UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from________ to ___________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
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The number of shares outstanding of the issuer’s common stock
as of November 10, 2025 was
ONDAS HOLDINGS INC.
INDEX TO FORM 10-Q
i
ONDAS HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Certificates of deposit | ||||||||
| Investments in marketable equity securities | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other Assets: | ||||||||
| Goodwill, net of accumulated impairment charges | ||||||||
| Intangible assets, net | ||||||||
| Long-term equity investments | ||||||||
| Deposits and other assets | ||||||||
| Operating lease right of use assets | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Notes payable, net of unamortized debt discount and issuance costs of $ | ||||||||
| Convertible notes payable, net of unamortized debt discount and issuance cost of $ | ||||||||
| Convertible notes payable, net of unamortized debt discount and issuance cost of $ | ||||||||
| Deferred revenue | ||||||||
| Government grant liability | ||||||||
| Total current liabilities | ||||||||
| Long-Term Liabilities: | ||||||||
| Notes payable | ||||||||
| Convertible notes payable, net of current, net of unamortized debt discount and issuance cost of $ | ||||||||
| Accrued interest | ||||||||
| Government grant liability, net of current | ||||||||
| Operating lease liabilities, net of current | ||||||||
| Deferred tax liability | ||||||||
| Other liabilities | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 15) | ||||||||
| Temporary Equity | ||||||||
| Redeemable noncontrolling interest | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock - par value $ | ||||||||
| Preferred stock, Series A - par value $ | ||||||||
| Common Stock - par value $ | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Ondas Holdings stockholders’ equity | ||||||||
| Noncontrolling interest | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited Condensed Consolidated Financial Statements.
1
ONDAS HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit (loss) | ( | ) | ||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Change in fair value of government grant liability | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest and dividend income | ||||||||||||||||
| Unrealized gain on investments | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign exchange gain (loss), net | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less preferred dividends attributable to noncontrolling interest | ||||||||||||||||
| Less deemed dividends attributable to accretion of redemption value | ||||||||||||||||
| Less net loss attributable to noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||||||||||
The accompanying footnotes are an integral part of these unaudited Condensed Consolidated Financial Statements.
2
ONDAS HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(Unaudited)
| Ondas Holdings Inc. Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||
| Redeemable Noncontrolling Interest | Common Stock | Additional | Accumulated | Noncontrolling | Total Stockholders’ Equity | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | paid in capital | deficit | Interest | (Deficit) | |||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Sale of redeemable preferred stock in Ondas Networks, net of issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Issuance of warrants in connection with the sale of redeemable preferred stock in Ondas Networks | - | - | ||||||||||||||||||||||||||||||
| Preferred dividends atrributable to redeemable noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accretion of redeemable preferred stock in Ondas Networks | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Sale of common stock, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Issuance of warrants in Ondas Autonomous Systems, in connection with sale of common stock | - | - | ||||||||||||||||||||||||||||||
| Issuance of shares upon exercise of options | - | |||||||||||||||||||||||||||||||
| Delivery of shares for restricted stock units | - | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Issuance of shares for payment on convertible debt | - | |||||||||||||||||||||||||||||||
| Preferred dividends attributable to redeemable noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accretion of redeemable preferred stock in Ondas Networks | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Settlement of development agreement | - | |||||||||||||||||||||||||||||||
| Warrant conversion | - | |||||||||||||||||||||||||||||||
| Issuance of shares upon exercise of options | - | |||||||||||||||||||||||||||||||
| Delivery of shares for restricted stock units | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Issuance of shares for payment on convertible debt | - | |||||||||||||||||||||||||||||||
| Preferred dividends attributable to redeemable noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accretion of redeemable preferred stock in Ondas Networks | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Sale of common stock and warrants, net of issuance costs | - | |||||||||||||||||||||||||||||||
| Issuance of warrants in Ondas Networks, in connection with note payable | - | - | ||||||||||||||||||||||||||||||
| Delivery of shares for restricted stock units | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of warrants in Ondas Networks, in connection with convertible note payable | - | - | ||||||||||||||||||||||||||||||
| Preferred dividends attributable to redeemable noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accretion of redeemable preferred stock in Ondas Networks | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of shares for payment on convertible debt | - | |||||||||||||||||||||||||||||||
| Issuance of shares upon exercise of options and warrants | - | |||||||||||||||||||||||||||||||
| Delivery of shares for restricted stock units | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Preferred dividends attributable to redeemable noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accretion of redeemable preferred stock in Ondas Networks | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of shares and pre-funded warrants from June 2025 Public Offering, net of costs | - | |||||||||||||||||||||||||||||||
| Issuance of shares for payment on convertible debt | - | |||||||||||||||||||||||||||||||
| Issuance of shares upon exercise of options and warrants | - | |||||||||||||||||||||||||||||||
| Delivery of shares for restricted stock units | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Preferred dividends attributable to redeemable noncontrolling interest | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accretion of redeemable preferred stock in Ondas Networks | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Exercise of warrants in Ondas Autonomous Systems by noncontrolling interests | - | - | ||||||||||||||||||||||||||||||
| Issuance of shares from August 2025 Public Offering, net of costs | - | |||||||||||||||||||||||||||||||
| Issuance of shares from September 2025 Offering, net of costs | - | |||||||||||||||||||||||||||||||
| Issuance of shares for payment on convertible debt | - | |||||||||||||||||||||||||||||||
| Issuance of shares upon exercise of options and warrants | - | |||||||||||||||||||||||||||||||
| Delivery of shares for restricted stock units | - | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited Condensed Consolidated Financial Statements.
3
ONDAS HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities: | ||||||||
| Investment gains | ( | ) | ||||||
| Depreciation | ||||||||
| Amortization of debt discount and issuance costs | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of right of use asset | ||||||||
| Retirement of assets | ||||||||
| Loss on intellectual property | ||||||||
| Change in fair value of government grant liability | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Other current assets | ( | ) | ||||||
| Deposits and other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Deferred tax liability | ( | ) | - | |||||
| Other liabilities | ||||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Patent costs | ( | ) | ( | ) | ||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of equipment | ||||||||
| Purchase of software intangible | ( | ) | ( | ) | ||||
| Purchase of long-term equity investment | ( | ) | ||||||
| Purchases of equity securities | ( | ) | ||||||
| Cash paid for asset acquisition, net of cash acquired | ( | ) | ||||||
| Cash paid for business acquisition, net of cash acquired | ( | ) | ||||||
| Net cash flows used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of noncontrolling interest in Ondas Networks, net of issuance costs | ||||||||
| Proceeds from sale of common stock and warrants, net of issuance costs | ||||||||
| Proceeds from exercise of options and warrants | ||||||||
| Proceeds from exercise of warrants in OAS | ||||||||
| Proceeds from convertible notes payable, net of issuance costs, related party | ||||||||
| Proceeds from convertible notes payable, net of issuance costs | ||||||||
| Proceeds from notes payable, net of issuance costs, related party | ||||||||
| Proceeds from government grant | ||||||||
| Payments on government grant liability | ( | ) | ||||||
| Net cash flows provided by financing activities | ||||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | ||||||
| Cash, cash equivalents, and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||||||||
| Preferred dividends attributable to redeemable noncontrolling interest | $ | $ | ||||||
| Accretion of redeemable preferred stock in Ondas Networks | $ | $ | ||||||
| Common stock issued in exchange for debt repayment | $ | $ | ||||||
| Noncash consideration for settlement of development agreement payable | $ | $ | ||||||
| Warrants in Ondas Autonomous Systems, in relation to sale of common stock | $ | $ | ||||||
| Warrants in Ondas Holdings, in relation to sale of common stock | $ | $ | ||||||
| Warrants in relation to sale of redeemable preferred stock in Ondas Networks | $ | $ | ||||||
| Warrants in Ondas Networks, in relation to notes payable and convertible notes payable | $ | $ | ||||||
| Transfer of equipment into inventory | $ | $ | ||||||
| Operating leases right-of-use assets obtained in exchange of lease liabilities | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited Condensed Consolidated Financial Statements.
4
ONDAS HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
The Company
Ondas Holdings Inc. (“Ondas Holdings”, “Ondas”,
the “Company,” “we,” or “our”) was originally incorporated in Nevada on
As a result, Ondas Networks, Ondas Capital, OAS, American Robotics, Airobotics and Apeiro became our subsidiaries. Ondas’ corporate headquarters are located in Boston, Massachusetts. Ondas Networks has offices and facilities in Sunnyvale, California, American Robotics’ offices and facilities are located in Sparks, Maryland, Airobotics’ offices and facilities are located in Petah Tikva, Israel, and Apeiro offices and facilities are located in Kokhav Yaʼir, Israel.
Business Activity
Ondas is a leading provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks, Ondas Capital, OAS, Airobotics, Apeiro, and American Robotics. Ondas Networks provides wireless connectivity solutions. OAS provides autonomous aerial, ground robotics, and automated data solutions through its subsidiaries Airobotics, Apeiro and American Robotics. Ondas Networks and OAS together provide users in defense, homeland security, and critical infrastructure markets with improved connectivity and data collection and information processing capabilities. We operate Ondas Networks and OAS as separate business segments, and the following is a discussion of each segment.
Ondas Networks
Ondas Networks provides wireless connectivity solutions enabling mission-critical Industrial Internet applications and services. We refer to these applications as the Mission-Critical Internet of Things (“MC-IoT”). Our wireless networking products are applicable to a wide range of MC-IoT applications, which are most often located at the very edge of large industrial networks. These applications require secure, real-time connectivity with the ability to process large amounts of data at the edge of large industrial networks. Such applications are required in all of the major critical infrastructure markets, including rail, electric grids, drone operations, oil and gas, and public safety, homeland security and government, where secure, reliable and fast operational decisions are required in order to improve efficiency and ensure a high degree of safety and security. Our MC-IoT intellectual property has been adopted by the Institute of Electrical and Electronics Engineers (“IEEE”), the leading worldwide standards body in data networking protocols, and forms the core of the IEEE 802.16 standard. Because standards-based communications solutions are preferred by our mission-critical customers and ecosystem partners, we continue to take a leadership position in IEEE as it relates to wireless networking for industrial markets.
5
We design, develop, manufacture, sell and support FullMAX, our patented, Software Defined Radio (“SDR”) platform for secure, private, wide-area broadband networks. Our customers install FullMAX systems in order to upgrade and expand their legacy wide-area network infrastructure. By upgrading their legacy systems, customers benefit from significant increases in data throughput which enables new applications. We have targeted the North American freight rail operators for the initial adoption of our FullMAX platform. These rail operators currently operate legacy communications systems utilizing dated narrowband wireless technologies for voice and data communications. These legacy wireless networks have limited data capacity and are unable to support the adoption of new, intelligent train control and management systems. The freight rail operators through the Association of American Railroads (“AAR”), its advisory subsidiary MxV Rail, as well as the American Railway Engineering and Maintenance Association (“AREMA”), have adopted the IEEE 802.16 standard for future private wireless networks. The IEEE 802.16t Direct Peer-to-Peer (“DPP”) protocol has been selected by the AAR as the new standard for Next Generation head-of-train / end-of-train (“HOT-EOT”) communications or “NGHE Gen4.” This new protocol for train telemetry operations enables new safety and operational improvements to existing HOT-EOT applications.
