On November 7, 2025, the Company held a special meeting of its shareholders where it obtained Shareholder Approval, resulting in the Shareholder Approval Date being such date.

Under the terms of the Common Warrants, the Investors may not exercise the warrants to the extent such exercise would cause the Investor, together with its affiliates, to beneficially own a number of shares of common stock which would exceed 4.99% (or, at such Investor’s option upon issuance, 9.99%), of the Company’s then outstanding Common Stock following such exercise, excluding for purposes of such determination shares of Common Stock issuable upon exercise of such warrants which have not been exercised.

The Company classified the issued Common Stock and Warrants as equity based on the guidance provided under ASC 815-40.

Offering Costs related to the Stock Purchase Agreement:

Upon the closing of the Offering and pursuant to an agreement entered into with H.C. Wainwright & Co., LLC (the “Underwriter”), the Company paid in cash to the Underwriter a total amount fees totaling 7% of gross proceeds, plus $35,000 in expenses and issued to the Underwriter warrants equal to 7% of shares sold in the Offering, which are exercisable for five years after shareholder approval at the exercise price of 125% of the share price in the Offering ($0.7688).

As of the issuance date of the underwriter warrants, the fair value of the warrants was estimated at $38. The valuation was based on a Black-Scholes option-pricing model, using an expected volatility of 73.6%, a risk-free rate of 3.71%, a contractual term of 5 years and a stock price at the issuance date of $0.5806. The issuance costs incurred by the company was approximately $199, which was recognized in equity.

Warrant inducement agreement September 2025:

In September 2025, the Company entered into a warrant inducement agreement (the “Inducement Letter”) with a holder of existing warrants (the “Existing Warrants”). Pursuant to the Inducement Letter, the holder agreed to exercise for cash the Existing Warrants to purchase an aggregate of 4,270,197 shares of the Company’s Common Stock at an exercise price of $0.37 per share in consideration of the Company’s issuance new common stock purchase warrants (the “New Warrants”) , to purchase up to an aggregate of 6,405,296 shares of the Company’s common stock (the “New Warrant Shares”) at an exercise price of $0.37 per share. The Company received aggregate gross proceeds of approximately $1.6 million from the exercise of the Existing Warrants by the holder, before deducting financial advisory fees and other offering expenses payable by the Company.

The Existing Warrants were originally issued as follows:

1,271,187 warrants on December 20, 2023, with an expiration date of June 20, 2029 at an exercise price of $1.18 per share

Offering of warrants September 2025:

As part of the same transaction mentioned above, the Company issued the following new warrants (the “New Warrants”) to the holder of existing warrants :

Warrants to purchase up to 3,406,286 shares of the common stock, par value $0.0001 per share, at an exercise price of $0.37 per share, at 1:1 exchange ratio, exercisable for a period of five years, subject to shareholder approval (referred as “New Warrants”).

On November 7, 2025, the Company held a special meeting of its shareholders where it obtained Shareholder Approval, resulting in the Shareholder Approval Date being such date.

The exercise price and number of new Shares issuable upon exercise of the New Warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, subsequent rights offerings, pro rata distributions, reorganizations, or similar events affecting the Company’s Common Stock and the exercise price.

In accordance with ASC Topic 815 guidance on equity classified warrant modifications, the incremental change in fair value of the induced warrants was accounted for as an additional equity issuance cost for the warrant inducement, which was recorded to additional paid-in capital. 

Offering Costs related to September 2025 fund-raising round:

Rodman & Renshaw LLC and H.C. Wainwright & Co., LLC (“Wainwright”) acted as financial advisors to the Company in connection with the transactions contemplated by the Inducement Letter. Pursuant to an engagement letter with Wainwright, the Company has agreed to pay the financial advisors a cash fee equal to 7.0% of the aggregate gross proceeds received from the holder’s exercise of the Existing Warrants, as well as a management fee equal to 1.0% of the gross proceeds from the exercise of the Existing Warrants. The Company has also agreed to issue to the financial advisors or their designees warrants (the “Inducement Placement Agent Warrants”) to purchase up to 298,914 shares of Common Stock (representing 7.0% of the Existing Warrants being exercised), which will have the same terms as the New Warrants having a term of five years of Stockholder Approval (as defined above) except the Inducement Placement Agent Warrants will have an exercise price equal to $0.4625 per share (125% of the exercise price of the Existing Warrants).

