Aerospace Systems |
|
| Dynamic Deliveries |
|
| Total |
| |||
Revenue |
|
|
|
|
|
|
|
|
| |||
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
| |||
Salaries |
|
|
|
|
|
|
|
|
| |||
Depreciation and amortization |
|
|
|
|
|
|
|
|
| |||
Stock compensation expense |
|
|
|
|
|
|
|
|
| |||
Other general and administrative costs |
|
|
|
|
|
|
|
|
| |||
Total Operating Expenses |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable assets as of June 30, 2026 |
| $ |
|
| $ |
|
| $ |
| |||
Identifiable assets as of December 31, 2025 |
| $ |
|
| $ |
|
| $ |
| |||
Segment information for the six months ended June 30, 2025 was as follows:
|
| Six Months Ended June 30, 2025 |
| |||||||||
|
| Dynamic Aerospace Systems |
|
| Dynamic Deliveries |
|
| Total |
| |||
Revenue |
|
|
|
|
|
|
|
|
| |||
Revenue |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
| |||
Depreciation and Amortization |
|
|
|
|
|
|
|
|
| |||
Stock compensation expense |
|
|
|
|
|
|
|
|
| |||
Other general and administrative costs |
|
|
|
|
|
|
|
|
| |||
Total Operating Expenses |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable assets as of June 30, 2025 |
| $ |
|
|
|
|
| $ |
| |||
| F-21 |
| Table of Contents |
DYNAMIC AEROSPACE SYSTEMS CORPORATION (FORMERLY BROOQLY INC.)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 14 – COMMITMENTS AND CONTINGENCIES
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. As of the date of this Quarterly Report, the Company was not aware of any such legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
NOTE 15 – SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to June 30, 2026, through the date of this filing of these unaudited condensed financial statements and has determined that the following are material subsequent events.
On July 15, 2026, the Company entered into a short-term loan agreement with its COO, Jeff Hail, for a principal amount of $
In August 2026, the Company sold
| F-22 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this Quarterly Report. In addition to historical information, this discussion and analysis contains forward-looking statements, within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Item 1A. Risk Factors” included in our most recent Annual Report on Form 10-K. All amounts in this Quarterly Report are in U.S. dollars, unless otherwise noted.
Overview
The following Management’s Discussion and Analysis relates to our new restructured business operations, rather than the prior business operations of the Company before February 25, 2025. Following the restructuring of our business, we are mainly focused on UAVs and drone-related sales and services.
The following discussion and analysis of the financial condition and results of operations of Dynamic Aerospace Systems Corporation (“Dynamic Aerospace Systems,” the “Company,” “we,” “our” or “us”), should be read in conjunction with our financial statements and related notes as filed with the U.S. Securities and Exchange Commission (the “SEC”). This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those anticipated due to various factors, including those described in our SEC filings. Unless otherwise stated, references to “we,” “us,” or “our” refer to Dynamic Aerospace Systems Corporation. For additional details on our operations, see our website at https://www.dynamicaerosystems.com. (As noted above, information available on our website is not incorporated by reference in, or a part of, this or any other report we file with or furnish to the SEC).
Dynamic Aerospace Systems is a leader in unmanned aerial vehicle (“UAV”) manufacturing and autonomous logistics, focusing on advanced vertical takeoff and landing (“VTOL”) drones and UAV technologies, such as the Company’s G1 VTOL (the “G1”) and US-1 electric rotor copter (the “US-1”). We serve government, defense, and commercial sectors, delivering solutions for logistics, surveillance, reconnaissance, and mission-critical operations across the United States, Gulf Coast nations, and NATO countries. Our mission is to optimize efficiency, reduce risk, and accelerate delivery through autonomous aerial solutions that enhance operational effectiveness and situational awareness.
In 2025, we adopted the trade name Dynamic Aerospace Systems to reflect our new strategic focus on autonomous aerospace technologies and to align with its expanded emphasis on UAV innovation and logistics. This rebranding coincided with significant corporate developments, including the acquisition of assets from Vayu (US) Inc., Impossible Aerospace Corporation, and Global Autonomous Corporation from Alpine 4 Holdings, Inc. (ALPP) on April 1, 2025. These acquisitions strengthened our technological capabilities and market position in the UAV sector. Additionally, the appointment of a FedEx logistics expert to our Board of Directors enhanced our strategic expertise in logistics and supply chain optimization.