Our software-based FullMAX platform is an important and timely upgrade solution for privately-owned and operated wireless wide-area networks, leveraging Internet Protocol-based communications to provide security, more reliability and significant data throughput for our mission-critical infrastructure customers. We believe industrial and critical infrastructure markets throughout the globe have reached an inflection point where legacy serial and analog based protocols no longer meet industry needs. In addition to offering enhanced data throughput, FullMAX is an intelligent networking platform enabling the adoption of sophisticated operating systems and equipment supporting next-generation MC-IoT applications over wide field areas. These new MC-IoT applications and related equipment require more processing power at the edge of large industrial networks and the efficient utilization of network capacity and scarce bandwidth.
Ondas Autonomous Systems (OAS)
Our OAS business unit develops, integrates, and deploys multi-domain autonomous solutions spanning air, ground, and communication systems for high-performance applications in defense, homeland security, and industrial markets. OAS delivers a unified technology ecosystem that combines autonomous drones, ground robotics, and secure tethered communications to enhance operational intelligence, safety, and resilience across mission-critical environments.
OAS’ portfolio includes the Optimus System™, a fully autonomous drone platform designed for persistent aerial intelligence, surveillance, and reconnaissance (ISR), and the Iron Drone Raider™, a fully autonomous interceptor drone engineered to detect, track, and neutralize small hostile drones. Complementing these aerial platforms, Apeiro’s advanced ground robots and fiber-spool communication systems extend mission reach, enabling autonomous and resilient operations across complex terrain, underground environments, and communications-denied areas.
Our multi-domain autonomy architecture serves customers across defense, homeland security, public safety, and critical industrial sectors, including smart cities, airports, seaports, oil and gas, mining, heavy construction, data centers, and semiconductor manufacturing. OAS solutions are built for persistent operations in the most demanding conditions — urban areas, sensitive facilities, and remote field deployments — providing unmatched situational awareness, security, and operational continuity.
In addition to our core platforms, OAS provides a wide suite of enabling services to ensure successful deployment and sustainment, including AI-driven data analytics, automation and IT integration, safety and regulatory certification, training, and lifecycle maintenance. These capabilities empower customers to fully harness the benefits of autonomous technology while ensuring compliance and operational safety.
OAS and its portfolio companies — American Robotics, Airobotics, and Apeiro — represent a powerful and synergistic combination of aerospace, robotics, and data technologies. Together, they deliver a comprehensive end-to-end platform that addresses every phase of the product lifecycle, from research and development through manufacturing, certification, and field sustainment.
OAS has achieved multiple industry-leading milestones, including the FAA Type Certification of the Optimus 1-EX UAV on September 25, 2023 — the first autonomous security data-capture UAV to receive this distinction. This certification, the highest echelon of FAA airworthiness recognition, enables broad beyond-visual-line-of-sight (BVLOS) operations over people and infrastructure and validates the system’s safety and reliability within the U.S. National Airspace System (NAS).
6
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited Consolidated Financial Statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”). The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in the 2024 Form 10-K and are updated, as necessary, in this Form 10-Q. The December 31, 2024 consolidated balance sheet data presented for comparative purposes was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the nine months ended September 30, 2025, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and our subsidiaries, Ondas Networks, Ondas Capital, OAS, American Robotics, Apeiro and Airobotics. All inter-company accounts and transactions between these entities have been eliminated in these unaudited Condensed Consolidated Financial Statements. The functional currency of the Company and all of our subsidiaries is the U.S. dollar.
Business Combinations
We utilize the purchase method of accounting for business combinations. This method requires, among other things, that results of operations of acquired companies are included in Ondas’ results of operations beginning on the respective acquisition dates and that assets acquired, and liabilities assumed are recognized at fair value as of the acquisition date. Any excess of the fair value of consideration transferred over the fair values of the net assets acquired is recognized as goodwill. Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date; these are recorded in either other accruals within current liabilities (for expected payments in less than a year) or other non-current liabilities (for expected payments in greater than a year), both on our consolidated balance sheets. Subsequent changes to the fair value of contingent consideration liabilities are recognized in other income (expense) in the Consolidated Statements of Operations. Contingent consideration payments made soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows. Contingent consideration payments not made soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the consolidated statements of cash flows, and amounts paid in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows. The fair value of assets acquired, and liabilities assumed in certain cases, may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair values of the underlying net assets of an acquired business. The Company tests goodwill for impairment on an annual basis during the fourth quarter of its fiscal year, or immediately if conditions indicate that such impairment could exist. The Company evaluates qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and whether it is necessary to perform goodwill impairment process.
7
Intangible assets represent patents, licenses, software and allocation of purchase price to identifiable intangible assets of an acquired business. The Company estimates the fair value of its reporting units using the fair market value measurement requirement. Intangible assets are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.
We amortize our intangible
assets with a finite life on a straight-line basis, over
Segment Information
Operating segments are defined
as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision
Maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The Company’s CODM is
its Chief Executive Officer. The Company determined it has
Use of Estimates
The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to allocation of consideration for business combinations to identifiable tangible and intangible assets, revenue recognition, allowance for credit losses, inventory write-downs to reflect net realizable value, assumptions used in the valuation of stock-based awards and valuation allowances against deferred tax assets. Actual results could differ from those estimates.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all
highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. As of September 30, 2025
and December 31, 2024, we had cash equivalents. Restricted cash includes cash that is not readily available for use in the Company’s
operating activities. At September 30, 2025, $
Accounts Receivable
Accounts receivable are stated
at a gross invoice amount less an allowance for credit losses as well as net of any discounts or other forms of variable consideration.
We estimate allowance for credit losses by evaluating specific accounts where information indicates our customers may have an inability
to meet financial obligations, such as customer payment history, credit worthiness and receivable amounts outstanding for an extended
period beyond contractual terms. We use assumptions and judgment, based on the best available facts and circumstances, to record an allowance
to reduce the receivable to the amount expected to be collected. These allowances are evaluated and adjusted as additional information
is received. We had an allowance for credit losses as of September 30, 2025 and December 31, 2024 of $
8
As of September 30, 2025,
the Company had $
Investments in marketable equity securities
The Company’s investments in marketable equity securities are measured at fair value at each reporting date, with unrealized gains and losses recognized in Other income (expense), net in the Company’s unaudited Condensed Consolidated Statements of Operations. Realized gains and losses on sales of marketable equity securities are determined using the specific identification method and are included in Other income (expense), net in the Company’s unaudited Condensed Consolidated Statements of Operations. Dividend income is recognized on the ex-dividend date.
Inventory
Inventories, which consist
solely of raw materials, work in process and finished goods, are stated at the lower of cost (first-in, first-out) or net realizable
value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and
projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected
use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete
are written down to net realizable value. As of September 30, 2025 and December 31, 2024 such reserves were $
Inventory consists of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Raw Material | $ | $ | ||||||
| Work in Process | ||||||||
| Finished Goods | ||||||||
| Less Inventory Reserves | ( | ) | ( | ) | ||||
| Total Inventory, net | $ | $ | ||||||
Property and Equipment
All additions, including
improvements to existing facilities, are recorded at cost. Maintenance and repairs are charged to expense as incurred. Depreciation of
property and equipment is principally recorded using the straight-line method over the estimated useful lives of the assets. The estimated
useful lives typically are (i)
Impairment of Long-Lived Assets
Long-lived assets are evaluated whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Such indicators include significant technological changes, adverse changes in market conditions and/or poor operating results. The carrying value of a long-lived asset group is considered impaired when the projected undiscounted future cash flows are less than its carrying value. The amount of impairment loss recognized is the difference between the estimated fair value and the carrying value of the asset or asset group. Fair market value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved. There was impairment of long-lived assets for the three and nine months ended September 30, 2025 and 2024, respectively.
Research and Development
Costs for research and development are expensed as incurred except for research and development equipment with alternative future use. Research and development expenses consist primarily of salaries, salary related expenses and costs of contractors and materials.
9
Government Grants
The government grant liability was assumed through the acquisition of Airobotics and asset purchase of Iron Drone. Airobotics and Iron Drone receive government grants from the Israel Innovation Authority (formerly: the Office of the Chief Scientist in Israel, “the IIA”), and the grant funds are repayable to the extent that future economic benefits are expected from the research project that will result in royalty-bearing sales. A liability for grants received is first measured at fair value using a discount rate that reflects a market rate of interest. The difference between the amount of the grant received and the fair value of the liability is accounted for as a government grant and recognized as a reduction of research and development expenses.
At each reporting date, the
Company evaluates whether there is reasonable assurance that the liability recognized, in whole or in part, will not be repaid (since
the Company will not be required to pay royalties) based on the best estimate of future sales and using the original effective interest
method, which is
Fair Value of Financial Instruments
Our financial assets and liabilities measured at fair value on a recurring basis consist primarily of receivables, accounts payable, accrued expenses and short- and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximate our fair value because of the short-term maturity of such instruments. Our financial assets measured at fair value on a nonrecurring basis include right of use assets, goodwill and intangibles, which are adjusted to fair value whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Our estimate of the fair value of right of use assets, goodwill and intangibles is based on expected future cash flows and actual results may differ from those estimates.
We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3).
Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs, as follows:
| Level 1 -- | Unadjusted quoted prices in active markets for identical assets or liabilities. | |
| Level 2 -- | Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. | |
| Level 3 -- | Unobservable inputs for the asset or liability. |
10
The Company had no Level
3 assets that are required to be valued at fair value as of December 31, 2024. The Company had Level 3 assets that are required to be
valued at fair value as of September 30, 2025. The fair value of the Company’s investment in warrants in a publicly traded company
was determined using a Black-Scholes Model.
| Nine Months Ended September 30, 2025 | ||||
| Stock price | $ | |||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Remaining contractual life in years | ||||
| Dividend yield | % | |||
The following table provides a reconciliation of the beginning and ending balances for the Level 3 warrant assets measured at fair value using significant unobservable inputs:
| Warrants | ||||
| Balance as of December 31, 2024 | $ | |||
| Warrants purchased, adjusted to fair value | ||||
| Net gain on change in fair value | ||||
| Balance as of September 30, 2025 | $ |
The Company had Level 3 liabilities
that are required to be valued at fair value as of September 30, 2025 and December 31, 2024. The fair value of the government grant liability
is determined as the sum of
| Government Grant Liability | ||||
| Balance as of December 31, 2024 | $ | |||
| Repayment on liability | ( | ) | ||
| Government grant proceeds received, adjusted to fair value | ||||
| Net loss on change in fair value of liability | ||||
| Balance as of September 30, 2025 | $ | |||
Deferred Offering Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financing as deferred offering costs until such financing is consummated. After consummation of equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs are expensed immediately as a charge to other income (expense) in the Condensed Consolidated Statements of Operations.
