NOTE 5 – GOODWILL AND ACQUISITIONS

The Company completed the acquisitions detailed below to expand product offerings, add critical technology, and enter new markets. Control was obtained through the purchase of the issued and outstanding share capital, membership interests, by merger or through the purchase of specified assets constituting a business, pursuant to the respective acquisition agreement. Equity consideration issued in connection with the acquisitions was measured at fair value based on the quoted market price on the respective acquisition dates. All identifiable intangible assets acquired other than goodwill are finite lived.

Acquisition-related costs incurred in connection with the 2026 acquisitions were $14.1 million and $24.4 million for the three and nine months ended September 30, 2026, respectively, and were expensed as incurred. These costs are included in general and administrative expense in the condensed consolidated statements of operations. The accounts receivable acquired across the Company’s 2026 acquisitions were not material individually. Accordingly, the Company has not separately disclosed the gross contractual amounts receivable or the best estimate of contractual cash flows not expected to be collected. The unaudited pro forma financial information reflected below includes adjustments that are directly attributable to the acquisitions and factually supportable, including incremental amortization of acquired intangible assets and incremental depreciation related to fair value adjustments of property and equipment.

The Company valued identifiable intangible assets acquired in its business combinations, and assets acquired that are consolidated as variable interest entities (i.e., Indo Earth Ltd.), using valuation approaches applied consistently across all acquisitions completed during the period. For material acquisitions, the Company primarily used income-based valuation techniques to estimate fair value based on the present value of expected future economic benefits, including the multi-period excess earnings method for developed technology and the relief-from-royalty method for trade names. These valuations incorporate management's financial forecasts, estimated useful lives, contributory asset charges, royalty rates, tax rates, and discount rates. For acquisitions determined to be immaterial, the Company may use market-based benchmarking approaches, including observable transaction multiples, comparable royalty rate benchmarks, and other market-corroborated data, to estimate the fair value of acquired intangible assets. The Company engaged third-party valuation specialists, as appropriate, to assist in the identification and valuation of intangible assets acquired.

2026 Acquisitions

Rotron Aerospace Ltd.

On March 16, 2026, the Company completed the acquisition of Rotron Aerospace Ltd. (“Rotron”), pursuant to the Share Purchase Agreement (the “Rotron Acquisition Agreement”), by and among the Company, Gilo Holdings Ltd., a private limited company existing under the laws of England and Wales (“Gilo”) and indirect owner of Rotron, and the shareholders of Gilo. Pursuant to the Rotron Acquisition Agreement, the Company acquired 100% of the issued and outstanding share capital of Rotron. The purchase consideration includes cash consideration of $6.7 million and the issuance of 3,334,753 shares of the Company’s common stock with a fair value of $35.1 million.

Pursuant to the Rotron Acquisition Agreement, the Company agreed to contingent consideration in the form of an earn-out payable over four post-acquisition periods, generally corresponding to calendar years 2026 through 2029. The earn-out is based on the achievement of specified program win milestones and revenue targets during each earn-out period. For each period, the earn-out consists of (i) a program win component calculated as a percentage of the total contract value of qualifying customer program wins awarded during the period, subject to defined eligibility criteria and an aggregate cap of £25.0 million, and (ii) a revenue component based on revenues earned in excess of defined target thresholds, which is uncapped. The revenue-based earn-out is payable only to the extent it exceeds the program win earn-out for the same period, and failure to achieve an earn-out in any period does not preclude payments in subsequent periods. The earn-out arrangement is accounted for as contingent consideration and measured at fair value, with changes in fair value recognized in earnings until settlement.

In addition, the Rotron Acquisition Agreement provides for a separate contingent payment to the former shareholders based on the amount of preacquisition research and development credit ultimately received by the Company. The earn-out and related contingent consideration was recorded at its acquisition-date fair value of $42.5 million.

The intangible assets acquired include $25.0 million allocated to developed technology, with a useful life of five years, and $3.7 million allocated to trademarks, with a useful life of five years. The acquired intangible assets have a weighted-average amortization period of five years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. No measurement period adjustments were recorded during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments primarily related to an increase in contingent consideration of $0.8 million, a decrease in deferred tax liabilities of $1.3 million, and increases in certain accruals. The measurement period adjustments resulted in a net decrease to goodwill of $0.6 million. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in the acquisition-date fair value of contingent consideration, (2) changes in fair values of property, plant, and equipment, (3) changes in valuation of intangible assets such as developed technology, tradename, as well as goodwill, (4) adjustments to deferred tax balances and (5) other changes to assets and liabilities, including contract assets and contract liabilities.

Rotron generated revenue of $9.5 million and a net loss of $1.1 million for the three months ended September 30, 2026, and revenue of $13.3 million and net loss of $2.4 million for the nine months ended September 30, 2026, in each case from the acquisition date, which are included in the Company's condensed consolidated statements of operations.

Bird Aerosystems Ltd.

