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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT PREPARED IN ANTICIPATION OF RENDERING LEGAL ADVICE

This memorandum was prepared by Calderwood & Harkness LLP at the direction of Whitmore Aerospace LLC in connection with the rendering of legal advice regarding sanctions compliance and restricted-party screening obligations. This document is protected by the attorney-client privilege, the work product doctrine, and any other applicable privileges. It is not intended for disclosure to any third party and should not be disclosed without the prior written consent of Calderwood & Harkness LLP and Whitmore Aerospace LLC. Inadvertent disclosure does not constitute a waiver of any applicable privilege.

MEMORANDUM

FROM: Leila Nazari, Associate, Calderwood & Harkness LLP (DC Bar No. 1081209)

REVIEWED BY: Sandra Tung, Partner, Calderwood & Harkness LLP (DC Bar No. 492103)

TO: Janet Pfeiffer, General Counsel & Chief Compliance Officer, Whitmore Aerospace LLC (VA Bar No. 78432); David Sung, Director of Export Controls & Trade Compliance / Empowered Official, Whitmore Aerospace LLC

DATE: May 23, 2025

RE: OFAC and Restricted-Party Sanctions Screening Results and Risk Assessment — WPX-4200 Meridian Export Program (Prospective Direct Commercial Sale to Republic of Kantara, Ministry of National Defence)

Calderwood & Harkness LLP 1200 Pennsylvania Avenue NW, Suite 800 Washington, DC 20004

Whitmore Aerospace LLC 2400 Ridgecrest Boulevard, Suite 600 Arlington, VA 22201

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I. Executive Summary

The purpose of this memorandum is to present the results of the Phase 1 automated and manual restricted-party and sanctions screening conducted in connection with Whitmore Aerospace LLC's ("WAL" or "Whitmore") prospective Direct Commercial Sale of thirty-six (36) WPX-4200 Meridian Electro-Optical/Infrared ("EO/IR") Multi-Spectral Targeting Pods, together with associated spare parts and components (valued at approximately $9.2 million) and a three-year field support and sustainment package (valued at approximately $7.5 million), to the Ministry of National Defence of the Republic of Kantara ("Kantara MoND"). The base contract value for the thirty-six targeting pod units is $74,600,000, bringing the total estimated program value to approximately $91,300,000.

Phase 1 screening was completed on May 23, 2025, in accordance with the engagement timeline established at the outset of this matter. The screening was conducted using two complementary methodologies: (i) automated screening performed through Pinecrest Compliance Solutions LLC's ("Pinecrest") PineScan Global™ platform, which screens against all major U.S. and multilateral restricted-party lists, and (ii) independent manual verification conducted by Calderwood & Harkness LLP ("C&H") against all applicable U.S. government and multilateral sanctions and restricted-party lists, supplemented by open-source media and adverse information screening for all screened parties.

The summary finding of Phase 1 screening is as follows: No direct matches or "hits" were identified for the primary end-user (Kantara MoND), its designated procurement contact (Brigadier General Niko Stathakis, Director of Procurement, Kantara MoND), the proposed foreign intermediary (Drakon Defence Systems S.A., a Kantaran société anonyme), or Drakon's Chief Executive Officer (Theodoros Papadimitriou). Each of these parties screened clear against all ten (10) restricted-party lists applied in the Phase 1 screening process.

However, one significant compliance red flag was identified during the course of C&H's open-source media and adverse information screening. Specifically, Yiannis Andreou, a Cypriot national (age 63) and the listed ultimate beneficial owner ("UBO") of Castellan Holdings Limited ("Castellan"), a Cyprus-registered private limited company (Registration No. HE-394521) that holds a 28% minority equity stake in Drakon Defence Systems S.A. ("Drakon"), has a documented prior business association with Viktor Semichastny, a Russian national who was designated on the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") under Executive Order 14024 on April 15, 2022 (SDN Entry ID: SDNR-2022-04871). Semichastny's designation was made in connection with his activities in the defense and defense-related materiel sector of the Russian Federation. Open-source reporting indicates that Andreou and Semichastny co-invested in a Cyprus-registered real estate development entity, Adriatic Shores Development Ltd., which was dissolved in 2020, approximately two years prior to Semichastny's SDN designation.

While neither Andreou nor Castellan Holdings Limited appears on any restricted-party list, the prior business relationship between the UBO of a minority shareholder in WAL's proposed foreign intermediary and an SDN-designated individual constitutes a compliance red flag of sufficient significance to warrant enhanced due diligence before WAL proceeds to finalize any intermediary agreement with Drakon or to submit any license application to the Directorate of Defense Trade Controls ("DDTC").

Accordingly, C&H recommends that WAL undertake Phase 2 enhanced due diligence ("EDD") focused on Castellan Holdings Limited and Yiannis Andreou. To that end, with WAL's authorization, C&H has engaged Northbridge Forensic Advisory Group LLC ("Northbridge") to conduct a Tier 2 EDD investigation. The Northbridge Tier 2 EDD Report is due on June 16, 2025. Upon receipt of the Northbridge report, C&H will prepare and deliver a separate Enhanced Due Diligence Risk Assessment Memorandum to WAL containing a risk rating and a compliance recommendation regarding WAL's proposed engagement of Drakon as its exclusive in-country representative for the WPX-4200 Meridian export program.

In the interim, C&H recommends that WAL suspend finalization of the Drakon intermediary agreement and refrain from making any commission payments, executing any letters of intent, or entering into any binding commercial commitments with or through Drakon until the Castellan/Andreou red flag has been satisfactorily resolved.

II. Scope of Engagement and Screening Mandate

A. Engagement Background

Calderwood & Harkness LLP was engaged by Whitmore Aerospace LLC effective May 7, 2025, pursuant to an engagement letter of that date, to provide legal counsel and advisory services in connection with WAL's prospective WPX-4200 Meridian export program to the Republic of Kantara. The scope of C&H's engagement encompasses, among other workstreams, comprehensive OFAC and restricted-party sanctions screening of all prospective foreign end-users, consignees, intermediaries, and other transaction participants involved in the contemplated WPX-4200 Meridian export transaction.

The engagement letter, executed by Janet Pfeiffer on behalf of WAL and Sandra Tung on behalf of C&H, was countersigned and returned to C&H on May 7, 2025. A retainer in the amount of $50,000 was received by C&H on May 9, 2025, via wire transfer to C&H's IOLTA account. Conflicts clearance for this engagement was completed on May 5, 2025, prior to execution of the engagement letter, and was documented under C&H Conflicts Clearance No. SC-2025-CF-04412. No conflicts of interest were identified.

The C&H engagement team assigned to this matter consists of the following attorneys:

• Sandra Tung, Partner (DC Bar No. 492103) — Responsible Partner, overseeing all workstreams and providing final review and approval of all deliverables.

• Oliver Mackenzie, Partner — Billing Partner, responsible for engagement economics and fee management.

• Garrett Simmons, Associate — Lead Associate, with primary responsibility for the ITAR/EAR jurisdiction and commodity classification assessment workstream.

• Leila Nazari, Associate (DC Bar No. 1081209) — Working Associate, with primary responsibility for the sanctions/OFAC screening and due diligence workstream, including preparation of this memorandum.

This memorandum constitutes a deliverable under the sanctions/OFAC screening and due diligence workstream of C&H's engagement. The estimated fee component for this workstream, as set forth in the engagement letter, is $35,000 to $45,000, within the overall engagement estimate of $185,000 to $245,000 for all workstreams combined. Fees and expenses are being billed in accordance with C&H's standard hourly rates, as set forth in the engagement letter, and are subject to the retainer and billing arrangements agreed upon between C&H and WAL.

B. Transaction Overview for Screening Purposes

For purposes of establishing the screening mandate and contextualizing the results presented in this memorandum, the key parameters of the contemplated transaction are summarized below.

Product. The defense article at issue is the WPX-4200 Meridian Electro-Optical/Infrared Multi-Spectral Targeting Pod, a precision targeting system designed for integration onto tactical fighter aircraft. Based on a preliminary assessment, the WPX-4200 is anticipated to be classified under United States Munitions List ("USML") Category XII(d) (fire control, range finder, optical and guidance and control equipment), indicating that it is a defense article subject to the jurisdiction of the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130. A comprehensive jurisdiction and commodity classification assessment memorandum is being prepared as a separate workstream by Garrett Simmons and Leila Nazari, under Sandra Tung's review, with a target delivery date of June 6, 2025. That memorandum will address the precise USML classification and confirm ITAR jurisdictional status, and will be provided to WAL under separate cover.

Transaction Structure. The contemplated transaction is structured as a Direct Commercial Sale ("DCS") between WAL (as the U.S. exporter and manufacturer) and Kantara MoND (as the foreign end-user and purchaser). The transaction is not proceeding through the Foreign Military Sales ("FMS") pathway administered by the Defense Security Cooperation Agency ("DSCA"). As a DCS transaction involving ITAR-controlled defense articles, the export will require prior authorization from the Department of State, DDTC, in the form of a DSP-5 export license and, depending on the scope of technical data and defense services to be provided in connection with the field support package, a Technical Assistance Agreement ("TAA").

End-User. The foreign end-user is the Ministry of National Defence of the Republic of Kantara, located at 14 Boulevard of the Republic, Velaris, Kantara 10200. The designated end-use for the WPX-4200 Meridian targeting pods is integration onto the Kantara Air Force's fleet of twenty-four (24) F-16 Block 50 multi-role fighter aircraft. The end-use is a bona fide military application by an allied government entity.

In-Country Intermediary. WAL proposes to engage Drakon Defence Systems S.A. (Kantaran commercial registration number KR-SA-2011-08934), located at 42 Leventis Avenue, 3rd Floor, Velaris, Kantara 10340, as WAL's exclusive in-country representative for the WPX-4200 Meridian export program. Drakon's proposed role is to facilitate the commercial and government-liaison aspects of the transaction within Kantara, including engagement with Kantara MoND procurement officials. The proposed commission structure provides for a commission of 4.5% of the net base contract value, calculated as $74,600,000 × 4.5% = $3,357,000. The intermediary / representation agreement with Drakon has not yet been finalized, and its finalization is being coordinated by Hargrove & Landsdowne LLP (Philip Hargrove, Senior Partner, VA Bar No. 34219), which serves as coordinating counsel for the underlying commercial contract and Drakon intermediary agreement.

Country Risk Profile. The Republic of Kantara is a NATO partner state and a participating state of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. Under the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, Kantara is classified in Country Group A:1. Kantara is not subject to any U.S. arms embargo, and it is not subject to any OFAC comprehensive sanctions program, sectoral sanctions program, or secondary sanctions program. There are no country-based OFAC restrictions applicable to Kantara. The country-level risk profile is favorable for the contemplated transaction, although individual and entity-level screening remains required and has been conducted as described herein.

C. Screening Methodology

The Phase 1 sanctions and restricted-party screening was conducted using a two-track methodology combining automated platform-based screening with independent manual verification and open-source adverse information screening.

Phase 1 — Automated Screening (PineScan Global™ Platform). Automated screening was performed using the PineScan Global™ platform, operated by Pinecrest Compliance Solutions LLC, located at 330 South Tryon Street, Suite 210, Charlotte, NC 28202 (CEO: Margaret Holbrook). PineScan Global is a commercially available sanctions and restricted-party screening platform that maintains current and historical data from all major U.S. and multilateral restricted-party lists. The PineScan Global platform's list coverage includes, but is not limited to, the following: the OFAC Specially Designated Nationals and blocked Persons List ("SDN List"), the Bureau of Industry and Security ("BIS") Entity List, the BIS Denied Persons List, the BIS Unverified List, the DDTC AECA Debarred Parties List, the Department of Defense Section 1260H List of Chinese Military Companies, the European Union Consolidated Sanctions List, the United Nations Security Council Consolidated List, and twenty-two (22) additional national and international sanctions lists. Pinecrest is contracted directly by WAL; screening costs are borne by WAL outside of the C&H engagement budget.

PineScan Global employs fuzzy-matching algorithms with configurable match sensitivity thresholds. For purposes of this screening, match sensitivity was set at the "high" threshold level (i.e., a low tolerance for deviation from the queried name, which maximizes the likelihood of false positive results while minimizing the risk of missed matches). All PineScan Global screening output reports are included as Attachment B to this memorandum.

