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Stockholders’ Equity (Deficit)
 3 Months Ended
Mar. 31, 2025
Equity [Abstract]  
Stockholders’ Equity (Deficit)

Note 7 – Stockholders’ Equity (Deficit)

 

Preferred Series F Convertible Stock

 

Purchase History

 

On June 26, 2022, the Company entered into a Securities Purchase Agreement (the “Series F Agreement”) with Alpha. Pursuant to the terms of the Series F Agreement, the Board of Directors of the Company (the “Board”) designated a new series of Preferred Stock, the Series F 5% Preferred Convertible Stock (“Series F”), and authorized the sale and issuance of up to 35,000 shares of Series F with a stated value of $1,000 per share. Pursuant to the Series F Agreement, sales of Series F are accompanied by warrants equal to the number of issuable shares upon conversion of the Series F to Common Stock (the “Series F Warrants”).

  

Alpha Investment Right

 

The Series F Agreement provides Alpha the right to purchase up to an additional $25,000,000 stated value of Series F, after their initial 10,000 Series F purchased on June 26, 2022, and accompanying warrants (the “Additional Investment Right” or “AIR”). Under the AIR, the Series F and Series F warrants are initially convertible and exercisable at a conversion and exercise price equal to the volume-weighted average price of the Company’s Common Stock for three trading days prior to the date Alpha gives notice to the Company that it will exercise its AIR. Under the terms of the AIR, conversion and exercise prices are subject to downward adjustment for any equity instrument or equity-linked instrument sold or granted at an effective price per share that is lower than the initial conversion and exercise price (“Down Round Provision”). See Note 8 for warrant related disclosures.

 

On February 7, 2025, Alpha and the Company executed a funding agreement in which Alpha agreed to exercise its AIR quarterly to provide financing the Company for the next twelve months, with such amounts and timing of funding to be agreed to by the parties.

 

As consideration for Alpha’s commitment to additional funding, the Company agreed to (i) extend the period in which Alpha can exercise its AIR by extending the termination date of December 31, 2025 to June 1, 2026 and (ii) granting Alpha certain registration rights related to the Series F Alpha currently holds and will receive upon further exercises of its AIR. The Company filed the required registration statement to register 6,500,000 shares of Common Stock which became effective by the Securities and Exchange Commission on April 25, 2025.

 

During the three months ended March 31, 2025, we issued the following Series F pursuant to the exercise of the AIR by Alpha:

 

  ● On February 7, 2025, we issued 1,000 Series F to Alpha upon the exercise of their AIR and received $1,000,000 of gross proceeds. The Series F are initially convertible into 450,390 shares of Common Stock at an initial conversion price of $2.2203 and Series F Warrants to purchase up to 450,390 shares of Common Stock at an initial exercise price of $2.2203. The Series F Warrants are immediately exercisable upon issuance and have a three-year term.
     
  ● On March 17, 2025, we issued 500 Series F to Alpha upon the exercise of their AIR and received $500,000 of gross proceeds. The Series F are initially convertible into 415,420 shares of Common Stock at an initial conversion price of $1.2036 and Series F Warrants to purchase up to 415,420 shares of Common Stock at an initial exercise price of $1.2036. The Series F Warrants are immediately exercisable upon issuance and have a three-year term. This issuance resulted in down round provisions embedded within previously issued Series F and Series F Warrants being triggered (the “March 2025 Down Round Trigger”), including the Series F and Series F Warrants issued on February 7, 2025. See the deemed dividends resulting from the March 2025 Down Round Trigger below.

 

 

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

 

Note 7 – Stockholders’ Equity (Deficit) – Continued

 

During the three months ended March 31, 2024, we issued the following Series F pursuant to the exercise of the AIR by Alpha:

 

  ● On March 6, 2024, we issued 1,000 Series F to Alpha or assignees of Alpha upon the exercise of their AIR and received $950,000 of net proceeds after deducting equity issuance costs for legal fees of $50,000. The Series F were initially convertible into 16,588 shares of Common Stock at an initial conversion price of $60.29 and warrants to purchase up to 16,588 shares of Common Stock at an initial exercise price of $60.29 and exercisable immediately for a period of three years.

