NOTE 16 – RELATED PARTY TRANSACTIONS

As of June 30, 2026 and December 31, 2025, the Company owed $81 thousand to independent directors related to accrued compensation and $0.7 million to independent directors related to taxes collected on RSU shares delivered, respectively, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Investment in Ondas Networks

At December 31, 2025, Ondas Networks was a separate business unit that was consolidated in the December 31, 2025 financial statements. Ondas Networks provides mission-critical private wireless connectivity solutions for Industrial Internet of Things (IOT) applications, enabling secure, reliable, wide-area communications and edge data transport in demanding critical infrastructure environments.

On January 16, 2026, Ondas Networks completed a Series B preferred stock financing (the “2026 Networks Offering”) for aggregate gross proceeds of approximately $8.4 million, which included approximately $6.0 million from the Company and $2.0 million from other investors. In connection with the 2026 Networks Offering, Ondas Networks issued shares of Series B-1 and B-2 Preferred Stock. The Series B Preferred Stock accrues dividends at a rate of 8% per annum of the original issue price. Dividends are payable only when, as, and if declared by the board of directors of Ondas Networks and may be paid in cash or additional shares of Ondas Networks preferred stock. Each share of Series B Preferred Stock is convertible at the option of the holder at any time into shares of Ondas Networks common stock at an initial conversion price equal to the original issue price, subject to standard adjustments. The Series B Preferred Stock is redeemable upon the occurrence of specified events, including at the option of the holder after a stated period, at amounts intended to provide a return of capital plus accrued dividends.

During the quarter ended March 31, 2026, the Company determined that it no longer held a controlling financial interest in Ondas Networks, a VIE, as a result of the 2026 Networks Offering. This determination resulted from the 2026 Networks Offering, pursuant to which minority preferred shareholders exercised warrants and acquired additional voting interests in Ondas Networks (refer to Note 18). As a result of these additional issuances, the Company’s ownership and voting interests were diluted such that it no longer possessed the unilateral power to direct the activities that most significantly impact Ondas Networks’ economic performance. Accordingly, the Company was not considered the primary beneficiary and deconsolidated Ondas Networks effective January 16, 2026. Subsequent to deconsolidation, the assets, liabilities, and results of operations of Ondas Networks are no longer included in the Company’s consolidated financial statements.

Upon deconsolidation, the Company derecognized all assets and liabilities of Ondas Networks, including the related noncontrolling interest, and measured the retained ownership interest at fair value. The Company recognized a gain on deconsolidation of $51.5 million, which is included in other income (expense), net in the condensed consolidated statements of operations for the six months ended June 30, 2026. The most significant carrying amounts of the assets and liabilities that were deconsolidated were inventory of $3.6 million, deposits and other assets of $2.3 million, convertible notes payable of $5.0 million, accrued expenses and other liabilities, current and long-term, of $2.7 million, and notes payable to the Company of $10.4 million.

Following the deconsolidation, the Company retains an approximately 47.5% ownership interest in Ondas Networks and has the ability to exercise significant influence over Ondas Networks’ operating and financial policies. The retained equity interest is presented as Investment in unconsolidated affiliate within noncurrent assets and the retained note receivable is presented as Other assets on the condensed consolidated balance sheets. The Company elected the fair value option for its retained equity investment in and note receivable from Ondas Networks for operational ease associated with subsequent measurement. As a result, the retained interests are carried at fair value, with changes in fair value recognized in earnings each reporting period and included in other income (expense) in the condensed consolidated statements of operations.

For the three and six months ended June 30, 2026, we recognized a loss of $2.5 million for the change in fair value of the equity investment in affiliate, which is included in other income (expense) in the condensed consolidated statements of operations.

Networks Note

On January 16, 2026, upon the deconsolidation of Ondas Networks, the Company recorded a note receivable from Ondas Networks (the “Networks Note”). The Networks Note is presented within other assets on the condensed consolidated balance sheets and is separate from the Company’s equity-method investment in Ondas Networks. The Networks Note represents a contractual debt instrument and is accounted for as a financial asset in accordance with U.S. GAAP. The face value of the Networks Note is $10 million, and bears interest at 8% and matures in December 2027. As of January 16, 2026, the fair value of the Networks Note was $8.8 million.

As of June 30, 2026, the fair value of the Networks Note was $9.1 million. For the three and six months ended June 30, 2026, we recognized a gain of $0.3 million on the change in fair value of the note receivable, which is included in other income (expense) in the condensed consolidated statements of operations. No principal or interest has been paid since the Networks Note was issued.

Ondas Networks Convertible Notes

On July 8, 2024, July 23, 2024, and November 13, 2024 C&P elected to purchase Convertible Notes in Ondas Networks in the aggregate original principal amount of $0.7 million, $0.8 million, and $1.0 million, respectively, (the “C&P Networks Convertible Notes”). Joseph Popolo, a former director of the Company, was the sole control person of C&P.

