Letter to Shareholders
Dear Fellow Shareholders,
The first half of 2026 marks a pivotal moment in Cyberlux’s evolution.
Over the past several years, we have transformed Cyberlux from a small defense technology company into an integrated defense solutions platform serving U.S. and allied military customers across unmanned aircraft systems, tactical communications, and global integration services. That transformation has required significant investment, operational discipline, and perseverance. Today, I believe the most significant opportunities in our company’s history lie ahead of us.
While our first-quarter financial results do not fully reflect the strength of our business, they also do not tell the whole story.
Revenue in the quarter was affected by several temporary factors, including government funding disruptions, malicious litigation and coordinated social-media attacks that constrained our operating flexibility, and shifts in the timing of customer shipments. These headwinds affected reported results but did not diminish the strength of our customer relationships, our technology portfolio, our manufacturing capabilities, or the long-term demand environment supporting our business.
Today, those challenges are largely behind us.
We have substantially concluded the legal matters that occupied management for more than eighteen months, freeing our leadership team to focus entirely on executing the strategic plan. As we enter the second half of 2026, we do so with approximately $15.4 million in firm backlog and $35.5 million in near-term pipeline opportunities, together representing more than $50 million in visible business opportunities already identified. Together, these positions provide meaningful visibility as we continue to execute against our long-term growth strategy.
Cyberlux UAS completed the delivery of 2,000 K-8 systems to the U.S. Department of War, positioning Cyberlux as an established U.S. manufacturer of Group 1 unmanned aircraft systems by delivered unit volume. More importantly, our UAS business remains highly active, with multiple opportunities progressing through the sales pipeline. We believe global demand for advanced drone technologies continues to accelerate, and we believe our proven execution, our manufacturing capabilities, and our expanding product portfolio position us to capitalize on this growing market.
Our Datron Military Communications business continues to demonstrate exceptional execution: delivering Foreign Military Sales orders ahead of schedule, expanding its tactical communications product portfolio, and pursuing new manufacturing partnerships with allied nations.
Our Global Integration Services business is also demonstrating the strength of Cyberlux’s integrated operating model. Rather than selling individual products, we are increasingly delivering complete mission-ready solutions that combine unmanned systems, tactical communications, training, sustainment, and logistical support. This approach unlocks larger opportunities, deepens customer relationships, and differentiates Cyberlux as a comprehensive defense solutions provider rather than a single-product manufacturer.
Looking ahead, we believe the defense market is entering a period of sustained growth.
The Administration’s proposed FY2027 U.S. defense budget request, if enacted, would prioritize many of the capability areas in which Cyberlux has invested over the past several years, including unmanned aircraft systems, tactical communications, electronic-warfare resilience, autonomous systems, border security, and modernization initiatives. Our strategy has always been to build capabilities ahead of demand, and we believe those investments now position us to capitalize on the opportunities emerging across the defense sector.
Our priorities for the remainder of 2026 remain clear:
- Execute our existing backlog efficiently while converting additional pipeline opportunities into revenue.
- Expand our integrated Datron–UAS solutions across allied Foreign Military Sales programs.
- Continue advancing our next-generation X-Series unmanned aircraft platforms.
- Strengthen our balance sheet through disciplined capital allocation.
- Position Cyberlux to become a $100 million annual defense-solutions company over time.
We recognize that our shareholders have remained patient throughout a period marked by acquisitions, operational integration, industry disruption, and legal challenges. Your confidence and continued support have enabled us to build what we believe is a materially stronger company — with a broader platform and greater long-term opportunity.
Meaningful work remains ahead, but I firmly believe Cyberlux has emerged from this period with stronger operating businesses, sharper strategic focus, and a deeper pipeline of opportunities than at any point in our history. We remain focused on execution, disciplined growth, and creating long-term value for our shareholders.
On behalf of our Board of Directors, employees, partners, and leadership team, thank you for your continued trust and support.
We look forward to updating you on our continued progress.
Sincerely,
Mark D. Schmidt
President & Chief Executive Officer
Cyberlux Corporation
Cautionary statement regarding forward-looking statements
This letter contains forward-looking statements within the meaning of the federal securities laws, including statements regarding the Company’s backlog, pipeline, business opportunities, expected growth, product development, market conditions, defense-budget priorities, and long-term strategic objectives. These statements are based on management’s current expectations and assumptions and involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied by these statements, including — but not limited to — government-funding availability and timing, contract-award timing, Foreign Military Sales approvals, supply-chain conditions, competitive dynamics, litigation and regulatory developments, capital-market conditions, and the other risks described in the Company’s OTC Markets ARS disclosures. The Company undertakes no obligation to update forward-looking statements to reflect events occurring after the date of this letter, except as required by applicable law. This letter is not an offer to sell or a solicitation to buy any security.