ParaZero (NASDAQ: PRZO) sales soar 195% as losses widen
Rhea-AI Filing Summary
ParaZero Technologies Ltd. (PRZO) reported much stronger operating performance for the six months ended June 30, 2026, driven by rapid growth of its DefendAir counter‑UAS product line. Sales rose 195.3% to $1,057,210 from $357,979, and gross profit improved to $380,376, with gross margin swinging from a negative 20.6% to 36% as higher-margin defense and OEM integration sales scaled.
Operating expenses also rose, especially selling, marketing and G&A, while R&D declined modestly. The company recorded a larger net loss of $4,335,835 versus $2,295,955, mainly due to an adverse change in the fair value of derivative warrant liabilities and higher equity-based compensation. ParaZero strengthened its balance sheet through three registered direct offerings in early 2026, ending June with about $7.8 million in cash, cash equivalents and short-term deposits, and management believes this will fund operations for at least the next 12 months. The company highlighted multiple new and follow-on DefendAir orders from Israeli, U.S. and European Tier‑1 defense and security customers, while noting that ongoing regional conflict around Israel has not yet disrupted its operations.
Positive
- Sales grew 195.3% year-over-year to $1,057,210, driven by defense and OEM integration demand, indicating rapid commercial traction for DefendAir and related products.
- Gross margin improved to 36% from a negative 20.6%, reflecting a more favorable product mix and better cost structure.
- Cash, cash equivalents and short-term deposits totaled about $7.8 million at June 30, 2026, supported by three registered direct offerings that raised approximately $7.5 million in gross proceeds.
- Derivative warrant liabilities were eliminated from the balance sheet after series A warrants were reclassified to equity, simplifying the capital structure.
Negative
- Net loss increased 88.8% to $4,335,835, as higher operating expenses and a negative revaluation of warrant liabilities outweighed revenue and margin gains.
- Operating cash outflow was $2,950,112 in the half-year, and management acknowledges it remains early stage and expects to need additional financing beyond the current runway.
- Operating expenses reached $4,388,099 (R&D, selling and marketing, G&A combined), rising significantly year-over-year and keeping the company far from break-even.
Filing Explained
Completed 2026 offerings and exercised pre-funded warrants left 29,162,475 shares outstanding at June 30, 2026, with 5,610,156 more reserved under awards.
As a Form 6-K, this report furnishes ParaZero’s unaudited interim financial statements and management discussion for the six months ended
A registered direct offering is a negotiated sale of registered securities to selected investors, with placement-agent fees reducing net proceeds. A pre-funded warrant is sold near the share price with a nominal exercise price and converts into shares when exercised; the disclosed warrants have therefore moved from warrant capacity to issued shares.
The company also reports 5,610,156 ordinary shares reserved for existing awards, 1,429,488 shares available for future awards, 1,703,114 unvested RSUs and 1,002,992 outstanding options. These amounts represent potential future issuance rather than shares already included in the outstanding count.
Key Figures
Key Terms
DefendAir technical
pre-funded warrants financial
counter-UAS technical
Israel Innovation Authority regulatory
Research Law regulatory
Secured Overnight Financing Rate financial
FAQ
How did ParaZero (PRZO) revenue perform in the first half of 2026?
What happened to ParaZero (PRZO) gross margin in the first half of 2026?
What was ParaZero (PRZO) net loss for the six months ended June 30, 2026?
How much liquidity does ParaZero (PRZO) have as of June 30, 2026?
What capital raises did ParaZero (PRZO) complete in early 2026?
Has the security situation in Israel affected ParaZero (PRZO) operations?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of August
Commission file number:
(Translation of registrant’s name into English)
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of the Registrant’s (i) Condensed Interim Financial Statements as of June 30, 2026, which is attached hereto as Exhibit 99.1; (ii) Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2026, which is attached hereto as Exhibit 99.2; and (iii) press release issued on August 26, 2026, titled “ParaZero Reports Strong First Half 2026 Results with 195% Sales Growth and Expanding DefendAir Commercial Momentum”, which is attached hereto as Exhibit 99.3.
This Form 6-K, including Exhibit 99.1, Exhibit 99.2, but excluding the press release attached as Exhibit 99.3 attached hereto, is incorporated by reference into the Registrant’s Registration Statements on Form S-8 (File No. 333-278268 and 333-285054) and Form F-3 (File Nos. 333-281443 and 333-275351), filed with the Securities and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
1
EXHIBIT INDEX
| Exhibit No. | ||
| 99.1 | ParaZero Technologies Ltd.’s Interim Condensed Financial Statements as of June 30, 2026. | |
| 99.2 | ParaZero Technologies Ltd.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2026. | |
| 99.3 | Press release titled: “ParaZero Reports Strong First Half 2026 Results with 195% Sales Growth and Expanding DefendAir Commercial Momentum” | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
2
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ParaZero Technologies Ltd. | |||
| Date: August 26, 2026 | By: | /s/ Ariel Alon | |
| Name: | Ariel Alon | ||
| Title: | Chief Executive Officer | ||
3
Exhibit 99.1
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2026
(UNAUDITED)
INDEX
| Page | ||
| Condensed Interim Balance Sheets | 2–3 | |
| Condensed Interim Statements of Comprehensive Loss | 4 | |
| Condensed Interim Statements of Changes in Shareholders’ Deficit | 5 | |
| Condensed Interim Statements of Cash Flows | 6 | |
| Notes to the Condensed Interim Financial Statements | 8–16 |
- - - - - - - - - - - -
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM BALANCE SHEETS (Unaudited)
U.S. dollars
| June 30, | December 31, | |||||||||
| Note | 2026 | 2025 | ||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | ||||||||||
| Short term deposits | ||||||||||
| Trade receivables | ||||||||||
| Other current assets | 3 | |||||||||
| Inventories | ||||||||||
| TOTAL CURRENT ASSETS | ||||||||||
| NON-CURRENT ASSETS: | ||||||||||
| Restricted deposit | 4 | |||||||||
| Prepaid expenses | ||||||||||
| Operating lease right-of-use asset | 5 | |||||||||
| Property and equipment, net | ||||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||||
| TOTAL ASSETS | ||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
2
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM BALANCE SHEETS (Unaudited)
U.S. dollars
| June 30, | December 31, | |||||||||
| Note | 2026 | 2025 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Trade payables | ||||||||||
| Operating lease liabilities | 5 | |||||||||
| Other current liabilities | 6 | |||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||
| NON-CURRENT LIABILITIES: | ||||||||||
| Operating lease liabilities, net of current portion | 5 | |||||||||
| Derivative warrant liabilities | 7 | - | ||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||||
| COMMITMENTS AND CONTINGENCIES | 9 | |||||||||
| SHAREHOLDERS’ DEFICIT | 8 | |||||||||
| Ordinary shares, NIS | ||||||||||
| Additional paid-in capital | ||||||||||
| Accumulated losses | ( | ) | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
3
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
U.S. dollars
| Six months ended June 30, | Six months ended June 30, | |||||||
| 2026 | 2025 | |||||||
| U.S. dollars | ||||||||
| Sales | ||||||||
| Cost of Sales | ||||||||
| GROSS PROFIT (LOSS) | ( | ) | ||||||
| Research and development expenses | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| Change in fair value of derivative warrant liabilities | ( | ) | ||||||
| Other finance income, net | ||||||||
| NET LOSS AND COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||
| Net loss per ordinary share, basic and diluted | ( | ) | ( | ) | ||||