Redeemable Noncontrolling Interests
In 2023 and 2024, Ondas Networks
Inc. entered into multiple agreements with a third party for the sale of redeemable preferred stock in Ondas Networks (see Note 12 –
Redeemable Noncontrolling Interest). The preferred stock accrues dividends at the rate per annum of eight percent (
| (i) | In respect of the 2023 investments, for the greater of two times the initial investment plus accrued dividends or the amount that would be due if the Preferred Stock was converted into Common Stock. |
| (ii) | In respect of the 2024 investment, for the greater of one times the initial investment plus accrued dividends or the amount that would be due if the Preferred Stock was converted into Common Stock. |
11
The applicable accounting
guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it
is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the
occurrence of an event that is not solely within the control of the issuer. As a result, the Company recorded the noncontrolling interest
as redeemable noncontrolling interest and classified it in temporary equity within its consolidated balance sheet initially at its acquisition-date
estimated redemption value or fair value. In addition, the Company has elected to accrete the redeemable noncontrolling interest to the
full redemption value as of the earliest redemption date by accruing dividends at
Income Taxes
Income taxes are accounted
for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets
to the amount that will more likely than not be realized. In accordance with U.S. GAAP, we recognize the effect of uncertain income tax
positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position.
Recognized uncertain income tax positions are measured at the largest amount that is greater than
Stock-based Compensation
We calculate stock-based compensation expense for option awards (“Stock-based Award(s)”) based on the estimated grant/issue date fair value using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) and recognize the expense on a straight-line basis over the vesting period. We account for forfeitures as they occur.
The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period in determining the fair value of Stock-based Awards. The expected term is based on the “simplified method”, due to the Company’s limited option exercise history. Under this method, the term is estimated using the weighted average of the service vesting period and contractual term of the option award. As the Company does not yet have sufficient history of its own volatility, the Company has identified several public entities of similar size, complexities and industry and calculates historical volatility based on the volatilities of these companies. Although we believe our assumptions used to calculate stock-based compensation expense are reasonable, these assumptions can involve complex judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to our assumptions could significantly impact the amount of expense recorded in a given period.
We recognize restricted stock unit expense over the period of vesting or period that services will be provided. Compensation associated with shares of Common Stock, issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date, which is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided.
Shipping and Handling
We expense all shipping and handling costs as incurred. These costs are included in Cost of goods sold on the accompanying Condensed Consolidated Statements of Operations.
12
Advertising and Promotional Expenses
We expense advertising and
promotional costs as incurred. We recognized expense of $
Post-Retirement Benefits:
We have one 401(k) Savings
Plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under this 401(k) Plan, matching
contributions are based upon the amount of the employees’ contributions subject to certain limitations. We recognized expense of
$
Apeiro and Airobotics’
post-employment benefits are usually funded by deposits with insurance companies and are classified as defined deposit plans or defined
benefit plans. Apeiro and Airobotics’ have defined deposit plans, in accordance with Section 14 of Severance Compensation Israeli
Law, 1963, according to which Apeiro and Airobotics regularly makes its payments without having a legal or implied obligation to make
additional payments even if the fund has not accumulated sufficient amounts to pay all employee benefits, in the current period and in
previous periods. Deposits to a defined benefit plan for severance pay or benefits, are recognized as an expense when deposited with
the plan in parallel with receiving work services from the employee. All of Apeiro and Airobotics’ employees in Israel are subject
to Section 14 of Severance Compensation Israeli Law. We recognized expense of $
Revenue Recognition
We derive our revenue from product sales, services, and development arrangements. We determine revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract (where revenue is allocated on a relative standalone selling price basis by maximizing the use of observable inputs to determine the standalone selling price for each performance obligation); and (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the products or services it transfers to the customer.
Ondas has two business segments that generate revenue: Ondas Networks and OAS. Ondas Networks is engaged in the development, marketing, and sale of wireless radio systems for secure, wide area mission-critical, business-to-business networks. Ondas Networks generates revenue primarily from the sale of our FullMAX System and the delivery of related services, along with non-recurring engineering (“NRE”) development projects with certain customers. OAS generates revenue through the sales of their Optimus System™, the Iron Drone Raider™, and separately priced support, maintenance and ancillary services directly related to the sale of the Optimus System™ and the Iron Drone Raider™.
Product Sales Revenue
Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract.
Ondas Networks’ software and hardware, and OAS’ Optimus System™ and Iron Drone Raider™, are sold with a limited one-year basic warranty included in the price. The limited one-year basic warranty is an assurance-type warranty, is not a separate performance obligation, and thus no transaction price is allocated to it. The nature of tasks under the limited one-year basic warranty only provides for remedying defective product(s) covered by the warranty.
13
Service and Subscription Revenue
Service revenue is comprised of separately priced support and maintenance sales, as well as ancillary services, directly related to product sales, including product training, installation, and onsite support. Ancillary service revenues are recognized at the point in time when those services have been provided to the customer and the performance obligation has been satisfied. The Company allocates the transaction price to the service based on the stand-alone selling prices of these performance obligations which are stated in our contracts.
OAS also generates service revenue by selling a data subscription service to its customers based on the information collected by their autonomous systems. The customer pays for a monthly, annual, or multi-annual subscription service to remotely access the data collected by their autonomous systems. Data subscription service revenue is recognized on straight line basis over the length of the customer subscription agreement. If a subscription payment is received prior to installation and operation of their autonomous systems, it is held in deferred revenue and recognized after operation commences over the length of the subscription service.
Development Revenue
Development revenue is comprised primarily of non-recurring engineering service contracts to develop software and hardware applications for various customers. For Ondas Networks, in 2025 and 2024, a significant portion of this revenue is generated from one parent customer whereby Ondas Networks is to develop such applications to interoperate within the customers infrastructure. For these contracts, Ondas Networks and the customers work cooperatively, whereby the customers’ involvement is to provide technical specifications for the product design, as well as to review and approve the project progress at various markers based on predetermined milestones. The products developed are not able to be sold to any other customer and are based in part upon existing Ondas Networks and customer technology. Development revenue is typically recognized over time using a percentage of completion input method, whereby revenues are recorded on the basis of the Company’s estimates of satisfaction of the performance obligation based on the ratio of actual costs incurred to total estimated costs. The input method is utilized because management considers it to be the best available measure of progress as the performance obligations are completed.
Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of revenue and cost of revenue are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on the performance completed to date.
Payment Terms
Ondas Networks’ payment terms are Net 30 days from the date of the invoices for product and services related revenue. OAS’s payment terms vary and range from Net 30 days to Net 60 days from the date of the invoices for product and services related revenue. Payment terms for the majority of development related revenue carry milestone-related payment obligations which span the contract life. For milestone-based development contracts, the customer reviews the completed milestone and once approved, makes payment pursuant to the applicable contract.
Contracts with Multiple Performance Obligations
Our contracts may contain more than one of the products and services listed above, each of which is separately accounted for as a distinct performance obligation. We account for multiple agreements with a single customer as a single contract if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. We allocate the total transaction price to each distinct performance obligation in a multiple performance obligations arrangement on a relative standalone selling price basis. The standalone selling price reflects the price we would charge for a specific product or service if it were sold separately in similar circumstances and to similar customers. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. If a contract contains a single performance obligation, no allocation is required.
14
Contract Modification
Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For the nine months ended September 30, 2025, and 2024, there were no modifications to contract specifications.
Disaggregation of Revenue
The following tables present our disaggregated revenues by type of revenue, timing of revenue, and revenue by country:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Type of Revenue: | ||||||||||||||||
| Product revenue | $ | $ | $ | $ | ||||||||||||
| Service and subscription revenue | ||||||||||||||||
| Development revenue | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Timing of Revenue: | ||||||||||||||||
| Revenue recognized point in time | $ | $ | $ | $ | ||||||||||||
| Revenue recognized over time | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Geographic Region of Revenue, based on location services were provided or product was shipped to: | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| United Arab Emirates | ||||||||||||||||
| Europe | ||||||||||||||||
| Israel | ||||||||||||||||
| India | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
15
Contract Assets and Liabilities
We recognize a receivable
or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our
right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract
asset is recorded when we have recognized revenue over time in accordance with meeting our performance obligation but are unable to invoice
the customer yet based on the contractual invoicing terms. The contract asset is reclassified to a receivable when the right to consideration
becomes unconditional. Contract assets are recorded at gross revenue recognized less an allowance for credit losses (see Accounts Receivable
above).
| Nine Months Ended September 30, 2025 | Year Ended December 31, 2024 | |||||||
| Balance at beginning of period | $ | $ | ||||||
| Contract assets recognized | ||||||||
| Reclassification to Accounts receivable, net | ( | ) | ( | ) | ||||
| Balance at end of period | $ | $ | ||||||
We recognize a contract liability (deferred revenue) when we receive consideration from a customer, or if we have the unconditional right to consideration (i.e., a receivable), prior to satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the activity in our contract liabilities during the nine months ended September 30, 2025 and the year ended December 31, 2024.
| Nine Months Ended September 30, 2025 | Year Ended December 31, 2024 | |||||||
| Balance at beginning of period | $ | $ | ||||||
| Additions | ||||||||
| Transfer to revenue | ( | ) | ( | ) | ||||
| Transfer to general and administrative expense | ( | ) | ||||||
| Balance at end of period | $ | $ | ||||||
Revenue recognized during
the nine months ended September 30, 2025 and 2024 that was included in the contract liability opening balance was $
Warranty Reserve
For our software and hardware products, we provide a limited one-year assurance-type warranty and for our development service, we provide no warranties. The assurance-type warranty covers defects in material and workmanship only. If a software or hardware component is determined to be defective after being tested by the Company within the one-year, the Company will repair, replace or refund the price of the covered hardware and/or software to the customer (not including any shipping, handling, delivery or installation charges). We estimate, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance-type warranties and has determined that the estimated outstanding warranty obligation on September 30, 2025 and December 31, 2024 are immaterial to the Company’s unaudited Condensed Consolidated Financial Statements.
16
Leases
Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. As of March 31, 2025, the Company’s operating leases consisted of office spaces in Sunnyvale, CA (the “Oakmead Lease”), Sparks, MD, Waltham, MA (the “Waltham Lease”), and Petah Tikva, Israel (the “Airobotics Leases”).
On January 22, 2021, we entered
into a 24-month lease (effective April 1, 2021) with the owner and landlord (the “2021 Gibraltar Lease”), wherein the base
rate was $
On August 7, 2023, Ondas Networks
entered into a
On August 5, 2021, the Company
acquired American Robotics and the American Robotics Lease, located in Marlborough, Massachusetts, wherein the base rate was $
On October 8, 2021, American
Robotics entered into an 86-month operating lease for space in Waltham, Massachusetts. The Waltham Lease commenced on March 1, 2022, and
is scheduled to terminate on April 30, 2029, wherein the base rate is $
On January 15, 2024, American
Robotics entered into an agreement to sublet their full leased space, leasehold improvements, and remaining furniture and fixtures in
Waltham, Massachusetts through April 30, 2029, the remaining lease term, for $
On January 1, 2025, American
Robotics entered into a 48-month operating lease agreement for office space in Sparks, Maryland through December 31, 2028, wherein base
rent is $
On January 23, 2023, the Company
acquired Airobotics and the Airobotics Leases, which includes office space in Petah Tikva, Israel leased according to three different
lease agreements. These agreements are with respect to different sections of the entire leased area and were in effect through December
31, 2023, February 28, 2024, and November 30, 2024 wherein the base rate of the entire leased area was approximately $
On November 25, 2024, Airobotics
entered into a 24-month lease agreement with the owner and landlord of office space in Dubai, United Arab Emirates (the “Dubai Office
Lease”). The Dubai Office Lease commenced on December 1, 2024, and is an operating lease through December 2, 2026. Base rent for
the full lease term is $
We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement. If we determine that the arrangement is a lease, or contains a lease, at lease inception, we then determine whether the lease is an operating lease or finance lease. Operating and finance leases result in recording a right of use (“ROU”) asset and lease liability on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancellable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This rate is generally consistent with the interest rate we pay on borrowings under our credit facilities, as this rate approximates our collateralized borrowing capabilities over a similar term of the lease payments. We have elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying assets. We have elected not to separate lease and non-lease components for any class of underlying asset.