 

Since the execution of the Series F Agreement, the Company has sold and issued Series F and Series F Warrants to Alpha or investors that Alpha has assigned the AIR for cash proceeds through the exercise of the AIR.

 

A summary of the Series F activity for the three months ended March 31, 2025 is as follows:

 

Date of Purchase  Shares Purchased   Gross Proceeds   Net Proceeds   Original Conversion Price   Shares Outstanding December 31, 2024   Series F Converted   Shares Outstanding March 31, 2025   Conversion Price at March 31, 2025   Shares Issuable at March 31, 2025 
November 15, 2023    1,850   $1,850,000   $1,850,000   $124.70    150    —    150   $1.10    136,364 
March 6, 2024    1,000    1,000,000    950,000    60.29    435    (335)   100    1.10    90,909 
April 12, 2024    1,050    1,050,000    1,050,000    37.00    1,050    (1,050)   —    1.10    — 
May 31, 2024    1,050    1,050,000    1,025,000    32.15    1,050    (525)   525    1.10    477,273 
July 25, 2024    500    500,000    500,000    23.15    500    (500)   —    1.10    — 
August 27, 2024    500    500,000    500,000    20.19    500    —    500    1.10    454,545 
October 1, 2024 (i)    1,500    —    —    12.00    1,500    —    1,500    1.10    1,363,636 
December 18, 2024    750    750,000    750,000    5.25    750    —    750    1.20(ii)   623,131 
February 7, 2025   1,000    1,000,000    1,000,000    2.22    —    —    1,000    1.20(ii)   830,841 
March 17, 2025   500    500,000    500,000    1.20    —    —    500    1.20    415,420 
Total March 31, 2025     9,700   $8,200,000   $8,125,000   $—    5,935    (2,410)   5,025   $—    4,392,119 

 

(i)These shares were issued as consideration for executing the Omnibus Agreement in connection with the October 2024 Offering
(ii)Reflects the conversion price after the March 2025 Down Round Trigger that was triggered with the Sale of Series F on March 17, 2025.

 

 

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

 

Note 7 – Stockholders’ Equity (Deficit) – Continued

 

A summary of the Series F activity for the three months ended March 31, 2024, is as follows:

 

Date of Purchase   Shares Purchased   Gross Proceeds   Net Proceeds   Original Conversion Price   Shares Outstanding December 31, 2023   Series F Converted   Shares Outstanding March 31, 2024   Conversion Price at March 31, 2024   Shares Issuable at March 31, 2024 
June 26, 2022      10,000   $10,000,000   $9,920,000   $620.00    2,925    (2,925)   —   $30.00    — 
March 10, 2023      3,000    3,000,000    3,000,000    420.00    3,000    (205)   2,795    30.00    93,167 
November 15, 2023    1,850    1,850,000    1,850,000    124.70    150    —    150    30.00    5,000 
March 6, 2024    1,000    1,000,000    950,000    60.29    —    —    1,000    30.00    33,333 
Total March 31, 2024      15,850   $15,850,000   $15,720,000   $—    6,075    (3,130)   3,945   $—    131,500 

 

During the three months ended March 31, 2025 and 2024, a total of 2,410 and 3,130 Series F were converted into a total of 2,190,908 and 59,041 shares of Common Stock, respectively, and dividends accrued to the Series F were $67,651 and $61,235, respectively. As of March 31, 2025 and December 31, 2024, accrued dividends on the Series F total $814,317 and $746,666 which are included in accrued expenses on the unaudited consolidated balance sheets, at the rate per share (as a percentage of the $1,000 stated par value per share of Series F) of 5% per annum, beginning on the purchase date.