| Weighted average number of ordinary shares outstanding, basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
4
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT (Unaudited)
U.S. dollars
| Ordinary shares | Additional | |||||||||||||||||||
| Number | paid-in | Accumulated | ||||||||||||||||||
| of shares | Amount | capital | losses | Total | ||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2024 | ( | ) | ( | ) | ||||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2025: | ||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net of issuance costs (Note 8D) | ||||||||||||||||||||
| Issuance of ordinary shares from vested restricted share units | ( | ) | - | |||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Exercise of series A warrants (Note 8B) | ||||||||||||||||||||
| Comprehensive loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| BALANCE AS OF JUNE 30, 2025 | ( | ) | ||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2025 | ( | ) | ||||||||||||||||||
| CHANGES DURING SIX MONTHS ENDED JUNE 30, 2026: | ||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net of issuance costs (Note 8F) | ||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net of issuance costs (Note 8G) | ||||||||||||||||||||
| Issuance of ordinary shares and pre-funded warrants, net of issuance costs (Note 8H) | ||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Issuance of shares upon restricted share units vesting | ( | ) | - | |||||||||||||||||
| Classification of series A warrants to Equity (Note 8B) | - | |||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| BALANCE AS OF JUNE 30, 2026 | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
5
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
U.S. dollars
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Stock based compensation | ||||||||
| Inventory write-down | ||||||||
| Changes in fair value of derivative liabilities | ( | ) | ||||||
| Loss from exchange differences on cash and cash equivalents | ||||||||
| Finance (incomes) expenses | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables, net | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Operating lease right-of use asset | ||||||||
| Trade payables | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in short term deposits | ( | ) | ( | ) | ||||
| Change in restricted deposit | ( | ) | ( | ) | ||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from exercise of series A warrants | ||||||||
| Issuance of ordinary shares and prefunded warrants, net of issuance costs (Note 8D) | ||||||||
| Net cash from financing activities | ||||||||
| Effect of exchange rate changes on cash, cash equivalents | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
6
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS: | ||||||||
| Cash received from interest | ||||||||
| Supplemental disclosure of non-cash investment and financing activities: | ||||||||
| Derivative warrants liabilities exercised into ordinary shares | ||||||||
| Derivative warrants liabilities classified to equity | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
7
PARAZERO TECHNOLOGIES LTD.
Note 1 – General
| A. | PARAZERO TECHNOLOGIES LTD. (the “Company”) was incorporated in Israel on |
| B. | The Company’s ordinary shares began trading on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “PRZO” on July 27, 2023, following its initial public offering transaction. |
| C. | The Company is in its early commercialization stage and has not yet generated significant revenue to date. The Company has funded its operations substantially through issuances of its equity securities in public and private offerings. As of June 30, 2026, the Company had $ Considering the above, the Company’s management currently estimates that based on its operating plan, its cash position, together with anticipated revenue from existing customers pursuant to existing purchase orders, as well as projected revenue from new customers, will be sufficient to fund its current operations and satisfy its obligations through at least the next 12 months from the date of issuance of these financial statements. |
8
PARAZERO TECHNOLOGIES LTD.
Note 2 – Basis for Presentation and Significant Accounting Policies
| A. | Basis for Presentation |
The Company’s accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements.
The condensed interim financial statements reflect all adjustments considered necessary for a fair presentation of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature.
These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2025 and notes thereto that are included in the Company’s Form 20-F, filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2026. The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2026.
| B. | Significant Accounting Policies |
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.
| C. | Recent Accounting Pronouncements |
Recent accounting pronouncements are identical to those presented in the latest annual financial statements, except for the following:
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in ASU 2025-11 are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2025-11 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and related disclosures
9
PARAZERO TECHNOLOGIES LTD.
Note 3 – Other Current Assets:
| June 30 | December 31 | |||||||
| 2026 | 2025 | |||||||
| Governmental institutions | ||||||||
| Prepaid expenses | ||||||||
| Advance to suppliers | ||||||||
| Income receivable | ||||||||
| Other current assets | ||||||||
Note 4 – Restricted Deposits:
The restricted deposits consist of funds
that are contractually restricted as to usage or withdrawal due to guarantees made with regard to lease payments for the Company’s
office space. The bank deposit bears an annual interest rate of
Note 5 – Leases:
On February 1, 2024, the Company entered
into a three-year lease agreement commencing on March 15, 2024 (the “Lease Agreement”), to move its corporate headquarters,
including the offices and research and development facility, to 1 Hatahana Street, Menivim Tower, Kfar Saba 4453001 Israel where it occupies
approximately
On June 17, 2026 the Company extended the lease for an additional one and a half years and has an option to extend the lease for an additional one and a half years (which are not included in the measurement of the lease).
In addition, on July 6, 2025, the Company
entered into a three-year lease agreement to lease a vehicle. The monthly aggregate rental payment is approximately NIS
The Company’s lease expenses (building and vehicle) were as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Lease expense (building and vehicle) | $ | $ | ||||||
Other information related to the building leases as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term — operating leases (years) | ||||||||
| Weighted-average discount rate — operating leases (%) | ||||||||
10
PARAZERO TECHNOLOGIES LTD.
Other information related to the vehicle leases as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term — operating leases (years) | ||||||||
| Weighted-average discount rate — operating leases (%) | ||||||||
Undiscounted maturities of operating lease payments are summarized as follows:
| June 30, 2026 | ||||
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| Total undiscounted cash flows | $ | |||
| Imputed interest | $ | ( | ) | |
| Operating lease liabilities | $ | |||
Note 6 – Other Current Liabilities:
| June 30 | December 31 | |||||||
| 2026 | 2025 | |||||||
| Employees, salaries and related liabilities | ||||||||
| Deferred Revenue (1) | ||||||||
| Warranty provision | ||||||||
| Advances from customers | ||||||||
| Accrued expenses | ||||||||
| Other payables | ||||||||
(1)
| June 30 | December 31 | |||||||
| 2026 | 2025 | |||||||
| Balance at the beginning of the period | ||||||||
| Deferred revenue relating to new sales | ||||||||
| Revenue recognized during the period | ( | ) | ( | ) | ||||
| Balance at the end of the period | ||||||||
Remaining Performance Obligations (“RPO”)
represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be recognized as
revenue in future periods. As of June 30, 2026, the total RPO amounted to $
11
PARAZERO TECHNOLOGIES LTD.