17
Lease Costs
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Components of total lease costs: | ||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Common area maintenance expense | ||||||||||||||||
| Short-term lease costs (1) | ||||||||||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
| (1) |
Lease Positions as of September 30, 2025 and December 31, 2024
ROU lease assets and lease liabilities for our operating leases were recorded in the unaudited condensed consolidated balance sheet as follows:
| September 30, 2025 | December 31, 2024 | |||||||
| Assets: | ||||||||
| Operating lease assets | $ | $ | ||||||
| Total lease assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Operating lease liabilities, current | $ | $ | ||||||
| Operating lease liabilities, net of current | ||||||||
| Total lease liabilities | $ | $ | ||||||
Other Leases Information
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Operating cash flows for operating leases | $ | $ | ||||||
| Weighted average remaining lease term (in years) – operating lease | ||||||||
| Weighted average discount rate – operating lease | % | % | ||||||
Undiscounted Leases Cash Flows
Future lease payments included in the measurement of lease liabilities on the unaudited condensed consolidated balance sheet as of September 30, 2025, for the following five years and thereafter are as follows:
| Years ending December 31, (1) | ||||
| 2025 (3 months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total future minimum lease payments | $ | |||
| Less imputed interest | ( | ) | ||
| Total | $ | |||
| (1) |
18
Net Loss Per Common Share
Basic net loss per share is computed by dividing net loss available to common stockholders (the numerator) by the weighted average number of shares of Common Stock outstanding for each period (the denominator). Income available to common stockholders shall be computed by deducting the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from net income.
The computation of diluted net loss per share is similar to the computation of basic net loss per share except that the numerator may have to adjust for any dividends and income or loss associated with potentially dilutive securities that are assumed to have resulted in the issuance of shares of Common Stock, and the denominator may have to adjust to include the number of additional shares of Common Stock that would have been outstanding if the dilutive potential shares of Common Stock had been issued during the period to reflect the potential dilution that could occur from shares of Common Stock issuable through stock options, warrants, restricted stock units, or convertible preferred stock. For purposes of determining diluted earnings per common share, the treasury stock method is used for stock options, warrants, and restricted stock units, and the if-converted method is used for convertible preferred stock as prescribed in ASC Topic 260. Because of the net loss for the nine months ended September 30, 2025 and 2024, the impact of including this in our computation of diluted net loss per share was anti-dilutive.
The following potentially dilutive securities for the three and nine months ended September 30, 2025 and 2024 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive.
| Three and Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Warrants to purchase Common Stock | ||||||||
| Options to purchase Common Stock | ||||||||
| Potential shares issuable under 2022 Convertible Promissory Notes | ||||||||
| Potential shares issuable under 2023 Additional Notes | ||||||||
| Restricted stock units | ||||||||
| Total potentially dilutive securities | ||||||||
Concentrations of Credit Risk
Financial instruments that
potentially subject us to concentrations of credit risk consist of cash and accounts receivable. Cash is deposited with a limited number
of financial institutions. The balances held at any one financial institution may be in excess of FDIC insurance limits. As of September
30, 2025, the Company was $
Credit is extended to customers based on an evaluation of their financial condition and other factors. We generally do not require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance for credit losses.
Concentration of Customers
Because we have only recently
invested in our customer service and support organization, a small number of customers have accounted for a substantial amount of our
revenue. Revenue from significant customers, those representing 10% or more of total revenue, was composed of one customer accounting
for
Accounts receivable from significant
customers, those representing 10% or more of the total accounts receivable, were composed of two customers accounting for
19
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-08, “Accounting for and Disclosure of Crypto Assets”, which amends and enhances the disclosure requirements for crypto assets. The new requirements will be effective for public business entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. The adoption of this pronouncement as of January 1, 2025 had no impact on our accompanying unaudited Condensed Consolidated Financial Statements, as the Company has no crypto assets.
In November 2024, the FASB issued ASU No. 2024-04, “Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments”. The amendments in ASU No. 2024-04 clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion, applicable only to conversions that include the issuance of all equity securities issuable pursuant to the conversion privileges provided in the terms of the debt at issuance, and make additional clarifications to assist stakeholders in applying the guidance. For all entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The adoption of this pronouncement as of January 1, 2025 had no impact on our accompanying unaudited Condensed Consolidated Financial Statements, as the Company’s convertible debt instruments’ conversion privileges were not changed to induce conversion.
Recently Issued Accounting Pronouncements Not Yet Adopted
In October 2023, the FASB issued ASU No. 2023-06, which incorporates 14 of the 27 disclosures referred to by the SEC in their SEC Release No. 33-10532, Disclosure Update and Simplification, issued on August 17, 2018. The amendments in this ASU modify the disclosure or presentation requirements of a variety of Topics in the Codification and apply to all reporting entities within the scope of the affected Topics unless otherwise indicated. The amendments in this ASU should be applied prospectively. For public business entities, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company has evaluated the effects of the adoption of ASU No. 2022-03, and it is not expected to have an impact on the Company’s unaudited Condensed Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures”, which requires companies to provide disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The new requirements will be effective for public business entities for annual periods beginning after December 15, 2024. The Company is currently assessing the impact of adopting this standard on the Company’s unaudited Condensed Consolidated Financial Statements.
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)”. The amendments in ASU No. 2024-03 require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under U.S. GAAP in the same disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. For all public business entities, the amendments in ASU No. 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. In January 2025, the FASB issued ASU No. 2025-01, which clarified the above effective dates for ASU No. 2024-03. The Company is currently assessing the impact of adopting this standard on the Company’s unaudited Condensed Consolidated Financial Statements.
In May 2025, the FASB issued ASU No. 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity”, which require an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a variable interest entity (VIE) that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. The amendments in ASU No. 2025-03 replace the requirement that the primary beneficiary always is the acquirer with an assessment that requires an entity to consider the factors to determine which entity is the accounting acquirer. The amendments in ASU No. 2025-03 are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact of adopting this standard on the Company’s unaudited Condensed Consolidated Financial Statements.
20
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which provides all entities, including public business entities, with a practical expedient, which allows the entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The amendments in ASU No. 2025-05 should be applied prospectively and are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently assessing the impact of adopting this standard on the Company’s unaudited Condensed Consolidated Financial Statements.
NOTE 3 – INVESTMENTS IN MARKETABLE EQUITY SECURITIES
Investments in marketable equity securities consist of publicly traded
common stock and warrants exercisable for publicly traded common stock. Our investments in marketable equity securities are concentrated
in three publicly traded companies, representing
| As of September 30, 2025 | ||||||||||||||
| Fair Value Hierarchy | Cost Basis | Gross Unrealized Gains | Fair Value | |||||||||||
| Publicly traded stock | Level 1 | $ | $ | $ | ||||||||||
| Warrants exercisable for publicly traded stock | Level 3 | |||||||||||||
| Total | $ | $ | $ | |||||||||||
The Company’s investment
in warrants exercisable for publicly traded stock allow us to purchase up to
NOTE 4 – OTHER CURRENT ASSETS
Other current assets consist of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid income tax | ||||||||
| Dividend income receivable | ||||||||
| Advance to vendors | ||||||||
| Contract asset | ||||||||
| VAT input credit | ||||||||
| Prepaid software subscriptions | ||||||||
| Other prepaid expenses and current assets | ||||||||
| Total other current assets | $ | $ | ||||||
21
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Vehicles | $ | $ | ||||||
| Computer equipment | ||||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Development equipment | ||||||||
| Drones and base stations | ||||||||
| Machinery and equipment | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net property and equipment | $ | $ | ||||||
Depreciation expense for the
three months ended September 30, 2025 and 2024 was $
NOTE 6 – GOODWILL AND BUSINESS ACQUISITION
We account for acquisitions in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”). The excess of the purchase price over the estimated fair value of net assets acquired in a business combination is recorded as goodwill.
Apeiro Transaction
On August 31, 2025, the Company completed the acquisition of Apeiro,
pursuant to the Share Purchase Agreement (the “Apeiro Acquisition Agreement”), by and among the Company, Apeiro, and the Apeiro
shareholders. Pursuant to the Apeiro Acquisition Agreement, the Company acquired
The following table summarizes the consideration paid for Apeiro and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.
| Purchase price consideration: | ||||
| Cash | $ | |||
| Estimated fair value of assets acquired: | ||||
| Cash and cash equivalents and restricted cash | $ | |||
| Certificates of deposit | ||||
| Other current assets | ||||
| Property and equipment | ||||
| Intangible assets | ||||
| Total estimated fair value of assets acquired | ||||
| Estimated fair value of liabilities assumed: | ||||
| Accounts payable | ||||
| Customer Prepayments | ||||
| Other payables | ||||
| Deferred tax liability | ||||
| Total estimated fair value of liabilities assumed | ||||
| Net Assets Acquired | $ | |||
| Goodwill | $ | |||
22
The intangible assets acquired include the developed technology (see Note 7 – Intangible Assets). The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill and (3) other changes to assets and liabilities.
Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes.
Our results for the nine months ended September 30, 2025 include results from Apeiro between September 1, 2025 and September 30, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Apeiro had occurred on January 1, 2024. The pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods.
| (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue, net | $ | $ | $ | $ | ||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Goodwill
The Company has recognized goodwill primarily as part of the American Robotics acquisition in 2021, the Airobotics acquisition in 2023, and the Apeiro acquisition in August 2025. In December 2024, the Company bypassed the qualitative analysis and proceeded directly to a quantitative analysis. The Company engaged a third-party service provider to carry out a valuation of the OAS reporting unit. Using a discounted cash flow model and market approach model with updated forecasts for revenue and cash flows, it was determined that the fair value of the OAS reporting unit was higher than the carrying value as of December 31, 2024 and no impairment was necessary.