Along with the November 13, 2024 Networks Convertible Notes, Ondas Networks issued warrants to purchase $1.0 million in shares of Ondas Networks Preferred Stock at an exercise price of $20.65 per share (the “Networks Warrants”). The number of Networks Warrants exercisable under the Security Agreement is calculated by $1.0 million divided by the Conversion Price, which is the amount equal to the price per share of Ondas Networks’ most senior series of Preferred Stock issued to investors in Ondas Networks’ next equity financing date, or if none, then $41.3104. The Networks Warrants are exercisable commencing November 13, 2024 through November 13, 2029 and have a relative fair value of $0.4 million, which was recorded as debt discount.

As of December 31, 2025, the total outstanding principal on the C&P Networks Convertible Notes was $2.5 million. Accrued interest as of December 31, 2025, was $0.2 million and is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For the three months ended June 30, 2025, we recognized interest expense of $47 thousand and amortization expense of $0.1 million related to debt discount and issuance costs. For the six months ended June 30, 2025, we recognized interest expense of $0.1 million and amortization expense of $0.2 million related to debt discount and issuance costs. Interest expense and amortization expense related to debt discount and issuance costs are included in interest expense in the condensed consolidated statements of operations.

On January 16, 2026, Ondas Networks consummated an additional equity financing round. Pursuant to the Securities Purchase Agreement, the C&P Warrants and the principal balance and accrued interest on the C&P Networks Convertible Notes were converted into shares of Ondas Networks Preferred Stock.

OAS Convertible Notes

On October 10, 2024, Privet Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company and OAS, elected to purchase a convertible note in OAS in the original principal amount of $1.0 million (the “Privet OAS Convertible Note”). As of December 31, 2025, the total outstanding principal on the Privet OAS Convertible Note was $1.0 million, net of unamortized issuance costs of $7 thousand. Accrued interest as of December 31, 2025 was $61 thousand, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For the three months ended June 30, 2025, we recognized interest expense of $12 thousand and amortization expense of $2 thousand related to the issuance costs. For the six months ended June 30, 2025, we recognized interest expense of $25 thousand and amortization expense of $5 thousand related to issuance costs. Interest expense and amortization expense related to issuance costs are included in interest expense in the condensed consolidated statements of operations.

On January 5, 2026, in connection with the OAS Exchange, Privet Ventures LLC converted $1.0 million in principal and $61 thousand of accrued interest on the Privet OAS Convertible Note into OAS Common Stock under the original conversion terms of the OAS Convertible Notes, which was immediately exchanged for 1,153,625 shares of Common Stock, repaying the Privet OAS Convertible Note in full.

Ondas Networks Secured Note

On September 3, 2024, Ondas Networks entered into the C&P Security Agreement, in which Ondas Networks may draw, and C&P shall loan Ondas Networks, up to $1.5 million. Pursuant to the C&P Security Agreement, Ondas Networks issued C&P the Ondas Networks Secured Note.

On September 3, 2024 and October 7, 2024, pursuant to the C&P Security Agreement, Ondas Networks issued C&P warrants to purchase $1.0 million and $0.5 million, respectively, in shares of Ondas Networks Preferred Stock at an exercise price of $20.65 per share (the “C&P Warrants”). The number of warrants exercisable under the C&P Security Agreement is calculated by $1.5 million divided by the Conversion Price, which is the amount equal to the price per share of the most senior series of Ondas Networks Preferred Stock issued to investors in Ondas Networks’ next equity financing date, or if none, then $41.3104. The C&P Warrants are exercisable commencing September 3, 2024 through September 3, 2029 and October 7, 2024 through October 7, 2029, respectively. The C&P Warrants have a total relative fair value of $0.6 million, which was recorded as debt discount. Joseph Popolo, a former director of the Company, was the sole control person of C&P.

As of December 31, 2025, the total outstanding principal on the Ondas Networks Secured Note was $1.5 million. Accrued interest as of December 31, 2025 was $0.2 million, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For the three months ended June 30, 2025, we recognized interest expense of $30 thousand. For the six months ended June 30, 2025, we recognized interest expense of $59 thousand and amortization expense of $0.2 million related to the debt discount and issuance costs. Interest expense and amortization expense related to the debt discount and issuance costs are included in interest expense in the condensed consolidated statements of operations. No principal or interest was paid on the Ondas Networks Secured Note through December 31, 2025.

Effective January 16, 2026, the Company determined that it no longer held a controlling financial interest in Ondas Networks and no longer includes the assets, liabilities, and results of operations of Ondas Networks in the condensed consolidated financial statements subsequent to that date.