Note 7 – Derivatives Warrant Liabilities:
Private Placement Warrants
The Company issued pre-funded warrants,
series A warrants and series B warrants as part of the PIPE (as defined in Note 8.B below) in October 2023. The pre-funded warrants and
series B warrants have been fully exercised. As of December 31, 2025,
On January 5, 2026, the Company completed
an equity financing that triggered the final adjustment to the exercise price of the series A warrants pursuant to their down-round reset
provision. Following such adjustment, the exercise price of the Series A warrants was fixed at $
The fair value of the series A warrants as of January 4, 2026 was calculated using the Black–Scholes option price model, based on a probability of an adjustment event and using the following assumptions:
| June 30, 2026 |
December 31, 2025 |
|||||||
| Expected volatility (%) | % | % | ||||||
| Risk-free interest rate (%) | % | % | ||||||
| Expected Life (years) | ||||||||
| Value per share | $ |
$ |
||||||
| Exercise price (U.S. dollars per share) | $ | $ |
$ | $ |
||||
The following table sets forth the changes in the number of outstanding series A warrants during the six months ended June 30, 2026:
| Balance as of December 31, 2025 | ||||
| Exercise of warrants | ||||
| Balance as of January 4, 2026 and as of June 30 2026 |
The following table sets forth the fair value changes of the series A warrants:
| Balance as of December 31, 2025 | ||||
| Change in fair value | ||||
| Balance as of January 4, 2026 | ||||
| Classification to equity | ( | ) | ||
| Balance as of June 30, 2026 |
12
PARAZERO TECHNOLOGIES LTD.
Note 8 – Shareholders’ Equity:
| A. | Initial public offering (the “IPO”) |
| On July 31, 2023, the Company closed an initial public offering of its ordinary shares (the “IPO”). The Company issued and sold |
| B. | Private investment |
| On October 30, 2023, the Company raised gross proceeds of approximately $
During 2023, certain warrant holders exercised
During January and February 2024, certain warrant holders exercised
During December 2024, certain warrant holders exercised
As of December 31, 2024, the pre-funded warrants and series B warrants have been exercised in full.
During January 2025, certain warrant holders exercised
As of June 30, 2026, there were |
| C. | Form F-3 (the “Form F-3”) | |
| On August 9, 2024, the Company filed a Shelf Registration Statement on Form F-3 (the “Form F-3”) with the SEC for the registration under the Securities Act of 1933, as amended, of such indeterminate number of ordinary shares, warrants to purchase ordinary shares, and units, in one or more offerings for an aggregate initial offering price of up to $ |
13
PARAZERO TECHNOLOGIES LTD.
| D. | Registered direct offering - February 13, 2025 |
| On February 13, 2025, the Company closed a registered direct offering utilizing the Form F-3. The Company issued and sold |
| E. | Registered direct offering - August 4, 2025 | |
| On August 4, 2025, the Company closed a registered direct offering utilizing Form F-3. The Company issued and sold |
| F. | Registered direct offering - January 5, 2026 | |
| On January 5, 2026, the Company completed a registered direct offering utilizing the Form F-3. The Company issued and sold |
| G. | Registered direct offering – January 12, 2026 | |
| On January 12, 2026, the Company completed a registered direct offering utilizing the Form F-3. The Company issued and sold |
| H. | Registered direct offering – March 24, 2026 | |
| On March 24, 2026, the Company completed a registered direct offering utilizing the Form F-3. The Company issued and sold |
| I. | Equity Warrants |
During April 2024, certain consultants
exercised
As of June 30,2026, the remaining outstanding equity warrants are summarized in the table below:
| Issuance date | In connection with | Expiration date | No. of warrants issued | Exercise price per share | No. of Ordinary shares underlying warrants | |||||||||||
| 2022* | $ | |||||||||||||||
| 2023 | $ | |||||||||||||||
| 2023 | $ | |||||||||||||||
| 2023 | $ | |||||||||||||||
| * |
14
PARAZERO TECHNOLOGIES LTD.
| F. | Stock-based Compensation |
The Company’s Global Share Incentive Plan (2022) (the “Plan”) was adopted by Company’s Board of Directors (the “Board”) on March 28, 2022. The Plan provides for the grant of options to purchase ordinary shares, restricted share units representing ordinary shares and ordinary shares (collectively, the “Awards”) to the Company’s employees, officers, directors, advisors and consultants in order to promote a close identity of interests between those individuals and us.
On February 19, 2025, the Company’s
pool of shares under the Plan was increased by
On June 1, 2026, the Company’s
pool of shares under the Plan was increased by
As of June 30, 2026, the total number
of ordinary shares reserved for issuance under existing awards granted under the Plan was
For the six months ended June 30, 2026,
the Board approved the grant of an aggregate of
A summary of the stock option activity for the six months ended June 30, 2026 is as follows:
| Number of Options | Weighted Average Exercise Price | |||||||
| Options outstanding as of December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Forfeited | ( | ) | $ | |||||
| Options outstanding as of June 30, 2026 | $ | |||||||
| Options exercisable as of June 30, 2026 | $ | |||||||
As of June 30, 2026, the Company had
As of June 30, 2026, the unrecognized
compensation cost related to all unvested options is $
As of June 30, 2026, the intrinsic value
of the outstanding and exercisable options was
The Company used the Black-Scholes option-pricing model to determine the fair value of options granted during 2023 - 2026. The following assumptions were applied in determining the options’ fair value on their grant date:
| 2026 | 2025 | |||||
| Risk-free interest rate | % | % | ||||
| Expected option term (years) | ||||||
| Expected share price volatility |
| G. | Restricted Share Units Grant |
On March 1, 2026, the Board approved
the grant of an aggregate of
15
PARAZERO TECHNOLOGIES LTD.
The Company calculates the fair value of RSUs based on the fair value on the closing trading price of the underlying shares at the date of grant. Each RSU vests based on continued service to the Company, between 12 – 36 months. The grant date fair value of the award is recognized as stock-based compensation expense over the requisite service period.
The fair value of this grant was $
A summary of the RSUs activity for the six months ended June 30, 2026 is as follows:
| Amount of RSUs | Weighted Average Grant date Fair |Value per Share | |||||||
| Outstanding as of December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Forfeited | ||||||||
| Vested | ( | ) | $ | |||||
| Unvested and Outstanding as of June 30, 2026 | $ | |||||||
Note 9 – Commitments and Contingencies
| A. | Israel Innovation Authority |
The Company has received royalty-bearing
grants from the Israel Innovation Authority (the “IIA”), for approved research and development projects. The programs include
grants for: wages, materials, subcontractors and miscellaneous. The Company is required to pay royalties at the rate of
As of December 31, 2019, the research
and development projects funded by the IIA were completed. The total amount of the IIA grant received was $
As of June 30, 2026, the maximum
obligation with respect to the grants received from the IIA, including accrued interest, contingent upon entitled future sales, is $
When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. There is no certainty that the Company would obtain such approvals.
16
PARAZERO TECHNOLOGIES LTD.
| B. | Liens |
The Company’s long-term restricted
deposits held in a bank in the amount of NIS
| C. | Legal proceedings |
The Company filed a claim against a customer (the “Customer”) in connection with an alleged breach of a consulting and development services agreement entered into in September 2024. The Company alleges that it completed the first two milestones under the agreement, including regulatory research, technical testing, and the presentation of an implementation solution, and that the Customer subsequently terminated the engagement and failed to pay the agreed consideration for the services rendered.