The changes in the carrying amount of goodwill for the nine months ended September 30, 2025 are as follows:
| OAS | ||||
| Balance as of January 1, 2024 and 2025 | $ | |||
| Goodwill acquired | ||||
| Balance as of September 30, 2025 | $ | |||
NOTE 7 – INTANGIBLE ASSETS
The components of intangible assets, all of which are finite lived, were as follows:
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Useful Life | ||||||||||||||||||||
| Patents | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||
| Patents in process | ||||||||||||||||||||||||||
| Licenses | ( | ) | ( | ) | ||||||||||||||||||||||
| Software | ( | ) | ( | ) | ||||||||||||||||||||||
| Trademarks | ( | ) | ( | ) | ||||||||||||||||||||||
| FAA waiver | ( | ) | ( | ) | ||||||||||||||||||||||
| Developed technology | ( | ) | ( | ) | ||||||||||||||||||||||
| Non-compete agreements | ( | ) | ( | ) | ||||||||||||||||||||||
| Marketing-related assets | ( | ) | ( | ) | ||||||||||||||||||||||
| Customer relationships | ( | ) | ( | ) | ||||||||||||||||||||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
23
Amortization expense for the
three months ended September 30, 2025 and 2024 was $
Estimated amortization expense for the next five years for the intangible assets currently being amortized is as follows:
| Year Ending December 31, | Estimated Amortization | |||
| 2025 (3 months) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 8 – LONG-TERM EQUITY INVESTMENT
On August 12, 2025, the Company purchased a non-controlling interest
in Rift Dynamics AS (“Rift”), a Norway-based defense technology company specializing in affordable, mass-producible combat
drone systems, for the aggregate price of $
This long-term equity investment
consists of an equity investment in a private company through common stock that is accounted for at cost, with adjustments for observable
changes in prices or impairments, and is classified as long-term equity investment on our Condensed Consolidated Balance Sheets with adjustments
recognized in Other (expense) income, net on our unaudited Condensed Consolidated Statements of Operations. The Company has determined
that the equity investment does not have a readily determinable fair value and elected the measurement alternative. Therefore, the equity
investment’s carrying amount will be adjusted to fair value at the time of the next observable price change for the identical or
similar investment of the same issuer or when an impairment is recognized. Each reporting period, the Company performs a qualitative assessment
to evaluate whether the investment is impaired. The assessment includes a review of recent operating results and trends, recent sales/acquisitions
of the investee securities, and other publicly available data. If the investment is impaired, the Company writes it down to its estimated
fair value. As of September 30, 2025 the long-term equity investment had a carrying value of $
NOTE 9 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Accrued payroll and other benefits | $ | $ | ||||||
| D&O insurance financing payable | ||||||||
| Accrued professional fees | ||||||||
| VAT payable | ||||||||
| Accrued interest | ||||||||
| Accrued purchases | ||||||||
| Accrued income tax | ||||||||
| Liability for factored receivables | ||||||||
| Other accrued expenses and payables | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
24
NOTE 10 – NOTES PAYABLE
2017 Convertible Promissory Note
On September 14, 2017, the Company and an individual entered into a convertible promissory note with unilateral conversion preferences by the individual (the “2017 Convertible Promissory Note”). On July 11, 2018, the Company’s Board approved certain changes to the 2017 Convertible Promissory Note wherein the conversion feature was changed from unilateral to mutual between the individual and the Company.
The Company may at any time
on or after a qualified public offering convert any unpaid repayment at the IPO conversion price. The conversion price is the lesser of
the (i) price per share of Common Stock sold in the Qualified Public Offering, discounted by
As of September 30, 2025 and
December 31, 2024, the total outstanding balance of the 2017 Convertible Promissory Note was $
2022 Convertible Exchange Notes
On
October 28, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors
pursuant to which we issued convertible notes (“2022 Convertible Promissory Notes”) in the principal amount of $
On January 20, 2023, the Company entered into an Amendment No. 1 to the Purchase Agreement (“Amended SPA”). The Amended SPA amends the notes as described below and was accounted for as a modification of the Purchase Agreement.
Pursuant
to the terms of the Amended SPA, on January 20, 2023, the Company exchanged the 2022 Convertible Promissory Notes, on a dollar-for-dollar
basis, into
The 2022 Convertible Exchange Notes are identical in all material respects to the 2022 Convertible Promissory Notes, except that they (i) are issued pursuant to the Base Indenture (as defined below) and the First Supplemental Indenture (as defined below); (ii) have a maturity date of October 28, 2024; (iii) allow for the Acceleration of Installment Amounts (as defined in the 2022 Convertible Exchange Notes) not to exceed eight (8) times the Installment Amount (as defined in the 2022 Convertible Exchange Notes) with respect to the Installment Date (as defined in the 2022 Convertible Exchange Notes) related to the Current Acceleration (as defined in the 2022 Convertible Exchange Notes); and (iv) modify the Acceleration Conversion Price (as defined in the 2022 Convertible Exchange Notes).
The 2022 Convertible Exchange Notes were issued pursuant to the first supplemental indenture (the “First Supplemental Indenture”), dated as of January 20, 2023, between the Company and Wilmington Savings Fund Society, FSB, as trustee (the “Trustee”). The First Supplemental Indenture supplements the indenture entered into by and between the Company and the Trustee, dated as of January 20, 2023 (the “Base Indenture” and, together with the First Supplemental Indenture, the “Initial Indenture”). The Initial Indenture has been qualified under the Trust Indenture Act of 1939, and the terms of the 2022 Convertible Exchange Notes include those set forth in the Initial Indenture and those made part of the Initial Indenture by reference to the Trust Indenture Act.
On July 21, 2023, the Company
entered into an agreement and waiver with the holder of the 2022 Convertible Exchange Notes (the “Agreement and Waiver,” together
with the Purchase Agreement and Amended SPA, the “SPA”) that included (i) extending the Maturity Date to from October 28,
2024 to April 28, 2025; (ii) waive the last sentence of Section 8(e) of the Notes (such that last sentence of Section 8(e) of the Notes
shall have no further force and effect) (the “Acceleration Waiver”); (iii) reduce the Conversion Price of the 2022 Convertible
Exchange Notes to the lower of (A) the Conversion Price then in effect and (B) the greater of (x) the Floor Price (as defined in the Notes)
then in effect and (y)
25
The
2022 Convertible Exchange Notes bear interest at the rate of
The “Installment Amount” will equal:
| (i) | for all Installment Dates other than the maturity date, the lesser of (x) the Holder Pro Rata Amount of $ |
| (ii) | on the maturity date, the principal amount then outstanding under the Note. |
Each
month, the note holders may accelerate a portion of the note due up to eight times the minimum Installment Amount of $
As
of September 30, 2025, the 2022 Convertible Promissory Notes have been repaid in full, and the remaining unamortized debt discount and
issuance costs of $
2023 Additional Notes
On July 24, 2023, pursuant
to the terms of the Purchase Agreement, as amended, an Investor elected to purchase
The 2023 Additional Notes
bear interest at the rate of
26
As
of September 30, 2025, the 2023 Additional Notes have been repaid in full, and the remaining unamortized debt discount and issuance costs
of $
2024 Additional Notes
On December 3, 17, and 31,
2024, pursuant to the terms of the Purchase Agreement, as amended, an Investor elected to purchase
The 2024 Additional Notes
bear interest at the rate of
As
of September 30, 2025, the 2024 Additional Notes have been repaid in full, and the remaining unamortized debt discount and issuance costs
of $
As of December 31, 2024, the total outstanding principal on the 2022 Convertible
Exchange Notes, 2023 Additional Notes, and 2024 Additional Notes was $
For
the three months ended September 30, 2025, we recognized interest expense of $
27
Ondas Networks Convertible Notes
On July 8, 2024 and July 23, 2024, Charles & Potomac Capital, LLC,
(“C&P”), an entity affiliated with Joseph Popolo, a former director of the Company, elected to purchase Convertible Notes
in the aggregate original principal amount of $
On November 13, 2024, pursuant to the Securities Purchase Agreement,
dated November 13, 2024, by and between Networks and a private investor group (the “November Networks SPA”), multiple investors
elected to purchase Convertible Notes in the aggregate original principal amount of $
On January 15, 2025, pursuant to the Securities Purchase Agreement,
dated January 15, 2025, by and between Networks, the Company, and a private investor group (the “January Networks SPA,” together
with the November Networks SPA, the “Networks SPA”), multiple investors elected to purchase Convertible Notes in the aggregate
original principal amount of $
On November 13, 2024 and January 15, 2025, in connection with the November
Networks Convertible Notes and January 2025 Networks Convertible Notes, respectively, Networks issued the investors warrants to purchase
$
In the event Ondas Networks consummates an additional equity financing prior to the maturity date, the principal balance and unpaid accrued interest on the Ondas Networks Convertible Notes will be convertible at the option of the Investor into conversion shares upon closing of the next round of equity financing.
On July 3, 2025, the Company amended the Ondas Networks Convertible Notes to extend the maturity date to December 31, 2025. The amendment was accounted for as a debt modification under ASC 470-50.
As of September 30, 2025, the total outstanding principal on the Ondas
Networks Convertible Notes was $
28
OAS Convertible Notes
In October and December 2024, multiple investors elected to purchase
Convertible Notes in the aggregate original principal amount of $
In the event OAS consummates the next round of equity financing prior to the maturity date, the principal balance and unpaid accrued interest on the OAS Convertible Notes will be automatically converted into conversion shares upon closing of the next round of equity financing.
As
of September 30, 2025, the total outstanding principal on the OAS Convertible Notes was $
Ondas Networks Secured Note
On September 3, 2024, Networks
entered into a Security Note Agreement (the “C&P Security Agreement”) with C&P, in which, Networks may draw, and C&P
shall loan Networks, up to $
On September 3, 2024 and October 7, 2024, pursuant to the C&P Security
Agreement, Networks issued C&P warrants to purchase $ and $
As
of September 30, 2025, the total outstanding principal on the Networks Secured Note was $
Government Grant Liability
Airobotics has received grants
from the Israel Innovation Authority (“IIA”) to finance its research and development programs in Israel, through which Airobotics
received IIA participation payments in the aggregate amount of approximately $
The Company’s royalty
liability to the IIA as of September 30, 2025 and December 31, 2024, including grants received by Airobotics and the associated LIBOR
interest on all such grants, was $
29
NOTE 11 – STOCKHOLDERS’ EQUITY
Common Stock
As of September 30, 2025 and
December 31, 2024, the Company had
Preferred Stock
As of September 30, 2025 and
December 31, 2024, the Company had
Form S-3
On February 2, 2024, the Company
initially filed with the Securities and Exchange Commission (the “SEC”) a new shelf Registration Statement on Form S-3 for
up to $
On April 18, 2025, the Company
initially filed with the SEC a new shelf Registration Statement on Form S-3 for up to $
On September 9, 2025, the Company filed with the SEC an automatic shelf Registration Statement on Form S-3ASR (the “Form S-3ASR”) and was automatically effective upon filing on September 9, 2025, for shares of its Common Stock; shares of its preferred stock, which the Company may issue in one or more series or classes; debt securities, which the company may issue in one or more series; warrants to purchase its Common Stock, preferred stock or debt securities; and units.
Stock Issued for Convertible Debt
During the nine months ended
September 30, 2025, the Company issued
During the nine months ended
September 30, 2024, the Company issued
June 2025 Public Offering
On June 9, 2025, the Company entered into an underwriting agreement
(the “June 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as sole underwriter (the “June Underwriter”),
relating to the Company’s underwritten public offering (the “June 2025 Public Offering”) of
On June 10, 2025, the June Underwriter exercised the June Option in full. The June Shares and June Pre-Funded Warrants were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the New Form S-3.