On March 11, 2026, the Company completed the acquisition of Bird Aerosystems Ltd., a company organized under the laws of the State of Israel (“Bird”) pursuant to the Share Purchase Agreement (the “Bird Purchase Agreement”), entered into by and among the Company, Bird, Bird’s shareholders, and a general partnership organized under the laws of the State of Israel, solely in its capacity as the representative, agent and attorney-in-fact of the indemnifying parties. The Company acquired 100% of the issued and outstanding share capital of Bird for an aggregate purchase price of $127.9 million consisting of $23.5 million in cash consideration and 10,291,207 shares of the Company’s common stock with a fair value of $104.5 million.

The intangible assets acquired include $34.6 million allocated to customer relationships with a useful life of eight years, $21.1 million allocated to developed technology with a useful life of eight years, and $2.7 million allocated to trademarks with a useful life of seven years. The acquired intangible assets have a weighted-average amortization period of eight years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. No measurement period adjustments were recorded during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments primarily related to a decrease in deferred tax liabilities of $12.8 million and an increase in certain accruals of $0.7 million. The measurement period adjustments resulted in a net decrease to goodwill of $12.1 million. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in the valuation of acquired inventory, including fair value step-up, (2) changes in fair values of property, plant, and equipment, (3) changes in valuation of intangible assets such as customer relationships, developed technology, and trademarks, as well as goodwill, (4) adjustments to deferred tax balances, and (5) other changes to assets and liabilities, including contract assets and contract liabilities.

Bird generated revenue of $5.5 million and net loss of $6.4 million for the three months ended September 30, 2026, and revenue of $22.0 million and net loss of $11.1 million for the nine months ended September 30, 2026, in each case from the acquisition date, which are included in the Company's condensed consolidated statements of operations.

Indo-Earth Moving Ltd.

On March 17, 2026, the Company completed the acquisition of Indo Earth Moving Ltd. (“Indo”) pursuant to a Share Purchase Agreement with Indo’s shareholders and their representative (the “Indo Agreement”). Pursuant to the Indo Agreement, at closing the Company transferred cash consideration of $5.7 million and 2,441,506 shares of Common Stock with a fair value of $27.5 million, for total consideration of $33.2 million (together, the “Indo Base Consideration”), in exchange for all outstanding equity interests in Indo. The Company also agreed to issue 3,051,882 shares of Common Stock upon the achievement of specified technical and regulatory milestones (the “Indo Milestone Payment”) and agreed to make additional earn-out payments of up to $140.0 million, payable in cash or shares of the Company's Common Stock at the Company's election, based on the achievement of defined post-closing revenue, bookings and profitability targets (the “Indo Earn-Out Payments”).

Although the transaction was structured as a legal acquisition, (i) Indo did not meet the GAAP definition of a business under ASC 805, (ii) Indo qualified as a variable interest entity (“VIE”) as its pre-Acquisition equity capitalization was not sufficient to finance its activities without additional subordinated financial support, and (iii) the Company was the primary beneficiary of Indo. As such, Indo was consolidated in the Company’s condensed consolidated financial statements beginning on the date the Company obtained a controlling financial interest and recognized a loss on the acquisition measured as the difference between the fair value of the consideration paid and the net amount of Indo’s identifiable assets measured in accordance with ASC 805.

The Indo Milestone Payment and Indo Earn-Out Payments represent liability-classified contingent consideration and were measured at fair value at the date the Company obtained a controlling financial interest. The fair value of the Indo Milestone Payment and Indo Earn-Out Payments at the date the Company obtained a controlling financial interest totaled $25.4 million and $58.8 million, respectively. The fair value of the Indo customer relationship acquired totaled $92.5 million and has an estimated useful life of ten years. Amortization of the Indo Customer Relationship is presented in sales and marketing expense on a straight-line basis.

Under the terms of the Indo Agreement, the Company may be entitled to recover all or a portion of the Indo Base Consideration transferred if certain conditions are not satisfied within a defined period following the acquisition date. As of September 30, 2026, the Company has concluded that the refundability provisions represent a contingent feature of the purchase consideration. Accordingly, the refundable amounts continue to be evaluated at each reporting date based on the facts and circumstances then existing, including the likelihood that the relevant conditions will be met. The Company has not recorded any refund receivable as of September 30, 2026, as management has determined that realization of any refund is not probable.

World View

On April 1, 2026, the Company completed the acquisition of World View Enterprises Inc., a Delaware corporation ("World View") pursuant to the Agreement and Plan of Merger dated March 23, 2026 (the “World View Agreement”), by and among the Company, Wassaic Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Wassaic Merger Sub”), World View and Fortis Advisors LLC, a Delaware limited liability company, in its capacity as the representative. Pursuant to the World View Agreement, Wassaic Merger Sub merged with and into World View, with World View surviving the merger as a wholly owned subsidiary of the Company and the Company obtaining 100% of the voting equity interests in World View. The aggregate purchase consideration was $145.3 million, consisting of 12,774,802 shares of the Company’s common stock with a fair value of $112.5 million, $10.0 million related to effective settlement of a pre-acquisition note receivable described below, and $22.8 million of cash consideration.