The Customer filed a statement of defense and counterclaim against the Company, alleging, among other things, that the Company failed to fulfill its obligations under the agreement and made misrepresentations regarding its expertise. The counterclaim seeks reimbursement of amounts previously paid to the Company, as well as compensation for alleged lost business opportunities and impairment of the Customer’s value.
The Company’s management is of the opinion that the claim has no merits and intends to vigorously defend its case.
Given the early stage of the proceedings, the Company is unable to determine the likelihood of an adverse outcome or reasonably estimate any potential loss, if any, associated with the matter.
NOTE 10 – SEGMENT REPORTING
Segment information is prepared
on the same basis that the chief executive officer, who is the Company’s chief operating decision maker, manages the business, makes
business decisions and assesses performance. The Company has
The chief executive officer assesses performance for this segment and decides how to allocate resources based on operating expenses excluding non-cash items and net loss. The measure of segment assets is reported on the balance sheet as cash and cash equivalents. The chief executive officer performs the assessment of segment performance by using the reported measure of segment profit or loss to monitor budget versus actual results.
The table below summarizes the significant expense categories regularly reviewed by the chief operating decision maker for the periods ended June 30, 2026 and June 30, 2025:
| June 30 | June 30 | |||||||
| 2026 | 2025 | |||||||
| Sales | ||||||||
| Cost of Sales (*) | ||||||||
| Payroll and payroll related | ||||||||
| Others | ||||||||
| Research and Development expenses (*) | ||||||||
| Payroll and payroll related | ||||||||
| Material, subcontractors, consultants and other | ||||||||
| Selling and Marketing expenses (*) | ||||||||
| Payroll and payroll related | ||||||||
| Professional services, tradeshows and others | ||||||||
| General and Administrative expenses (*) | ||||||||
| Payroll and payroll related | ||||||||
| Professional services and Facility related and other | ||||||||
| Other segment items: (*) | ( | ) | ||||||
| Net loss | ||||||||
| (*) |
Note 11 – Subsequent Events
| A. | No subsequent events occurred. |
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Exhibit 99.2
PARAZERO TECHNOLOGIES LTD.’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2026
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Form 6-K and our Annual Report on Form 20-F for the year ended December 31, 2025 (the “Annual Report”).
Unless the context requires otherwise, the terms “ParaZero,” “we,” “us,” “our,” “the Company,” and similar designations refer to ParaZero Technologies Ltd. References to “ordinary shares”, “warrants” and “share capital” refer to the ordinary shares, warrants and share capital, respectively, of ParaZero.
References to “U.S. dollars” and “$” are to currency of the United States of America. References to “ordinary shares” are to our ordinary shares, par value NIS 0.02 per share. Our financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate our expected results for any future periods.
Forward Looking Statements
Certain information included or incorporated by reference in this Report on Form 6-K may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” or other similar words, but are not the only way these statements are identified.
These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Important factors that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below:
| ● | our limited operating history; |
| ● | our current and future capital requirements and our belief that our existing cash will be sufficient to fund our operations for more than one year from the date that the financial statements are issued; |
| ● | our ability to obtain necessary regulatory approvals from governmental agencies, or limitations put on the use of small unmanned aerial systems (“UASs”) in response to public privacy concerns; |
| ● | our ability to manufacture, market and sell our products and to generate revenues; |
| ● | our ability to maintain our relationships with key partners and grow relationships with new partners; |
| ● | our ability to maintain or protect the validity of our U.S. and other patents and other intellectual property; |
| ● | our ability to launch and penetrate markets in new locations and new market segments; |
| ● | our ability to retain key executive members and hire additional personnel; |
| ● | our ability to maintain and expand intellectual property rights; |
| ● | interpretations of current laws and the passages of future laws; |
| ● | our ability to achieve greater regulatory compliance needed in existing and new markets; |
| ● | the overall demand for drone safety systems and counter unmanned aerial systems; |
| ● | our ability to achieve key performance milestones in our planned operational testing; |
| ● | our ability to establish adequate sales, marketing and distribution channels; |
| ● | acceptance of our business model by investors; |
| ● | changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements and the impact of such policies on us, our customers and suppliers, and the global economic environment |
| ● | the fact that we conduct business in multiple foreign jurisdictions, exposing us to foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic instability in each jurisdiction; |
| ● | adverse federal, state and local government regulation, in the United States, Europe or Israel and other foreign jurisdictions; |
| ● | our ability to maintain the listing of our ordinary shares on The Nasdaq Capital Market |
| ● | security, political and economic instability in the Middle East that could harm our business, including due to the current security situation in Israel; and |
| ● | those factors referred to under the headings “Risk Factors” and “Operating and Financial Review and Prospects” in our Annual Report, as well as in our Annual Report generally. |
These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in the Annual Report in greater detail under the heading “Risk Factors” and elsewhere in the Annual Report. You should not rely upon forward-looking statements as predictions of future events.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Report on Form 6-K.
Risk Factors
There are no material changes to the risk factors previously disclosed in our Annual Report on Form 20-F for the year ended December 31, 2025.
2
Operating Results.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and the related notes included in our Annual Report, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2026, included elsewhere in this Report on Form 6-K. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties.
The following financial data in this narrative are expressed in U.S. dollars, except as otherwise noted.
Overview
ParaZero Technologies Ltd. is an Israel-based aerospace and defense technology company focused on safety, protection, and mitigation solutions for unmanned aerial systems, or UAS. We were founded in 2014 with the objective of enabling the safe and scalable integration of drones into regulated airspace and sensitive operational environments.
Our technological foundation is rooted in aerospace-grade engineering, autonomous safety mechanisms, and real-time flight monitoring systems. Since our inception, we have focused on addressing one of the key barriers to drone adoption: the risk posed to people, property, and critical infrastructure in the event of system failure or loss of control.
Over time, we have developed a portfolio of proprietary technologies designed to autonomously respond to emergency scenarios. This legacy of safety-centric design, operational data, and field deployment experience has positioned us to expand beyond commercial applications into defense and security-oriented markets, applying the same patent technology to create counter-UAS, or C-UAS solutions, also known as anti-drone solutions.
The rapid adoption of UAS technologies in recent years has also introduced significant security challenges. UAS technology is now easily accessible not only to militaries around the world but also to non-state entities, criminal organizations, and individuals with malicious intent.
After years of saving numerous unmanned and manned aerial systems, we applied our innovative, patent-protected technology in order to lead the battle against hostile drones. We believe that our technology solutions leverage a distinct technology portfolio protected by global patents that were developed over the course of more than a decade. We believe that this technology portfolio enables us to effectively counteract various threats posed by drones by rapidly developing bespoke C-UAS solutions for key clientele. Recent international conflicts have highlighted the extensive use of drones in various attacks and the critical necessity to counteract these strikes promptly with minimal damage as well as deliver critical supplies in high-risk operational zones. We have commenced development of dedicated solutions based on our technology.