On June 11, 2025, the Company closed the June 2025 Public Offering
and issued the June Shares and June Pre-Funded Warrants. The public offering price for each June Share was $
30
The table below details the net proceeds of the June 2025 Public Offering.
| Gross Proceeds: | ||||
| Initial Closing | $ | |||
| Option Closing | ||||
| Offering Costs: | ||||
| Underwriting discounts and commissions | ( | ) | ||
| Other offering costs | ( | ) | ||
| Net Proceeds | $ | |||
The Company will use the net proceeds of the June 2025 Public Offering for general corporate purposes, including funding capital expenditures and providing working capital.
August 2025 Public Offering
On August 13, 2025, the Company entered into an underwriting agreement
(the “August 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the several underwriters
(the “August Underwriters”), relating to the Company’s underwritten public offering (the “August 2025 Public Offering”)
of
On August 14, 2025, the August Underwriters exercised the August Option
in full, and the Company closed the August 2025 Public Offering and issued the August Shares. The August Shares were offered, issued,
and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the New Form S-3. The public offering price
for each August Share was $
The table below details the net proceeds of the August 2025 Public Offering.
| Gross Proceeds: | ||||
| Initial Closing | $ | |||
| Option Closing | ||||
| Offering Costs: | ||||
| Underwriting discounts and commissions | ( | ) | ||
| Other offering costs | ( | ) | ||
| Net Proceeds | $ | |||
The Company intends to use the net proceeds of the August 2025 Public Offering for working capital, general corporate purposes and potential strategic transactions, including acquisitions of businesses or assets, joint ventures or investments in businesses, products or technologies.
September 2025 Offering
On September 9, 2025, the Company entered into an underwriting agreement
(the “September 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the several underwriters
(the “September Underwriters”), relating to the Company’s underwritten offering (the “September 2025 Offering”)
of
31
On September 10, 2025, the Company closed the September 2025 Offering
and issued the September Shares. The September Shares were offered, issued, and sold pursuant to a prospectus supplement and accompanying
prospectus that form part of the Form S-3ASR. The offering price for each September Share was $
The table below details the net proceeds of the September 2025 Offering.
| Gross Proceeds: | ||||
| Initial Closing | $ | |||
| Option Closing | ||||
| Offering Costs: | ||||
| Underwriting discounts and commissions | ( | ) | ||
| Other offering costs | ( | ) | ||
| Net Proceeds | $ | |||
The Company intends to use the net proceeds of the September 2025 Offering for corporate development and strategic growth, including acquisitions, joint ventures, and investments.
Sale of Common Stock in Ondas Holdings and Warrants to Purchase Common Stock of OAS
On February 26, 2024, the Company entered into a Securities Purchase
Agreement (the “Ondas Agreement”) with certain purchasers named therein (the “Ondas Purchasers”) for the purchase
and sale of (i) an aggregate of
The Company engaged a third-party service provider to carry out an
appraisal of the OAS Warrants, who ran a Monte Carlo simulation to determine the fair value of the OAS Warrants as of February 26, 2024,
which is $
Noncontrolling interest in OAS
On September 11, 2025, certain OAS warrant holders exercised their
warrants for
32
Sale of Common Stock and Warrants in Ondas Holdings
On August 28, 2024, the Company entered into a Securities Purchase
Agreement, (the “August 2024 Purchase Agreement”) with an institutional investor (the “August 2024 Investor”),
pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the August 2024 Investor
an aggregate of
Each share of Common Stock
and accompanying Series A Warrant and Series B Warrant were sold together at a combined offering price of $
The Company used the Black-Scholes Model to determine the fair value
of warrants to purchase Common Stock of the Company, which is $
Warrants to Purchase Preferred Stock of Networks
On September 3, 2024 and October 7, 2024, in connection with the Networks
Secured Note, Networks issued C&P warrants to purchase $
On November 13, 2024 and January 15, 2025, in connection with the November
Networks Convertible Notes and January 2025 Networks Convertible Notes, Networks issued the investors warrants to purchase $
As of September 30, 2025, there were
Warrants to Purchase Common Stock of Networks
On June 3, 2024, the Company issued warrants to purchase
As of September 30, 2025, there were
33
Warrants to Purchase Common Stock of the Company
We use the Black-Scholes Model to determine the fair value of warrants to purchase Common Stock of the Company. The Black-Scholes Model is an acceptable model in accordance with U.S GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the warrant.
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price.
A summary of our Warrants activity for the nine months ended September 30, 2025 and related information follows:
| Number of Shares Under Warrant | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||
| Balance as of January 1, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Cancelled | ( | ) | ||||||||||
| Balance as of September 30, 2025 | $ | |||||||||||
| Vested and exercisable as of September 30, 2025 | $ | |||||||||||
Total stock-based compensation
expense for warrants for the three and nine months ended September 30, 2025 was $
Stock Options to Purchase Common Stock
The Company awards stock options to certain employees, directors, and
consultants, which represent the right to purchase Common Stock on the date of exercise at a stated exercise price. Stock options granted
to employees generally vest over a two to four-year period and are contingent on ongoing employment. Compensation expenses related to
these awards is recognized straight-line over the applicable vesting period. Stock options granted to consultants are subject to the attainment
of pre-established performance conditions. The actual number of shares subject to the award is determined at the end of the performance
period and may range from
On January 7, 2025, the Compensation Committee granted Ron Stern stock
options to purchase an aggregate of
34
Also in January 2025, the Compensation Committee granted an aggregate
of
In May 2025, the Compensation
Committee granted an aggregate of
On June 23, 2025, the Compensation
Committee granted
On July 8, 2025, the
Compensation Committee granted an aggregate of
In August, 2025, the Compensation
Committee granted an aggregate of
On September 18, 2025, the
Compensation Committee granted
The assumptions used in the Monte Carlo simulation and Black-Scholes Model are set forth in the table below.
| Nine Months Ended September 30, 2025 | ||||
| Stock price | $ | | ||
| Risk-free interest rate | % | |||
| Volatility | | % | ||
| Expected life in years | ||||
| Dividend yield | % | |||
A summary of our Option activity for the three and nine months ended September 30, 2025 and related information follows:
| Number of Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||
| Balance as of January 1, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Forfeited | ( | ) | ||||||||||
| Canceled | ( | ) | ||||||||||
| Balance as of September 30, 2025 | $ | |||||||||||
| Vested and Exercisable as of September 30, 2025 | $ | |||||||||||
35
As of September 30, 2025,
total unrecognized compensation expense related to non-vested stock options was $
Total stock-based compensation expense for stock options for the three and nine months ended September 30, 2025 and 2024 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| Cost of goods sold | ||||||||||||||||
| Total stock-based expense related to options | $ | $ | $ | $ | ||||||||||||
Restricted Stock Units
The Company awards Restricted Stock Units (“RSUs”) to certain employees and directors, which represent a right to receive Common Stock for each RSU that vests. Compensation expenses related to these awards is recognized straight-line over the applicable vesting period.
On January 11, 2025, the Compensation
Committee granted an aggregate of
On February 21, 2025, the
Compensation Committee granted
On May 12, 2025, the Compensation
Committee granted an aggregate of
On May 12, 2025, the Compensation
Committee granted an aggregate of
On June 23, 2025, the Compensation
Committee granted
On August 4, 2025, the Compensation
Committee granted
On August 11, 2025, the Compensation
Committee granted
Also on August 11, 2025, the
Compensation Committee granted
36
On September 4, 2025, the
Compensation Committee granted
On September 5, 2025, the
Compensation Committee granted
A summary of our RSUs activity and related information is as follows:
| RSUs | Weighted Average Grant Date Fair Value | Weighted Average Vesting Period (Years) | ||||||||||
| Unvested balance at January 1, 2025 | $ | |||||||||||
| Granted | $ | |||||||||||
| Vested | ( | ) | $ | |||||||||
| Unvested balance at September 30, 2025 | $ | |||||||||||
As of September 30, 2025, there were
Total stock-based compensation expense for RSUs for the three and nine months ended September 30, 2025 and 2024 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Sales and marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| Cost of goods sold | ||||||||||||||||
| Total stock-based expense related to restricted stock units | $ | $ | $ | $ | ||||||||||||
Equity Incentive Plan
In 2018, our stockholders
adopted the 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which
In 2021, our stockholders
adopted the Ondas Holdings Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The purpose of the 2021 Plan is to enable the
Company to attract, retain, reward, and motivate eligible individuals by providing them with an opportunity to acquire or increase a proprietary
interest in the Company and to incentivize them to expend maximum efforts for the growth and success of the Company, so as to strengthen
the mutuality of the interests between the eligible individuals and the shareholders of the Company. The 2021 Plan provides for the issuance
of awards including stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards. On November
18, 2024, stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares of the Company’s Common
Stock authorized for issuance under the 2021 Plan from
37
NOTE 12 – REDEEMABLE NONCONTROLLING INTEREST
Series A-1 Preferred Stock
On July 9, 2023, Ondas Networks
entered into a Preferred Stock Purchase Agreement (the “Original Networks Agreement”) with an initial purchaser named therein
(the “
The Preferred Stock accrues
dividends at the rate per annum of eight percent (
On July 21, 2023, Ondas
Networks entered into a certain Amendment to Preferred Stock Purchase Agreement (the “2023 Networks Amendment,” together with
the Original Networks Agreement, the “2023 Networks Agreement”). Pursuant to the 2023 Networks Amendment, in exchange for
an initial sale of shares of Networks Preferred Stock, the 2023 Initial Purchaser acquired the following (the “Initial Networks
Closing”), for gross proceeds to Networks of $
Networks will use the proceeds from the sale of the Networks Preferred Stock for working capital and other general corporate purposes, including fees related to the transactions contemplated by the 2023 Networks Agreement. No portion of the proceeds will be distributed to the Company.
Also on July 21, 2023, Networks completed the Initial Networks Closing. In connection with the Initial Networks Closing, the Company issued the 2023 Initial Warrants. Also, in connection with the Initial Networks Closing, the parties entered into an indemnification agreement, investors’ rights agreement, right of first refusal agreement, and voting agreement. Forms of each of these agreements are attached to Exhibit 10.1 to Form 8-K filed on July 28, 2023.
On August 11, 2023, Networks
completed the Second Initial Purchaser Closing. In connection with the Second Initial Purchaser Closing, the Company issued Second Initial
Purchaser Warrants. Following the Second Initial Purchaser Closing, the 2023 Initial Purchaser has invested an aggregate of $
38
The Company assessed the
Networks Preferred Stock in accordance with ASC 480 and determined that it should be recorded as temporary equity and not as a liability.
The initial valuation was assigned to the Networks Preferred Stock and the 2023 Initial Warrants and Second Initial Purchaser Warrants
on relative fair values, with the initial valuation of the noncontrolling interest being $
Networks Series A-2 Preferred Stock
On February 26, 2024, Ondas
Networks entered into a second Preferred Stock Purchase Agreement (the “2024 Networks Agreement”) for an investment of $
The Series A-2 Networks Preferred
Stock accrues dividends at the rate per annum of eight percent (
Pursuant to the Networks Agreement, the Company entered into a registration rights agreement with the 2024 Networks Purchasers to register the resale of the Common Stock underlying the 2024 Holdings Warrants pursuant to a registration statement to be filed no later 180 days following the closing of the 2024 Networks Offering. Also, pursuant to the 2024 Networks Agreement, the 2024 Networks Purchasers became parties to those certain investors’ rights agreement, right of first refusal agreement, and voting agreement, dated July 21, 2023.