Dynamic Aerospace Systems Operations
Revenue
Operating as Dynamic Aerospace Systems, we have focused on developing and commercializing advanced VTOL drones and UAV systems, including the G1 and US-1, designed for applications such as autonomous logistics, surveillance, and reconnaissance. Prior revenue was based on the MyTreat Logistics systems; however, as of the period covered by this Quarterly Report, we had discontinued that revenue model and are solely focused on UAV manufacturing and autonomous logistics using our drones. Our operational focus has been on expanding market reach and advancing research and development (“R&D”). Collaborations with government agencies, NATO allies, and commercial aerospace leaders have driven early-stage contracts and pilot programs, particularly for defense and logistics applications. Revenue generation remains in the growth phase as we scale production and secure larger contracts.
| 3 |
| Table of Contents |
Cost Structure and Expenses
Our primary expenses include research and development (R&D), manufacturing, and operational costs associated with our facilities in Ann Arbor, Michigan, and planned flight testing at Strother Field, Kansas (expected to be operational in 2026). The acquisition of assets significantly increased our capital expenditures, aimed at enhancing proprietary UAV designs with autonomous flight controls and advanced sensor integration. We have also invested in secure communication technologies to ensure reliable and secure UAV operations. General and administrative expenses include costs related to corporate governance, regulatory compliance, and the integration of new board expertise to support our strategic vision.
Liquidity Position
Our liquidity position is supported by operational cash flows, strategic partnerships, and financing activities. The asset acquisitions in 2025 were funded through the issuance of shares of Class B Common Stock, aligning with our strategy to preserve cash reserves while expanding our technological portfolio. We are actively pursuing additional contracts with government and commercial clients to bolster cash inflows. Management is also exploring further equity and debt financing to support ongoing R&D and the expansion of manufacturing capabilities. As with many growth-stage companies, our ability to secure additional capital will be critical to sustaining operations and achieving long-term objectives. There can be no assurance that we will obtain financing on favorable terms, and any further issuance of equity could dilute existing shareholders.
Financial Condition
For the six months ended June 30, 2026, our financial condition reflects a growth-oriented company with significant investments in technology and infrastructure. The transition to operating as Dynamic Aerospace Systems has positioned us to capitalize on the growing demand for autonomous UAV solutions. However, we have identified potential risks, including material weaknesses in internal controls over financial reporting, which we are actively working to remediate. Our balance sheet is primarily composed of intangible assets related to UAV technology, and physical assets from acquisitions.
Key Trends and Uncertainties
The UAV and autonomous logistics market is rapidly evolving, driven by increasing demand for efficient, secure, and scalable solutions in defense, logistics, and commercial sectors. Our proprietary technologies, such as the G1’s VTOL and fixed-wing efficiency and the US-1’s extended flight capabilities, position us to meet these demands. However, we face risks including regulatory changes, competitive pressures, and the need for continuous innovation. The integration of AI-driven autonomy and sustainable propulsion systems, planned for future development, will require substantial investment and successful execution to maintain our competitive edge.
Conclusion
The transition to operating as Dynamic Aerospace Systems marks a pivotal shift toward leadership in autonomous aerospace solutions. With the strategic acquisitions discussed above and funded through the issuance of Class B Common Stock, a strengthened board, and a focus on innovative UAV technologies, we are well-positioned to drive growth in the logistics, defense, and commercial sectors. However, our success depends on securing additional capital, scaling operations, and navigating competitive and regulatory challenges. We remain committed to delivering value to our stakeholders through innovation, operational excellence, and strategic partnerships.
Results of Operations
The following information should be read in conjunction with the condensed financial statements and notes appearing elsewhere in this Quarterly Report. We have generated minimal revenues from inception to date. We anticipate that we may not receive any significant revenues from operations until we begin our planned UAV sales and operations.
For the Three Months Ended June 30, 2026 and 2025
Revenues
For the three months ended June 30, 2026 and 2025, we generated no revenues.
| 4 |
| Table of Contents |
Operating Expenses
Professional fees were $369,999 in the three months ended June 30, 2026, an increase of $136,594, or 59%, compared to $233,405 in the three months ended June 30, 2025, resulting from professional fees paid related to the implementation of our Dynamic Aerospace Systems assets acquired in April 2025.
Salaries were $518,139 in the three months ended June 30, 2026, an increase of $518,139, or 100%, compared to $-0- in the three months ended June 30, 2025 due to the hiring of certain Vayu employees following the acquisition of the Vayu Assets.
Depreciation and amortization expense decreased by $8,035, or 9%, from $94,494 in the three months ended June 30, 2025 to $86,459 in the three months ended June 30, 2026, as a result of certain fixed assets coming to the end of their depreciable lives in 2026.