Recent Commercial Milestones
During the six months ended June 30, 2026, and subsequent thereto, we continued to expand the commercial adoption of our DefendAir™ counter-UAS solutions across defense, security, and critical infrastructure markets.
In January 2026, we received our first purchase order from a major Israeli defense entity for the DefendAir solution. During the same month, we expanded our European presence through a new reseller agreement and an initial DefendAir order from a second key NATO country, and secured an additional order from a major global defense corporation.
In February 2026, we received an additional DefendAir order from a second branch of an Israeli defense entity. The order included specialized net-launching systems, interception pods compatible with handheld, stationary and drone-mounted configurations, and a comprehensive training package designed to support operational readiness and deployment.
In March 2026, we received a new purchase order from an Israeli defense entity that included an evaluation kit, net pods, live exercises and training services to support rapid operational deployment and maximize readiness.
During April 2026, we secured multiple orders for DefendAir products, including an order valued at more than $650,000 from a Tier-1 international drone interception company, a follow-on order from an Israeli defense entity, and an additional follow-on order for DefendAir systems, including personal net launchers, net pods and training services.
3
In May 2026, we expanded our manufacturing capabilities and secured a full-scale production capacity to support increasing demand for DefendAir counter-drone systems.
In June 2026, we received our first DefendAir order from a U.S.-based Tier-1 defense corporation, entered into two new Israeli integration agreements for DefendAir net pods to be incorporated into autonomous counter-UAS platforms, and received an additional net pod order from a second business unit of a Tier-1 Israeli-based global defense company.
Subsequent to June 30, 2026, we continued to expand commercial adoption of DefendAir. In July 2026, we received a purchase order valued at more than $1 million from a U.S.-based customer, secured a follow-on order for an operational system protecting high-value assets and critical infrastructure, and received a net pod order from a third business unit of a Tier-1 Israeli-based global defense company. In August 2026, we received an initial DefendAir order from a Tier-1 European defense manufacturer for integration into an autonomous counter-UAS platform. Additionally, in August 2026, we announced that we received our first order, including DefendAir net launchers, Net Pods and a dedicated on-site training program to be delivered by our personnel, from a U.S. government entity, representing our first sale of DefendAir to a U.S. federal customer.
Recent Offerings
Registered Direct Offering – January 5 2026
On January 5, 2026, we closed a registered direct offering, or the First January 2026 RDO, with investors for the purchase and sale of (i) 850,000 of our ordinary shares and (ii) pre-funded warrants to purchase up to 650,000 ordinary shares at a purchase price of $1 per ordinary share and $0.09999 per pre-funded warrant. The pre-funded warrants were immediately exercisable at an exercise price of $0.00001 per ordinary share, subject to adjustment as set forth therein, and will not expire until exercised in full. The aggregate gross proceeds from the First January 2026 RDO were approximately $1.5 million.
As of the date hereof, 650,000 pre-funded warrants issued in the First January 2026 RDO have been exercised in full into 650,000 ordinary shares. In connection with the First January 2026 RDO, we paid an aggregate of $100,000 in financial advisory fees.
Registered Direct Offering – January 12 2026
On January 12, 2026, we closed a registered direct offering, or the Second January 2026 RDO, with investors for the purchase and sale of (i)1,000,000 of our ordinary shares and (ii) pre-funded warrants to purchase up to 1,000,000 ordinary shares at a purchase price of $1 per ordinary share and $0.09999 per pre-funded warrant. The pre-funded warrants were immediately exercisable at an exercise price of $0.00001 per ordinary share, subject to adjustment as set forth therein, and will not expire until exercised in full. The aggregate gross proceeds from the Second January 2026 RDO were approximately $2.0 million.
As of the date hereof, 1,000,000 pre-funded warrants issued in the Second January 2026 RDO have been exercised in full into 1,000,000 ordinary shares. In connection with the Second January 2026 RDO, we paid an aggregate of $100,000 in financial advisory fees.
Registered Direct Offering – March 2026
On March 24, 2026, we closed a registered direct offering, or the March 2026 RDO, with investors for the purchase and sale of (i) 1,208,333 of our ordinary shares and (ii) pre-funded warrants to purchase up to 4,125,000 ordinary shares at a purchase price of $0.75 per ordinary share and $0.74999 per pre-funded warrant. The pre-funded warrants are immediately exercisable at an exercise price of $0.00001 per ordinary share, subject to adjustment as set forth therein, and will not expire until exercised in full. The aggregate gross proceeds to us from the March 2026 RDO were approximately $4.0 million.
As of the date hereof, pre-funded warrants to purchase 4,125,000 ordinary shares issued in the March 2026 RDO have been exercised in full on a cashless basis into 4,124,949 ordinary shares. In connection with the March 2026 RDO, we paid an aggregate of $280,000 in placement agent fees and reimbursed the placement agent’s actual out-of-pocket expenses up to $50,000.
4
Impact of the War in Israel
In October 2023, Israel was attacked by a terrorist organization and entered a state of war on several fronts. In June 2025, in light of continued nuclear threats and intelligence assessments indicating imminent attacks, Israel launched a preemptive strike directly targeting military and nuclear infrastructure inside Iran, aimed at disrupting Iran’s capacity to coordinate or launch further hostilities against Israel, as well as to degrade its nuclear program. In response, Iran launched multiple waves of drones and ballistic missiles at Israeli cities. While most of these attacks were intercepted, several caused civilian casualties and damage to infrastructure. While a ceasefire was reached between Israel and Iran in June 2025 after 12 days of hostilities, on February 28, 2026, the United States and Israel launched coordinated military strikes against Iran, including attacks on strategic military infrastructure and leadership targets, with the stated aim of degrading Iran’s capacity to conduct or support hostile operations against them. In response, Iran has fired missiles and drones toward population centers and military installations in Israel, Europe and neighboring countries in the Gulf region, and also launched counter-strikes against U.S. forces and allied bases throughout the Gulf region. Although the United States and Iran have announced ceasefire and de-escalation arrangements from time to time, including a memorandum of understanding entered into on June 17, 2026 that contemplates the termination of military operations on multiple fronts, hostilities have resumed and may continue or escalate. A broader regional conflict involving additional state and non-state actors remains a significant risk. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. These situations may potentially escalate in the future to more violent events which may affect Israel and us. Our operations have not been adversely affected by this situation, and we have not experienced disruptions to our business operations. However, the intensity and duration of the current security situation in Israel is difficult to predict at this stage, as are such war’s economic implications on our business and operations and on Israel’s economy in general.
We are closely monitoring the developments of this war. See “Item 3.D Risk Factors— Risks Related to Our Incorporation, Location and Operations in Israel– Our headquarters, research and development and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel including the recent war with Hamas and other terrorist organizations from the Gaza Strip.” in the Annual Report for additional information.
Components of Operating Results
Sales
Revenue is recognized when (or as) control of the promised goods or services is transferred to the customer, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. The Company follows five steps to record revenue: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies its performance obligations.
