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Retirement Plans | 12 Months Ended
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Dec. 31, 2023
Retirement Plans |
Retirement Plans | Note 10 – Retirement Plans Defined Benefit Plan senseFly S.A. sponsors a defined benefit pension plan (the “Defined Benefit Plan”) covering all its employees. The Defined Benefit Plan provides benefits in the event of retirement, death or disability, with benefits based on age and salary. The Defined Benefit Plan is funded through contributions paid by senseFly S.A. and its employees, respectively. The Defined Benefit Plan assets are Groupe Mutuel Prévoyance (“GMP”), which invests these plan assets in cash and cash equivalents, equities, bonds, real estate and alternative investments. The Projected Benefit Obligation (“PBO”) includes in full the accrued liability for the plan death and disability benefits, irrespective of the extent to which these benefits may be reinsured with an insurer. The actuarial valuations are based on the census data as of December 31, 2023, provided by GMP. The Company recognizes the overfunded or underfunded status of the Defined Benefit Plan as an asset or liability in its consolidated balance sheets and recognizes changes in the funded status of the Defined Benefit Plan in the year in which the changes occur through accumulated other comprehensive income or loss. The Defined Benefit Plan’s assets and benefit obligations are remeasured as of December 31 each year. The net periodic benefit cost of the Defined Benefit Plan for the period from January 1, 2023 through December 31, 2023 was as follows: Schedule of Net Periodic Benefit
|  | 2023 |
Service cost |  | $ | 259,031 |
Interest cost |  |  | 66,136 |
Expected return on plan assets |  |  | (133,373 | )
Amortization of prior service cost (credit) |  |  | (2,205 | )
Loss recognized due to settlements and curtailments |  |  | 38,579 |
Net periodic pension benefit cost |  | $ | 228,168 |
The PBO is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases. The changes in the projected benefit obligation for the period from January 1, 2023 through December 31, 2023 were as follows: Schedule of Projected Benefit Obligation for the Period
|  | 2023 |
PBO, beginning of period |  | $ | 3,299,621 |
Service cost |  |  | 259,031 |
Interest cost |  |  | 66,136 |
Plan participation contributions |  |  | 207,225 |
Actuarial (gains) / losses |  |  | 87,078 |
Benefits paid through plan assets |  |  | (84,874 | )
Curtailments, settlements and special contractual termination benefits |  |  | (1,225,712 | )
Foreign currency exchange rate changes |  |  | 269,346 |
PBO, end of period |  |  | 2,877,851 |
Component representing future salary increases |  |  | (98,669 | )
Accumulated benefit obligation (“ABO”), end of period |  | $ | 2,779,182 |
AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Note 10 – Retirement Plans- Continued For the period from January 1, 2023 through December 31, 2023, the change in fair value of the Pension Plan assets was as follows:
|  | 2023 |
Fair value of plan assets, beginning of period |  | $ | 3,296,404 |
Expected return on plan assets |  |  | 133,373 |
Gain / (losses) on plan assets |  |  | (287,690 | )
Employer contributions |  |  | 302,019 |
Plan participant contributions |  |  | 207,225 |
Benefits paid through plan assets |  |  | (84,874 | )
Settlements |  |  | (1,160,679 | )
Foreign currency exchange rate changes |  |  | 255,940 |
Fair value of plan assets, end of period |  | $ | 2,661,718 |
senseFly S.A.’s investment objectives are to ensure that the assets of its Defined Benefit Plan are invested to provide an optimal rate of investment return on the total investment portfolio, consistent with the assumption of a reasonable risk level, and to ensure that pension funds are available to meet the plans’ benefit obligations as they become due. senseFly S.A. believes that a well-diversified investment portfolio will result in the highest attainable investment return with an acceptable level of overall risk. Investment strategies and allocation decisions are also governed by applicable governmental regulatory agencies. senseFly’s investment strategy with respect to the Defined Benefit Plan is to invest in accordance with the following allocation: 31.8% in equities, 35.4% in bonds, 17.1% in real estate, 11.3% in alternative investments and 4.4% in cash and cash equivalents. The following table presents the fair value of the Defined Benefit Plan assets by major categories and by levels within the fair value hierarchy as of December 31, 2023: Schedule of Defined Benefit Plan Assets by Major Categories