As of the issuance date of the underwriter warrants, the fair value of the warrants was estimated at $78. The valuation was based on a Black-Scholes option-pricing model, using an expected volatility of 73.91%, a risk-free rate of 3.71%, a contractual term of 5 years and a stock price at the issuance date of $0.4322

The issuance costs incurred by the company which was recognized in equity was :

Offering of common stocks and pre-funded warrants September 2025:

On September 27, 2025, the Company entered into the PIPE Purchase Agreement with White Lion, pursuant to which the Company agreed to issue and sell to White Lion in a private placement (the “White Lion Private Placement”):: 

871,766 shares of Common Stock for a purchase price of $0.2125 per share of Common Stock and

The total gross proceeds were $850,000

The Pre-Funded Warrants are immediately exercisable at an exercise price of $0.0001 per share of Common Stock and will not expire until exercised in full.

The Company may not effect any exercise of the Pre-Funded Warrants, and White Lion does not have the right to exercise any portion of the Pre-Funded Warrants, if such exercise, aggregated with all other shares then beneficially owned by White Lion (as calculated pursuant to Section 13(d) of the Exchange Act) would result in White Lion beneficially owning more than 4.99% of the outstanding Common Stock. The beneficial ownership limitation may be increased or decreased by White Lion to any other percentage not in excess of 9.99% upon notice to the Company.

Equity Line of Credit Agreement October 2025:

On September 27, 2025, the company entered into a equity line of credit agreement (the “ELOC Purchase Agreement”) and the White Lion registration rights agreement (the “White Lion RRA”) with White Lion, commencing from October 1, 2025 (the “Effective Date”) provided that the Company did not cancel the ELOC Purchase Agreement prior to the Effective Date. Pursuant to the ELOC Purchase Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to the Commitment Amount of $30,000,000 in aggregate gross purchase price of newly issued shares of the Company’s Common Stock for the 36-month period beginning form October 1, 2025 (the “Commitment Shares”), subject to certain limitations and conditions set forth in the ELOC Purchase Agreement. The shares will be issued at a fixed discount to the lowest of the prevailing market price or the lowest traded price in the preceding 30 days.

As consideration for White Lion’s irrevocable commitment to purchase the Company’s Common Stock up to the Commitment Amount, the Company agreed to issue Commitment Shares equal to the Commitment Amount of $750,000 divided by the lowest traded price of the Company’s Common Stock during the 30 business days prior to the issuance of the Commitment Shares. which may be issued at any time as unregistered shares or as registered shares once the Resale Registration Statement becomes effective. The commitment to purchase the Commitment Shares was terminable at the option of the Company at any time on or prior to October 1, 2025, as more fully described in the ELOC Purchase Agreement.

The maximum number of shares issuable under the ELOC Purchase Agreement is subject to the exchange cap equal to 19.99% of the Company’s outstanding Common Stock as of the Commencement Date.

The number of shares sold pursuant to any such notice may not exceed 40% of the average daily trading volume for the Common Stock traded on Nasdaq immediately preceding receipt of the applicable Purchase Notice, and can be increased at any time at the sole discretion of White Lion.

The Company is obligated under the ELOC Purchase Agreement and the White Lion RRA to file a registration statement (the “Resale Registration Statement”) with the SEC to register the Common Stock under the Securities Act, for the resale by White Lion of shares of Common Stock that the Company may issue to White Lion under the ELOC Purchase Agreement, as well as to register the Commitment Shares. This filing must occur within five business days of the date of the ELOC Purchase Agreement. The Company filed the Resale Registration Statement on October 7, 2025. The Commitment Shares obligation expense arises upon effectiveness of the ELOC agreement, until the Commitment Shares are issued which the company can issue immediately or at any time thereafter.

The Company may terminate the ELOC Purchase Agreement at any time, which shall be effected by written notice being sent by the Company to White Lion.

2025 Equity Incentive Plan

In August 2025, under and in accordance with the equity restructure, the Company’s Board of Directors terminated the Old 2015 Equity Incentive Plan.

On August 12, 2025, the Company’s shareholders approved the Actelis 2025 Equity Incentive Plan (the “2025 Plan”), authorizing the issuance of up to 1.8 million shares of the Company’s common stock for grants of stock options and restricted stock units (“RSUs”) awards to employees, directors, and consultants.

The 2025 Plan became effective upon shareholder approval and will remain in effect until 2035, unless earlier terminated in accordance with its terms. 

Pursuant to the current Section 102 of the Israeli Tax Ordinance, which came into effect on January 1, 2003, options may be granted through a trustee (i.e., Approved 102 Options) or not through a trustee (i.e., Unapproved 102 Options). The Company elected to grant its options and RSU’s through a trustee. As a result, the Company will not be allowed to claim as an expense for tax purposes in Israel the amounts credited to the employee as capital gains to the grantees, although it will generally be entitled to do so in respect of the salary income component (if any) of such awards when the related tax is paid by the employee.