Performance obligations are satisfied over time if one of the following criteria is met: (a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance; (b) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (c) the Company’s performance does not create an asset with an alternative use for the Company and the Company has an enforceable right to payment for performance completed to date. If a performance obligation is not satisfied over time, a Company satisfies the performance obligation at a point in time.
The Company’s revenues consist mainly of sales of drone safety systems and counter-UAS net-launching platforms (“products”) with a one-year warranty, directly to system manufactures, resellers and an online store.
The Company recognizes revenue from the sale of products at the point of time when control is transferred to its customers. Once the products have been physically delivered to the agreed location, the Company no longer has physical possession but has a present right to receive payment without retaining any significant risks or benefits.
5
The products include warranties that require the Company to either replace or repair defective products during the warranty period if the products fail to comply with their described specifications. Such warranties are not accounted for as separate performance obligations and hence no revenue is allocated to them. Instead, a provision is made for the costs of satisfying the warranties.
The Company assesses the performance obligations in its contracts. Contracts consisting of supply of products and/or design services were identified as having a single performance obligation that is satisfied once the product is delivered to the customer
Revenues from development and customization contracts in which the performance obligation is satisfied over time are recognized over the duration of contract and commensurate with the progress of services. The Company measures the progress of services using the input method, based on the effort expended relative to the estimated total effort to satisfy the performance obligation.
Cost of Sales
Cost of sales consists primarily of expenses related to the purchase of materials of products sold, salary and related. It also consists of write down charges of obsolete inventory items, warranty on product sold and royalties to the Israel Innovation Authority (“IIA”) on sales.
The Government of Israel, through the IIA, encourages research and development projects by providing grants. We may receive grants from the IIA at the rates that range from 20% to 50% of the research and development expenses, as prescribed by the research committee of the IIA. Our research and development efforts relating to our product have been financed in part through royalty-bearing grants in an aggregate amount of approximately $738,000 received from the IIA, as of June 30, 2026, none of which were received during the six months ended June 30, 2026. As of the same date, our contingent liabilities regarding IIA grants received by us were in an aggregate amount of approximately $575,000. With respect to the royalty-bearing grants we are committed to pay royalties at a rate of 3% to 3.5% on sales proceeds from our products that were developed in whole or in part using these IIA grants. For information regarding our obligations in connection with the grants received from the IIA under the Israeli Encouragement of Research, Development and Industrial Initiative Technology Law, 5744-1984, as amended, and related regulations, or the Research Law, see “Government Grants and Related Royalties” below.
Operating expenses
Our current operating expenses consist of three components: (i) research and development expenses; (ii) sales and marketing expenses and (iii) general and administrative expenses. Labor costs are the most significant component of operating expenses and consist of salaries including benefits.
Research and development expenses
Research and development expenses consist primarily of labor costs, subcontractors, advisors, material and costs associated with patent-related expenses. Costs are expensed as they are incurred.
We anticipate that our research and development expenses will increase in the future as we increase our development headcount and infrastructure to support our continued research and development programs and the potential commercialization of our products.
6
Sales and marketing expenses
Sales and marketing expenses consist primarily of labor costs and consultants.
General and administrative expenses
General and administrative expenses consist primarily of labor costs, professional service fees and facilities.
As a public company whose ordinary shares are listed in the United States, we incur significant expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance premiums, director compensation, and other costs associated with being a public company.
Finance income and expenses
Finance income consists of interest received on short term deposits and finance expenses consist of changes in fair value of derivative warrant liability, and other finance expenses and income which mainly included currency exchange rate differences and bank charges.
Income Taxes
We have yet to generate taxable income in Israel. As of June 30, 2026, our net operating loss carry forwards for tax purposes were approximately $37.4 million. We anticipate that we will continue to generate losses for the foreseeable future and that we will be able to carry forward these losses for tax purposes indefinitely to future taxable years. Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses.
Results of Operations
Our results of operations have varied in the past and can be expected to vary in the future due to numerous factors. We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance.
Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
Results of Operations
| Six months ended June 30, | ||||||||
| (in USD, except share and per share data) | 2026 | 2025 | ||||||
| Statements of Operations Data: | ||||||||
| Sales | 1,057,210 | 357,979 | ||||||
| Cost of sales | (676,834 | ) | (431,888 | ) | ||||
| Gross profit | 380,376 | (73,909 | ) | |||||
| Research and development expenses | (962,705 | ) | (1,155,436 | ) | ||||
| Sales and marketing expenses | (1,078,616 | ) | (752,420 | ) | ||||
| General and administrative expenses | (2,346,778 | ) | (1,670,513 | ) | ||||
| Operating loss | (4,007,723 | ) | (3,652,278 | ) | ||||
| Change in fair value of derivative warrant liabilities | (526,930 | ) | (1,253,042 | ) | ||||
| Other finance income, net | 198,818 | 103,281 | ||||||
| Net loss and comprehensive loss | (4,335,835 | ) | (2,295,955 | ) | ||||
| Basic and diluted loss per share | (0.17 | ) | (0.14 | ) | ||||
| Weighted average number of shares outstanding used in computing basic and diluted loss per share | 24,915,975 | 16,018,334 | ||||||
Sales
Sales increased by $699,231, or 195.3%, to $1,057,210 for the six months ended June 30, 2026, compared to $357,979 for the six months ended June 30, 2025. This increase was mainly attributed to the company shifting towards sales of newly developed products, mainly in the defense sector, and original equipment manufacturer integrations in the commercial market that contributed to a higher volume of sales.
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Cost of sales
Cost of sales increased by $244,946, or 56.7%, to $676,834 for the six months ended June 30, 2026, compared to $431,888 for the six months ended June 30, 2025. The increase was mainly due to the increase of sold units and improved gross margin during the six months ended June 30, 2026.
Gross Profit
Gross profit (revenue less costs of sales) increased by $454,285 to $380,376 for the six months ended June 30, 2026, compared to $(73,909) for the six months ended June 30, 2025. Gross margin was 36% for the six months ended June 30, 2026, an increase of 56.6 % from a negative gross margin of 20.6% for the six months ended June 30, 2025. This increase in gross margin resulted primarily from the growth in revenue from new sales generated in the defense sector at a rate that exceeded the increase in cost of sales, reflecting improved operating leverage and a more favorable cost structure.
Research and Development Expenses
Research and development expenses decreased by $192,732, or 16.7%, to $962,704 for the six months ended June 30, 2026, compared to $1,155,436 for the six months ended June 30, 2025. The decrease resulted mainly from labor costs due to the decreased number of employees and consultants’ costs in the amount of $116,596.
Selling and marketing expenses
Our selling and marketing expenses increased by $321,196, or 43.4%, to $1,078,616 for the six months ended June 30, 2026, compared to $752,420 for the six months ended June 30, 2025. The increase resulted mainly from labor costs of $228,133 and by an increase in travel and conferences participation costs of $92,232.
General and administrative expenses
Our general and administrative expenses increased by $676,265, or 40.5%, to $2,346,778 for the six months ended June 30, 2026, compared to $1,670,513 for the six months ended June 30, 2025. The increase resulted mainly from labor cost of $113,866, directors fess $141,988 and non-cash expenses of $320,946 related to grants pursuant to our equity incentive plan.
