| Related Party Transactions |
| 12. |
Related Party Transactions |
Related
party transactions include the following:
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Aspen Avionics has a Commercialization
Agreement with Centro Italiano Richerche Aerospaziali S.c.p.A (“CIRA”), a stockholder of Aspen Avionics, whereby CIRA
licensed certain technology to Aspen Avionics. As consideration for the license, CIRA will receive a royalty based on each unit sold
by Aspen Avionics. In March 2020, Aspen Avionics entered into an agreement with CIRA to settle unpaid royalty amounts due under a
development agreement. The Company owed $0.6 million to CIRA as of June 30, 2026 and December 31, 2025. |
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Coastal Defense entered
into unsecured due on demand notes with two stockholders (the “Stockholder Notes”). Interest is charged at 7.00% per
year. As of December 31, 2025, the outstanding balance of the Stockholder Notes was $1.1 million. |
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During
2025, the Company engaged in settlement discussions with one counterparty, Jeffrey F. Parker as executor of the estate of Kenneth
Parker, and received a proposed settlement pursuant to which the Company is expected to pay the counterparty $1.0
million in full satisfaction of the obligations. The proposed settlement reflects a comprehensive resolution that includes offsets
for amounts owed by Failor Services, Inc. (“Failor”) and Coastal Restaurant Group (“CRG”) to Coastal Defense.
As of December 31, 2025, Coastal Defense’s recorded balances relating to these items were as follows: (i) amount due to
Jeffrey F. Parker related to the Stockholder Notes of $1.0
million, (ii) amount due from Failor of $0.4
million, and (iii) an immaterial amount due from CRG, resulting in a net amount due of $0.6
million. The proposed settlement payment of $1.0 million
exceeds the net recorded balance by $0.4
million, which was accrued at December 31, 2025 and included in “Related party payables” on the condensed consolidated
balance sheets. |
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In January 2026, the Company
made a payment of $0.1 million to one of the stockholders. In April 2026, the Company also finalized the settlement with Jeffrey
F. Parker and fully repaid the remaining Stockholder Note. No amounts remained outstanding under the Stockholder Notes as of June
30, 2026. |
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Edvard Per Erik Svehag,
a member of the Company’s Board of Directors, is a director of Dangroup ApS (“Dangroup”) and indirectly beneficially
owns approximately 60% of Dangroup. Dangroup was also a former shareholder of Sky-Watch, which the Company acquired in March 2022. |
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On
June 28, 2024, the Company signed an Incentive Agreement whereby the Company will pay Dangroup 20%
of Sky-Watch’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) as an incentive bonus for
their continued involvement in Sky-Watch’s governance, management and/or other operations commencing on January 1, 2025 for an
initial term of five years. The
agreement was amended in December 2024 and June 2026. In connection with the
June 2026 amendment, the Company also agreed to pay Dangroup DKK 1.3 million, or $0.2 million with a foreign exchange rate as of
June 30, 2026, on or before December 15, 2026. The incentive bonus related to fiscal year 2025 of $6.1 million was paid in June 2026. |
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On
June 28, 2024, the Company signed a Consulting Agreement whereby the Company will pay Mr. Svehag 2.5%
of Sky-Watch’s EBITDA as a consulting fee for his assistance with branding and rolling out products and services into new and
additional markets commencing on January 1, 2024. In February 2026, the Company hired Mr. Svehag as an employee and terminated the
Consulting Agreement. The amounts owed under this agreement are included in “Accrued expenses” on the condensed
consolidated balance sheet as of June 30, 2026 but were included in “Related party payables” on the condensed
consolidated balance sheet as of December 31, 2025. Consulting fees related to fiscal year 2025 of $0.9 million were paid in June
2026. |
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During the three and six
months ended June 30, 2026, the Company recorded $2.9 million and $3.5 million, respectively, and $2.0 million and $2.6 million of
expense in the three and six months ended June 30, 2025, respectively, within general and administrative expense related to these
agreements. |
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