Phase 1 — Manual / Independent Verification. In addition to the automated screening, C&H independently verified all PineScan Global results through manual searches conducted directly on authoritative U.S. government and multilateral sources. Specifically, C&H conducted manual searches of the following ten (10) lists for each screened party:

1. OFAC Specially Designated Nationals and blocked Persons List (SDN List);

2. OFAC Sectoral Sanctions Identifications List ("SSI List");

3. OFAC Non-SDN Menu-Based Sanctions List ("NS-MBS List");

4. BIS Entity List (Supplement No. 4 to Part 744 of the EAR);

5. BIS Denied Persons List;

6. BIS Unverified List;

7. DDTC AECA Debarred Parties List;

8. Department of Defense Section 1260H List (Chinese Military Companies);

9. EU Consolidated Sanctions List; and

10. UN Security Council Consolidated List.

Manual searches were conducted using the following tools and databases: the U.S. Department of the Treasury OFAC Sanctions List Search tool (available at https://sanctionssearch.ofac.treas.gov/), the BIS Consolidated Screening List tool (available at https://www.trade.gov/consolidated-screening-list), the DDTC website for the AECA Debarred Parties List, and the EU Sanctions Map tool for the EU Consolidated Sanctions List. C&H's manual verification notes are included as part of Attachment C to this memorandum.

Open-Source Media and Adverse Information Screening. In addition to list-based screening, C&H conducted open-source media and adverse information screening for all screened parties. This screening was performed using commercial databases (including Sundial Solutions, Dow Jones Factiva, and the Kestrel Software database), publicly available corporate registry records, and general internet searches. The purpose of the open-source screening was to identify potential compliance red flags — such as prior sanctions violations, involvement in illicit procurement networks, connections to sanctioned persons or entities, or other adverse information — that may not be captured by list-based screening alone. Open-source research documentation is included as part of Attachment C.

III. Parties Screened

A. List of Screened Parties

The following table sets forth all parties that were subject to Phase 1 sanctions and restricted-party screening in connection with the WPX-4200 Meridian export program. For each screened party, the table provides the party's name, role in the transaction, nationality or jurisdiction, and a brief description. Screening results for each party are presented in Section IV below.

B. Status of Incomplete Screenings

As reflected in the table above, parties identified as items 7 through 9 — namely, the five (5) individual members of Drakon's board of directors, the Kantara Air Force logistics and receiving personnel, and the as-yet-unidentified freight forwarder or carrier — could not be screened during the Phase 1 process because sufficient identifying information has not yet been provided to C&H or WAL.

With respect to the Drakon board members, WAL has requested the relevant corporate registry extract from Drakon's Kantaran legal counsel, Thessaly Law Chambers (Alexia Merouri, Managing Partner, Kantara Bar Association Registration No. KBA-2004-1128), but the extract had not been received as of the date of this memorandum. C&H recommends that WAL follow up promptly with Drakon and Thessaly Law Chambers to obtain the names, nationalities, dates of birth, and any other available identifying information for all five Drakon board members, so that screening can be completed as soon as practicable.

With respect to the Kantara Air Force logistics and receiving personnel, it is understood that their identities will not be available until the transaction has progressed to a more advanced stage. Similarly, the freight forwarder and carrier have not yet been engaged. C&H recommends that all additional parties be screened as their identities become known, and in all events prior to any license application filing with DDTC or any export activity. No defense articles, defense services, or technical data should be exported, and no license application should be filed, until screening of all transaction participants has been completed and documented.

IV. Phase 1 Screening Results

A. Screening Lists Applied

Phase 1 screening was conducted against the following ten (10) restricted-party and sanctions lists, which collectively represent the principal U.S. government and multilateral lists applicable to the contemplated ITAR-controlled defense article export transaction:

1. OFAC Specially Designated Nationals and blocked Persons List (SDN List) — Maintained by the U.S. Department of the Treasury, Office of Foreign Assets Control. The SDN List identifies individuals and entities whose property and interests in property are blocked pursuant to various U.S. sanctions programs. U.S. persons are generally prohibited from engaging in transactions with SDN-listed parties.

2. OFAC Sectoral Sanctions Identifications List (SSI List) — Maintained by OFAC. The SSI List identifies persons operating in specified sectors of certain sanctioned country economies (principally Russia) who are subject to prohibitions on certain types of transactions, including debt and equity restrictions.

3. OFAC Non-SDN Menu-Based Sanctions List (NS-MBS List) — Maintained by OFAC. The NS-MBS List identifies persons subject to certain menu-based sanctions under various Executive Orders and statutes, which may include restrictions short of a full asset freeze.

4. BIS Entity List (Supplement No. 4 to Part 744 of the EAR) — Maintained by the Bureau of Industry and Security, U.S. Department of Commerce. The Entity List identifies foreign persons, including businesses, research institutions, government organizations, and individuals, that are subject to specific license requirements for the export, reexport, or transfer (in-country) of specified items subject to the EAR.

5. BIS Denied Persons List — Maintained by BIS. The Denied Persons List identifies persons who have been denied export privileges pursuant to administrative orders issued by BIS.

6. BIS Unverified List — Maintained by BIS. The Unverified List identifies foreign persons for whom BIS has been unable to verify the bona fides of prior export transactions, triggering additional due diligence and licensing requirements.

7. DDTC AECA Debarred Parties List — Maintained by the Directorate of Defense Trade Controls, U.S. Department of State. The AECA Debarred Parties List identifies persons who have been statutorily debarred from participating in the export of defense articles and defense services under the Arms Export Control Act ("AECA"), 22 U.S.C. § 2778.

8. Department of Defense Section 1260H List (Chinese Military Companies) — Maintained by the U.S. Department of Defense pursuant to Section 1260H of the National Defense Authorization Act for Fiscal Year 2021. This list identifies entities that are Chinese military companies operating in the United States or in any jurisdiction.

9. EU Consolidated Sanctions List — Maintained by the European Union. The EU Consolidated Sanctions List consolidates all persons, groups, and entities subject to EU financial sanctions (asset freezes) under EU sanctions regulations.

10. UN Security Council Consolidated List — Maintained by the United Nations Security Council. The UN Consolidated List includes all individuals and entities subject to sanctions measures imposed by the UN Security Council.

In addition to the foregoing lists, the PineScan Global platform screened against twenty-two (22) additional national and international sanctions lists, as described in Section II.C above. No matches were identified on any of the additional lists screened by PineScan Global.

B. Results by Party — No Direct Hits

The following subsections present the Phase 1 screening results for each of the six (6) parties for which complete screening was conducted. For each party, the results of the PineScan Global automated screening, C&H's independent manual verification, and the open-source media and adverse information screening are reported separately.

1. Kantara Ministry of National Defence. PineScan Global Result: No match identified on any of the screened lists, including the OFAC SDN List, SSI List, NS-MBS List, BIS Entity List, BIS Denied Persons List, BIS Unverified List, DDTC AECA Debarred Parties List, DoD Section 1260H List, EU Consolidated Sanctions List, UN Security Council Consolidated List, and all additional lists screened by the PineScan Global platform. No partial matches or potential aliases were flagged by the fuzzy-matching algorithm at the high-sensitivity threshold.

C&H Manual Verification: No match identified. The Republic of Kantara is not subject to any OFAC comprehensive sanctions program (such as those applicable to Cuba, Iran, North Korea, Syria, or the Crimea, Donetsk, and Luhansk regions of Ukraine). Kantara is not subject to any OFAC secondary sanctions program, sectoral sanctions program, or menu-based sanctions program. No OFAC country-based restrictions are applicable to the Republic of Kantara or to its government ministries and agencies. The Kantara Ministry of National Defence does not appear on any of the ten screened lists.

Open-Source Screening: No adverse information identified. The Republic of Kantara is a NATO partner state and a participating state of the Wassenaar Arrangement. Kantara is classified in Country Group A:1 under the EAR. Open-source research did not reveal any reports of sanctions violations, export control violations, proliferation concerns, or other adverse information associated with the Kantara Ministry of National Defence. Kantara maintains a cooperative defense relationship with the United States and has been an authorized recipient of U.S. defense articles through both FMS and DCS channels in prior years.

Result: CLEAR

2. Brigadier General Niko Stathakis. PineScan Global Result: No match identified on any of the screened lists. The PineScan Global fuzzy-matching algorithm did not flag any partial matches, potential aliases, or phonetic variants for the name "Niko Stathakis" or "Nikolaos Stathakis" on any screened list.

C&H Manual Verification: No match identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other seven screened lists. C&H searched for the name "Stathakis" as well as common variants (including "Stathakes," "Stathaki," and "Stathakis") and identified no matches on any list.

Open-Source Screening: No adverse information identified. Brigadier General Niko Stathakis is an active-duty officer of the Kantaran Armed Forces serving in a procurement role within the Ministry of National Defence. Open-source research identified publicly available references to BG Stathakis in the context of Kantaran defense procurement activities, consistent with his stated role. No reports of sanctions violations, corruption, bribery, or other adverse information were identified.

Result: CLEAR

3. Drakon Defence Systems S.A. PineScan Global Result: No match identified on any of the screened lists. The entity name "Drakon Defence Systems S.A." and variants thereof (including "Drakon Defense Systems," "Drakon Defence," and the Kantaran-language transliteration) did not match any entry on any screened list.

C&H Manual Verification: No match identified on the OFAC SDN List, SSI List, NS-MBS List, BIS Entity List, BIS Denied Persons List, BIS Unverified List, DDTC AECA Debarred Parties List, DoD Section 1260H List, EU Consolidated Sanctions List, or UN Security Council Consolidated List. C&H searched for the entity name and known variants, the Kantaran commercial registration number (KR-SA-2011-08934), and the registered address. No matches were identified on any list.

Open-Source Screening: Drakon Defence Systems S.A. is a licensed defense broker and consultancy operating under Kantaran law, established in 2011. Open-source research identified Drakon as an active participant in the Kantaran defense procurement market, with publicly reported involvement in several prior defense procurement programs involving Western-origin defense equipment. No adverse information was identified regarding sanctions evasion, export control violations, involvement in prohibited transactions, diversion of controlled items, or other compliance-relevant concerns. Drakon maintains a registered office in a commercial district of Velaris, Kantara, consistent with its stated business activities.

However, as discussed in detail in Section V of this memorandum, Drakon's ownership structure includes Castellan Holdings Limited (HE-394521), a Cyprus-registered private limited company, as a 28% minority equity shareholder. The compliance implications of Castellan's participation in Drakon's ownership structure, and specifically the prior business association between Castellan's listed UBO (Yiannis Andreou) and an OFAC SDN-designated individual (Viktor Semichastny), are analyzed separately below.

Result: CLEAR (subject to Castellan Holdings / Yiannis Andreou red flag analysis in Section V)

4. Theodoros Papadimitriou. PineScan Global Result: No match identified on any of the screened lists. The PineScan Global fuzzy-matching algorithm identified one potential partial match for the surname "Papadimitriou" on the EU Consolidated Sanctions List; however, upon further analysis, the potential match was determined to be a false positive — the listed individual was a different person (different first name, different date of birth, different nationality) with no connection to Theodoros Papadimitriou.

C&H Manual Verification: No match identified. C&H confirmed the false-positive determination for the EU Consolidated Sanctions List partial match identified by PineScan Global. The listed individual on the EU Consolidated Sanctions List is a Greek national named Georgios Papadimitriou, born in 1971, designated in connection with an unrelated matter. There is no connection between Georgios Papadimitriou and Theodoros Papadimitriou. No matches were identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other screened lists.

Open-Source Screening: No adverse information identified. Theodoros Papadimitriou is a Kantaran national, age 57, who has served as Chief Executive Officer of Drakon Defence Systems S.A. since the company's founding in 2011. Open-source research identified publicly available biographical information consistent with his stated role and background. No reports of sanctions violations, corruption, bribery, export control violations, or other adverse information were identified.

Result: CLEAR

5. Castellan Holdings Limited. PineScan Global Result: No direct match identified on any of the screened lists. The entity name "Castellan Holdings Limited" and variants thereof did not match any entry on any screened list at any sensitivity threshold. The Cyprus company registration number (HE-394521) was also searched and did not match any list entry.

