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STOCKHOLDERS’ EQUITY
 9 Months Ended
Sep. 30, 2025
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

Series A Preferred Stock

 

On June 7, 2022, the Company’s board of directors approved an Amendment to its Articles of Incorporation, to designate 3,000,000 shares of the Series A Preferred, par value $0.0001. The Certificate of Designation became effective in the state of Delaware on January 20, 2023. Each share of Series A Preferred had an initial stated value of $10.00 per share. On August 28, 2023, the Company amended its Series A Preferred Certificate of Designation, to amend the Series A Stated Value to $2.50 per share.

 

Each share of Series A Preferred was convertible into the number of common shares equal to the Series A Stated Value ($2.50) divided by the Fair Market Value of the common stock. The Fair Market Value is equal to the average of the closing price for the Company’s common stock on a National Market Exchange, for the 20 trading days prior to conversion or in the case of an initial public offering the initial listing price, subject to price protection. Series A Preferred has voting rights equal to the number of common shares into which it may convert. The conversion rights of Preferred Series A were contingent upon the Company’s completion of the initial public offering and/or listing on a National Market Exchange. The holders of the Series A Preferred shall be entitled to a dividend that is payable to the holders of the Company’s common stock as well as certain liquidation rights.

 

The Series A Preferred were evaluated to determine whether temporary or permanent equity classification on the consolidated balance sheet was appropriate. As per the terms of the Series A Preferred Certificate of Designation, Series A Preferred is not redeemable for cash. As such, the Series A Preferred is classified as permanent equity. The Company concluded that the conversion rights under the Series A Preferred were clearly and closely related to the equity host instrument. Accordingly, the conversion rights feature on the Series A Preferred were not considered an embedded derivative that required bifurcation.

 

On June 7, 2022, in connection with the acquisition of 100% of the Safe-Pro USA, the Company issued 3,000,000 share of Series A preferred stock. On August 28, 2024, in conjunction with the Company’s initial public offering, the Series A Preferred shares were converted into 1,500,000 shares of common stock.

 

Series B Preferred Stock

 

On August 29, 2022, the Company’s board of directors approved an Amendment to its Articles of Incorporation, to designate 3,275,000 shares of the Series B Preferred, par value $0.0001. The Certificate of Designation became effective in the state of Delaware on January 20, 2023. Each share of Series B Preferred had a stated value of $2.00 per share.

 

Each share of Series B Preferred was convertible into the number of common shares equal to the Series B Stated Value ($2.00) divided by the Fair Market Value of the common stock. The Fair Market Value is equal to the average of the closing price for the Company’s common stock on a National Market Exchange, for the 20 trading days prior to conversion or in the case of an initial public offering the initial listing price, subject to price protection. Series B Preferred has voting rights equal to the number of common shares into which it may convert. The conversion rights of Preferred Series B were contingent upon the Company’s completion of the initial public offering and/or listing on a National Market Exchange. The holders of the Series B Preferred shall be entitled to a dividend that is payable to the holders of the Company’s common stock as well as certain liquidation rights.

 

On August 29, 2022, in connection with the acquisition of 100% of Airborne Response, the Company issued 3,275,000 shares of Series B preferred stock. On August 27, 2024, in conjunction with the Company’s initial public offering, the Series B Preferred shares were converted into 1,310,000 shares of common stock.

 

Series C Preferred Stock

 

On May 7, 2025, the Company’s board of directors approved an Amendment to its Articles of Incorporation, to designate 2,000 shares of the Series C Preferred, par value $0.0001. On May 8, 2025, the Company’s Certificate of Designation for Series C Preferred Stock became effective, authorizing 2,000 shares with a stated value of $1,100 per share. The Series C Preferred Stock was non-voting, entitled to dividends on an as-converted basis, and convertible into common stock at a fixed price of $2.25 per share. The Company had the option to redeem the shares at stated value, and holders were entitled to liquidation preference equal to the stated value.

 

 

SAFE PRO GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(unaudited)

 

On July 22, 2025, the Company issued 427,778 common shares pursuant to the conversion of 875 shares of Preferred Series C at a conversion ratio of $2.25 per share.

 

On July 23, 2025, the Company issued 70,889 common shares pursuant to the conversion of 145 shares of Preferred Series C at a conversion ratio of $2.25 per share.

 

On September 11, 2025, the Company issued 14,667 common shares pursuant to the conversion of 30 shares of Preferred Series C at a conversion ratio of $2.25 per share.

 

As of September 30, 2025, all Series C Preferred Stock had been converted into common shares, resulting in no outstanding balance.

