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Warrants

3 Months Ended

Mar. 31, 2025

Note 8 – Warrants

Equity Classified Warrants

As previously disclosed in Note 7, we issued Series F Warrants in connection with the issuance of Series F Preferred Stock upon Alpha exercising their AIR on February 7, 2025 and March 17, 2025.

During the three months ended March 31, 2025, we issued the following Series F Warrants in connection with the issuance of Series F Preferred Stock pursuant to the exercise of the AIR by Alpha:

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

	●	On February 7, 2025, we issued 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 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 Warrants issued on February 7, 2025. See the deemed dividends resulting from the March 2025 Down Round Trigger above.

A summary of activity related to warrants, classified within stockholders’ equity (deficit) for the years presented is as follows:

	Shares		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term
Outstanding as of December 31, 2024		317,664	$	4.96			2.60
Issued – February 7, 2025		450,390		1.20	*		—
Issued – March 17, 2025		415,420		1.20			—
Outstanding as of March 31, 2025		1,183,474		1.72	*		2.76
Exercisable as of March 31, 2025		1,183,474	$	1.72	*		2.76

*	Reflects the exercise price after the March 2025 Down Round Trigger on March 17, 2025 as described above.

As of March 31, 2025, the intrinsic value of the warrants was nil based on the market price of our stock and the warrant exercise price.

Liability Classified Warrants

The Series A and B warrants issued in October 2024 pursuant to an offering have the following contractual terms.

Each Series A Warrant and B Warrant is immediately exercisable on the date of issuance and expires five years from the closing date of the offering.

Under the alternate cashless exercise option of the Series A Warrants, a holder of the Series A Warrant, has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of Common Stock that would be issuable upon a cash exercise of the Series A Warrant and (y) 2.0. In addition, the Series A Warrants and Series B Warrants contain a reset of the exercise price to a price equal to the lesser of (i) the then exercise price and (ii) the lowest volume weighted average price for the five trading days immediately preceding and immediately following the date the Company effects a reverse stock split in the future with a proportionate adjustment to the number of shares underlying the Series A Warrants and Series B Warrants so that the aggregate exercise price remains constant in such an event (the “Share Combination Event”). Finally, with certain exceptions, the Series B Warrants provide for a down round adjustment to the exercise price and number of shares underlying the Series B Warrants upon the Company’s issuance of its Common Stock or common stock equivalents at a price per share that is less than the exercise price of the Series B Warrant. As of December 31, 2024, the exercise price of the Series A and B Warrants was $1.9445. This was adjusted down to $1.20 with the March 2025 Down Round Trigger and an additional 2,582,234 warrants were issued.

AGEAGLE AERIAL SYSTEMS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(UNAUDITED)

A summary of activity related to the Series A and B warrants, classified as liabilities, for the three months ended March 31, 2025 is as follows:

	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term
Outstanding as of December 31, 2024		4,628,312		$	1.9445			4.75
Issued – March 2025 Down Round Trigger		2,582,234			1.2036			—
Series B Exercised		(267,849	)		1.9445			—
Outstanding as of March 31, 2025		6,942,697			1.2036	*		4.50
Exercisable as of March 31, 2025		6,942,697		$	1.2036	*		4.50

*	Reflects the exercise price after the March 2025 Down Round Trigger on March 17, 2025 as described above.