Safe Pro Group Inc. (NASDAQ: SPAI) announced a $1 million subcontract to supply AI‑powered edge‑processing systems to a U.S. government prime contractor. The award will support the company’s SPOTD platform, which uses machine‑learning and computer‑vision to analyze drone imagery and detect explosive threats, marking SPAI’s first government contract for its AI technology.
The subcontract was made possible by strategic investments from Ondas Inc. (NASDAQ: ONDS) and Unusual Machines Inc. (NYSE: UMAC). These investments underscore industry confidence in SPAI’s edge‑AI capabilities and provide the capital needed to move from development to low‑rate initial production (LRIP).
The LRIP phase is a common entry point for defense contracts and can lead to larger, full‑rate deployments. While the $1 million award is modest, it represents a foothold that could generate additional revenue streams and help offset the company’s current revenue shortfalls and high burn rate. The contract’s timing and scale also signal to potential customers that SPAI’s technology is ready for operational use.
Safe Pro Group’s financial context highlights the significance of this award. In 2024, the company reported revenue of $2.17 million, a 136.37% increase from $917,720 in 2023, but also recorded a loss of $7.43 million. In Q3 2025, revenue was $101 k, up 9.3% from the prior quarter, while operating losses widened to $5.0 million. The company’s gross margin improved to 41.8% in fiscal 2024, driven by higher‑margin aerial imaging services, but the margin slipped to 33.1% in Q3 2025. The new contract could provide a revenue boost that helps mitigate these losses and reduce cash burn.
Investors reacted negatively to the announcement, citing that the award is a subcontract rather than a direct prime contract and that the company has not disclosed a contract timeline, delivery schedule, or revenue recognition dates. The lack of immediate financial clarity dampened enthusiasm, even as the award validates SPAI’s technology in a high‑barrier market.
Dan Erdberg, Chairman and CEO of Safe Pro Group, said the company is proud of its growth in 2024 and highlighted the impact of its AI platform in Ukraine, where it located over 16,000 mines and explosive items. He added that the additional investment from Ondas “serves as further validation of our capabilities to leverage AI and drones to enhance soldier safety and humanitarian missions globally.” Eric Brock, Chairman and CEO of Ondas Holdings, noted that the investment reflects Ondas’ confidence in the growing role of AI and autonomy in defense and humanitarian operations worldwide.
The subcontract is a milestone that demonstrates market acceptance of SPAI’s edge‑AI solutions and could pave the way for larger government contracts. However, the company’s ongoing profitability challenges and high burn rate mean that the award’s financial impact will be incremental until a full‑rate deployment is secured. The event underscores the importance of clear contract terms and revenue timing for investors evaluating the company’s trajectory.
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