Stock compensation expense was $558,897 in the three months ended June 30, 2026, an increase of $488,846, or 698%, compared to $70,051 in the three months ended June 30, 2025. Stock compensation expense arises primarily from RSU incentive grants made to employees under our Executive and Non-Executive RSU Plans following the acquisition of the Vayu Assets in April 2025.
Other general and administrative costs were $206,396 in the three months ended June 30, 2026, an increase of $126,200, or 157%, compared to $80,196 in the three months ended June 30, 2025 due primarily to higher overhead costs related with the administration of our newly acquired assets in 2025.
Other Income and Expenses
We recognized financing cost of $297,602 in the three months ended June 30, 2026, reflecting the excess of the allocated components of certain debt instruments at inception over the net proceeds from such instruments. There was no corresponding charge in the three months ended June 30, 2025.
During the three months ended June 30, 2026, we recognized a gain from the change in fair value of derivative financial instruments of $104,629 to record the change in fair value of certain floating-rate convertible features embedded in our debt instruments that were recorded as derivative financial instruments. There was no corresponding gain or loss in the three months ended June 30, 2025.
Amortization of debt discount was $223,033 in the three months ended June 30, 2026, a decrease of $104,888, or 32%, compared to $327,921 in the three months ended June 30, 2025. Such charges reflect the amortization of beneficial conversion features and original issue discounts that we recorded as discounts at inception of certain of our promissory and convertible notes issued in 2025 and 2026. The decrease is due to larger discount balances in 2025 compared to 2026.
Interest and other expense was $23,453 in the three months ended June 30, 2026, an increase of $23,753, or 7,918%, compared to interest income of $300 in the three months ended June 30, 2025. The increased interest expense is attributable to interest-bearing debt balances in 2026 with no corresponding balances in 2025.
Net Loss
For the three months ended June 30, 2026, we recognized a net loss of $2,179,349, an increase of $1,373,582, or 170%, compared to net loss of $805,767 in the three months ended June 30, 2025. The increase is primarily due to higher salaries and operating expenses from scaling our operations in preparation for future growth, stock-based compensation for employee RSU incentive grants, and day-one financing costs associated with issuance of certain convertible notes.
For the Six Months Ended June 30, 2026 and 2025
Revenues
For the six months ended June 30, 2026 and 2025, we generated no revenues.
| 5 |
| Table of Contents |
Operating Expenses
Professional fees were $656,189 in the six months ended June 30, 2026, an increase of $149,816, or 30%, compared to $506,373 in the six months ended June 30, 2025, resulting from professional fees paid related to the implementation of our Dynamic Aerospace Systems assets acquired in April 2025.
Salaries were $947,390 in the six months ended June 30, 2026, an increase of $947,390, or 100%, compared to $-0- in the six months ended June 30, 2025 due to the hiring of certain Vayu employees following the acquisition of the Vayu Assets.
Depreciation and amortization expense increased by $79,111, or 84%, from $94,494 in the six months ended June 30, 2025 to $173,605 in the six months ended June 30, 2026, as a result of amortization of intangible assets and depreciation of fixed assets acquired from Vayu and GAC in April 2025.
Stock compensation expense was $958,163 in the six months ended June 30, 2026, an increase of $888,112, or 1,268%, compared to $70,051 in the six months ended June 30, 2025, resulting from RSU incentive grants made to employees under our Executive and Non-Executive RSU Plans in mid-2025 for which a full six months of expense are reflected in 2026.
Other general and administrative costs were $269,674 in the six months ended June 30, 2026, an increase of $134,129, or 99%, compared to $135,545 in the six months ended June 30, 2025 due primarily to higher overhead costs related with the administration of our newly acquired assets in 2025.
Other Income and Expenses
We recognized financing cost of $308,236 in the six months ended June 30, 2026, reflecting the excess of the allocated components of certain debt instruments at inception over the net proceeds from such instruments. There was no corresponding charge in the six months ended June 30, 2025.
During the six months ended June 30, 2026, we recognized a gain from the change in fair value of derivative financial instruments of $541,886 to record the change in fair value of certain floating-rate convertible features embedded in our debt instruments that were treated as derivative financial instruments. There was no corresponding gain or loss in the six months ended June 30, 2025.
Amortization of debt discount was $414,797 in the six months ended June 30, 2026, a decrease of $76,903, or 16%, compared to $491,700 in the six months ended June 30, 2025. Such charges reflect the amortization of beneficial conversion features and original issue discounts that we recorded as discounts at inception of certain of our promissory and convertible notes issued in 2025 and 2026. The decrease is due to larger discount balances in 2025 compared to 2026.