Prior to the acquisition, the Company purchased a $10.0 million convertible promissory note issued by World View. The promissory note was entered into in contemplation of the acquisition and was accounted for at fair value prior to closing. The promissory note was effectively settled upon the Company obtaining control of World View and its fair value upon closing was included in the aggregate consideration transferred.

The acquisition of World View expands the Company's capabilities in advanced aerial intelligence, surveillance, and reconnaissance solutions and enhances the Company's position in the defense, security, and critical infrastructure markets.

The intangible assets acquired include $68.5 million allocated to developed technology with a useful life of eight years, and $2.9 million allocated to trade name with a useful life of eight years. The acquired intangible assets have a weighted-average amortization period of eight years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. During the three and nine months ended September 30, 2026, the Company recorded measurement period adjustments related to a $0.6 million decrease in fair value of acquired intangible assets and a $0.6 million decrease in deferred tax liabilities. As a result, these adjustments had no net impact on goodwill. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in valuation of intangible assets such as developed technology and trade name, as well as goodwill, (2) changes to acquired deferred tax assets and liabilities, including the impact of Section 382 ownership change analysis, and (3) other changes to assets and liabilities, including contract assets and contract liabilities.

Concurrently with the closing of the acquisition, the Company granted restricted stock awards to certain continuing employees of World View ("World View Awards"). The World View Awards had an aggregate grant date fair value of $12.0 million. The World View Awards were granted outside the Company's existing equity incentive plan as inducement awards in connection with the acquisition and are subject to terms and conditions of the applicable award agreements. The World View Awards vest over a twelve month period subject to recipient's continued employment through the applicable vesting dates. The Company accounted for these awards separately from the business combination as stock-based compensation.

World View generated revenue of $4.1 million and net loss of $13.7 million for the three months ended September 30, 2026, and revenue of $6.0 million and net loss of $34.7 million for the nine months ended September 30, 2026, in each case from the acquisition date, which are included in the Company's condensed consolidated statements of operations.

Mistral

On April 24, 2026, the Company completed the acquisition of Mistral, Inc., a Delaware corporation ("Mistral"), pursuant to the Agreement and Plan of Merger dated March 8, 2026 (the “Mistral Agreement”), by and among the Company, Project Cyclone, a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Mistral and Mistral’s sole shareholder. Pursuant to the Mistral Agreement, Merger Sub merged with and into Mistral, with Mistral surviving the merger as a wholly owned subsidiary of the Company and the Company obtaining 100% of the voting equity interests in Mistral. The aggregate purchase consideration was $176.7 million, consisting of 2,612,891 shares of the Company’s common stock with a fair value of $27.6 million and $150.0 million of deferred consideration.

The deferred consideration represented a fixed monetary obligation that was payable through the issuance of a variable number of shares of the Company’s common stock. An initial installment was issued at the closing, with the deferred consideration payable in six remaining equal installments over the 20 business day period following the acquisition date. During the three months ended June 30, 2026, the Company recognized a gain of $7.4 million resulting from changes in the fair value of the deferred consideration liability through settlement. The obligation was settled through issuance of an aggregate of 18,070,922 shares of the Company's common stock.

The Company acquired Mistral to strengthen its position in the U.S. defense market by gaining access to established government contracting channels and expanding its capabilities in defense and homeland security programs. The acquisition also enables the Company to accelerate the deployment of its autonomous systems and enhance its ability to participate directly in large-scale U.S. government contracts.

The intangible assets acquired include $86.3 million allocated to program relationships with a useful life of five years, $11.3 million allocated to customer relationships with a useful life of nine years, and $6.2 million allocated to trademarks with a useful life of seven years. The acquired intangible assets have a weighted-average amortization period of six years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. During the three and nine months ended September 30, 2026, the Company recorded measurement period adjustments primarily related to the settlement of net working capital adjustments of $0.9 million and a $1.4 million decrease in deferred tax liabilities. These measurement period adjustments resulted in a $2.2 million net decrease in goodwill. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in the valuation of acquired inventory, including fair value step-up, (2) changes in valuation of intangible assets such as program relationships, customer relationships, and trademarks, as well as goodwill, (3) adjustment to deferred tax balances, and (4) other changes to assets and liabilities, including contract assets and contract liabilities.

Mistral generated revenue of $50.0 million and net loss of $1.8 million for the three months ended September 30, 2026, and revenue of $57.5 million and net income of $10.6 million for the nine months ended September 30, 2026, in each case from the acquisition date, which are included in the Company's condensed consolidated statements of operations.

Omnisys

On May 21, 2026, the Company completed the acquisition of Omnisys Ltd., a company organized under the laws of the State of Israel ("Omnisys") pursuant to the Share Purchase Agreement dated May 16, 2026 (the “Omnisys Agreement”), by and among the Company, Omnisys, Omnisys' shareholders, and Mr. Ofer Yarden, solely in such person’s capacity as the representative, agent and attorney-in-fact of the indemnifying parties. Pursuant to the Omnisys Agreement, the Company acquired 100% of the issued and outstanding share capital of Omnisys for an aggregate purchase consideration of $211.6 million consisting of 3,098,291 shares of the Company’s common stock with a fair value of $28.4 million, $170.0 million of deferred consideration and contingent earn-out consideration with a fair value of $13.2 million.