Networks used the proceeds from the sale of the 2024 Networks Offering Securities to immediately redeem an amount of shares of Networks Common Stock at the 2024 Per Share Price held by the Company that was equivalent to the amount of proceeds raised in the sale of the 2024 Networks Offering Securities.
The issuance of the 2024 Networks Offering Securities was exempt from registration requirements of the Securities Act pursuant to Section 4(2) of such Securities Act and Regulation D promulgated thereunder based upon the representations of each of the 2024 Networks Purchasers that it was an “accredited investor” (as defined under Rule 501 of Regulation D) and that it was purchasing such securities without a present view toward a distribution of the securities. In addition, there was no general advertisement conducted in connection with the sale of the 2024 Networks Offering Securities. See the Current Report on Form 8-K filed with the SEC on February 26, 2024 for further details.
39
The Company assessed the Series
A-2 Networks Preferred Stock in accordance with ASC 480 and determined that it should be recorded as temporary equity and not as a liability.
The initial valuation was assigned to the Series A-2 Networks Preferred Stock and the 2024 Holdings Warrants based on relative fair values,
with the initial valuation of the noncontrolling interest being $
The Company recorded accrued
dividends of $
NOTE 13 – SEGMENT INFORMATION
Operating segments are defined
as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision
Maker (“CODM”) in making decisions regarding resource allocation and performance assessment.
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | |||||||||||||||||||||||
| Ondas Networks | OAS | Total | Ondas Networks | OAS | Total | |||||||||||||||||||
| Product revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Service and subscription revenue | ||||||||||||||||||||||||
| Development revenue | ||||||||||||||||||||||||
| Revenue, net | ||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Segment operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other segment items | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Segment loss before provision for income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Corporate operating expenses | ( | ) | ( | ) | ||||||||||||||||||||
| Elimination of intercompany interest | ||||||||||||||||||||||||
| Corporate unrealized gain on investments | ||||||||||||||||||||||||
| Corporate interest income | ||||||||||||||||||||||||
| Corporate interest expense | ( | ) | ( | ) | ||||||||||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
40
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | |||||||||||||||||||||||
| Ondas Networks | OAS | Total | Ondas Networks | OAS | Total | |||||||||||||||||||
| Product revenue | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Service and subscription revenue | ||||||||||||||||||||||||
| Development revenue | ||||||||||||||||||||||||
| Revenue, net | ||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Segment operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other segment items | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Segment loss before provision for income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Corporate operating expenses | ( | ) | ( | ) | ||||||||||||||||||||
| Elimination of intercompany interest | ||||||||||||||||||||||||
| Corporate unrealized gain on investments | ||||||||||||||||||||||||
| Corporate interest income | ||||||||||||||||||||||||
| Corporate interest expense | ( | ) | ( | ) | ||||||||||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
Additional segment information is set forth below as of and for the three and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Ondas Networks | OAS | Corporate | Total | Ondas Networks | OAS | Corporate | Total | |||||||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Stock-based compensation | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Ondas Networks | OAS | Corporate | Total | Ondas Networks | OAS | Corporate | Total | |||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Goodwill | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Stock-based compensation | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
41
NOTE 14 – INCOME TAXES
The Company had a net deferred
tax liability of $
The Company had a net deferred
tax asset of $
As of December 31, 2024, the
Company and Networks, respectively, had Federal net operating loss carryforwards (“NOLs”) of approximately $
In assessing the realization of deferred tax assets, including the NOLs, the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. Based on its assessment, the Company has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time.
In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s Federal Carryforwards could be limited in the event of a change in ownership. As of December 31, 2021, the Company completed an analysis and determined that there were multiple ownership changes. Provided sufficient taxable income is generated the annual base limitation plus increased limitation calculated pursuant to IRS Notice 2003-65 will allow the Company to utilize all existing losses within the carryover periods.
The Company applies the FASB’s provisions for uncertain tax positions. The Company utilizes the two-step process to determine the amount of recognized tax benefit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the unaudited Condensed Consolidated Financial Statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties associated with uncertain tax positions as a component of income tax expense.
As of September 30, 2025 and December 31, 2024, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.
42
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such loss contingencies that are included in the financial statements as of September 30, 2025.
On October 27, 2023, the Company
reached a settlement agreement for legal proceedings related to Ardenna in which the Company is entitled to receive $
On June 6, 2024, Airobotics
filed a Notice of Non-Payment with the Abu Dhabi Civil Courts in connection with a customer’s lack of payment relating to a purchase
order and breach of a settlement agreement in relation to such purchase order. A performance order was filed on July 11, 2024, and rejected
on July 17, 2024 by the Abu Dhabi Civil Courts. On July 30, 2024, Airobotics appealed the rejection of the performance order. On August
28, 2024, the Abu Dhabi Civil Court of Appeals accepted the appeal and appointed an expert to review the case. On October 9, 2024, the
Abu Dhabi Civil Court of Appeals ruled in favor of Airobotics for the full amount of the initial purchase order less amounts paid to date
by the customer (without taking into consideration the terms of the settlement agreement breached by the customer), which resulted in
a total award of $
War in Israel
On October 7, 2023, the State of Israel, where Airobotics’ main offices and facilities are located, suffered a surprise attack by hostile forces from the Gaza Strip, which led to the Security Cabinet of the State of Israel declaring a state of war in Israel. This military operation and related activities are on-going as of the date of this filing.
The Company is closely monitoring how the military operation and related activities could adversely affect its anticipated milestones and its Israel-based activities to support future operations, including the Company’s ability to import materials that are required to construct the Optimus System™ and to ship them outside of Israel. Although there have been disruptions in our business and operations, the Company has determined that there have not been any materially adverse effects on its business or operations. The Company does not believe the disruptions in its business and operations will have an enduring impact on its business and operations, but it continues to monitor the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company’s Israeli office to support the Company’s activities. The Company does not have any specific contingency plans in the event of any such escalation or change.
NOTE 16 – RELATED PARTY TRANSACTIONS
As of September 30, 2025 and
December 31, 2024, the Company owed $
Networks Convertible Notes (See Note 10 – Notes Payable)
On
July 8, 2024, July 23, 2024, and November 13, 2024 C&P elected to purchase Convertible Notes in Networks in the aggregate original
principal amount of $
Along with the November 13, 2024 Networks Convertible Notes, Networks issued
C&P warrants to purchase $
43
As
of September 30, 2025, the total outstanding principal on the C&P Networks Convertible Notes was $
OAS Convertible Notes (See Note 10 – Notes Payable)
In October and December 2024, C&P elected to purchase OAS Convertible
Notes in the aggregate original principal amount of $
On October 10, 2024, Privet Ventures LLC, an entity affiliated with Eric
Brock, Chairman and Chief Executive Officer of the Company and OAS, elected to purchase OAS Convertible Notes in the original principal
amount of $
Networks Secured Note (See Note 10 – Notes Payable)
On September 3, 2024, Networks entered into the C&P Security Agreement,
in which Networks may draw, and C&P shall loan Networks, up to $
On September 3, 2024 and October 7, 2024, pursuant to the C&P Security
Agreement, Networks issued C&P warrants to purchase $
44
As of September 30, 2025,
the total outstanding principal on the Networks Secured Note was $
Sale of Common Stock in Ondas Holdings and Warrants to Purchase Common Stock of OAS (See Note 11 – Stockholders’ Equity)
On February 26, 2024, the Company completed the 2024 Ondas Offering with
respect to the sale of (i) an aggregate of
Networks Series A-1 Preferred Stock (See Note 12 – Redeemable Noncontrolling Interest)
On July 21, 2023 and August 11, 2023, Networks completed the 2023 Networks Offering. See Note 12 – Redeemable Noncontrolling Interest, Networks Series A-1 Preferred Stock, for further details.
C&P is the proxy for the members of the 2023 Initial Purchaser, and the manager of the 2023 Initial Purchaser must act in accordance with C&P’s direction with respect to exercise and voting of the issuer’s securities and derivative securities held by the 2023 Initial Purchaser. Joseph Popolo, a former director of the Company, was the sole control person of C&P.
Networks Series A-2 Preferred Stock (See Note 12 – Redeemable Noncontrolling Interest)
On February 26, 2024, Ondas Networks completed a private placement with
certain purchasers with respect to the sale of (i) the Series A-2 Networks Preferred Stock and (ii) 2024 Holdings Warrants. See Note 12
– Redeemable Noncontrolling Interest, Networks Series A-2 Preferred Stock, for further details. In connection with the 2024 Networks
Offering, C&P paid $
NOTE 17 – SUBSEQUENT EVENTS
Management has evaluated subsequent events as of November 13, 2025, the date the unaudited Condensed Consolidated Financial Statements were issued according to the requirements of ASC topic 855.
SPO Transaction
On October 1, 2025, the
Company completed the acquisition of Smart Precision Optics S.P.O LTD., a company organized under the laws of the State of Israel
(“SPO”), pursuant to (i) the Share Purchase Agreement, dated August 20, 2025 (the “SPA”), by and among the
Company, SPO, Shamir Investment Entrepreneurship ACS LTD., an agricultural cooperative society organized under the laws of the State
of Israel (“Shamir”) and (ii) the Side Letter, dated August 20, 2025, by and among the Company, SPO and Shamir (the
“Side Letter,” together with the SPA, the “Agreement”). In accordance with the terms of the Agreement, the
Company acquired (i)
Additionally, if SPO obtains or receives Qualified Grants (as defined in
the Agreement) between the closing of the Acquisition and December 31, 2026, the Company shall be required to make payment to Shamir in
an amount equal to
45
Subject to the terms of the SPO
Agreement, Shamir has the right (the “First Put Option”) to cause the Company to purchase all (but not less than all) of the
remaining issued and outstanding share capital of SPO held by Shamir, which acquisition shall be accompanied with sale for no additional
consideration of any and all capital notes of SPO then held by Shamir (such shares and capital notes, jointly, the “Put Shares”),
at a purchase price of approximately $
Subject to the terms of the SPO
Agreement, to the extent that the First Put Opinion was not exercised, Shamir has the right to appoint a third-party evaluator to determine
SPO’s valuation and after receiving such valuation, Shamir may offer to the Company to purchase the Put Shares at such evaluated
price (the “Second Put Option,” together with the First Put Option, the "SPO Options"). If the Company declines,
the Company may make a counter-offer to purchase the Put Shares. If Shamir rejects the Company’s counter-offer, Shamir can initiate
a “Forced Sale” process to sell
Additionally, subject to the terms of the SPO Agreement, in the event that
the Second Put Option is exhausted without being exercised, the Company shall have the right (the “Call Option”) to require
Shamir to sell all (and not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir in consideration
for the amount reflecting SPO’s valuation on a cash free-debt free basis of approximately $
4M Transaction
On October 29, 2025, the Company completed the acquisition of a controlling
interest in 4M Defense Ltd., a company registered in the State of Israel (“4M”), pursuant to the Share Purchase Agreement,
dated October 24, 2025 (the “4M Agreement”), by and among the Company, 4M, Chirokka Holding Ltd., a company registered in
the State of Israel (“HoldCo”), Mr. Itzik Malka (“Itzik”), and Mr. Nir Cohen (“Nir”, and jointly with
Itzik, the “Shareholders”). HoldCo held
Sentry Transaction
On November 3, 2025, the Company entered into a Share Purchase Agreement
(the “Sentry Agreement”), by and among the Company, Sentry CS Ltd, a company organized under the laws of the State of Israel
(“Sentry”), Sentry’s shareholders, (the “Sentry Major Shareholders”), and Sagitta Holdco SARL, a private
limited liability company organized under the laws of the Grand Duchy of Luxembourg. The Agreement provides that, upon the terms and subject
to the conditions set forth in the Sentry Agreement, the Company will acquire
46
October 2025 Offering
On October 6, 2025, the Company entered into an underwriting agreement
(the “October 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the several underwriters
(the “October Underwriters”), relating to the Company’s underwritten offering (the “October 2025 Offering”)
of (i)
The October Shares and October Warrants were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the Form S-3ASR.