 

Common Stock Issuances

 

Conversions

 

During the three months ended March 31, 2025 and 2024, the Company issued 700,000 and 1,597 shares of Common Stock for the conversion of $770,000 and $100,000 of principal outstanding on a convertible note at a conversion ratio of $1.10 and $62.50, respectively (see Note 5).

 

During the three months ended March 31, 2025 and 2024, the Company issued 2,190,908 and 59,041 shares of Common Stock for the conversion of 2,410 and 3,130 shares of Series F with a stated value of $1,000 per share, respectively.

 

 

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

 

Note 7 – Stockholders’ Equity (Deficit) – Continued

 

Warrant Exercises

 

During the three months ended March 31, 2025, we issued 267,849 shares of Common Stock for the exercise of Series B warrants with an exercise price of $1.9445 and aggregate exercise price of $520,833. The Company agreed to credit $350,000 of the aggregate exercise price pursuant to a settlement reached with the Series B warrant holder over a dispute and received approximately $171,000 of cash proceeds.

 

On March 6, 2024, the Company entered into a warrant exercise agreement with several institutional investors holding warrants pursuant to a securities purchase agreement, dated as of June 5, 2023, in connection with a private placement. The warrant exercise agreement provided that for those investors who exercised their existing warrants they would receive a reduction in the exercise price to $30.00 per share of Common Stock. During the three months ended March 31, 2024, the Company received $497,701 from the exercise of 16,590 warrants converted to 16,590 shares of Common Stock.

 

Down Round Triggers and Deemed Dividend

 

Below is a summary of the deemed dividends resulting from the March 2025 and 2024 Down Round Triggers:

 

Deemed Dividends on Series F Preferred Stock
Date of Trigger Event  Description of Trigger Event  Series F Triggered  Conversion Prices Prior to Trigger  Conversion Price After Trigger  Incremental Value Deemed Dividend
March 17, 2025  March 2025 Down Round Trigger   5,025   $2.22 - 5.25   $1.20   $976,637 
                        
Deemed Dividends on Series F Warrants 
March 17, 2025  March 2025 Down Round Trigger   593,247   $2.22 - 5.25   $1.20   $79,695 
Total Deemed Dividends                    $1,056,332 

 

Series F and Series F Warrants issued prior to December 2024 have conversion and exercise prices equal to $1.10 and were not impacted by the March 2025 Down Round Trigger.

 

Deemed Dividends on Series F Preferred Stock
Date of Trigger Event  Description of Trigger Event  Series F Triggered  Conversion Prices Prior to Trigger  Conversion Price After Trigger  Incremental Value Deemed Dividend
March 6, 2024  March 2024 Down Round Trigger   3,945   $ 60.29 - 124.50   $30.00   $5,102,674 
                         
Deemed Dividends on Series F Warrants 
March 6, 2024  March 2024 Down Round Trigger   54,695   $ 60.29 - 124.50   $30.00   $147,030 
 Total Deemed Dividends                     $5,249,704 

 

 

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

 

Note 7 – Stockholders’ Equity (Deficit) – Continued

 

Deemed dividends are reflected as an increase to additional paid in capital and an increase to accumulated deficit and as an increase to total net loss or decrease to total net income attributable to Common Stockholders in computing earnings per share on the condensed consolidated statements of operations and comprehensive income (loss).

 

Stock-based Compensation

 

The Company determines the fair value of awards granted under the 2017 Omnibus Equity Incentive Plan (the “Equity Plan”) based on the fair value of its Common Stock on the date of grant. Stock-based compensation expenses related to grants under the Equity Plan are included in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss). For the three months ended March 31, 2025 and 2024, the Company recorded stock-based compensation of $49,880 and $18,580, respectively.

 

Restricted Stock Units (“RSUs”)

 

For the three months ended March 31, 2025, a summary of RSU activity is as follows:

 

   Shares 

Weighted Average Grant Date Fair

Value

Outstanding as of December 31, 2024   7,293   $324.64 
Granted   72,194    2.10 
Cancelled   (1,072)   264.60 
Vested and released   —    — 
Outstanding as of March 31, 2025   78,415    28.57 
Vested as of March 31, 2025   8,015    255.33 
Unvested as of March 31, 2025   70,400   $2.75 

 

For the three months ended March 31, 2025, the aggregate fair value of RSU awards at the time of grant was $151,640 based the market price of our Common Stock on the date of grant.

