NOTE 12 – REDEEMABLE NONCONTROLLING INTERESTS

Ondas Networks Preferred Stock

Prior to deconsolidation during the three Months ended March 31, 2026, Ondas Networks had issued multiple series of convertible preferred stock to third-party investors in connection with equity financings used to fund its operations. These preferred stock instruments generally accrued dividends and were convertible into shares of Ondas Networks common stock at the option of the holder. Because the preferred stock is redeemable upon the occurrence of specified events, the Company accounted for these instruments as temporary equity in accordance with ASC 480 prior to deconsolidation.

Redeemable Noncontrolling Interest in SPO

In connection with the acquisition of SPO, Shamir retained a noncontrolling equity interest. Shamir has the right (the “First Put Option”) to cause the Company to purchase all (but not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir at a purchase price of approximately $220.69 per share, including all capital notes of SPO then held by Shamir for no additional consideration. Shamir may exercise the First Put Option during the period commencing on October 15, 2025, and ending June 30, 2026.

As of December 31, 2025, the carrying value and redemption value of Shamir’s noncontrolling equity interest was $2.3 million. During the three months ended March 31, 2026, the Company attributed $1.1 million of SPO’s net loss and $0 thousand of foreign currency translation losses to the carrying value of Shamir’s noncontrolling interest. Since the noncontrolling interest is currently redeemable, the Company recorded accretion of $1.3 million during the three months ended March 31, 2026, to increase the carrying amount of the noncontrolling interest to its redemption value of $2.5 million as of March 31, 2026.

Redeemable Noncontrolling Interest in 4M

In connection with the acquisition of 4M in October 2025, the 4M shareholders retained a noncontrolling equity interest. The 4M shareholders have the right to cause the Company to purchase all (but not less than all) of the remaining issued and outstanding share capital of 4M at an aggregate purchase price equal to 30% of 90% of 4M’s EBITDA during the 12-month period ending on the first day of the calendar quarter during which such calculation is made. The 4M shareholders may exercise the redemption right during the period from January 1, 2026 through December 31, 2027. As of December 31, 2025, the carrying value of redeemable noncontrolling interest was $3.0 million.

For the period of January 1 through March 15, 2026, the Company attributed $427 thousand of 4M’s net loss and $8 thousand of foreign currency translation gains to the redeemable noncontrolling interest, resulting in a carrying value of $2.6 million immediately prior to the transaction described below.

On March 16, 2026, the Company and 4M shareholders entered into the 4M Supplement, whereby the Company acquired the remaining 30% of the issued and outstanding share capital of 4M, for a purchase price of (i) $3.7 million, paid with 352,968 shares of Common Stock, and (ii) an additional amount of up to $1.4 million in shares of common stock in contingent earn-out payments, subject to certain milestones as set forth in the 4M Supplement. During the three months ended March 31, 2026, the Company recognized $30 thousand of stock-based compensation in relation to the contingent earn-out payments.

Upon closing, the redemption feature associated with the noncontrolling interest was eliminated and the redeemable noncontrolling interest balance of $2.6 million was reclassified to additional paid-in capital.