The deferred consideration consisted of a fixed monetary obligation of $170.0 million, of which $2.4 million was payable in cash and $167.6 million was payable through the issuance of a variable number of shares of the Company’s common stock. An initial installment was issued at the closing, with the deferred consideration payable in six remaining equal installments over 24 trading days following the acquisition date. During the three months ended June 30, 2026, the Company recognized a loss of $1.2 million resulting from changes in the fair value of the deferred consideration liability through settlement. The obligation was settled through issuance of an aggregate of 20,056,441 shares of the Company's common stock.

The contingent earn-out arrangement provides for additional consideration of up to $60.0 million, payable to the former shareholders of Omnisys in either cash or the Company’s common stock, at the Company’s election. The earn-out is contingent upon achievement of specified cumulative new customer order targets during the period beginning on the acquisition date and ending on the third anniversary of the acquisition date. No earn-out payment is due unless the specified minimum performance threshold is achieved. If cumulative new customer orders exceed the specified minimum performance threshold, the earn-out increases on a linear basis, up to a maximum payment of $60.0 million upon achievement of the maximum specified target amount. The contingent consideration is classified as a liability and measured at fair value at each reporting date, with changes in fair value recognized in earnings until the contingency is resolved. There were no changes to the fair value of the contingent consideration through September 30, 2026.

The Company acquired Omnisys to strengthen its autonomous defense systems portfolio by adding battle-proven battlefield orchestration software that complements its existing autonomous platforms and expands opportunities to deliver integrated software-enabled defense solutions to global customers.

The intangible assets acquired include $83.7 million allocated to developed technology with a useful life of eight years, $23.3 million allocated to customer relationships with a useful life of five years, and $2.2 million allocated to trademarks with a useful life of six years. The acquired intangible assets have a weighted-average amortization period of seven years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. During the three and nine months ended September 30, 2026, the Company recorded measurement period adjustments primarily related to a $1.4 million decrease in acquired intangible assets and a $12.4 million decrease in the deferred tax liabilities. The measurement period adjustments resulted in a net decrease to goodwill of $11.0 million. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in acquisition-date fair value of contingent consideration, (2) changes in valuation of intangible assets such as customer relationships, developed technology, and trademarks, as well as goodwill, (3) adjustments to deferred tax balances, and (4) other changes to assets and liabilities, including contract assets and contract liabilities.

Omnisys generated revenue of $5.9 million and net loss of $8.7 million for the three months ended September 30, 2026, and revenue of $19.1 million and net loss of $6.6 million for the nine months ended September 30, 2026, in each case from the acquisition date, which are included in the Company's condensed consolidated statements of operations.

High Point UAS, LLC

On July 2, 2026, the Company completed the acquisition of 100% of the outstanding membership interests of High Point UAS, LLC, ("High Point") the parent of DZYNE Technologies, LLC, (“DZYNE”), a U.S.-based defense technology company specializing in long-endurance autonomous aircraft, counter-UAS systems and autonomous effects. The total consideration transferred was $850.5 million, consisting of $175.6 million of cash, 39,999,998 shares of the Company's common stock issued at closing with a fair value of $317.6 million, and an additional 44,999,998 shares to be delivered to the sellers on January 4, 2027 with a fair value of $357.3 million. The cash consideration includes amounts paid on behalf of the sellers at closing and is subject to a post-closing working capital adjustment. The purchase price allocation is preliminary and subject to change during the measurement period.

The Company acquired DZYNE to expand its autonomous defense platform and to add an experienced workforce and established relationships with U.S. and allied defense customers.

The intangible assets acquired include $170.2 million allocated to developed technology with useful lives ranging from five to seven years and $113.2 million allocated to customer relationships with a useful life of eight years. The acquired intangible assets have a weighted-average amortization period of approximately seven years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. Substantially all of the preliminary goodwill recognized is currently expected to be deductible for income tax purposes. The amount of tax-deductible goodwill remains provisional and subject to change as the Company completes its acquisition accounting. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in the valuation of acquired inventory, (2) changes in the valuation of intangible assets such as customer relationships and developed technology, as well as goodwill, (3) adjustments to deferred tax balances, and (4) other changes to assets and liabilities, including contract assets and contract liabilities.

DZYNE generated revenue of $30.1 million and a net loss of $22.2 million since the acquisition date, which are recognized in the condensed consolidated statement of operations for the three and nine months ended September 30, 2026.

Cyberhawk Holdings Limited

On August 10, 2026, the Company completed the acquisition of Cyberhawk Holdings Limited, a private company incorporated in England and Wales (“Cyberhawk”), pursuant to the Share Purchase Agreement (the “Cyberhawk Agreement”), dated June 17, 2026, by and among the Company, Cyberhawk and the shareholders of Cyberhawk. Pursuant to the Cyberhawk Agreement, the Company acquired 100% of the issued and outstanding share capital of Cyberhawk for an aggregate purchase consideration of $123.6 million consisting of $118.2 million in cash and 581,732 shares of the Company's common stock with a fair value of $5.4 million.