 

For the three months ended March 31, 2025, the Company recognized $49,880 of stock-based compensation expense, and had approximately $137,886 of unrecognized stock-based compensation expense related to RSUs, which will be amortized over approximately fifteen months.

 

For the three months ended March 31, 2024, a summary of RSU activity is as follows:

 

   Shares 

Weighted Average Grant Date Fair

Value

Outstanding as of December 31, 2023   3,054   $901.50 
Granted   —    — 
Cancelled   (9)   467.00 
Vested and released   —    — 
Outstanding as of March 31, 2024   3,045    903.00 
Vested as of March 31, 2024   2,869    928.00 
Unvested as of March 31, 2024   176   $494.50 

 

 

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

 

Note 7 – Stockholders’ Equity (Deficit) – Continued

 

For the three months ended March 31, 2024, no RSUs were awarded. The Company recognized $18,580 of stock compensation expense, and had $25,000 of unrecognized stock-based compensation expense related to RSUs.

 

Issuance of RSUs to Current Officers and Directors of the Company

 

For the three months ended March 31, 2025, the Company granted 5,000 RSUs to officers, equal to $11,200 as compensation, which vested immediately. For the three months ended March 31, 2024, no RSUs were granted to officers.

 

For the three months ended March 31, 2025, the Company granted 56,000 RSUs equal to $125,440 to the four non-executive directors as quarterly board compensation, which vest in 330 days. For the three months ended March 31, 2024, the Company assigned 2,000 RSUs equal to $74,000 to the four non-executive directors as quarterly board compensation, which were granted on April 1, 2024, and vested immediately

 

Stock Options

 

For the three months ended March 31, 2025 a summary of the options activity is as follows:

 

   Shares   Weighted Average Exercise Price   Weighted Average Fair Value  

Weighted Average Remaining Contractual Term

(Years)

  

Aggregate Intrinsic

Value

 
Outstanding as of December 31, 2024   56   $5,342   $2,874    1.23   $— 
Granted   —    —    —    —    — 
Exercised   —    —    —    —    — 
Expired/Forfeited   (5)   410    247    —    — 
Outstanding as of March 31, 2025   51   $5,825   $3,131    0.95   $— 
Exercisable as of March 31, 2025   51   $5,825   $3,131    0.95   $— 

 

As of March 31, 2025, the Company had no unrecognized compensation cost related to stock options.

 

Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or as of March 31, 2025 (for outstanding options), less the applicable exercise price.

 

For the three months ended March 31, 2025, there was no stock compensation expense related to the stock options.

 

 

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

 

Note 7 – Stockholders’ Equity (Deficit) – Continued

 

For the three months ended March 31, 2024, a summary of the options activity is as follows:

 

   Shares   Weighted Average Exercise Price   Weighted Average Fair Value  

Weighted Average Remaining Contractual Term

(Years)

   Aggregate Intrinsic Value 
Outstanding as of December 31, 2023   2,505   $2,000   $1,080    1.49   $2,294 
Granted   —    —    —    —    — 
Exercised   —    —    —    —    — 
Expired/Forfeited   (1,203)   2,055    1,126    —    — 
Outstanding as of March 31, 2024   1,302   $2,010   $1,082    2.36   $— 
Exercisable as of March 31, 2024   1,177   $2,184   $1,178    2.19   $— 

 

As of March 31, 2024, the Company had approximately $21,000 of total unrecognized compensation cost related to stock options, which will be amortized through June 30, 2025.

 

Cancellations of Options

 

For the three months ended March 31, 2025 and 2024, as a result of employee terminations and options expirations, stock options aggregating 5 and 1,203 with fair market values of $1,235 and $1,292,459 were canceled, respectively.