 

Common stock issued for compensation and services

 

2025

 

On February 27, 2025, the Company issued 100,000 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $3.90, representing the market close on date of issuance. The award was issued to an individual for services. Stock-based professional fees in the amount of $390,000 are recorded to Professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

On February 28, 2025, the Company issued 400,000 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $3.88, representing the market close on date of issuance. The award was issued to Mr. Erdberg, the Company’s CEO, as pursuant to his contractual agreement with the Company. Stock-based compensation in the amount of $1,552,500 is recorded and is represented in Salary, wages and payroll taxes on the Company’s unaudited condensed consolidated statement of operations.

 

Also on February 28, 2025, the Company issued 100,000 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $3.88, representing the market close on date of issuance. The award was issued to an individual for services. Stock-based professional fees in the amount of $380,000 are recorded to Professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

On March 11, 2025, the Company issued 25,000 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $3.06, representing the market close on date of issuance. The award was issued to an individual for services. Stock-based professional fees in the amount of $76,500 are recorded to Professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

On March 20, 2025, the Company issued 12,500 common shares, outside of its 2022 Equity Plan, at a fair market value of $2.93, representing the market close on date of issuance. The award was issued to individuals for services. Stock-based professional fees in the amount of $36,625 are recorded to Professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

On June 13, 2025, the Company issued 37,500 common shares, pursuant to 2022 Equity Plan, at a fair market value of $3.01, representing the market close on date of issuance. The award was issued to an individual for services. Stock-based professional fees in the amount of $112,875 are recorded as professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

Also on June 13, 2025, the Company issued 165,000 restricted shares at a fair market value of $3.01, representing the market close on date of issuance. Stock-based professional fees in the amount of $496,650 are recorded to professional fees, on the Company’s unaudited condensed consolidated statement of operations. The foregoing securities were issued pursuant to Section 4(a)(2) of the Securities Act. The awards were issued to individuals for services relating to certain equity transactions and have not been registered pursuant to the Securities Act of 1933.

 

On July 22, 2025, the Company issued 265,000 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $3.85, representing the market close on date of issuance. The awards were issued to individuals in connection with services performed or pursuant to contractual employment agreements. Stock-based compensation fees totaling $1,020,250 are recorded, including $442,750 to Professional fees and $577,500 to Salary, wages and payroll taxes on the Company’s unaudited condensed consolidated statement of operations.

 

 

SAFE PRO GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(unaudited)

 

Also on July 22, 2025, the Company issued 30,000 restricted shares at a fair market value of $3.85, representing the market close on date of issuance. Stock based professional fees in the amount of $115,500 are recorded to professional fees, on the Company’s unaudited condensed consolidated statement of operations. The foregoing securities were issued pursuant to Section 4(a)(2) of the Securities Act. The award was issued to an individual for services performed and has not been registered pursuant to the Securities Act of 1933.

 

On August 4, 2025, the Company granted 30,000 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $3.36, representing the market close on date of issuance. The award was granted to an individual in connection with services performed. The shares vest in equal monthly installments of 2,500 shares over a 12-month period beginning September 1, 2025, subject to continued service. As of September 30, 2025, the Company issued 2,500 shares. Stock-based professional fees in the amount of $8,400 are recorded to professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

On August 22, 2025, the Company issued 187,500 common shares, pursuant to its 2022 Equity Plan, at a fair market value of $5.69, representing the market close on date of issuance. The awards were issued to individuals in connection with services performed or pursuant to contractual employment agreements. Stock based professional fees in the amount of $1,066,875 are recorded to professional fees, on the Company’s unaudited condensed consolidated statement of operations.

 

2024

 

On January 9, 2024, the Company issued 50,000 vested restricted common shares to a director for services rendered pursuant to a board of directors’ agreement (See Note 11). The Company valued these common shares at the fair value of $98,000, or $1.96 per share based on sales of common stock units in recent private placements.

 

On June 24, 2024, the Company issued 180,000 fully vested restricted common shares to consultants for services rendered. The Company valued these common shares at $450,000 or $2.50 per share based on sales of common stock units in recent private placements.

 

On August 29, 2024, the Company issued 80,000 restricted common shares to consultants for services rendered. The Company valued these common shares at $400,000 or $5.00 per share based on the initial listing price for its public offering.

 

Additionally, on August 29, 2024, the Company issued 270,000 restricted common shares to Daniyel Erdberg, 80,000 restricted common shares to Theresa Carlise and 50,000 restricted common shares to an Employee. The Company valued these common shares at $2,000,000 or $5.00 per share based on the initial listing price for its public offering.

 

In connection with these shares, the Company recorded stock-based professional fees of $400,000 and $948,000, respectively, for the three and nine months ended September 30, 2024.