The Company acquired Cyberhawk to strengthen its critical infrastructure intelligence platform by adding complementary AI-enabled inspection technology, software capabilities, industry expertise, and customer relationships. The acquisition expands the Company's presence in critical infrastructure and industrial markets and is expected to enhance future growth opportunities through the combined offering of autonomous systems, inspection services, and data analytics solutions.

The intangible assets acquired include $30.0 million allocated to developed technology with a useful life of six years, $25.0 million allocated to customer relationships with a useful life of eleven years, and $3.0 million allocated to trademarks with a useful life of six years. The acquired intangible assets have a weighted-average amortization period of eight years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in valuation of intangible assets such as customer relationships, developed technology, and trademarks, as well as goodwill, (2) adjustments to deferred tax balances, and (3) other changes to assets and liabilities, including contract assets and contract liabilities.

Cyberhawk generated revenue of $6.6 million and net loss of $2.4 million since the acquisition date that is recognized in the condensed consolidated statement of operations for the three and nine months ended September 30, 2026.

Gate Technologies Ltd. and Bron Technologies sp. z o.o

On September 14, 2026, the Company completed the acquisition of Gate Technologies Ltd., a company organized under the laws of the State of Israel (“Gate”), and Bron Technologies sp. z.o.o, a private company organized under the laws of the State of Poland (“Bron”), pursuant to a Share Purchase Agreement dated September 14, 2026 (the "Gate and Bron Agreement"), by and among the Company, Gate, Bron, Gate shareholders, Bron shareholders and Adv. Amir Geva, solely in such person's capacity as the representative, agent and attorney-in-fact of the indemnifying parties. The acquisition was accounted for as a single business combination. Pursuant to the Gate and Bron Agreement, the Company acquired 100% of the issued and outstanding share capital of Gate and Bron for an aggregate purchase consideration of $318.8 million consisting of $135.0 million in cash, 10,689,655 shares of the Company’s common stock with a fair value of $77.3 million, deferred consideration with a fair value of $19.7 million and contingent earn-out consideration with a fair value of $86.8 million. The contingent consideration consisted of an earn-out arrangement with an acquisition-date fair value of $84.8 million and a customer collections holdback with an acquisition-date fair value of $2.0 million.

At the closing, the Company retained $22.5 million of consideration otherwise payable to the sellers. Of this amount, $20.5 million was retained to secure sellers' indemnification obligation for pre-closing representations and warranties. This was accounted for as deferred consideration and recorded at its present value of $19.7 million, reflecting a discount for the time value of money. The remaining $2.0 million was retained to secure potential shortfall in post-closing customer collections and was accounted for as contingent consideration, with an acquisition-date fair value of $2.0 million.

In addition, the former shareholders of Gate and Bron may receive additional consideration of up to $185.0 million payable either in cash or the Company's common stock, at the Company's election. The earn-out is contingent upon achievement of specified aggregate EBITDA targets of Gate and Bron during the period from January 1, 2026 through December 31, 2028. The contingent consideration is classified as a liability and measured at fair value at each reporting date, with changes in fair value recognized in earnings until the contingency is resolved. There were no changes to the fair value of the contingent consideration through September 30, 2026.

The Company acquired Gate and Bron to expand its precision strike platform by adding critical capabilities across the autonomous strike technology stack while providing access to new customers, partners, and strategic ecosystem relationships. Gate and Bron’s capabilities complement the Company’s existing technologies across autonomous strike platforms, propulsion, mission systems, resilient communications, engineering, production and software-enabled mission management. The acquisition strengthens the Company's ability to provide integrated solutions across the complete autonomous strike architecture.

The intangible assets acquired include $76.0 million allocated to developed technology with a useful life of nine years, $25.0 million allocated to customer relationships with a useful life of 11 years, and $5.0 million allocated to trademarks with a useful life of eight years. The acquired intangible assets have a weighted-average amortization period of nine years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in the valuation of acquired inventory, including fair value step-up, (2) changes in the acquisition-date fair value of contingent consideration, (3) changes in valuation of intangible assets such as customer relationships, developed technology, and trademarks, as well as goodwill, (4) adjustments to deferred tax balances, and (5) other changes to assets and liabilities, including contract assets and contract liabilities.

Gate and Bron generated revenue of $13.3 million and net loss of $2.2 million since the acquisition date that is recognized in the condensed consolidated statement of operations for the three and nine months ended September 30, 2026.

Other 2026 acquisitions

During the nine months ended September 30, 2026, the Company completed other acquisitions that were individually and collectively immaterial. The aggregate purchase price was approximately $87.9 million consisting of 7,836,203 shares of the Company’s common stock with a fair value of $58.9 million, $2.3 million of cash consideration, and contingent consideration arrangements with an aggregate fair value of $26.7 million. The acquisitions were accounted for as business combinations, and the consideration transferred has been allocated on a preliminary basis to the assets acquired and liabilities assumed. The identifiable intangible assets recognized include approximately $30.9 million of developed technology with a weighted-average useful life of nine years and $8.5 million of customer relationships with a weighted-average useful life of ten years. The Company also recognized goodwill of approximately $55.5 million, which represents the assembled workforce, acquired capabilities, and future economic benefits expected to arise from the acquisitions. Approximately $12.0 million of the goodwill is deductible for tax purposes. The preliminary purchase price allocations are subject to change during the measurement period as additional information becomes available regarding the fair value of the assets acquired and liabilities assumed. Detailed disclosures required for individually material business combinations have not been presented, as the acquisitions were not material individually or in the aggregate.