C&H Manual Verification: No direct match identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other seven screened lists. C&H searched for the entity name, known variants, the Cyprus registration number, and the registered address (8 Themistocles Dervis Street, Office 401, Nicosia, Cyprus 1066). No matches were identified. The entity name "Castellan Holdings Limited" does not appear on any restricted-party list maintained by the U.S. government or the multilateral bodies covered by the Phase 1 screening.

Open-Source Screening: Castellan Holdings Limited is a Cyprus-registered private limited company with registration number HE-394521. The listed ultimate beneficial owner, as disclosed by Drakon Defence Systems S.A. in its corporate information package provided to WAL, is Yiannis Andreou, a Cypriot national, age 63. Limited publicly available information exists regarding Castellan's corporate activities beyond its 28% equity stake in Drakon Defence Systems S.A. The registered office address — 8 Themistocles Dervis Street, Office 401, Nicosia, Cyprus 1066 — is located in a commercial office building in Nicosia that is commonly used as a registered address for Cyprus holding companies and special-purpose vehicles. This fact is not inherently adverse but is noted as contextual information relevant to the due diligence assessment.

Critically, the ultimate beneficial ownership of Castellan Holdings Limited has not yet been fully verified beyond Drakon's initial disclosure identifying Andreou as the UBO. It is not known whether Castellan's ownership structure includes additional layers, nominee arrangements, trust structures, or other intermediary vehicles that might obscure the true beneficial ownership chain. Enhanced due diligence is recommended to verify the completeness and accuracy of Drakon's UBO disclosure.

Result: NO DIRECT HIT — RED FLAG IDENTIFIED (see Section V)

6. Yiannis Andreou. PineScan Global Result: No direct match identified on any of the screened lists. The name "Yiannis Andreou" and variants thereof (including "Ioannis Andreou," "Yannis Andreou," and "John Andreou") did not match any entry on any screened list.

C&H Manual Verification: No direct match identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other seven screened lists. C&H searched for the name and known variants, including transliterations and common anglicizations. No matches were identified. Yiannis Andreou does not appear on any restricted-party list maintained by the U.S. government or the multilateral bodies covered by the Phase 1 screening.

Open-Source Screening: During the course of open-source media and adverse information screening, C&H identified a prior business association between Yiannis Andreou and Viktor Semichastny, a Russian national who is designated on the OFAC SDN List under Executive Order 14024 (SDN Entry ID: SDNR-2022-04871; effective date: April 15, 2022). Specifically, open-source media reports indicate that Andreou and Semichastny were co-investors in Adriatic Shores Development Ltd., a Cyprus-registered limited company that was engaged in a real estate development venture. Adriatic Shores Development Ltd. was dissolved in 2020, approximately two years prior to Semichastny's OFAC SDN designation in April 2022. The full nature, scope, and duration of the Andreou-Semichastny relationship, and whether any residual financial, beneficial ownership, or personal connections persist, have not been independently verified at this stage. This finding constitutes a significant compliance red flag warranting enhanced due diligence and is analyzed in detail in Section V of this memorandum.

Result: NO DIRECT HIT — RED FLAG IDENTIFIED (see Section V)

C. Summary Results Matrix

A detailed Restricted-Party Screening Checklist and Results Matrix has been prepared as a separate Excel workbook and is attached to this memorandum as Attachment A. The Results Matrix provides a party-by-party, list-by-list tabulation of all Phase 1 screening results, including the following data fields for each screening query: (i) party name and identifying information, (ii) list screened, (iii) screening tool used (PineScan Global or C&H manual verification), (iv) date of screening, (v) result (match / no match / partial match / false positive), (vi) analyst name, and (vii) analyst notes. The Results Matrix is intended to serve as a contemporaneous compliance record documenting the screening process and results, and should be maintained in WAL's export compliance files in accordance with the record retention obligations discussed in Section VII.C below.

The Results Matrix has been transmitted to the recipients of this memorandum via the secure email accompanying this memorandum. A copy is also being maintained in C&H's engagement file.

V. Compliance Red Flag: Castellan Holdings Ltd. / Yiannis Andreou — Association with OFAC SDN-Designated Viktor Semichastny

A. Factual Background

During the open-source media and adverse information screening conducted by C&H as part of the Phase 1 screening process, a significant compliance red flag was identified in connection with Yiannis Andreou, the listed ultimate beneficial owner of Castellan Holdings Limited, a 28% minority equity shareholder in Drakon Defence Systems S.A.

The factual basis for this red flag is as follows:

Yiannis Andreou is a Cypriot national, age 63, identified as the listed UBO of Castellan Holdings Limited (Cyprus Registration No. HE-394521). Castellan is a Cyprus-registered private limited company that holds a 28% minority equity stake in Drakon Defence Systems S.A. (Kantaran Registration No. KR-SA-2011-08934), WAL's proposed exclusive in-country representative for the WPX-4200 Meridian export program. The identification of Andreou as Castellan's UBO was made based on the corporate information package provided by Drakon to WAL in connection with the intermediary engagement discussions.

Viktor Semichastny is a Russian national, age 58. Semichastny was designated on the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") on April 15, 2022, under Executive Order 14024 of April 15, 2021 ("Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation"), as amended. Semichastny's SDN entry carries the identification number SDNR-2022-04871. The stated basis for Semichastny's designation is that he was determined to operate or to have operated in the defense and defense-related materiel sector of the Russian Federation. As an SDN-designated person, Semichastny's property and interests in property within the United States or within the possession or control of U.S. persons are blocked, and U.S. persons are generally prohibited from engaging in any transactions or dealings with Semichastny.

Nature of the Association. Open-source media reports, corroborated by Cyprus corporate registry data accessible through publicly available databases, indicate that Andreou and Semichastny were co-investors in Adriatic Shores Development Ltd., a Cyprus-registered limited company. Adriatic Shores Development Ltd. appears to have been a real estate development venture focused on coastal property development. The precise ownership percentages, investment amounts, and governance roles of Andreou and Semichastny within Adriatic Shores Development Ltd. have not been established through Phase 1 screening alone and are among the subjects of the Phase 2 enhanced due diligence investigation. Adriatic Shores Development Ltd. was dissolved in 2020, approximately two years prior to Semichastny's OFAC SDN designation in April 2022.

Current Status of the Relationship. No current business relationship between Andreou and Semichastny has been asserted or disclosed by Andreou, by Drakon, or in any corporate disclosure provided to WAL. However, C&H has not independently verified the absence of a current relationship. The full nature, scope, and duration of the Andreou-Semichastny relationship — including whether the relationship extended beyond the Adriatic Shores Development Ltd. co-investment, whether any joint financial interests or obligations survived the dissolution of that entity, and whether any residual financial, beneficial ownership, or personal connections persist — remain unknown and unverified as of the date of this memorandum. These questions are central to the Phase 2 enhanced due diligence investigation.

B. Regulatory Significance of the Red Flag

The Andreou-Semichastny association, while not itself constituting a violation of U.S. sanctions law, carries significant regulatory implications that WAL must evaluate before proceeding with the Drakon intermediary engagement or any aspect of the WPX-4200 Meridian export program that involves Drakon.

OFAC 50 Percent Rule. Under OFAC's guidance on the application of the 50 Percent Rule, any entity that is owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more persons who are identified on the SDN List is itself considered to be a blocked person, regardless of whether the entity itself appears on the SDN List. See 31 C.F.R. § 501 app. A; OFAC, Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property are blocked (Aug. 13, 2014). While there is currently no evidence that Viktor Semichastny holds any direct or indirect ownership interest in Castellan Holdings Limited or Drakon Defence Systems S.A., the prior business association between Andreou and Semichastny raises the question of whether any undisclosed ownership, control, or beneficial interest relationship exists. If Semichastny were found to hold a direct or indirect ownership interest in Castellan or Drakon — whether through nominee arrangements, trust structures, or other intermediary vehicles — the 50 Percent Rule analysis could be implicated, potentially rendering the entity a blocked person and making any transaction with Drakon a prohibited activity.

Even in the absence of a 50 percent ownership threshold being met, OFAC has made clear that U.S. persons should exercise caution in engaging in transactions with entities in which an SDN-designated person has any ownership interest, as such transactions may raise concerns under the general prohibition on dealing in the property or interests in property of blocked persons.

OFAC Framework for Compliance Commitments. Under OFAC's "A Framework for OFAC Compliance Commitments," published in May 2019, OFAC identifies the key elements of an effective sanctions compliance program, including risk assessment, screening, and due diligence procedures designed to identify and address red flags. The Framework specifically identifies, as a hallmark of an inadequate compliance program, the failure to conduct enhanced due diligence in response to identified red flags or warning signs. The prior business association between the UBO of a minority shareholder in WAL's proposed foreign intermediary and an SDN-designated individual constitutes precisely the type of red flag that OFAC expects a responsible U.S. exporter to investigate through enhanced due diligence before proceeding with a transaction.

Failure to conduct appropriate enhanced due diligence in the face of this identified red flag could expose WAL to enforcement risk in the event that the Drakon intermediary arrangement is later found to have involved, directly or indirectly, a blocked person or the property or interests in property of a blocked person. OFAC considers the adequacy of a company's compliance program, including its response to identified red flags, as a significant factor in determining the appropriate enforcement response in the event of an apparent violation. See OFAC, Economic Sanctions Enforcement Guidelines, 31 C.F.R. Part 501, app. A.

ITAR Compliance Implications. Under ITAR § 127.1, it is unlawful for any person to export or attempt to export from the United States any defense article or defense service designated in the USML, or to furnish any defense article or defense service to any person in violation of ITAR, including through intermediaries, agents, or representatives who may be acting on behalf of, or for the benefit of, sanctioned or prohibited parties. If Drakon were found to have any beneficial ownership connection to a sanctioned party, the export of WPX-4200 Meridian targeting pods through Drakon as an intermediary could constitute a violation of ITAR, regardless of whether the ultimate end-user (Kantara MoND) is itself a legitimate and authorized recipient.

IEEPA Penalties. Violations of U.S. economic sanctions administered by OFAC are enforceable under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706. IEEPA provides for civil penalties of up to the greater of $356,579 per violation (as adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, most recently adjusted effective January 2024) or twice the value of the transaction giving rise to the violation. IEEPA further provides for criminal penalties of up to $1,000,000 per violation and imprisonment of up to 20 years for willful violations. Given that the total program value of the WPX-4200 Meridian export program is approximately $91,300,000, the potential exposure under the "twice the value of the transaction" measure is substantial.

Commission Payments. The proposed commission arrangement with Drakon warrants particular attention in light of the identified red flag. Under the Drakon intermediary agreement as currently contemplated, Drakon would receive a commission of $3,357,000 (calculated as 4.5% of the $74,600,000 net base contract value). If Drakon were found to have any beneficial ownership connection to a sanctioned party — and specifically if any portion of the commission payment were to flow, directly or indirectly, to or for the benefit of Viktor Semichastny or another blocked person — the commission payment could constitute a prohibited transfer of funds for the benefit of a blocked person in violation of the OFAC sanctions applicable to Semichastny under Executive Order 14024. This risk underscores the importance of verifying Castellan's and Drakon's full beneficial ownership chain before any commission payments are authorized.

C. OFAC Red Flag Indicators Present

Based on the Phase 1 screening results and open-source research, C&H has identified the following specific OFAC red flag indicators that are present in the Castellan Holdings / Yiannis Andreou context:

• Prior business association between a transaction counterparty's UBO and an SDN-designated individual. Yiannis Andreou, the listed UBO of Castellan Holdings Limited (a 28% minority equity holder in Drakon), was a co-investor with Viktor Semichastny (SDN Entry ID: SDNR-2022-04871) in Adriatic Shores Development Ltd. (Cyprus, dissolved 2020). This prior joint venture / co-investment relationship constitutes a direct red flag under OFAC compliance guidance.

• Cypriot holding company structure with limited beneficial ownership transparency. Castellan Holdings Limited is a Cyprus-registered private limited company with a registered office at a commercial address in Nicosia commonly used by holding companies and special-purpose vehicles. Cyprus, while a member state of the European Union and subject to EU anti-money laundering regulations, has historically been identified by international observers and regulatory bodies as a jurisdiction with elevated risks related to opaque corporate structures, nominee arrangements, and the use of holding companies to obscure beneficial ownership. The limited publicly available information regarding Castellan's corporate activities and beneficial ownership chain beyond Drakon's initial disclosure is a source of concern.