 

Common stock and warrants issued for cash

 

2025

 

During the three months ended September 30, 2025, the Company completed a private placement of 2,000,000 Units for aggregate gross proceeds of $8,000,000, or $4.00 per Unit. Each Unit consisted of one share of common stock and one common stock purchase warrant. Each warrant entitles the holder to acquire one share of common stock at an exercise price of $6.00 per share, exercisable immediately and expiring three years from the date of issuance. The Company incurred direct equity issuance costs of $1,232,500, which were recorded as a reduction to additional paid-in capital.

 

2024

 

For the three months ending September 30, 2024, the Company issued 0 common shares for cash. During the nine months ended September 30, 2024, the Company completed a private placement of (i) 51,249 Units for aggregate proceeds of $163,997, or $3.20 per Unit. Each Unit consisted of one share of common stock and one common stock purchase warrant of the Company. Each warrant entitles the holder thereof to acquire one share of common stock of the Company for a price of $1.00 for a period of 3 years from the date of issuance and (ii) 101,564 Units for aggregate proceeds of $325,004, or $3.20 per Unit. Each Unit consisted of one share of common stock and one common stock purchase warrant of the Company. Each warrant entitles the holder thereof to acquire one share of common stock of the Company for a price of $3.20, for a period of 3 years from the date of issuance.

 

Contributed capital

 

On March 31, 2025, Mr. Borkar, President of Safe-Pro USA and an employee, which is his spouse, agreed to forgive aggregate accrued salary of $64,615, which has been recorded as contributed capital as presented on the condensed consolidated statement of shareholders’ equity. See Note 11.

 

 

SAFE PRO GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(unaudited)

 

Warrants

 

A summary of the status of the Company’s total outstanding warrants and changes during the nine months ended September 30, 2025 and 2024, respectively are as follows:

  

   Number of
Warrants		   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Term (Years)		   Aggregate
Intrinsic
Value (1)		  
Balance Outstanding on December 31, 2024    125,531   $4.09    3.26   $ 90,952  
Issued    2,525,835    5.37    2.84     -  
Exercised    (515,678)   -    -     -  
Balance Outstanding on September 30, 2025    2,135,688   $5.88    2.88   $ 2,435,901  
Exercisable, September 30, 2025    2,123,188   $5.89    2.87   $ 2,399,026  

 

(1) The aggregate intrinsic value on September 30, 2025, was calculated based on Nasdaq’s market close on September 30, 2025 of $7.02 and the exercise price of the underlying warrants.

 

   Number of
Warrants		   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Term (Years)		   Aggregate
Intrinsic
Value (1)		 
Balance Outstanding on December 31, 2023   611,017   $1.00    2.5   $574,356 
Issued   289,751    2.70    3.0    - 
Balance Outstanding on September 30, 2024   900,768   $1.55    2.1   $1,211,261 
Exercisable, September 30, 2024   849,768   $1.64    2.3   $1,382,621 

 

(1) The aggregate intrinsic value on September 30, 2024, was calculated based on Nasdaq’s market close on September 30, 2024 of $2.89 and the exercise price of the underlying warrants. The aggregate intrinsic value on December 31, 2023 was calculated based on the difference between the calculated fair value on December 31, 2023 of $1.94 and the exercise price of the underlying warrants.

 

For the nine months ending September 30, 2025 and 2024, the Company recorded $14,069 and $0, respectively, for stock-based compensation expense related to 12,500 warrants as issued for services. As of September 30, 2025, unamortized stock-based compensation for warrants was $ 1,378 to be recognized through December 31, 2025.

 

The above warrants granted during the nine months ended September 30, 2025 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:

 

   September 30, 2025 
Expected term, in years   5 
Expected volatility   54.41%
Risk-free interest rate   4.01%
Dividend yield   - 

 

Representative warrants

 

On August 29, 2024, in connection with the IPO, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Dawson James Securities, Inc. (the “Underwriter”), Pursuant to the Underwriting Agreement, the Company issued a common stock purchase warrant to the Underwriter for the purchase of 51,000 shares of common stock at an exercise price of $6.25, subject to adjustments (the “Underwriter Warrant”). The Underwriter Warrant is exercisable at any time and from time to time, in whole or in part, during the period commencing on March 1, 2025, and ending on August 28, 2029 and may be exercised on a cashless basis under certain circumstances. The Underwriter Warrant provides for registration rights (including piggyback rights) and customary anti-dilution provisions (for share dividends and splits and recapitalizations) and anti-dilution protection (adjustment in the price of the Underwriter Warrant and the number of shares underlying the Underwriter Warrant) resulting from corporate events (which would include dividends, reorganization, mergers and similar events). The Underwriter Warrant and the common stock underlying the Underwriter Warrant were registered as a part of the IPO Registration Statement.