2025 Acquisitions

As of September 30, 2026, the accounting for Sentry CS Ltd. and Robo-Team Holdings Ltd. remains preliminary, as certain fair value measurements associated with the assets acquired and liabilities assumed have not yet been finalized. During the three and nine months ended September 30, 2026, measurement period adjustments related to the Company's 2025 acquisitions totaled $0.8 million and $10.0 million, respectively. These adjustments related to decreases in deferred tax liabilities recorded and were applied retrospectively to the acquisition-date amounts and resulted in a corresponding decrease in goodwill. The accounting for the Company's remaining 2025 acquisitions has been finalized. For Sentry CS Ltd. and Robo-Team Holdings Ltd., the Company continues to evaluate information obtained about facts and circumstances that existed as of the respective acquisition dates, including, but not limited to, the valuation of identifiable intangible assets, tangible assets, assumed liabilities, deferred taxes, and other acquisition-related items.

Apeiro Motion Ltd.

On August 31, 2025, the Company completed the acquisition of Apeiro Motion Ltd. ("Apeiro"), pursuant to the Share Purchase Agreement (the “Apeiro Acquisition Agreement”), by and among the Company, Apeiro, and the Apeiro shareholders. Pursuant to the Apeiro Acquisition Agreement, the Company acquired 100% of the issued and outstanding share capital of Apeiro.

During the three months ended September 30, 2026, the Company finalized the purchase price allocation for the Apeiro acquisition. The following table summarizes the consideration transferred and the allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of the acquisition date.

The intangible assets acquired include $4.0 million allocated to developed technology with an estimated useful life of eight years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. No measurement period adjustments were recorded during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments related to certain accruals, which resulted in a net increase to goodwill of $61 thousand. These adjustments were reflected retrospectively as if they had been recognized as of the acquisition date.

Smart Precision Optics S.P.O Ltd.

On October 3, 2025, the Company completed the acquisition of Smart Precision Optics S.P.O. Ltd. (“SPO”), a company organized under the laws of the State of Israel, pursuant to (i) the SPO Share Purchase Agreement, dated August 20, 2025, by and among the Company, SPO, Shamir Investment Entrepreneurship ACS LTD., an agricultural cooperative society organized under the laws of the State of Israel (“Shamir”) and (ii) the Side Letter, dated August 20, 2025, by and among the Company, SPO and Shamir (the “Side Letter”) (collectively the “SPO Acquisition Agreement”). In accordance with the terms of the SPO Acquisition Agreement, the Company acquired (i) 51% of the issued and outstanding share capital of SPO for an aggregate purchase amount of approximately $6.0 million and (ii) 51% of the outstanding capital notes of SPO for an aggregate purchase amount of approximately $0.30 plus the Contingent Consideration, as defined below. The Company allocated the aggregate purchase amount to the purchase consideration and capital notes based on their relative fair value, resulting in $2.8 million in purchase consideration and $3.2 million in capital notes acquired by the Company, which have been eliminated in consolidation.

Additionally, if SPO obtains or receives Qualified Grants (as defined in the SPO Acquisition Agreement) between October 3, 2025 and December 31, 2026, the Company shall be required to make payment to Shamir in an amount equal to 10% of the amount of any such Qualified Grants received by SPO, up to an aggregate amount of approximately $11.9 million of Qualified Grants received (“Contingent Consideration”) (i.e. the maximum Contingent Consideration paid by the Company to Shamir shall be approximately $1.2 million). The Contingent Consideration shall be paid in cash, provided however, that the Company may choose, in its sole discretion, to pay the Contingent Consideration in shares of the Company’s Common Stock. No Qualified Grants have been received to date.

Subject to the terms of the SPO Acquisition Agreement, Shamir had 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, which acquisition shall have been accompanied with sale for no additional consideration of any and all capital notes of SPO then held by Shamir (such shares and capital notes, jointly, the “Put Shares”), at a purchase price of approximately $220.69 per share. The First Put Option expired unexercised on June 30, 2026.

Subject to the terms of the SPO Acquisition Agreement, as the First Put Option expired unexercised, Shamir has the right to appoint a third-party evaluator to determine SPO’s valuation and after receiving such valuation, Shamir may offer to the Company to purchase the Put Shares at such evaluated price (the “Second Put Option” together with the First Put Option, the “SPO Options”). If the Company declines, the Company may make a counter-offer to purchase the Put Shares. If Shamir rejects the Company’s counter-offer, Shamir can initiate a “Forced Sale” process to sell 100% of SPO to a third party during a limited period of nine months. Alternatively, if no Forced Sale occurs, Shamir can request an updated evaluation for SPO and either sell to the Company pursuant to Company’s offer, or buy all of the Company’s securities in SPO at the updated valuation. Shamir may exercise the foregoing during the period commencing on the second anniversary of the closing of the SPO Acquisition and ending June 30, 2029. The consideration payable by the Company to Shamir upon the consummation of either the First Put Option or the Second Put Option shall be paid in cash, provided however, that the Company may choose, in its sole discretion, to pay Shamir in Common Stock.

