T3 Defense acquires 60% of Project35 for $2.5M in drone market push

T3 Defense Inc. acquired a 60% stake in Israeli drone developer Project35 for stock and a $1.25 million note, placing the Nasdaq-listed acquirer on both sides of the fast-growing drone and counter-UAV market.

"Two forces are reshaping the modern battlefield: the rapid spread of unmanned aerial systems, and the urgent need to intercept them before they reach their targets," said Menny Shalom, chief executive officer of T3 Defense.

Under the terms, T3 Defense paid 21,059,871 shares of common stock and a 12 percent promissory note due in one year. The company plans to inject $2.5 million into Project35's operations over the next 12 months. Project35 expects revenue of about $2.4 million for the 2026 fiscal year, up from $1.4 million in 2025. T3 Defense, with a market capitalization of $8.86 million, reported $3.65 million in revenue over the last 12 months. Its shares trade at $0.15, down 98 percent over the past year.

The acquisition gives T3 Defense immediate access to Project35's Tier-1 defense relationships with Israel Aerospace Industries, Rafael Advanced Defense Systems, Elbit Systems and the Israel Ministry of Defense. Project35's autonomous aerial interceptor, designed to neutralize hostile drones within seconds using an AI tracking system, recently completed initial live-fire field trials — positioning the combined entity to compete for active defense procurement programs as drone threats proliferate globally.

"We have built the solutions, the team, and the deep engineering experience needed to counter today's aerial threats," said Gandi Kokton, chief executive officer of Project35. "The one element we were missing was the capital and platform to scale, and joining the T3 Defense ecosystem solves exactly that."

Project35's product lineup spans heavy-lift multirotor cargo drones, long-endurance fixed-wing VTOL aircraft for intelligence and reconnaissance, and high-speed AI-guided tactical FPV systems. The company holds AS9100 aviation quality certification and builds to Western supply-chain standards, including Blue UAS and NDAA compliance.

The founding team will remain in place. Kokton, a former aircraft designer at IAI and Elbit Systems, will lead business development. Co-founder Noa Bomshtein, who directed defense programs at Rafael, will oversee operations. Co-founder Dudu Farfara, an aeronautical engineer who served in the Israeli Navy and Ministry of Defense technology units, will continue leading product innovation.

T3 Defense's acquisition strategy targets manufacturers with strong customer relationships and solid order backlogs that are capacity- or resource-constrained. The company's portfolio now includes drones, counter-drone systems, tactical robotics and AI software integration. The deal structure — paid primarily in stock with a modest note — reflects T3 Defense's constrained balance sheet, with a current ratio of 0.25 indicating the company is quickly burning through cash.

This article is for informational purposes only and does not constitute investment advice.