• Incomplete beneficial ownership verification. Drakon's own disclosure materials identify Andreou as the UBO of Castellan, but the full beneficial ownership chain of Castellan has not yet been independently verified. It is not known whether additional layers of ownership, nominee arrangements, trust structures, or other intermediary vehicles exist between Andreou and Castellan's equity, or whether any other persons (including potentially sanctioned persons) hold direct or indirect interests in Castellan.

• Sector relevance of the SDN designation. Semichastny's OFAC SDN designation is specifically based on his activities in the defense and defense-related materiel sector of the Russian Federation. This is directly relevant to the present transaction context, in which the underlying export involves defense articles (WPX-4200 Meridian EO/IR targeting pods) and the intermediary (Drakon) operates in the defense procurement market. The sectoral alignment between Semichastny's designation basis and the nature of the contemplated transaction heightens the compliance significance of the Andreou-Semichastny association.

D. Assessment: Insufficient Information to Clear

Based on Phase 1 screening alone, C&H cannot provide a compliance clearance recommendation for the Andreou/Castellan/Drakon chain. The information available as of the date of this memorandum is insufficient to make a definitive determination on the following critical questions:

(i) Whether Yiannis Andreou maintains any ongoing business, financial, or personal relationship with Viktor Semichastny;

(ii) Whether Viktor Semichastny has any direct or indirect beneficial ownership interest — whether through equity holdings, contractual arrangements, nominee structures, trust arrangements, or otherwise — in Castellan Holdings Limited or, through Castellan, in Drakon Defence Systems S.A.;

(iii) Whether Castellan Holdings Limited's ownership structure includes any additional layers, nominee arrangements, or intermediary entities that might obscure connections to sanctioned persons or that have not been disclosed by Drakon;

(iv) Whether any funds flowing to Drakon in connection with the WPX-4200 Meridian export program — including, but not limited to, the proposed commission payments of $3,357,000 — could ultimately benefit Viktor Semichastny or any other blocked person, directly or indirectly; and

(v) Whether Andreou or Castellan have any other business relationships, financial interests, or affiliations with sanctioned persons or entities beyond the identified Semichastny association.

Until these questions are adequately addressed through enhanced due diligence, C&H recommends that WAL treat the Drakon intermediary engagement as presenting an unresolved sanctions compliance risk and proceed in accordance with the interim compliance recommendations set forth in Section VII below.

VI. Phase 2 Enhanced Due Diligence — Northbridge Engagement

A. Scope of Phase 2 EDD

In light of the compliance red flag identified in Section V above, and with the authorization of Janet Pfeiffer, General Counsel and Chief Compliance Officer of WAL, C&H has engaged Northbridge Forensic Advisory Group LLC ("Northbridge") to conduct a Tier 2 Enhanced Due Diligence investigation focused on Castellan Holdings Limited and Yiannis Andreou.

Northbridge Forensic Advisory Group LLC is a specialized investigative and forensic due diligence firm with offices in New York and London. The Northbridge engagement is being directed by Samuel Kreindler, Managing Director, located at 55 Water Street, 18th Floor, New York, NY 10041. Northbridge has substantial experience in conducting sanctions-related due diligence investigations in the defense and aerospace sector, including UBO verification, financial network analysis, and adverse information investigations across multiple jurisdictions.

The scope of the Northbridge Tier 2 EDD investigation includes the following workstreams:

• Corporate registry searches. Northbridge will conduct comprehensive corporate registry searches in Cyprus (Department of Registrar of Companies and intellectual Property) and any other relevant jurisdictions to verify Castellan Holdings Limited's full beneficial ownership chain, including identification of all shareholders, directors, officers, registered agents, and any nominee arrangements or trust structures associated with the entity.

• UBO verification. Northbridge will independently verify the ultimate beneficial ownership of Castellan Holdings Limited beyond the initial disclosure provided by Drakon Defence Systems S.A. This verification will include review of corporate registry filings, beneficial ownership registers (including the Cyprus UBO Register maintained pursuant to EU Anti-Money Laundering Directive requirements), and any other available documentary sources.

• Media, litigation, and regulatory action searches. Northbridge will conduct comprehensive searches of media databases (including English-language and non-English-language sources), court records, and regulatory enforcement databases for Yiannis Andreou, Castellan Holdings Limited, and any affiliated entities, in all relevant jurisdictions, to identify any adverse information, litigation history, regulatory enforcement actions, sanctions-related inquiries, or other compliance-relevant information.

• Financial network analysis. Northbridge will conduct a financial network analysis to identify any current or historical transactional links between Yiannis Andreou and Viktor Semichastny, including through intermediary entities, shared corporate affiliations, co-directorships, co-investments (beyond the identified Adriatic Shores Development Ltd. co-investment), or financial institutions.

• Adriatic Shores Development Ltd. dissolution verification. Northbridge will verify the dissolution of Adriatic Shores Development Ltd. through Cyprus corporate registry records, confirm the distribution (if any) of assets upon dissolution, and determine whether any successor entities, related ventures, or continuing obligations arose from the dissolution.

• Restricted-party list cross-referencing. Northbridge will assess whether any entities or individuals identified in the course of the investigation — including any additional Castellan or Andreou-related entities, affiliates, or associates — appear on any U.S. or international restricted-party lists or have sanctions-relevant connections that were not captured by the Phase 1 screening.

All work performed by Northbridge in connection with this engagement is being undertaken at the direction of counsel (C&H) and in anticipation of the rendering of legal advice to WAL regarding sanctions compliance in connection with the WPX-4200 Meridian export program. Accordingly, the Northbridge investigation and its work product are subject to the protections of the attorney-client privilege and the attorney work product doctrine, and all communications between C&H and Northbridge regarding this engagement are being treated as privileged and confidential.

The flat fee for the Northbridge Tier 2 EDD investigation is $28,500. This fee is being borne by WAL as a component of the overall due diligence costs associated with the WPX-4200 Meridian export program and is being invoiced directly by Northbridge to C&H for pass-through to WAL, in accordance with the fee arrangement set forth in the C&H engagement letter.

The report delivery deadline for the Northbridge Tier 2 EDD Report is June 16, 2025, which is forty (40) calendar days from the opening of the Northbridge engagement.

B. Deliverable. Upon completion of its investigation, Northbridge will produce a written Tier 2 Enhanced Due Diligence Report, which will be delivered to C&H as the directing counsel. The Northbridge report will be a privileged and confidential document prepared at the direction of counsel.

Upon receipt of the Northbridge report, C&H will synthesize the Northbridge findings with C&H's own analysis and legal assessment, and will prepare and deliver to WAL a separate Enhanced Due Diligence Risk Assessment Memorandum. That memorandum will contain: (i) a summary of the Northbridge investigative findings, (ii) C&H's legal analysis of the sanctions compliance implications of those findings, (iii) a risk rating for the Castellan/Andreou/Drakon chain (using a tiered risk-rating framework to be specified in that memorandum), and (iv) a compliance recommendation regarding whether WAL should proceed with, modify, or terminate its proposed engagement of Drakon Defence Systems S.A. as the exclusive in-country representative for the WPX-4200 Meridian export program. The Enhanced Due Diligence Risk Assessment Memorandum will be delivered to WAL as promptly as practicable following receipt of the Northbridge report, with a target delivery date of approximately five to seven business days after the June 16, 2025 Northbridge delivery deadline.

VII. Interim Compliance Recommendations

Pending completion of the Phase 2 enhanced due diligence investigation and delivery of C&H's Enhanced Due Diligence Risk Assessment Memorandum, C&H makes the following interim compliance recommendations to WAL.

A. Suspension of Drakon Intermediary Agreement Finalization

C&H recommends that WAL immediately suspend finalization of the intermediary / representation agreement with Drakon Defence Systems S.A. pending completion of the Phase 2 enhanced due diligence investigation and receipt of C&H's risk assessment memorandum. No binding intermediary agreement, letter of intent, memorandum of understanding, or other contractual commitment should be executed with Drakon until the Castellan/Andreou red flag has been resolved to the satisfaction of WAL's compliance function and outside counsel.

Hargrove & Landsdowne LLP (Philip Hargrove, Senior Partner, VA Bar No. 34219), which serves as coordinating counsel for the underlying commercial contract and the Drakon intermediary agreement, should be advised of this recommendation promptly. C&H is prepared to coordinate directly with Hargrove & Landsdowne on the timing and substance of any communications to Drakon regarding the delay in finalizing the intermediary agreement, with a view to avoiding unnecessary disclosure of the specific nature of the compliance concern while maintaining an appropriate level of transparency consistent with WAL's business relationship with Drakon and Kantara MoND.

No commission payments, advance payments, retainer fees, or any other form of financial consideration should be made to or through Drakon Defence Systems S.A. until the Castellan/Andreou red flag is resolved. No binding commercial commitments that would obligate WAL to make future payments to or through Drakon should be entered into during the pendency of the enhanced due diligence investigation. This recommendation extends to any informal or preliminary commitments that might create an expectation of future engagement, regardless of whether they are technically binding under applicable law.

B. Ongoing Screening Obligations

As noted in Section III.B above, several parties involved in the contemplated WPX-4200 Meridian export transaction have not yet been screened because their identities have not yet been made available. Specifically:

• Drakon Board Members. The five (5) individual members of Drakon's board of directors have not been identified. WAL should request the Drakon board member identities — including full legal names, dates of birth, nationalities, and any known aliases — from Drakon and/or Drakon's Kantaran legal counsel, Thessaly Law Chambers (Alexia Merouri, Managing Partner, Kantara Bar Association Registration No. KBA-2004-1128), as promptly as practicable. Upon receipt of this information, C&H will conduct Phase 1 screening of all identified board members.

• Kantara Air Force Logistics and Receiving Personnel. The names and identifying information of Kantara Air Force logistics and receiving personnel who will be involved in the receipt, acceptance, and integration of the WPX-4200 targeting pods will need to be screened prior to any export activity. These identities are expected to be provided by Kantara MoND at a later stage of the transaction.

• Freight Forwarder / Carrier. The freight forwarder and/or carrier for the anticipated shipment of the WPX-4200 targeting pods (anticipated route: Port of Baltimore, Maryland, United States, to Port of Velaris, Kantara) has not yet been engaged. The freight forwarder and carrier, and any relevant personnel thereof, must be screened before any export shipment is made.

All of the foregoing parties must be screened and cleared before any license application is filed with DDTC. The current target date for filing the DSP-5 export license application and TAA application is September 22, 2025. All parties must also be screened before any export activity (including any shipment of defense articles or provision of defense services or technical data).

In addition, rescreening of all previously cleared parties should be conducted at the following intervals, consistent with OFAC and BIS best-practice guidance:

(i) Immediately prior to the submission of any license application to DDTC;

(ii) Immediately prior to any shipment of defense articles or provision of defense services or technical data;

(iii) On a periodic basis — C&H recommends quarterly rescreening — during the life of any resulting export authorization; and

(iv) Upon any change in the identity or role of transaction participants, or upon any significant change in the sanctions landscape applicable to the Republic of Kantara, Cyprus, or any other relevant jurisdiction.

Sanctions lists are updated frequently by OFAC, BIS, DDTC, and other relevant authorities, and parties that were screened clear at one point in time may subsequently become designated. Periodic rescreening is essential to maintain compliance on an ongoing basis.

C. Record Retention

All screening records generated in connection with the Phase 1 screening process, including the following categories of documents, are being retained in C&H's matter file and should also be maintained in WAL's export compliance records:

• PineScan Global screening output reports (Attachment B);

• C&H manual verification notes and open-source research documentation (Attachment C);

• The Restricted-Party Screening Checklist and Results Matrix (Attachment A);

• This memorandum and any supplemental memoranda; and

• All correspondence and communications related to the screening process.