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and equivalents |  | $ | 117,463 |  |  | $ | - |  |  | $ | - |  |  | $ | 117,463 |
Equity securities |  |  | 846,910 |  |  |  | - |  |  |  | - |  |  |  | 846,910 |
Bonds |  |  | 942,056 |  |  |  | - |  |  |  | - |  |  |  | 942,056 |
Real estate |  |  | - |  |  |  | 454,583 |  |  |  | - |  |  |  | 454,583 |
Alternative investments |  |  | - |  |  |  | 300,706 |  |  |  | - |  |  |  | 300,706 |
Total fair value of plan assets |  | $ | 1,906,429 |  |  | $ | 755,289 |  |  | $ | - |  |  | $ | 2,661,718 |
The following tables present the fair value of the Defined Benefit Plan assets by major categories and by levels within the fair value hierarchy as of December 31, 2022:
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Cash and equivalents |  | $ | 279,883 |  |  | $ | - |  |  | $ | - |  |  | $ | 279,883 |
Equity securities |  |  | 906,136 |  |  |  | - |  |  |  | - |  |  |  | 906,136 |
Bonds |  |  | 1,167,789 |  |  |  | - |  |  |  | - |  |  |  | 1,167,789 |
Real estate |  |  | - |  |  |  | 570,490 |  |  |  | - |  |  |  | 570,490 |
Alternative investments |  |  | - |  |  |  | 372,105 |  |  |  | - |  |  |  | 372,105 |
Total fair value of plan assets |  | $ | 2,353,808 |  |  | $ | 942,595 |  |  | $ | - |  |  | $ | 3,296,403 |
The following table shows the unfunded status of the Defined Benefit Plan, defined as plan assets less the projected benefit obligation as of December 31, 2023: Schedule of Projected Benefit Obligation
Fair value of plan assets |  | $ | 2,661,718 |
Less: PBO |  |  | (2,877,851 | )
Underfunded status, end of period |  | $ | (216,133 | )
AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Note 10 – Retirement Plans- Continued As of December 31, 2023 and 2022, the underfunded status is included in defined plan obligation on the consolidated balance sheets. The Defined Benefit Plan has a PBO in excess of Defined Benefit Plan assets. For the period from January 1, 2023 through December 31, 2023, the amounts recognized in accumulated other comprehensive income (loss) related to the defined benefit plan were as follows: Schedule of Projected Benefit Obligation
|  | 2023 |
Net prior service (cost) / credit |  | $ | 10,572 |
Net gain / (loss) |  |  | (178,544 | )
Accumulated other comprehensive income (loss), net of tax |  | $ | (167,972 | )
The net prior service credit included in accumulated other comprehensive income (loss) as of December 31, 2023, is expected to be recognized as a component of net periodic benefit cost during the year ending December 31, 2024. The actuarial assumptions for the Defined Benefit Plan were as follows: Schedule of Assumption
Benefit obligations: |  |  |
Discount rate |  |  | 2.10 | %
Estimated rate of compensation increase |  |  | 1.25 | %
Periodic costs: |  |  |  |
Discount rate |  |  | 2.10 | %
Estimated rate of compensation increase |  |  | 1.25 | %
Expected long term rate of return on plan assets |  |  | 3.85 | %
Cash balance interest credit rate |  |  | 2.10 | %
The following table shows expected benefit payments from the Defined Benefit Plan for the next five fiscal years and the aggregate five years thereafter: Schedule of Expected Benefit Payments
Year Ending December 31: |  | Expected Plan Benefit Payments |
2024 |  | $ | 432,265 |
2025 |  |  | 387,629 |
2026 |  |  | 347,691 |
2027 |  |  | 310,103 |
2028 |  |  | 277,213 |
Thereafter |  |  | 1,045,423 |
Total expected benefit payments by the plan |  | $ | 2,800,324 |
Defined Contribution Plan The Company sponsors the AgEagle Aerial Systems 401(k) Plan (the “401(k) Plan”) that covers substantially all eligible employees in the United States. The Company matches contributions made by eligible employees, subject to certain percentage limits of the employees’ earnings. For the years ended December 31, 2023 and 2022, the Company’s employer contribution to the 401(k) Plan totaled $77,240 and $149,543, respectively. AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

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