NOTE 7 – LONG-TERM EQUITY INVESTMENTS

The Company’s long-term equity investments consist of equity investments in privately held companies through common and preferred stock. The Company accounts for these equity securities under the measurement alternative because they do not have readily determinable fair values and do not qualify for the equity method of accounting. Accordingly, the investments are carried at cost, less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company does not have significant influence over any of the long-term equity investees. Long-term equity investments are classified as such on the Company’s condensed consolidated balance sheets. Dividends or other distributions, if and when declared by an investee, are recognized as investment income, with adjustments to the carrying amounts of the investments recognized in other (expense) income, net in the condensed consolidated statements of operations.

In 2025, the Company purchased a non-controlling interest in Rift Dynamics AS (“Rift”), a Norway-based defense technology company specializing in affordable, mass-producible combat drone systems, for an aggregate purchase price of $0.6 million.

In 2025, the Company purchased preferred stock in Performance Drone Works (“PDW”), a defense technology company specializing in advanced robotics for mission-critical national security missions, for an aggregate purchase price of $35.0 million. The preferred stock is convertible into PDW common stock at the option of the holder and ranks senior to PDW’s common stock with respect to liquidation and dividend rights. The investment is subject to customary transfer restrictions and provides the Company with certain investor rights, including information rights and the right to appoint a non-voting observer to PDW’s board of directors, subject to specified conditions.

During the nine months ended September 30, 2026, the Company purchased preferred stock in Firestorm Labs, Inc. (“Firestorm”), a defense technology company that develops expeditionary manufacturing platforms enabling the on-demand, point-of-need production of mission-critical systems and components for military and defense applications, for an aggregate purchase price of $5.0 million.

During the nine months ended September 30, 2026, the Company purchased preferred stock in FPF Defense, Inc. (“FPF Defense”), a defense technology company that develops low-cost, high-volume counter-drone interceptors for U.S. and allied defense applications, for an aggregate purchase price of $5.0 million.

Each reporting period, the Company evaluates its investments for impairment by performing a qualitative assessment of relevant facts and circumstances. The assessment includes, but is not limited to, a review of recent operating results and trends, recent transactions involving securities of the investee, and other relevant publicly available information. If the Company determines that an investment is impaired, the carrying value is written down to its estimated fair value, with the resulting loss recognized in earnings.

As of September 30, 2026, the carrying amount of the Company’s equity investments accounted for under the measurement alternative was $47.3 million. There have been no upward or downward adjustments resulting from observable price changes and no impairment charges recorded since the acquisition of these investments.

Subsequent to September 30, 2026, the Company purchased additional preferred stock in PDW for an aggregate purchase price of $50.0 million. See Note 18, Subsequent Events.