Change in fair value of derivative warrant liabilities
In connection with our private placement in October 2023, we issued warrants that are classified as liabilities and were measured at fair value upon issuance and revalued as of June 30, 2026. Non-cash expenses of $526,930 were recorded as the change in fair value for the six months ended June 30, 2026, reflecting the change in the fair value of the outstanding warrants during the period.
Other finance income, net
Other finance income, net for the six months ended June 30, 2026, was $198,818 out of which $156,620 was interest income on short term deposits and $47, was foreign exchange income related to the remeasurement of a NIS-denominated lease asset, partly offset by bank fees and other non-cash expenses of $5,276, compared to finance income, net of $103,281 for the six months ended June 30, 2025, out of which $127,596 was interest income on short term deposits, partly offset by bank fees and other non-cash expenses of $24,315.
Net loss and comprehensive loss
Net loss and comprehensive loss increased by $2,039,880, or 88.8%, to $4,335,835 for the six months ended June 30, 2026, compared to a net loss of $2,295,955 for the six months ended June 30, 2025. The increase was primarily attributable to an unfavourable year-over-year change in the fair value of derivative warrant liabilities, from income of $1,253,042 in the prior-year period to an expense of $526,930 in the current period, as well as a $317,240 increase in expenses related to grants under the Company’s equity incentive plan, from $511,818 in the prior-year period to $829,058 in the current period.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s). A comprehensive discussion of our critical accounting policies is disclosed in our Annual Report, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2025, included elsewhere in this Report Form 6-K.
Liquidity and Capital Resources.
Overview
We are in our early commercialization stage and do not generate significant revenue in this stage. Therefore, we have suffered recurring losses from operations and negative cash flows from operations since inception. Our operations have been funded substantially through issuances of our equity securities in public and private offerings, including in our initial public offering in July 2023, our private placement in October 2023, our registered direct offerings in February 2025, August 2025, January 2026 and March 2026, loans from related parties, SAFEs and government grants for research and development projects received from the IIA. Considering the above, management expects that it will require additional financing in the future to fund its operations until it has generated significant revenues. As of June 30, 2026, we had approximately $7.8 million in cash, cash equivalents and short-term deposits.
We expect that our existing cash and cash equivalents as of June 30, 2026, together with anticipated revenue from existing customers pursuant to existing purchase orders, as well as projected revenue from new customers, will be sufficient to fund our current operations and satisfy our obligations for the next twelve months.
Our main expense over this period will be hiring more employees and other expenses associated with being a public company. We intend to evaluate our expenses during this period to determine whether we will need additional financing.
We expect that we will require additional capital to develop our next generation flight computer including algorithm optimization, artificial intelligence layer development and optical sensors input integration, as well as to commercialize our new product. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | our ability to market and sell our products and to generate revenues; |
| ● | the progress and costs of our research and development activities; |
| ● | the costs of manufacturing our products; |
| ● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
| ● | the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and |
| ● | the magnitude of our general and administrative expenses. |
Until we can generate significant recurring revenues and profit, we expect to satisfy our future cash needs through debt or equity financings, through the utilization of our current financial resources and sales of our products. We cannot be certain that additional funding will be available to us when needed, on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for commercialization efforts with respect to our products.
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The table below presents our cash flows for the periods indicated:
| Six months ended June 30, | ||||||||
| (in USD) | 2026 | 2025 | ||||||
| Operating activities | (2,950,112 | ) | (3,069,751 | ) | ||||
| Investing activities | (3,540,891 | ) | (2,529,181 | ) | ||||
| Financing activities | 6,588,577 | 3,791,288 | ||||||
| Net increase (decrease) in cash and cash equivalents | 90,574 | (1,813,284 | ) | |||||
Operating Activities
Net cash used in operating activities during the six months ended June 30, 2026 was $2,950,112. Net cash used in operating activities during the six months ended June 30, 2025 was $3,069,751. The level of cash used in operating activities remained generally consistent between periods.
Investing Activities
Net cash used in investing activities increased by $1,011,710 to $3,540,891 for the six months ended June 30, 2026, compared to $2,529,181 for six months ended June 30, 2025. With respect to the increase, $1,029,529 was invested in short term bank deposits partially offset by $15,202 which was used to purchase computers, general equipment and office equipment and $2,617 which was used to increase existing long-term restricted deposit, pledged as security in respect of guarantees granted by the bank to the Company’s landlords pursuant to the Company’s new lease agreement for its corporate offices and headquarters.
Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2026 was $6,588,577, which consisted of funds received from issuance of ordinary shares and pre-funded warrants, net of issuance costs in registered direct offerings completed in January 2026 and March 2026, in an aggregate amount net of issuance costs of $6,588,577. Net cash provided by financing activities during the six months ended June 30, 2025 was $3,791,288, which consisted of funds received from issuance of ordinary shares and pre-funded warrants, net of issuance costs in registered direct offering completed in February 2025, in an aggregate amount net of issuance costs of $2,532,495 and proceeds from exercise of series A warrants of $1,258,793 issued in our private placement in October 2023.
Government Grants and Related Royalties
We have developed drone safety systems, at least in part, with funds from IIA grants, and, accordingly, we would be obligated to pay these royalties on sales of the aforementioned products. Below is a description of our obligations in connection with the grants received from the IIA under the Research Law:
Local Manufacturing Obligation
As long as the manufacturing of our product candidates takes place in Israel and no technology funded with IIA grants is sold or out licensed to a non-Israeli entity, the maximum aggregate royalties paid would generally be up to the total amount of grants received, linked to the U.S. dollar and bearing interest. Until December 31, 2023, the interest was calculated at a rate based on an annual application of the LIBOR, applicable to U.S. dollar deposits, however, pursuant to the latest IIA regulations, as of January 31, 2024, IIA grants received after June 30, 2017, shall bear interest calculated at a rate based on an annual application of the SOFR, or at an alternative rate published by the Bank of Israel, plus approximately 0.72%.
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We believe that this change would not have material impact on our results or our financial position.
Further, when a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. We may not receive those approvals. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel.
Under the terms of the Research Law, the products may be manufactured outside of Israel by us or by another entity only if prior approval is received from the IIA (such approval is not required for the transfer of up to 10% of the manufacturing capacity in the aggregate, in which case a notice must be provided to the IIA and not be objected to by the IIA within 30 days of such notice).
Know-How Transfer Limitation
The Research Law restricts the ability to transfer know-how funded by the IIA outside of Israel. Transfer of IIA funded know-how outside of Israel requires prior approval of the IIA and may be subject to payments to the IIA, calculated according to formulae provided under the Research Law. The redemption fee is subject to a cap of six times the total amount of the IIA grants, plus interest accrued thereon (i.e. the total liability to the IIA, including accrued interest, multiplied by six). If we wish to transfer IIA funded know-how, the terms for approval will be determined according to the nature of the transaction and the consideration paid to us in connection with such transfer.