Additionally, subject to the terms of the SPO Acquisition Agreement, in the event that the Second Put Option is exhausted without being exercised, the Company shall have the right (the “Call Option”) to require Shamir to sell all (and not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir in consideration for the amount reflecting SPO’s valuation on a cash free-debt free basis of approximately $59.5 million, which acquisition shall be accompanied with sale for no additional consideration of any and all capital notes of SPO then held by Shamir, payable in cash. The Company may exercise the Call Option during the period commencing on the end of the Second Put Option Period and ending 18 months later.

During the three months ended September 30, 2026, the Company finalized the purchase price allocation for the SPO acquisition. The following table summarizes the consideration transferred and the allocation of the purchase consideration to the fair value of the assets acquired, liabilities assumed and noncontrolling interest retained by SPO shareholders as of the acquisition date.

The noncontrolling interest was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of SPO, using the purchase consideration paid for the Company’s 51% ownership as an observable input. The implied equity value was extrapolated to a 100% basis, and the 49% noncontrolling interest ownership percentage was applied to determine the fair value of the noncontrolling interest. Prior to its expiration on June 30, 2026, the noncontrolling interest, inclusive of the embedded First Put Option, was classified as redeemable noncontrolling interest in the consolidated balance sheets. Following the expiration of the First Put Option, the noncontrolling interest is no longer redeemable and is classified within noncontrolling interest in the consolidated balance sheets.

The intangible assets acquired include $3.2 million allocated to customer relationships with an estimated useful life of five years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. There were no measurement period adjustments with respect to the three and nine months ended September 30, 2026.

Insight Intelligent Sensors Ltd.

On October 27, 2025, the Company completed the acquisition of Insight Intelligent Sensors Ltd. (“Insight”), pursuant to the Share Purchase Agreement (the “Insight Acquisition Agreement”), by and among the Company, Insight, and the Insight shareholders. Pursuant to the Insight Acquisition Agreement, the Company acquired 51% of the issued and outstanding share capital of Insight, representing a controlling interest.

During the three months ended September 30, 2026, the Company finalized the purchase price allocation for the Insight acquisition. The following table summarizes the consideration transferred and the allocation of the purchase consideration to the fair value of the assets acquired, liabilities assumed and noncontrolling interest retained by Insight shareholders as of the acquisition date.

The noncontrolling interest was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of Insight, using the purchase consideration paid for the Company’s 51% ownership interest as an observable input. The implied equity value was extrapolated to a 100% basis, and the 49% noncontrolling interest ownership percentage was applied to determine the fair value of the noncontrolling interest.

The intangible assets acquired include $2.4 million allocated to developed technology with an estimated useful life of ten years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. No measurement period adjustments were recorded during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments related to deferred tax liabilities, which resulted in a net decrease to goodwill of $79 thousand. These adjustments were reflected retrospectively as if they had been recognized as of the acquisition date.

4M Defense Ltd.

On October 29, 2025, the Company completed the acquisition of a controlling interest in 4M Defense Ltd. (“4M”), a company registered in the State of Israel, pursuant to the Share Purchase Agreement, dated October 24, 2025 (the “4M Acquisition Agreement”), by and among the Company, 4M, Chirokka Holding Ltd., a company registered in the State of Israel (“HoldCo”), and the 4M shareholders. HoldCo held 100% of the share capital of 4M. In accordance with the terms of the 4M Acquisition Agreement, the Company acquired 70% of the issued and outstanding share capital of HoldCo (“HoldCo Shares”).

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.

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. 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.

During the three months ended September 30, 2026, the Company finalized the purchase price allocation for the 4M acquisition. The following table summarizes the consideration transferred and the allocation of the purchase consideration to the estimated fair value of the assets acquired, liabilities assumed and noncontrolling interest retained by 4M shareholders as of the acquisition date.

The noncontrolling interest was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of 4M, using the purchase consideration paid for the Company’s 70% ownership interest as an observable input. The implied equity value was derived by extrapolating the purchase consideration to a 100% basis and applying the 30% noncontrolling interest ownership percentage.

The intangible assets acquired include $0.9 million allocated to developed technology with an estimated useful life of ten years, $1.4 million allocated to customer relationships with an estimated useful life of five years, and $0.1 million allocated to backlog with an estimated useful life of three years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. No measurement period adjustments were recorded during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments related to deferred tax liabilities, which resulted in a net decrease to goodwill of $16 thousand. These adjustments were reflected retrospectively as if they had been recognized as of the acquisition date.

Sentry CS Ltd.