These records should be maintained in WAL's export compliance files in accordance with the record retention requirements of ITAR § 122.5, which requires retention

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT PREPARED IN ANTICIPATION OF RENDERING LEGAL ADVICE
This memorandum was prepared by Calderwood & Harkness LLP at the direction of Whitmore Aerospace LLC in connection with the rendering of legal advice regarding sanctions compliance and restricted-party screening obligations. This document is protected by the attorney-client privilege, the work product doctrine, and any other applicable privileges. It is not intended for disclosure to any third party and should not be disclosed without the prior written consent of Calderwood & Harkness LLP and Whitmore Aerospace LLC. Inadvertent disclosure does not constitute a waiver of any applicable privilege.
MEMORANDUM
FROM: Leila Nazari, Associate, Calderwood & Harkness LLP (DC Bar No. 1081209)
REVIEWED BY: Sandra Tung, Partner, Calderwood & Harkness LLP (DC Bar No. 492103)
TO: Janet Pfeiffer, General Counsel & Chief Compliance Officer, Whitmore Aerospace LLC (VA Bar No. 78432); David Sung, Director of Export Controls & Trade Compliance / Empowered Official, Whitmore Aerospace LLC
DATE: May 23, 2025
RE: OFAC and Restricted-Party Sanctions Screening Results and Risk Assessment — WPX-4200 Meridian Export Program (Prospective Direct Commercial Sale to Republic of Kantara, Ministry of National Defence)
Calderwood & Harkness LLP 1200 Pennsylvania Avenue NW, Suite 800 Washington, DC 20004
Whitmore Aerospace LLC 2400 Ridgecrest Boulevard, Suite 600 Arlington, VA 22201
Right-click to update Table of Contents
I. Executive Summary
The purpose of this memorandum is to present the results of the Phase 1 automated and manual restricted-party and sanctions screening conducted in connection with Whitmore Aerospace LLC's ("WAL" or "Whitmore") prospective Direct Commercial Sale of thirty-six (36) WPX-4200 Meridian Electro-Optical/Infrared ("EO/IR") Multi-Spectral Targeting Pods, together with associated spare parts and components (valued at approximately $9.2 million) and a three-year field support and sustainment package (valued at approximately $7.5 million), to the Ministry of National Defence of the Republic of Kantara ("Kantara MoND"). The base contract value for the thirty-six targeting pod units is $74,600,000, bringing the total estimated program value to approximately $91,300,000.
Phase 1 screening was completed on May 23, 2025, in accordance with the engagement timeline established at the outset of this matter. The screening was conducted using two complementary methodologies: (i) automated screening performed through Pinecrest Compliance Solutions LLC's ("Pinecrest") PineScan Global™ platform, which screens against all major U.S. and multilateral restricted-party lists, and (ii) independent manual verification conducted by Calderwood & Harkness LLP ("C&H") against all applicable U.S. government and multilateral sanctions and restricted-party lists, supplemented by open-source media and adverse information screening for all screened parties.
The summary finding of Phase 1 screening is as follows: No direct matches or "hits" were identified for the primary end-user (Kantara MoND), its designated procurement contact (Brigadier General Niko Stathakis, Director of Procurement, Kantara MoND), the proposed foreign intermediary (Drakon Defence Systems S.A., a Kantaran société anonyme), or Drakon's Chief Executive Officer (Theodoros Papadimitriou). Each of these parties screened clear against all ten (10) restricted-party lists applied in the Phase 1 screening process.
However, one significant compliance red flag was identified during the course of C&H's open-source media and adverse information screening. Specifically, Yiannis Andreou, a Cypriot national (age 63) and the listed ultimate beneficial owner ("UBO") of Castellan Holdings Limited ("Castellan"), a Cyprus-registered private limited company (Registration No. HE-394521) that holds a 28% minority equity stake in Drakon Defence Systems S.A. ("Drakon"), has a documented prior business association with Viktor Semichastny, a Russian national who was designated on the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") under Executive Order 14024 on April 15, 2022 (SDN Entry ID: SDNR-2022-04871). Semichastny's designation was made in connection with his activities in the defense and defense-related materiel sector of the Russian Federation. Open-source reporting indicates that Andreou and Semichastny co-invested in a Cyprus-registered real estate development entity, Adriatic Shores Development Ltd., which was dissolved in 2020, approximately two years prior to Semichastny's SDN designation.
While neither Andreou nor Castellan Holdings Limited appears on any restricted-party list, the prior business relationship between the UBO of a minority shareholder in WAL's proposed foreign intermediary and an SDN-designated individual constitutes a compliance red flag of sufficient significance to warrant enhanced due diligence before WAL proceeds to finalize any intermediary agreement with Drakon or to submit any license application to the Directorate of Defense Trade Controls ("DDTC").
Accordingly, C&H recommends that WAL undertake Phase 2 enhanced due diligence ("EDD") focused on Castellan Holdings Limited and Yiannis Andreou. To that end, with WAL's authorization, C&H has engaged Northbridge Forensic Advisory Group LLC ("Northbridge") to conduct a Tier 2 EDD investigation. The Northbridge Tier 2 EDD Report is due on June 16, 2025. Upon receipt of the Northbridge report, C&H will prepare and deliver a separate Enhanced Due Diligence Risk Assessment Memorandum to WAL containing a risk rating and a compliance recommendation regarding WAL's proposed engagement of Drakon as its exclusive in-country representative for the WPX-4200 Meridian export program.
In the interim, C&H recommends that WAL suspend finalization of the Drakon intermediary agreement and refrain from making any commission payments, executing any letters of intent, or entering into any binding commercial commitments with or through Drakon until the Castellan/Andreou red flag has been satisfactorily resolved.
II. Scope of Engagement and Screening Mandate
A. Engagement Background
Calderwood & Harkness LLP was engaged by Whitmore Aerospace LLC effective May 7, 2025, pursuant to an engagement letter of that date, to provide legal counsel and advisory services in connection with WAL's prospective WPX-4200 Meridian export program to the Republic of Kantara. The scope of C&H's engagement encompasses, among other workstreams, comprehensive OFAC and restricted-party sanctions screening of all prospective foreign end-users, consignees, intermediaries, and other transaction participants involved in the contemplated WPX-4200 Meridian export transaction.
The engagement letter, executed by Janet Pfeiffer on behalf of WAL and Sandra Tung on behalf of C&H, was countersigned and returned to C&H on May 7, 2025. A retainer in the amount of $50,000 was received by C&H on May 9, 2025, via wire transfer to C&H's IOLTA account. Conflicts clearance for this engagement was completed on May 5, 2025, prior to execution of the engagement letter, and was documented under C&H Conflicts Clearance No. SC-2025-CF-04412. No conflicts of interest were identified.
The C&H engagement team assigned to this matter consists of the following attorneys:
• Sandra Tung, Partner (DC Bar No. 492103) — Responsible Partner, overseeing all workstreams and providing final review and approval of all deliverables.
• Oliver Mackenzie, Partner — Billing Partner, responsible for engagement economics and fee management.
• Garrett Simmons, Associate — Lead Associate, with primary responsibility for the ITAR/EAR jurisdiction and commodity classification assessment workstream.
• Leila Nazari, Associate (DC Bar No. 1081209) — Working Associate, with primary responsibility for the sanctions/OFAC screening and due diligence workstream, including preparation of this memorandum.
This memorandum constitutes a deliverable under the sanctions/OFAC screening and due diligence workstream of C&H's engagement. The estimated fee component for this workstream, as set forth in the engagement letter, is $35,000 to $45,000, within the overall engagement estimate of $185,000 to $245,000 for all workstreams combined. Fees and expenses are being billed in accordance with C&H's standard hourly rates, as set forth in the engagement letter, and are subject to the retainer and billing arrangements agreed upon between C&H and WAL.
B. Transaction Overview for Screening Purposes
For purposes of establishing the screening mandate and contextualizing the results presented in this memorandum, the key parameters of the contemplated transaction are summarized below.
Product. The defense article at issue is the WPX-4200 Meridian Electro-Optical/Infrared Multi-Spectral Targeting Pod, a precision targeting system designed for integration onto tactical fighter aircraft. Based on a preliminary assessment, the WPX-4200 is anticipated to be classified under United States Munitions List ("USML") Category XII(d) (fire control, range finder, optical and guidance and control equipment), indicating that it is a defense article subject to the jurisdiction of the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130. A comprehensive jurisdiction and commodity classification assessment memorandum is being prepared as a separate workstream by Garrett Simmons and Leila Nazari, under Sandra Tung's review, with a target delivery date of June 6, 2025. That memorandum will address the precise USML classification and confirm ITAR jurisdictional status, and will be provided to WAL under separate cover.
Transaction Structure. The contemplated transaction is structured as a Direct Commercial Sale ("DCS") between WAL (as the U.S. exporter and manufacturer) and Kantara MoND (as the foreign end-user and purchaser). The transaction is not proceeding through the Foreign Military Sales ("FMS") pathway administered by the Defense Security Cooperation Agency ("DSCA"). As a DCS transaction involving ITAR-controlled defense articles, the export will require prior authorization from the Department of State, DDTC, in the form of a DSP-5 export license and, depending on the scope of technical data and defense services to be provided in connection with the field support package, a Technical Assistance Agreement ("TAA").
End-User. The foreign end-user is the Ministry of National Defence of the Republic of Kantara, located at 14 Boulevard of the Republic, Velaris, Kantara 10200. The designated end-use for the WPX-4200 Meridian targeting pods is integration onto the Kantara Air Force's fleet of twenty-four (24) F-16 Block 50 multi-role fighter aircraft. The end-use is a bona fide military application by an allied government entity.
In-Country Intermediary. WAL proposes to engage Drakon Defence Systems S.A. (Kantaran commercial registration number KR-SA-2011-08934), located at 42 Leventis Avenue, 3rd Floor, Velaris, Kantara 10340, as WAL's exclusive in-country representative for the WPX-4200 Meridian export program. Drakon's proposed role is to facilitate the commercial and government-liaison aspects of the transaction within Kantara, including engagement with Kantara MoND procurement officials. The proposed commission structure provides for a commission of 4.5% of the net base contract value, calculated as $74,600,000 × 4.5% = $3,357,000. The intermediary / representation agreement with Drakon has not yet been finalized, and its finalization is being coordinated by Hargrove & Landsdowne LLP (Philip Hargrove, Senior Partner, VA Bar No. 34219), which serves as coordinating counsel for the underlying commercial contract and Drakon intermediary agreement.
Country Risk Profile. The Republic of Kantara is a NATO partner state and a participating state of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. Under the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, Kantara is classified in Country Group A:1. Kantara is not subject to any U.S. arms embargo, and it is not subject to any OFAC comprehensive sanctions program, sectoral sanctions program, or secondary sanctions program. There are no country-based OFAC restrictions applicable to Kantara. The country-level risk profile is favorable for the contemplated transaction, although individual and entity-level screening remains required and has been conducted as described herein.
C. Screening Methodology
The Phase 1 sanctions and restricted-party screening was conducted using a two-track methodology combining automated platform-based screening with independent manual verification and open-source adverse information screening.
Phase 1 — Automated Screening (PineScan Global™ Platform). Automated screening was performed using the PineScan Global™ platform, operated by Pinecrest Compliance Solutions LLC, located at 330 South Tryon Street, Suite 210, Charlotte, NC 28202 (CEO: Margaret Holbrook). PineScan Global is a commercially available sanctions and restricted-party screening platform that maintains current and historical data from all major U.S. and multilateral restricted-party lists. The PineScan Global platform's list coverage includes, but is not limited to, the following: the OFAC Specially Designated Nationals and blocked Persons List ("SDN List"), the Bureau of Industry and Security ("BIS") Entity List, the BIS Denied Persons List, the BIS Unverified List, the DDTC AECA Debarred Parties List, the Department of Defense Section 1260H List of Chinese Military Companies, the European Union Consolidated Sanctions List, the United Nations Security Council Consolidated List, and twenty-two (22) additional national and international sanctions lists. Pinecrest is contracted directly by WAL; screening costs are borne by WAL outside of the C&H engagement budget.
PineScan Global employs fuzzy-matching algorithms with configurable match sensitivity thresholds. For purposes of this screening, match sensitivity was set at the "high" threshold level (i.e., a low tolerance for deviation from the queried name, which maximizes the likelihood of false positive results while minimizing the risk of missed matches). All PineScan Global screening output reports are included as Attachment B to this memorandum.
Phase 1 — Manual / Independent Verification. In addition to the automated screening, C&H independently verified all PineScan Global results through manual searches conducted directly on authoritative U.S. government and multilateral sources. Specifically, C&H conducted manual searches of the following ten (10) lists for each screened party:
1. OFAC Specially Designated Nationals and blocked Persons List (SDN List);
2. OFAC Sectoral Sanctions Identifications List ("SSI List");
3. OFAC Non-SDN Menu-Based Sanctions List ("NS-MBS List");