Interest and other expense was $44,674 in the six months ended June 30, 2026, an increase of $43,218, or 2,968%, compared to $1,456 in the six months ended June 30, 2025. The increased interest expense is attributable to higher interest-bearing debt balances in 2026.
Net Loss
For the six months ended June 30, 2026, we recognized a net loss of $3,230,842, an increase of $1,931,223, or 149%, compared to net loss of $1,299,619 in the six months ended June 30, 2025. The increase is primarily due to higher salaries and operating expenses from scaling our operations in preparation for future growth, stock-based compensation for employee RSU incentive grants, and day-one financing costs associated with issuance of certain convertible notes.
Liquidity and Capital Resources
Sources of Liquidity
Net Cash Used in Operating Activities.
Cash flows used in operating activities were $832,030 and $771,366 for the six months ended June 30, 2026 and 2025, respectively. Working capital for the six months ended June 30, 2026, provided cash of $1,085,897 due from cash provided by accounts payable and accrued liabilities (due primarily to unpaid executive salaries from 2025 and 2026), accrued interest, and related parties, partially offset by cash used by prepaid expenses. Working capital for the six months ended June 30, 2025 used cash of $127,992 due primarily to cash used by accounts payable and accrued interest.
| 6 |
| Table of Contents |
Net Cash Used in Investing Activities.
Cash flows used in investing activities were $66,229 and $-0-, for six months ended June 30, 2026 and 2025, respectively. Additions to property, plant and equipment during the six months ended June 30, 2026, are related to investments into demo drones.
Net Cash Provided by Financing Activities.
Cash flows provided by financing activities were $851,855 and $788,200 for the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026, we received $192,355 from the sale of common stock under the ELOC and in private placement transactions, $210,000 from the sale of preferred stock, and $579,500 received from the issuance of notes and convertible notes, partially offset by the repayment of a promissory note in the amount of $130,000. For the six months ended June 30, 2025, net cash provided by financing activities was $788,200, comprised of $843,200 received from the issuance of notes and convertible notes, partially offset by the repayment of two promissory notes in the amount of $55,000.
Significant Liquidity Transactions
Since inception, we have generated no revenues while funding operations primarily through support from affiliates, shareholders, and related parties. Notably, Aerospace Capital Partners, one of our largest shareholders, has already contributed financial resources to help support the Company during this period of growth. In addition, we have engaged an investment bank, AGP, to assist in raising additional capital to accelerate our business plan and ensure sufficient liquidity.
Although we will require additional equity or debt financing in the short term, management believes the Company is well-positioned to execute on its strategic objectives with the support of existing investors and engaged advisors. While any future financing may involve dilution or debt obligations, we are focused on securing capital on terms that preserve long-term shareholder value and support our path to profitability.
Equity Purchase Agreement
On July 31, 2025, we entered into an Equity Purchase Agreement (the “ELOC”) with Platinum Point Capital LLC, a Nevada limited liability company (the “Purchaser”) pursuant to which the Purchaser committed to purchase up to $15,000,000 of our Common Stock. In connection with the execution of the ELOC, we are obligated to issue 600,000 shares of our Common Stock to the Purchaser as a commitment fee.
Upon filing and effectiveness of a Registration Statement on Form S-1 to register the Advance Shares (defined below) and provided other closing conditions are met, from time to time over the term of the ELOC, we shall have the right, but not the obligation, to direct the Purchaser to purchase shares of our Common Stock (the “Advance Shares”) in a maximum amount of one hundred percent (100%) of the average daily trading volume over the five trading days preceding the applicable advance date. At any time and from time to time during the three-year term of the ELOC, we may deliver a notice to Purchaser (the “Advance Notice”) and shall deliver the Advance Shares to Purchaser on the next trading day. The purchase price for the Advance Shares shall equal 90.0% of the gross proceeds received by the Purchaser for the resale of the Advance Shares during the three consecutive trading days immediately following the date an Advance Notice is delivered. The ELOC terminates upon the first to occur of (i) July 31, 2028; (ii) the date that $15,000,000 in Advance Shares have been purchased by the Purchaser; and (iii) the date that we terminate the ELOC.
During the six months ended June 30, 2026, we issued 187,082 shares of our common stock under the ELOC and received gross proceeds of $101,993 against fees of $9,636 for net cash proceeds of $92,356.