On November 17, 2025, the Company completed the acquisition of Sentry CS Ltd., (“Sentrycs”) pursuant to the Share Purchase Agreement (the “Sentrycs Acquisition Agreement”), entered into by and among the Company, Sentrycs, a company organized under the laws of the State of Israel, Sentrycs’ shareholders (the “Sentrycs Major Shareholders”), and Sagitta Holdco SARL, a private limited liability company organized under the laws of the Grand Duchy of Luxembourg. The Company acquired 100% of the issued and outstanding share capital of Sentrycs for an aggregate purchase price of $224.6 million consisting of $134.1 million in cash and shares of the Company’s common stock valued at $90.6 million. This aggregate purchase price reflects the working capital adjustments made at closing pursuant to the Sentrycs Acquisition Agreement.

The Sentrycs Acquisition Agreement detailed that the purchase price consideration of $224.6 million would be paid over four payment dates, with the first payment made upon closing at November 17, 2025. The Company paid $149.6 million on November 17, 2025, consisting of $120.2 million in cash and 4,096,700 shares of Common Stock valued at $29.4 million. The remaining three payments would be made 30-days, 45-days and 120-days after closing. These three payments would total $25.0 million each and consist of $4.6 million in cash and shares of Common Stock valued at $20.4 million. At December 31, 2025, the Company recorded a liability for these payments in the amount of $75.0 million classified as Accrued Purchase Consideration on the Company’s Consolidated Balance Sheets. The Company issued 1,671,899, 1,622,607, and 1,928,532 shares of Common Stock on January 8, 2026, January 22, 2026, and March 26, 2026 respectively, related to the second, third, and fourth payments.

The Company also paid $37.5 million into an escrow account which we own (the “Ondas Escrow Amount”). On each of the second, third and fourth payment dates, $10.0 million was returned to the Company, and $2.5 million was transferred from the Ondas Escrow Amount to the Indemnity Escrow Account. Under the Indemnity Escrow terms and agreement, the funds will be held until the one-year anniversary of the closing date, during which time the Company may make indemnification claims. Any balance remaining after one year will be released to the sellers.

Amounts transferred to the Indemnity Escrow Account serve as security for the sellers’ indemnification obligations. Under the Indemnity Escrow Agreement, these funds will be held until the one-year anniversary of the Sentrycs Acquisition Agreement. During this period, the Company may assert indemnification claims in accordance with the agreement. Any balance remaining in the Indemnity Escrow Account after the one-year period, net of any amounts reserved for outstanding claims, will be released to the sellers. The Ondas Escrow Amount is included in Restricted cash on the Company’s Consolidated Balance Sheets, as the scheduled releases to the Company are considered short-term in nature. Amounts transferred to the Indemnity Escrow Account are recognized as part of the purchase consideration.

The intangible assets acquired include $66.0 million allocated to developed technology with an estimated useful life of ten years, $3.7 million allocated to trademarks with an estimated useful life of seven years, and $2.7 million allocated to customer relationships with an estimated useful life of five years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments related to deferred tax liabilities, which resulted in a net decrease to goodwill of $2.8 million. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, (3) deferred tax balances and (4) other changes to assets and liabilities.

Robo-Team Holdings Ltd.

On December 17, 2025, the Company completed the acquisition of Robo-Team Holdings Ltd. (“Robo-Team”), pursuant to the Share Purchase Agreement, dated November 23, 2025 (the “Robo-Team Acquisition Agreement”), by and among the Company, Robo-Team, and the Robo-Team shareholders. Pursuant to the Robo-Team Acquisition Agreement, the Company acquired 100% of the issued and outstanding share capital of Robo-Team.

The intangible assets acquired include $12.7 million allocated to developed technology with an estimated useful life of ten years, $14.6 million allocated to customer relationships with an estimated useful life of five years, and $3.5 million allocated to non-compete agreements with an estimated useful life of four years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. During the nine months ended September 30, 2026, the Company recorded measurement period adjustments related to deferred tax liabilities, which resulted in a net decrease to goodwill of $7.2 million. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

Supplemental Pro Forma Results of Operations

The following unaudited supplemental pro forma information presents the Company’s results of operations as if the acquisition of Apeiro, Rotron, Bird, World View, Mistral, Omnisys, DZYNE, Cyberhawk, Gate and Bron had occurred on January 1, 2025. The unaudited pro forma results include adjustments for the effects of purchase accounting, including a nonrecurring $10.0 million fair value step-up of acquired inventory and non-recurring acquisition related costs of approximately $10.1 million. The pro forma adjustments have been tax-effected at the applicable statutory rates. The unaudited pro forma results do not purport to represent what the Company’s results of operations would actually have been if the acquisitions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods.

Goodwill Impairment

The Company reviews goodwill for impairment annually as of December 31 and on an interim basis whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the nine months ended September 30, 2026, the Company performed an assessment of whether any such indicators were present and concluded that there were no triggering events or changes in circumstances that would indicate a potential impairment of goodwill. Accordingly, no interim impairment test was performed as of September 30, 2026.

As previously disclosed, the Company performed a qualitative assessment as of December 31, 2025 and concluded there were no indications of impairment with respect to the goodwill recorded at that date.