4. BIS Entity List (Supplement No. 4 to Part 744 of the EAR);
5. BIS Denied Persons List;
6. BIS Unverified List;
7. DDTC AECA Debarred Parties List;
8. Department of Defense Section 1260H List (Chinese Military Companies);
9. EU Consolidated Sanctions List; and
10. UN Security Council Consolidated List.
Manual searches were conducted using the following tools and databases: the U.S. Department of the Treasury OFAC Sanctions List Search tool (available at https://sanctionssearch.ofac.treas.gov/), the BIS Consolidated Screening List tool (available at https://www.trade.gov/consolidated-screening-list), the DDTC website for the AECA Debarred Parties List, and the EU Sanctions Map tool for the EU Consolidated Sanctions List. C&H's manual verification notes are included as part of Attachment C to this memorandum.
Open-Source Media and Adverse Information Screening. In addition to list-based screening, C&H conducted open-source media and adverse information screening for all screened parties. This screening was performed using commercial databases (including Sundial Solutions, Dow Jones Factiva, and the Kestrel Software database), publicly available corporate registry records, and general internet searches. The purpose of the open-source screening was to identify potential compliance red flags — such as prior sanctions violations, involvement in illicit procurement networks, connections to sanctioned persons or entities, or other adverse information — that may not be captured by list-based screening alone. Open-source research documentation is included as part of Attachment C.
III. Parties Screened
A. List of Screened Parties
The following table sets forth all parties that were subject to Phase 1 sanctions and restricted-party screening in connection with the WPX-4200 Meridian export program. For each screened party, the table provides the party's name, role in the transaction, nationality or jurisdiction, and a brief description. Screening results for each party are presented in Section IV below.
B. Status of Incomplete Screenings
As reflected in the table above, parties identified as items 7 through 9 — namely, the five (5) individual members of Drakon's board of directors, the Kantara Air Force logistics and receiving personnel, and the as-yet-unidentified freight forwarder or carrier — could not be screened during the Phase 1 process because sufficient identifying information has not yet been provided to C&H or WAL.
With respect to the Drakon board members, WAL has requested the relevant corporate registry extract from Drakon's Kantaran legal counsel, Thessaly Law Chambers (Alexia Merouri, Managing Partner, Kantara Bar Association Registration No. KBA-2004-1128), but the extract had not been received as of the date of this memorandum. C&H recommends that WAL follow up promptly with Drakon and Thessaly Law Chambers to obtain the names, nationalities, dates of birth, and any other available identifying information for all five Drakon board members, so that screening can be completed as soon as practicable.
With respect to the Kantara Air Force logistics and receiving personnel, it is understood that their identities will not be available until the transaction has progressed to a more advanced stage. Similarly, the freight forwarder and carrier have not yet been engaged. C&H recommends that all additional parties be screened as their identities become known, and in all events prior to any license application filing with DDTC or any export activity. No defense articles, defense services, or technical data should be exported, and no license application should be filed, until screening of all transaction participants has been completed and documented.
IV. Phase 1 Screening Results
A. Screening Lists Applied
Phase 1 screening was conducted against the following ten (10) restricted-party and sanctions lists, which collectively represent the principal U.S. government and multilateral lists applicable to the contemplated ITAR-controlled defense article export transaction:
1. OFAC Specially Designated Nationals and blocked Persons List (SDN List) — Maintained by the U.S. Department of the Treasury, Office of Foreign Assets Control. The SDN List identifies individuals and entities whose property and interests in property are blocked pursuant to various U.S. sanctions programs. U.S. persons are generally prohibited from engaging in transactions with SDN-listed parties.
2. OFAC Sectoral Sanctions Identifications List (SSI List) — Maintained by OFAC. The SSI List identifies persons operating in specified sectors of certain sanctioned country economies (principally Russia) who are subject to prohibitions on certain types of transactions, including debt and equity restrictions.
3. OFAC Non-SDN Menu-Based Sanctions List (NS-MBS List) — Maintained by OFAC. The NS-MBS List identifies persons subject to certain menu-based sanctions under various Executive Orders and statutes, which may include restrictions short of a full asset freeze.
4. BIS Entity List (Supplement No. 4 to Part 744 of the EAR) — Maintained by the Bureau of Industry and Security, U.S. Department of Commerce. The Entity List identifies foreign persons, including businesses, research institutions, government organizations, and individuals, that are subject to specific license requirements for the export, reexport, or transfer (in-country) of specified items subject to the EAR.
5. BIS Denied Persons List — Maintained by BIS. The Denied Persons List identifies persons who have been denied export privileges pursuant to administrative orders issued by BIS.
6. BIS Unverified List — Maintained by BIS. The Unverified List identifies foreign persons for whom BIS has been unable to verify the bona fides of prior export transactions, triggering additional due diligence and licensing requirements.
7. DDTC AECA Debarred Parties List — Maintained by the Directorate of Defense Trade Controls, U.S. Department of State. The AECA Debarred Parties List identifies persons who have been statutorily debarred from participating in the export of defense articles and defense services under the Arms Export Control Act ("AECA"), 22 U.S.C. § 2778.
8. Department of Defense Section 1260H List (Chinese Military Companies) — Maintained by the U.S. Department of Defense pursuant to Section 1260H of the National Defense Authorization Act for Fiscal Year 2021. This list identifies entities that are Chinese military companies operating in the United States or in any jurisdiction.
9. EU Consolidated Sanctions List — Maintained by the European Union. The EU Consolidated Sanctions List consolidates all persons, groups, and entities subject to EU financial sanctions (asset freezes) under EU sanctions regulations.
10. UN Security Council Consolidated List — Maintained by the United Nations Security Council. The UN Consolidated List includes all individuals and entities subject to sanctions measures imposed by the UN Security Council.
In addition to the foregoing lists, the PineScan Global platform screened against twenty-two (22) additional national and international sanctions lists, as described in Section II.C above. No matches were identified on any of the additional lists screened by PineScan Global.
B. Results by Party — No Direct Hits
The following subsections present the Phase 1 screening results for each of the six (6) parties for which complete screening was conducted. For each party, the results of the PineScan Global automated screening, C&H's independent manual verification, and the open-source media and adverse information screening are reported separately.
1. Kantara Ministry of National Defence. PineScan Global Result: No match identified on any of the screened lists, including the OFAC SDN List, SSI List, NS-MBS List, BIS Entity List, BIS Denied Persons List, BIS Unverified List, DDTC AECA Debarred Parties List, DoD Section 1260H List, EU Consolidated Sanctions List, UN Security Council Consolidated List, and all additional lists screened by the PineScan Global platform. No partial matches or potential aliases were flagged by the fuzzy-matching algorithm at the high-sensitivity threshold.
C&H Manual Verification: No match identified. The Republic of Kantara is not subject to any OFAC comprehensive sanctions program (such as those applicable to Cuba, Iran, North Korea, Syria, or the Crimea, Donetsk, and Luhansk regions of Ukraine). Kantara is not subject to any OFAC secondary sanctions program, sectoral sanctions program, or menu-based sanctions program. No OFAC country-based restrictions are applicable to the Republic of Kantara or to its government ministries and agencies. The Kantara Ministry of National Defence does not appear on any of the ten screened lists.
Open-Source Screening: No adverse information identified. The Republic of Kantara is a NATO partner state and a participating state of the Wassenaar Arrangement. Kantara is classified in Country Group A:1 under the EAR. Open-source research did not reveal any reports of sanctions violations, export control violations, proliferation concerns, or other adverse information associated with the Kantara Ministry of National Defence. Kantara maintains a cooperative defense relationship with the United States and has been an authorized recipient of U.S. defense articles through both FMS and DCS channels in prior years.
Result: CLEAR
2. Brigadier General Niko Stathakis. PineScan Global Result: No match identified on any of the screened lists. The PineScan Global fuzzy-matching algorithm did not flag any partial matches, potential aliases, or phonetic variants for the name "Niko Stathakis" or "Nikolaos Stathakis" on any screened list.
C&H Manual Verification: No match identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other seven screened lists. C&H searched for the name "Stathakis" as well as common variants (including "Stathakes," "Stathaki," and "Stathakis") and identified no matches on any list.
Open-Source Screening: No adverse information identified. Brigadier General Niko Stathakis is an active-duty officer of the Kantaran Armed Forces serving in a procurement role within the Ministry of National Defence. Open-source research identified publicly available references to BG Stathakis in the context of Kantaran defense procurement activities, consistent with his stated role. No reports of sanctions violations, corruption, bribery, or other adverse information were identified.
Result: CLEAR
3. Drakon Defence Systems S.A. PineScan Global Result: No match identified on any of the screened lists. The entity name "Drakon Defence Systems S.A." and variants thereof (including "Drakon Defense Systems," "Drakon Defence," and the Kantaran-language transliteration) did not match any entry on any screened list.
C&H Manual Verification: No match identified on the OFAC SDN List, SSI List, NS-MBS List, BIS Entity List, BIS Denied Persons List, BIS Unverified List, DDTC AECA Debarred Parties List, DoD Section 1260H List, EU Consolidated Sanctions List, or UN Security Council Consolidated List. C&H searched for the entity name and known variants, the Kantaran commercial registration number (KR-SA-2011-08934), and the registered address. No matches were identified on any list.
Open-Source Screening: Drakon Defence Systems S.A. is a licensed defense broker and consultancy operating under Kantaran law, established in 2011. Open-source research identified Drakon as an active participant in the Kantaran defense procurement market, with publicly reported involvement in several prior defense procurement programs involving Western-origin defense equipment. No adverse information was identified regarding sanctions evasion, export control violations, involvement in prohibited transactions, diversion of controlled items, or other compliance-relevant concerns. Drakon maintains a registered office in a commercial district of Velaris, Kantara, consistent with its stated business activities.
However, as discussed in detail in Section V of this memorandum, Drakon's ownership structure includes Castellan Holdings Limited (HE-394521), a Cyprus-registered private limited company, as a 28% minority equity shareholder. The compliance implications of Castellan's participation in Drakon's ownership structure, and specifically the prior business association between Castellan's listed UBO (Yiannis Andreou) and an OFAC SDN-designated individual (Viktor Semichastny), are analyzed separately below.
Result: CLEAR (subject to Castellan Holdings / Yiannis Andreou red flag analysis in Section V)
4. Theodoros Papadimitriou. PineScan Global Result: No match identified on any of the screened lists. The PineScan Global fuzzy-matching algorithm identified one potential partial match for the surname "Papadimitriou" on the EU Consolidated Sanctions List; however, upon further analysis, the potential match was determined to be a false positive — the listed individual was a different person (different first name, different date of birth, different nationality) with no connection to Theodoros Papadimitriou.
C&H Manual Verification: No match identified. C&H confirmed the false-positive determination for the EU Consolidated Sanctions List partial match identified by PineScan Global. The listed individual on the EU Consolidated Sanctions List is a Greek national named Georgios Papadimitriou, born in 1971, designated in connection with an unrelated matter. There is no connection between Georgios Papadimitriou and Theodoros Papadimitriou. No matches were identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other screened lists.
Open-Source Screening: No adverse information identified. Theodoros Papadimitriou is a Kantaran national, age 57, who has served as Chief Executive Officer of Drakon Defence Systems S.A. since the company's founding in 2011. Open-source research identified publicly available biographical information consistent with his stated role and background. No reports of sanctions violations, corruption, bribery, export control violations, or other adverse information were identified.
Result: CLEAR
5. Castellan Holdings Limited. PineScan Global Result: No direct match identified on any of the screened lists. The entity name "Castellan Holdings Limited" and variants thereof did not match any entry on any screened list at any sensitivity threshold. The Cyprus company registration number (HE-394521) was also searched and did not match any list entry.
C&H Manual Verification: No direct match identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other seven screened lists. C&H searched for the entity name, known variants, the Cyprus registration number, and the registered address (8 Themistocles Dervis Street, Office 401, Nicosia, Cyprus 1066). No matches were identified. The entity name "Castellan Holdings Limited" does not appear on any restricted-party list maintained by the U.S. government or the multilateral bodies covered by the Phase 1 screening.