Approval of transfer of IIA funded know-how to another Israeli company may be granted only if the recipient abides by the provisions of the Research Law and related regulations, including the restrictions on the transfer of know-how and manufacturing rights outside of Israel.
Change of Control
Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of our share capital or voting rights, (ii) is entitled to appoint our directors or our chief executive officer or (iii) serves as one of our directors or as our chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.
Approval to manufacture products outside of Israel or consent to the transfer of IIA funded know-how, if requested, is within the discretion of the IIA. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer IIA funded know-how or manufacturing out of Israel.
The consideration available to our shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA.
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Exhibit 99.3
ParaZero Reports Strong First Half 2026 Results with 195% Sales Growth and Expanding DefendAir Commercial Momentum
Sales Nearly Triple Year-Over-Year and Surpass Full-Year 2025 Levels; Gross Margin Improves from a negative 20.6% to 36% with Multiple Orders from Israeli, U.S., and European Customers
KFAR SABA, Israel, Aug. 26, 2026 (GLOBE NEWSWIRE) -- ParaZero Technologies Ltd. (Nasdaq: PRZO) (the “Company” or “ParaZero”), an aerospace defense company pioneering smart, autonomous solutions for the global manned and unmanned aerial systems (UAS) industry, reported today its financial results for the six months ended June 30, 2026, and provided an update on its commercial progress.
First Half 2026 Financial Highlights
| ● | Sales increased approximately three-fold by 195.3% to $1,057,210 for the six months ended June 30, 2026, compared to $357,979 in the same period of 2025. This already exceeds the Company’s full-year 2025 sales of $1,046,664. Growth was driven primarily by the shift toward newly developed defense-sector products and original equipment manufacturer (OEM) integrations. |
| ● | Gross profit turned positive at $380,376, compared to a gross loss of $73,909 in the prior-year period, with gross margin improving significantly to 36% for the six months ended June 30, 2026 from a negative 20.6% in the same period of 2025, reflecting improved operating leverage from higher-margin defense sales. |
| ● | Operating expenses increased, resulting in an operating loss of $4,007,723 compared to $3,652,278 in the prior-year period. The increase was primarily driven by higher sales and marketing expenses and general and administrative costs, offset by a 16.7% decrease in research and development, primarily due to efficiencies in labor and consulting costs. |
| ● | Net loss increased to $4,335,835 for the six months ended June 30, 2026, compared to $2,295,955 in the same period of 2025, primarly attributable to an unfavorable year-over-year change in the fair value of derivative warrant liabilities, from income of $1,253,042 in the prior-year period to an expense of $526,930 in the current period. |
| ● | As of June 30, 2026, the Company held approximately $7.8 million in cash, cash equivalents and short-term deposits. |
Commercial Momentum in DefendAir™ Counter-UAS Solutions
During the six months ended June 30, 2026, and in the subsequent period, ParaZero continued to expand adoption of its DefendAir counter-UAS solutions across defense, security and critical infrastructure markets:
| ● | January 2026: Received first purchase order from a major Israeli defense entity; expanded European presence with a new reseller agreement and initial order from a customer in a key NATO country; secured an additional order from a major global defense corporation. |
| ● | February 2026: Received additional DefendAir order from a second branch of an Israeli defense entity, including specialized net-launching systems, interception pods (handheld, stationary and drone-mounted configurations) and a comprehensive training package. |
| ● | March 2026: Secured a new purchase order from an Israeli defense entity that included an evaluation kit, net pods, live exercises and training services. |
| ● | April 2026: Multiple orders, including an order valued at more than $650,000 from a Tier-1 international drone interception company, plus follow-on orders from Israeli defense entities for personal net launchers, net pods and training. |
| ● | May 2026: Expanded manufacturing capabilities and secured full-scale production capacity to support rising demand. |
| ● | June 2026: Received first DefendAir order from a U.S.-based Tier-1 defense corporation; entered two new Israeli integration agreements for DefendAir net pods into autonomous counter-UAS platforms; and received a net pod order from a second business unit of a Tier-1 Israeli-based global defense company. |
Recent Commercial Developments After June 30, 2026:
| · | In July 2026, the company received a purchase order valued at more than $1 million from a U.S.-based customer, a follow-on order for an operational system protecting high-value assets and critical infrastructure, and a net pod order from a third business unit of a Tier-1 Israeli global defense company. The deliveries are expected to commence in the fourth quarter of 2026 and continue over a period of 12–18 months. |
| · | In August 2026, the company received its first order for DefendAir from a U.S. government entity, representing the first sale of DefendAir to a U.S. federal customer. |
| · | In August 2026, the company received an initial DefendAir order from a Tier-1 European defense manufacturer for integration into an autonomous counter-UAS platform. |
“These results demonstrate meaningful commercial traction for our DefendAir solutions as demand for effective counter-drone capabilities continues to grow globally,” said Ariel Alon, Chief Executive Officer of ParaZero. “The combination of strong revenue growth, improved gross margins, and a broadening base of Tier-1 defense and security customers positions us well as we continue to scale manufacturing and pursue additional opportunities in key markets.”
About ParaZero Technologies
ParaZero Technologies Ltd. (Nasdaq: PRZO) is an aerospace defense company pioneering smart, autonomous solutions for the global manned and unmanned aerial systems (UAS) industry.
Founded in 2014 by aviation professionals and drone industry veterans, ParaZero develops intelligent, mission-ready technologies for defense and advanced aerial applications.
The Company’s DefendAir product family provides a controlled, non-explosive, net-based physical interception capability designed for integration across personal, mobile, autonomous and fixed-site Counter-UAS systems.
For more information, visit ParaZero https://parazero.com/
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act and other securities laws. Forward-looking statements contained in this press release include, but are not limited to, statements regarding ParaZero’s strategic and business plans, technology, relationships, objectives and expectations for its business, growth, the impact of trends on and interest in its business, intellectual property, products and its future results, operations and financial performance and condition and may be identified by the use of words such as “may,” “seek,” “will,” “consider,” “likely,” “assume,” “estimate,” “expect,” “anticipate,” “intend,” “believe,” “do not believe,” “aim,” “predict,” “plan,” “project,” “continue,” “potential,” “guidance,” “objective,” “outlook,” “trends,” “future,” “could,” “would,” “should,” “target,” “on track” or their negatives or variations, and similar terminology and words of similar import, generally involve future or forward-looking statements. For example, the Company is using forward-looking statements when it discusses its efforts to expand production capacity, and the potential for additional orders and customer growth in the defense and commercial markets and its expectation to commence deliveries in the fourth quarter of 2026 and on a continuous basis over a period of 12–18 months. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. For a more detailed description of the risks and uncertainties affecting the Company, reference is made to the Company’s reports filed from time to time with the Securities and Exchange Commission (“SEC”), including, but not limited to, the risks detailed in the Company’s Annual Report on Form 20-F filed with the SEC on March 26, 2026. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. ParaZero is not responsible for the content of third-party websites.
Investor Relations Contact:
Michal
Efraty
Investor Relations
michal@efraty.com