Notes Payable
During the six months ended June 30, 2026, we issued convertible notes payable and promissory notes with a total face value of $627,022 that resulted in net proceeds of $419,500. Additionally, a convertible note with face value of $58,000 and penalties of $5,800 was converted into shares of our preferred stock, and a second note with a face value of $495,000 was partially converted for $65,000 of face value into common stock. We also repaid existing promissory notes totaling $130,000. The remaining outstanding debt as of June 30, 2026, matures at various times during the second half of 2026 and 2027.
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For additional information regarding our current debt arrangements, see Note 8 to the accompanying condensed financial statements for the period ended June 30, 2026. In addition, for information regarding our other material estimated future cash requirements under our contractual obligations and certain other commitments, see “Material Cash Requirements” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to such information except as set forth herein.
Liquidity Condition
In 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to continue as a Going Concern. This update provided U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. Under this standard, we are required to evaluate whether there is substantial doubt about our ability to continue as a going concern each reporting period, including interim periods. In evaluating our ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about our ability to continue as a going concern within 12 months after our financial statements were issued (August 10, 2027).
Management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our obligations due before August 10, 2027, and concluded that, without additional funding, we will not have sufficient funds to meet our obligations within one year from the date the financial statements were issued. Without raising additional capital, there is substantial doubt about our ability to continue as a going concern through August 10, 2027. The accompanying financial statements have been prepared assuming that we will continue as a going concern. This basis of presentation contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business.
As of June 30, 2026, we had cash balances of $7,605, a working capital deficit of $4,283,304 and an accumulated deficit of $13,021,962. For the six months ended June 30, 2026, we had a net loss of $3,230,842 and used cash from operating activities of $832,030. However, the Company is actively pursuing financing opportunities and anticipates revenue growth from sales that are expected to begin offsetting operating expenses within the next twelve months.
Off-Balance Sheet Arrangements
We have not and do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of establishing off-balance sheet arrangements or other contractually narrow or limited purposes. Therefore, we do not believe we are exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.
The above discussion should be read in conjunction with our condensed financial statements and the related notes. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure the information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of June 30, 2026, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our internal controls over financial reporting were ineffective as of the end of the period covered by this report.
The determination that our disclosure controls and procedures were not effective as of June 30, 2026, is a result of the material weakness related to the lack of formal control processes related to the identification of related party transactions at this point in time and limited segregation of duties. The Company hired a permanent Chief Financial Officer in March 2026 and plans to expand its accounting operations as the Company expands. The Company is in the process of establishing formal related party identification procedures.
MANAGEMENT’S QUARTERLY REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
Except as set forth above, there have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2026 that have materially affected or are reasonably likely to materially affect our internal controls.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date of the filing of this Quarterly Report, the Company was not aware of any material pending legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
ITEM 1A RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common and capital stock. There have been no material changes to our risk factors since our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
Except as previously disclosed in a Current Report on Form 8-K or in a Form 10-Q or 10-K, or as set forth below, the Company has not sold securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), during the period covered by this Quarterly Report:
During May 2026, we entered into a consulting arrangement with a third-party consultant for advisory services. As consideration for the services provided, we issued 500,000 shares of Common Stock.
During June 2026, we sold 476,191 shares of common stock and 714,287 five year warrants with an exercise price of $0.30 for an aggregate purchase price of $100,000.
During June 2026, we issued 25,000 shares of common stock in connection with the issuance of a convertible note payable.
The issuances of the promissory notes and the shares of common stock disclosed above were each consummated in privately negotiated transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act and regulations promulgated thereunder. The Company’s reliance upon Section 4(a)(2) of the Securities Act in issuing the securities was based upon the following factors in each transaction: (a) in each case, the issuance of the securities was in an isolated private transaction by the Company which did not involve a public offering; (b) there was only one recipient in each case; and (c) the negotiations for each issuance of securities took place directly between the individual investors and the Company; and (d) each purchaser made representations about being an accredited investor, purchasing for his or her own account, and not purchasing with the intent to distribute the securities.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Regulation S-K, Item 408).
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ITEM 6. EXHIBITS
Exhibit Index
Exhibit Number |
| Description |
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101.INS |
| Inline XBRL Instance Document |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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SIGNATURES
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.
| DYNAMIC AEROSPACE SYSTEMS CORPORATION |
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Date: August 10, 2026 | By: | /s/ Kent B. Wilson |
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| Kent B. Wilson |
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| Principal Executive Officer Chief Executive Officer |
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| By: | /s/ Robin Hoops |
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| Robin Hoops |
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| Principal Financial Officer Chief Financial Officer |
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