Open-Source Screening: Castellan Holdings Limited is a Cyprus-registered private limited company with registration number HE-394521. The listed ultimate beneficial owner, as disclosed by Drakon Defence Systems S.A. in its corporate information package provided to WAL, is Yiannis Andreou, a Cypriot national, age 63. Limited publicly available information exists regarding Castellan's corporate activities beyond its 28% equity stake in Drakon Defence Systems S.A. The registered office address — 8 Themistocles Dervis Street, Office 401, Nicosia, Cyprus 1066 — is located in a commercial office building in Nicosia that is commonly used as a registered address for Cyprus holding companies and special-purpose vehicles. This fact is not inherently adverse but is noted as contextual information relevant to the due diligence assessment.
Critically, the ultimate beneficial ownership of Castellan Holdings Limited has not yet been fully verified beyond Drakon's initial disclosure identifying Andreou as the UBO. It is not known whether Castellan's ownership structure includes additional layers, nominee arrangements, trust structures, or other intermediary vehicles that might obscure the true beneficial ownership chain. Enhanced due diligence is recommended to verify the completeness and accuracy of Drakon's UBO disclosure.
Result: NO DIRECT HIT — RED FLAG IDENTIFIED (see Section V)
6. Yiannis Andreou. PineScan Global Result: No direct match identified on any of the screened lists. The name "Yiannis Andreou" and variants thereof (including "Ioannis Andreou," "Yannis Andreou," and "John Andreou") did not match any entry on any screened list.
C&H Manual Verification: No direct match identified on the OFAC SDN List, SSI List, NS-MBS List, or any of the other seven screened lists. C&H searched for the name and known variants, including transliterations and common anglicizations. No matches were identified. Yiannis Andreou does not appear on any restricted-party list maintained by the U.S. government or the multilateral bodies covered by the Phase 1 screening.
Open-Source Screening: During the course of open-source media and adverse information screening, C&H identified a prior business association between Yiannis Andreou and Viktor Semichastny, a Russian national who is designated on the OFAC SDN List under Executive Order 14024 (SDN Entry ID: SDNR-2022-04871; effective date: April 15, 2022). Specifically, open-source media reports indicate that Andreou and Semichastny were co-investors in Adriatic Shores Development Ltd., a Cyprus-registered limited company that was engaged in a real estate development venture. Adriatic Shores Development Ltd. was dissolved in 2020, approximately two years prior to Semichastny's OFAC SDN designation in April 2022. The full nature, scope, and duration of the Andreou-Semichastny relationship, and whether any residual financial, beneficial ownership, or personal connections persist, have not been independently verified at this stage. This finding constitutes a significant compliance red flag warranting enhanced due diligence and is analyzed in detail in Section V of this memorandum.
Result: NO DIRECT HIT — RED FLAG IDENTIFIED (see Section V)
C. Summary Results Matrix
A detailed Restricted-Party Screening Checklist and Results Matrix has been prepared as a separate Excel workbook and is attached to this memorandum as Attachment A. The Results Matrix provides a party-by-party, list-by-list tabulation of all Phase 1 screening results, including the following data fields for each screening query: (i) party name and identifying information, (ii) list screened, (iii) screening tool used (PineScan Global or C&H manual verification), (iv) date of screening, (v) result (match / no match / partial match / false positive), (vi) analyst name, and (vii) analyst notes. The Results Matrix is intended to serve as a contemporaneous compliance record documenting the screening process and results, and should be maintained in WAL's export compliance files in accordance with the record retention obligations discussed in Section VII.C below.
The Results Matrix has been transmitted to the recipients of this memorandum via the secure email accompanying this memorandum. A copy is also being maintained in C&H's engagement file.
V. Compliance Red Flag: Castellan Holdings Ltd. / Yiannis Andreou — Association with OFAC SDN-Designated Viktor Semichastny
A. Factual Background
During the open-source media and adverse information screening conducted by C&H as part of the Phase 1 screening process, a significant compliance red flag was identified in connection with Yiannis Andreou, the listed ultimate beneficial owner of Castellan Holdings Limited, a 28% minority equity shareholder in Drakon Defence Systems S.A.
The factual basis for this red flag is as follows:
Yiannis Andreou is a Cypriot national, age 63, identified as the listed UBO of Castellan Holdings Limited (Cyprus Registration No. HE-394521). Castellan is a Cyprus-registered private limited company that holds a 28% minority equity stake in Drakon Defence Systems S.A. (Kantaran Registration No. KR-SA-2011-08934), WAL's proposed exclusive in-country representative for the WPX-4200 Meridian export program. The identification of Andreou as Castellan's UBO was made based on the corporate information package provided by Drakon to WAL in connection with the intermediary engagement discussions.
Viktor Semichastny is a Russian national, age 58. Semichastny was designated on the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") on April 15, 2022, under Executive Order 14024 of April 15, 2021 ("Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation"), as amended. Semichastny's SDN entry carries the identification number SDNR-2022-04871. The stated basis for Semichastny's designation is that he was determined to operate or to have operated in the defense and defense-related materiel sector of the Russian Federation. As an SDN-designated person, Semichastny's property and interests in property within the United States or within the possession or control of U.S. persons are blocked, and U.S. persons are generally prohibited from engaging in any transactions or dealings with Semichastny.
Nature of the Association. Open-source media reports, corroborated by Cyprus corporate registry data accessible through publicly available databases, indicate that Andreou and Semichastny were co-investors in Adriatic Shores Development Ltd., a Cyprus-registered limited company. Adriatic Shores Development Ltd. appears to have been a real estate development venture focused on coastal property development. The precise ownership percentages, investment amounts, and governance roles of Andreou and Semichastny within Adriatic Shores Development Ltd. have not been established through Phase 1 screening alone and are among the subjects of the Phase 2 enhanced due diligence investigation. Adriatic Shores Development Ltd. was dissolved in 2020, approximately two years prior to Semichastny's OFAC SDN designation in April 2022.
Current Status of the Relationship. No current business relationship between Andreou and Semichastny has been asserted or disclosed by Andreou, by Drakon, or in any corporate disclosure provided to WAL. However, C&H has not independently verified the absence of a current relationship. The full nature, scope, and duration of the Andreou-Semichastny relationship — including whether the relationship extended beyond the Adriatic Shores Development Ltd. co-investment, whether any joint financial interests or obligations survived the dissolution of that entity, and whether any residual financial, beneficial ownership, or personal connections persist — remain unknown and unverified as of the date of this memorandum. These questions are central to the Phase 2 enhanced due diligence investigation.
B. Regulatory Significance of the Red Flag
The Andreou-Semichastny association, while not itself constituting a violation of U.S. sanctions law, carries significant regulatory implications that WAL must evaluate before proceeding with the Drakon intermediary engagement or any aspect of the WPX-4200 Meridian export program that involves Drakon.
OFAC 50 Percent Rule. Under OFAC's guidance on the application of the 50 Percent Rule, any entity that is owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more persons who are identified on the SDN List is itself considered to be a blocked person, regardless of whether the entity itself appears on the SDN List. See 31 C.F.R. § 501 app. A; OFAC, Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property are blocked (Aug. 13, 2014). While there is currently no evidence that Viktor Semichastny holds any direct or indirect ownership interest in Castellan Holdings Limited or Drakon Defence Systems S.A., the prior business association between Andreou and Semichastny raises the question of whether any undisclosed ownership, control, or beneficial interest relationship exists. If Semichastny were found to hold a direct or indirect ownership interest in Castellan or Drakon — whether through nominee arrangements, trust structures, or other intermediary vehicles — the 50 Percent Rule analysis could be implicated, potentially rendering the entity a blocked person and making any transaction with Drakon a prohibited activity.
Even in the absence of a 50 percent ownership threshold being met, OFAC has made clear that U.S. persons should exercise caution in engaging in transactions with entities in which an SDN-designated person has any ownership interest, as such transactions may raise concerns under the general prohibition on dealing in the property or interests in property of blocked persons.
OFAC Framework for Compliance Commitments. Under OFAC's "A Framework for OFAC Compliance Commitments," published in May 2019, OFAC identifies the key elements of an effective sanctions compliance program, including risk assessment, screening, and due diligence procedures designed to identify and address red flags. The Framework specifically identifies, as a hallmark of an inadequate compliance program, the failure to conduct enhanced due diligence in response to identified red flags or warning signs. The prior business association between the UBO of a minority shareholder in WAL's proposed foreign intermediary and an SDN-designated individual constitutes precisely the type of red flag that OFAC expects a responsible U.S. exporter to investigate through enhanced due diligence before proceeding with a transaction.
Failure to conduct appropriate enhanced due diligence in the face of this identified red flag could expose WAL to enforcement risk in the event that the Drakon intermediary arrangement is later found to have involved, directly or indirectly, a blocked person or the property or interests in property of a blocked person. OFAC considers the adequacy of a company's compliance program, including its response to identified red flags, as a significant factor in determining the appropriate enforcement response in the event of an apparent violation. See OFAC, Economic Sanctions Enforcement Guidelines, 31 C.F.R. Part 501, app. A.
ITAR Compliance Implications. Under ITAR § 127.1, it is unlawful for any person to export or attempt to export from the United States any defense article or defense service designated in the USML, or to furnish any defense article or defense service to any person in violation of ITAR, including through intermediaries, agents, or representatives who may be acting on behalf of, or for the benefit of, sanctioned or prohibited parties. If Drakon were found to have any beneficial ownership connection to a sanctioned party, the export of WPX-4200 Meridian targeting pods through Drakon as an intermediary could constitute a violation of ITAR, regardless of whether the ultimate end-user (Kantara MoND) is itself a legitimate and authorized recipient.
IEEPA Penalties. Violations of U.S. economic sanctions administered by OFAC are enforceable under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706. IEEPA provides for civil penalties of up to the greater of $356,579 per violation (as adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, most recently adjusted effective January 2024) or twice the value of the transaction giving rise to the violation. IEEPA further provides for criminal penalties of up to $1,000,000 per violation and imprisonment of up to 20 years for willful violations. Given that the total program value of the WPX-4200 Meridian export program is approximately $91,300,000, the potential exposure under the "twice the value of the transaction" measure is substantial.
Commission Payments. The proposed commission arrangement with Drakon warrants particular attention in light of the identified red flag. Under the Drakon intermediary agreement as currently contemplated, Drakon would receive a commission of $3,357,000 (calculated as 4.5% of the $74,600,000 net base contract value). If Drakon were found to have any beneficial ownership connection to a sanctioned party — and specifically if any portion of the commission payment were to flow, directly or indirectly, to or for the benefit of Viktor Semichastny or another blocked person — the commission payment could constitute a prohibited transfer of funds for the benefit of a blocked person in violation of the OFAC sanctions applicable to Semichastny under Executive Order 14024. This risk underscores the importance of verifying Castellan's and Drakon's full beneficial ownership chain before any commission payments are authorized.
C. OFAC Red Flag Indicators Present
Based on the Phase 1 screening results and open-source research, C&H has identified the following specific OFAC red flag indicators that are present in the Castellan Holdings / Yiannis Andreou context:
• Prior business association between a transaction counterparty's UBO and an SDN-designated individual. Yiannis Andreou, the listed UBO of Castellan Holdings Limited (a 28% minority equity holder in Drakon), was a co-investor with Viktor Semichastny (SDN Entry ID: SDNR-2022-04871) in Adriatic Shores Development Ltd. (Cyprus, dissolved 2020). This prior joint venture / co-investment relationship constitutes a direct red flag under OFAC compliance guidance.
• Cypriot holding company structure with limited beneficial ownership transparency. Castellan Holdings Limited is a Cyprus-registered private limited company with a registered office at a commercial address in Nicosia commonly used by holding companies and special-purpose vehicles. Cyprus, while a member state of the European Union and subject to EU anti-money laundering regulations, has historically been identified by international observers and regulatory bodies as a jurisdiction with elevated risks related to opaque corporate structures, nominee arrangements, and the use of holding companies to obscure beneficial ownership. The limited publicly available information regarding Castellan's corporate activities and beneficial ownership chain beyond Drakon's initial disclosure is a source of concern.