 

Warrants issued for Convertible Preferred Series C Stock

 

On May 8, 2025, the Company entered into convertible Series C Preferred agreements with investors pursuant to which the Company issued and sold to the Investors for an aggregate price of $1,050,000 to (i) 1,050 Series C Preferred shares, stated value $1,100 which are convertible into 513,335 shares of the Company’s common stock at a conversion rate of $2.25 per share and (ii) warrants to purchase 513,335 shares of common stock at an initial exercise price of $2.93 per share, subject to adjustment.

 

During the three months ended September 30, 2025, 513,334 warrants were exercised at an exercise price of $2.93 per share, resulting in aggregate proceeds of approximately $1.5 million to the Company.

 

Warrants issued for Convertible Debt

 

During March 2024, the Company entered into convertible note agreements with investors pursuant to which the Company issued and sold to the Investors (i) the March 2024 Convertible Notes in the principal amount of $275,001 and (ii) the March 2024 Warrants to purchase up to 85,938 shares of the Company’s common stock at an initial exercise price of $1.00, subject to adjustment.

 

Warrants issued in connection with private placement

 

During the three months ended September 30, 2025, the Company completed a private placement of 2,000,000 Units for aggregate gross proceeds of $8,000,000, or $4.00 per Unit. Each Unit consisted of one share of common stock and one common stock purchase warrant. Each warrant entitles the holder to acquire one share of common stock at an exercise price of $6.00 per share, exercisable immediately and expiring three years from the date of issuance.

 

 

SAFE PRO GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(unaudited)

 

The Company determined that the warrants do not meet the definition of liability under FASB ASC Topic 480 and therefore classified the warrants as equity instruments.

 

Options

 

A summary of the Company’s stock option activity is as follows:

 

   Shares Underlying Options   Weighted Average Exercise
Price		   Weighted Average Contractual Life (Years)  

Intrinsic

Value

 
Outstanding at December 31, 2024   322,500   $3.40    4.97   $138,675 
Granted   650,000    7.42    4.66    - 
Forfeited   -    -    -    - 
Exercised   (8,748)   3.40    -    - 
Outstanding at September 30, 2025   963,752   $6.11    4.52   $1,363,782 
                     
Exercisable at September 30, 2025   432,188   $4.06    4.20   $1,217,851 

 

For the nine months ending September 30, 2025 and 2024, the Company recorded $548,342 and $0, respectively, for stock-based compensation expense related to stock options. As of September 30, 2025, unamortized stock-based compensation for stock options was $1,101,752 to be recognized through March 31, 2030.

 

The options granted during the nine months ended September 30, 2025 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:

 

   September 30, 2025 
Expected term, in years   4.59 
Expected volatility   51.36%
Risk-free interest rate   3.84%
Dividend yield   - 

 

2022 Equity Incentive Plan

 

On July 1, 2022, the Company’s Board of Directors authorized and adopted the 2022 Equity Incentive Plan (the “2022 Plan”) and reserved 5,000,000 shares of common stock for issuance thereunder. The 2022 Plan’s purpose is to encourage ownership in the Company by employees, officers, directors and consultants whose long-term service the Company considers essential to its continued progress and, thereby, encourage recipients to act in the stockholders’ interest and share in the Company’s success. The 2022 Plan provides for the issuance of incentive stock options, non-statutory stock options, restricted stock, restricted stock units (“RSUs”), and other stock-based awards. During the year ended December 31, 2024 and 2023, 1,082,500 and 595,000 of the Company’s common shares issued for services, as described above, were issued pursuant to the 2022 Plan, respectively. During the nine months ended September 30, 2025, 1,885,000 of the Company’s common shares and options issued for services and compensation, as described above, were issued pursuant to the 2022 Plan. As of September 30, 2025, the Company had 667,500 shares available for issuance under the 2022 Plan.

 

2025 Equity Incentive Plan

 

In April 2025, the Compensation Committee of the Board of Directors approved the 2025 Stock Plan, pending stockholders’ approval, which was subsequently received on June 26, 2025. The 2025 Plan is a stock-based compensation plan that provides discretionary grants of stock options, stock awards, stock unit awards and stock appreciation rights to key employees, non-employee directors and consultants. The share reserve is subject to an annual automatic increase of up to 5% of the Company’s outstanding common stock through January 1, 2035, unless otherwise determined by the Board. The plan includes provisions related to award limits, changes in control, and restrictions on repricing. No shares, stock options, or other awards have been issued under the 2025 Plan as of September 30, 2025.

 

 

SAFE PRO GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(unaudited)