• Incomplete beneficial ownership verification. Drakon's own disclosure materials identify Andreou as the UBO of Castellan, but the full beneficial ownership chain of Castellan has not yet been independently verified. It is not known whether additional layers of ownership, nominee arrangements, trust structures, or other intermediary vehicles exist between Andreou and Castellan's equity, or whether any other persons (including potentially sanctioned persons) hold direct or indirect interests in Castellan.
• Sector relevance of the SDN designation. Semichastny's OFAC SDN designation is specifically based on his activities in the defense and defense-related materiel sector of the Russian Federation. This is directly relevant to the present transaction context, in which the underlying export involves defense articles (WPX-4200 Meridian EO/IR targeting pods) and the intermediary (Drakon) operates in the defense procurement market. The sectoral alignment between Semichastny's designation basis and the nature of the contemplated transaction heightens the compliance significance of the Andreou-Semichastny association.
D. Assessment: Insufficient Information to Clear
Based on Phase 1 screening alone, C&H cannot provide a compliance clearance recommendation for the Andreou/Castellan/Drakon chain. The information available as of the date of this memorandum is insufficient to make a definitive determination on the following critical questions:
(i) Whether Yiannis Andreou maintains any ongoing business, financial, or personal relationship with Viktor Semichastny;
(ii) Whether Viktor Semichastny has any direct or indirect beneficial ownership interest — whether through equity holdings, contractual arrangements, nominee structures, trust arrangements, or otherwise — in Castellan Holdings Limited or, through Castellan, in Drakon Defence Systems S.A.;
(iii) Whether Castellan Holdings Limited's ownership structure includes any additional layers, nominee arrangements, or intermediary entities that might obscure connections to sanctioned persons or that have not been disclosed by Drakon;
(iv) Whether any funds flowing to Drakon in connection with the WPX-4200 Meridian export program — including, but not limited to, the proposed commission payments of $3,357,000 — could ultimately benefit Viktor Semichastny or any other blocked person, directly or indirectly; and
(v) Whether Andreou or Castellan have any other business relationships, financial interests, or affiliations with sanctioned persons or entities beyond the identified Semichastny association.
Until these questions are adequately addressed through enhanced due diligence, C&H recommends that WAL treat the Drakon intermediary engagement as presenting an unresolved sanctions compliance risk and proceed in accordance with the interim compliance recommendations set forth in Section VII below.
VI. Phase 2 Enhanced Due Diligence — Northbridge Engagement
A. Scope of Phase 2 EDD
In light of the compliance red flag identified in Section V above, and with the authorization of Janet Pfeiffer, General Counsel and Chief Compliance Officer of WAL, C&H has engaged Northbridge Forensic Advisory Group LLC ("Northbridge") to conduct a Tier 2 Enhanced Due Diligence investigation focused on Castellan Holdings Limited and Yiannis Andreou.
Northbridge Forensic Advisory Group LLC is a specialized investigative and forensic due diligence firm with offices in New York and London. The Northbridge engagement is being directed by Samuel Kreindler, Managing Director, located at 55 Water Street, 18th Floor, New York, NY 10041. Northbridge has substantial experience in conducting sanctions-related due diligence investigations in the defense and aerospace sector, including UBO verification, financial network analysis, and adverse information investigations across multiple jurisdictions.
The scope of the Northbridge Tier 2 EDD investigation includes the following workstreams:
• Corporate registry searches. Northbridge will conduct comprehensive corporate registry searches in Cyprus (Department of Registrar of Companies and intellectual Property) and any other relevant jurisdictions to verify Castellan Holdings Limited's full beneficial ownership chain, including identification of all shareholders, directors, officers, registered agents, and any nominee arrangements or trust structures associated with the entity.
• UBO verification. Northbridge will independently verify the ultimate beneficial ownership of Castellan Holdings Limited beyond the initial disclosure provided by Drakon Defence Systems S.A. This verification will include review of corporate registry filings, beneficial ownership registers (including the Cyprus UBO Register maintained pursuant to EU Anti-Money Laundering Directive requirements), and any other available documentary sources.
• Media, litigation, and regulatory action searches. Northbridge will conduct comprehensive searches of media databases (including English-language and non-English-language sources), court records, and regulatory enforcement databases for Yiannis Andreou, Castellan Holdings Limited, and any affiliated entities, in all relevant jurisdictions, to identify any adverse information, litigation history, regulatory enforcement actions, sanctions-related inquiries, or other compliance-relevant information.
• Financial network analysis. Northbridge will conduct a financial network analysis to identify any current or historical transactional links between Yiannis Andreou and Viktor Semichastny, including through intermediary entities, shared corporate affiliations, co-directorships, co-investments (beyond the identified Adriatic Shores Development Ltd. co-investment), or financial institutions.
• Adriatic Shores Development Ltd. dissolution verification. Northbridge will verify the dissolution of Adriatic Shores Development Ltd. through Cyprus corporate registry records, confirm the distribution (if any) of assets upon dissolution, and determine whether any successor entities, related ventures, or continuing obligations arose from the dissolution.
• Restricted-party list cross-referencing. Northbridge will assess whether any entities or individuals identified in the course of the investigation — including any additional Castellan or Andreou-related entities, affiliates, or associates — appear on any U.S. or international restricted-party lists or have sanctions-relevant connections that were not captured by the Phase 1 screening.
All work performed by Northbridge in connection with this engagement is being undertaken at the direction of counsel (C&H) and in anticipation of the rendering of legal advice to WAL regarding sanctions compliance in connection with the WPX-4200 Meridian export program. Accordingly, the Northbridge investigation and its work product are subject to the protections of the attorney-client privilege and the attorney work product doctrine, and all communications between C&H and Northbridge regarding this engagement are being treated as privileged and confidential.
The flat fee for the Northbridge Tier 2 EDD investigation is $28,500. This fee is being borne by WAL as a component of the overall due diligence costs associated with the WPX-4200 Meridian export program and is being invoiced directly by Northbridge to C&H for pass-through to WAL, in accordance with the fee arrangement set forth in the C&H engagement letter.
The report delivery deadline for the Northbridge Tier 2 EDD Report is June 16, 2025, which is forty (40) calendar days from the opening of the Northbridge engagement.
B. Deliverable. Upon completion of its investigation, Northbridge will produce a written Tier 2 Enhanced Due Diligence Report, which will be delivered to C&H as the directing counsel. The Northbridge report will be a privileged and confidential document prepared at the direction of counsel.
Upon receipt of the Northbridge report, C&H will synthesize the Northbridge findings with C&H's own analysis and legal assessment, and will prepare and deliver to WAL a separate Enhanced Due Diligence Risk Assessment Memorandum. That memorandum will contain: (i) a summary of the Northbridge investigative findings, (ii) C&H's legal analysis of the sanctions compliance implications of those findings, (iii) a risk rating for the Castellan/Andreou/Drakon chain (using a tiered risk-rating framework to be specified in that memorandum), and (iv) a compliance recommendation regarding whether WAL should proceed with, modify, or terminate its proposed engagement of Drakon Defence Systems S.A. as the exclusive in-country representative for the WPX-4200 Meridian export program. The Enhanced Due Diligence Risk Assessment Memorandum will be delivered to WAL as promptly as practicable following receipt of the Northbridge report, with a target delivery date of approximately five to seven business days after the June 16, 2025 Northbridge delivery deadline.
VII. Interim Compliance Recommendations
Pending completion of the Phase 2 enhanced due diligence investigation and delivery of C&H's Enhanced Due Diligence Risk Assessment Memorandum, C&H makes the following interim compliance recommendations to WAL.
A. Suspension of Drakon Intermediary Agreement Finalization
C&H recommends that WAL immediately suspend finalization of the intermediary / representation agreement with Drakon Defence Systems S.A. pending completion of the Phase 2 enhanced due diligence investigation and receipt of C&H's risk assessment memorandum. No binding intermediary agreement, letter of intent, memorandum of understanding, or other contractual commitment should be executed with Drakon until the Castellan/Andreou red flag has been resolved to the satisfaction of WAL's compliance function and outside counsel.
Hargrove & Landsdowne LLP (Philip Hargrove, Senior Partner, VA Bar No. 34219), which serves as coordinating counsel for the underlying commercial contract and the Drakon intermediary agreement, should be advised of this recommendation promptly. C&H is prepared to coordinate directly with Hargrove & Landsdowne on the timing and substance of any communications to Drakon regarding the delay in finalizing the intermediary agreement, with a view to avoiding unnecessary disclosure of the specific nature of the compliance concern while maintaining an appropriate level of transparency consistent with WAL's business relationship with Drakon and Kantara MoND.
No commission payments, advance payments, retainer fees, or any other form of financial consideration should be made to or through Drakon Defence Systems S.A. until the Castellan/Andreou red flag is resolved. No binding commercial commitments that would obligate WAL to make future payments to or through Drakon should be entered into during the pendency of the enhanced due diligence investigation. This recommendation extends to any informal or preliminary commitments that might create an expectation of future engagement, regardless of whether they are technically binding under applicable law.
B. Ongoing Screening Obligations
As noted in Section III.B above, several parties involved in the contemplated WPX-4200 Meridian export transaction have not yet been screened because their identities have not yet been made available. Specifically:
• Drakon Board Members. The five (5) individual members of Drakon's board of directors have not been identified. WAL should request the Drakon board member identities — including full legal names, dates of birth, nationalities, and any known aliases — from Drakon and/or Drakon's Kantaran legal counsel, Thessaly Law Chambers (Alexia Merouri, Managing Partner, Kantara Bar Association Registration No. KBA-2004-1128), as promptly as practicable. Upon receipt of this information, C&H will conduct Phase 1 screening of all identified board members.
• Kantara Air Force Logistics and Receiving Personnel. The names and identifying information of Kantara Air Force logistics and receiving personnel who will be involved in the receipt, acceptance, and integration of the WPX-4200 targeting pods will need to be screened prior to any export activity. These identities are expected to be provided by Kantara MoND at a later stage of the transaction.
• Freight Forwarder / Carrier. The freight forwarder and/or carrier for the anticipated shipment of the WPX-4200 targeting pods (anticipated route: Port of Baltimore, Maryland, United States, to Port of Velaris, Kantara) has not yet been engaged. The freight forwarder and carrier, and any relevant personnel thereof, must be screened before any export shipment is made.
All of the foregoing parties must be screened and cleared before any license application is filed with DDTC. The current target date for filing the DSP-5 export license application and TAA application is September 22, 2025. All parties must also be screened before any export activity (including any shipment of defense articles or provision of defense services or technical data).
In addition, rescreening of all previously cleared parties should be conducted at the following intervals, consistent with OFAC and BIS best-practice guidance:
(i) Immediately prior to the submission of any license application to DDTC;
(ii) Immediately prior to any shipment of defense articles or provision of defense services or technical data;
(iii) On a periodic basis — C&H recommends quarterly rescreening — during the life of any resulting export authorization; and
(iv) Upon any change in the identity or role of transaction participants, or upon any significant change in the sanctions landscape applicable to the Republic of Kantara, Cyprus, or any other relevant jurisdiction.
Sanctions lists are updated frequently by OFAC, BIS, DDTC, and other relevant authorities, and parties that were screened clear at one point in time may subsequently become designated. Periodic rescreening is essential to maintain compliance on an ongoing basis.
C. Record Retention
All screening records generated in connection with the Phase 1 screening process, including the following categories of documents, are being retained in C&H's matter file and should also be maintained in WAL's export compliance records:
• PineScan Global screening output reports (Attachment B);
• C&H manual verification notes and open-source research documentation (Attachment C);
• The Restricted-Party Screening Checklist and Results Matrix (Attachment A);
• This memorandum and any supplemental memoranda; and
• All correspondence and communications related to the screening process.
These records should be maintained in WAL's export compliance files in accordance with the record retention requirements of ITAR § 122.5, which requires retention

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT PREPARED IN ANTICIPATION OF RENDERING LEGAL ADVICE

MEMORANDUM

Record

Parties

Dates

Amounts