On October 7, 2025, the Company
closed the October 2025 Offering and issued the October Shares and October Warrants. The offering price for (i) each October Share and
accompanying October Common Warrant to purchase two (2) shares of Common Stock was $
The October Common Warrants have
an exercise price of $
The net proceeds to the Company
from the October Offering were approximately $
47
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provide information which our management believes to be relevant to an assessment and understanding of the results of operations and financial condition of Ondas Holdings Inc. (“Ondas Holdings,” “we,” “our,” or the “Company”). This discussion should be read together with our unaudited Condensed Consolidated Financial Statements and the notes included therein, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025, including the audited consolidated financial statements and notes included therein as of and for the year ended December 31, 2024 (“2024 Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. For a description of factors that may cause our actual results to differ materially from those anticipated in these forward-looking statements, please refer to the below section of this Report titled “Cautionary Note Regarding Forward-Looking Statements.” The reported results will not necessarily reflect future results of operations or financial condition.
Overview
Ondas Holdings is a leading provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks Inc., a Texas corporation (“Ondas Networks”), Apeiro Motion Ltd., an Israeli company (“Apeiro”), Ondas Capital Inc., a Nevada corporation (“Ondas Capital”), Ondas Autonomous Systems Inc., a Nevada corporation (“OAS”), which wholly-owns Airobotics Ltd., an Israeli company (“Airobotics”), and American Robotics, Inc., a Delaware corporation (“American Robotics”).
Ondas Networks provides wireless connectivity solutions. OAS provides drone, ground robotics and automated data solutions through its subsidiaries Airobotics and American Robotics and Ondas Holdings’ subsidiary Apeiro. Ondas Networks and OAS together provide users in defense, homeland security, and critical infrastructure markets with improved connectivity and data collection and information processing capabilities. We operate Ondas Networks and OAS as separate business segments, and the following is a discussion of each segment. See Note 1, Note 2, and Note 13 of the accompanying unaudited Condensed Consolidated Financial Statements for further information regarding our segments.
Ondas Networks Segment
Ondas Networks provides wireless connectivity solutions enabling mission-critical Industrial Internet applications and services. We refer to these applications as the Mission-Critical Internet of Things (“MC-IoT”). Our wireless networking products are applicable to a wide range of MC-IoT applications, which are most often located at the very edge of large industrial networks. These applications require secure, real-time connectivity with the ability to process large amounts of data at the edge of large industrial networks. Such applications are required in all of the major critical infrastructure markets, including rail, electric grids, drone operations, oil and gas, and public safety, homeland security and government, where secure, reliable and fast operational decisions are required in order to improve efficiency and ensure a high degree of safety and security. Our MC-IoT intellectual property has been adopted by the Institute of Electrical and Electronics Engineers (“IEEE”), the leading worldwide standards body in data networking protocols, and forms the core of the IEEE 802.16 standard. Because standards-based communications solutions are preferred by our mission-critical customers and ecosystem partners, we continue to take a leadership position in IEEE as it relates to wireless networking for industrial markets.
We design, develop, manufacture, sell and support FullMAX, our patented, Software Defined Radio platform for secure, private, wide-area broadband networks. Our customers install FullMAX systems in order to upgrade and expand their legacy wide-area network infrastructure. By upgrading their legacy systems, customers benefit from significant increases in data throughput which enables new applications. We have targeted the North American freight rail operators for the initial adoption of our FullMAX platform. These rail operators currently operate legacy communications systems utilizing dated narrowband wireless technologies for voice and data communications. These legacy wireless networks have limited data capacity and are unable to support the adoption of new, intelligent train control and management systems. The freight rail operators through the Association of American Railroads (“AAR”), its advisory subsidiary MxV Rail, as well as the American Railway Engineering and Maintenance Association, have adopted the IEEE 802.16 standard for future private wireless networks. The IEEE 802.16t Direct Peer-to-Peer protocol has been selected by the AAR as the new standard for Next Generation head-of-train / end-of-train (“HOT-EOT”) communications or “NGHE Gen4.” This new protocol for train telemetry operations enables new safety and operational improvements to existing HOT-EOT applications.
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Our software-based FullMAX platform is an important and timely upgrade solution for privately-owned and operated wireless wide-area networks, leveraging Internet Protocol-based communications to provide security, more reliability and significant data throughput for our mission-critical infrastructure customers. We believe industrial and critical infrastructure markets throughout the globe have reached an inflection point where legacy serial and analog based protocols no longer meet industry needs. In addition to offering enhanced data throughput, FullMAX is an intelligent networking platform enabling the adoption of sophisticated operating systems and equipment supporting next-generation MC-IoT applications over wide field areas. These new MC-IoT applications and related equipment require more processing power at the edge of large industrial networks and the efficient utilization of network capacity and scarce bandwidth.
Industry Partnerships
Ondas Networks continues to develop partnerships in the rail space to develop and market wireless communications products and services based on Ondas Networks’ technology. Our partnership with Siemens Mobility (“Siemens”) is geared to market our FullMAX-based networking technology and services and to jointly develop certain wireless communications products for the North American Rail Industry based on Siemens’ Advanced Train Control System protocol and our FullMAX MC-IoT platform. We are working with other industry partners to commercialize our platform technologies for specific use cases and to drive broad industry adoption of dot16 applications.
OAS Segment
Our OAS business unit develops, integrates, and deploys multi-domain autonomous solutions spanning air, ground, and communication systems for high-performance applications in defense, homeland security, and industrial markets. OAS delivers a unified technology ecosystem that combines autonomous drones, ground robotics, and secure tethered communications to enhance operational intelligence, safety, and resilience across mission-critical environments.
OAS’ portfolio includes the Optimus System™, a fully autonomous drone platform designed for persistent aerial intelligence, surveillance, and reconnaissance (ISR), and the Iron Drone Raider™, a fully autonomous interceptor drone engineered to detect, track, and neutralize small hostile drones. Complementing these aerial platforms, Apeiro’s advanced ground robots and fiber-spool communication systems extend mission reach, enabling autonomous and resilient operations across complex terrain, underground environments, and communications-denied areas.
Our multi-domain autonomy architecture serves customers across defense, homeland security, public safety, and critical industrial sectors, including smart cities, airports, seaports, oil and gas, mining, heavy construction, data centers, and semiconductor manufacturing. OAS solutions are built for persistent operations in the most demanding conditions — urban areas, sensitive facilities, and remote field deployments — providing unmatched situational awareness, security, and operational continuity.
In addition to our core platforms, OAS provides a wide suite of enabling services to ensure successful deployment and sustainment, including AI-driven data analytics, automation and IT integration, safety and regulatory certification, training, and lifecycle maintenance. These capabilities empower customers to fully harness the benefits of autonomous technology while ensuring compliance and operational safety.
OAS and its portfolio companies — American Robotics, Airobotics, and Apeiro — represent a powerful and synergistic combination of aerospace, robotics, and data technologies. Together, they deliver a comprehensive end-to-end platform that addresses every phase of the product lifecycle, from research and development through manufacturing, certification, and field sustainment.
OAS has achieved multiple industry-leading milestones, including the FAA Type Certification of the Optimus 1-EX UAV on September 25, 2023 — the first autonomous security data-capture UAV to receive this distinction. This certification, the highest echelon of FAA airworthiness recognition, enables broad beyond-visual-line-of-sight (BVLOS) operations over people and infrastructure and validates the system’s safety and reliability within the U.S. National Airspace System (NAS).
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War in Israel
On October 7, 2023, the State of Israel, where Airobotics’ main offices and facilities are located, suffered a surprise attack by hostile forces from the Gaza Strip, which led to the Security Cabinet of the State of Israel declaring a state of war in Israel. This military operation and related activities are on-going as of the date of this filing.
The Company is closely monitoring how the military operation and related activities could adversely affect its anticipated milestones and its Israel-based activities to support future operations, including the Company’s ability to import materials that are required to construct the Optimus System™ and to ship them outside of Israel. Although there have been disruptions in our business and operations, the Company has determined that there have not been any materially adverse effects on its business or operations. The Company does not believe the disruptions in its business and operations will have an enduring impact on its business and operations, but it continues to monitor the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company’s Israeli office to support the Company’s activities. The Company does not have any specific contingency plans in the event of any such escalation or change.
Results of Operations
Three months ended September 30, 2025 compared to three months ended September 30, 2024
| Three Months Ended September 30, | ||||||||||||
| Increase | ||||||||||||
| 2025 | 2024 | (Decrease) | ||||||||||
| Revenue, net | $ | 10,098,310 | $ | 1,480,792 | $ | 8,617,518 | ||||||
| Cost of goods sold | 7,493,915 | 1,433,232 | 6,060,683 | |||||||||
| Gross profit | 2,604,395 | 47,560 | 2,556,835 | |||||||||
| Operating expenses: | ||||||||||||
| General and administrative | 10,595,469 | 4,114,986 | 6,480,483 | |||||||||
| Sales and marketing | 2,999,720 | 1,410,944 | 1,588,776 | |||||||||
| Research and development | 4,512,756 | 3,182,345 | 1,330,411 | |||||||||
| Total operating expenses | 18,107,945 | 8,708,275 | 9,399,670 | |||||||||
| Operating loss | (15,503,550 | ) | (8,660,715 | ) | (6,842,835 | ) | ||||||
| Total other income (expense), net | 8,330,150 | (865,553 | ) | 9,195,703 | ||||||||
| Loss before provision for income taxes | (7,173,400 | ) | (9,526,268 | ) | 2,352,868 | |||||||
| Provision for income taxes | 307,456 | - | 307,456 | |||||||||
| Net loss | $ | (7,480,856 | ) | $ | (9,526,268 | ) | $ | 2,045,412 | ||||
Revenues
| Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Revenue, net | ||||||||||||
| Ondas Networks | $ | 81,517 | $ | 445,288 | $ | (363,771 | ) | |||||
| OAS | 10,016,793 | 1,035,504 | 8,981,289 | |||||||||
| Total | $ | 10,098,310 | $ | 1,480,792 | $ | 8,617,518 | ||||||
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Our revenues increased by $8,617,518 to $10,098,310 for the three months ended September 30, 2025, compared to $1,480,792 for the three months ended September 30, 2024. Revenues during the three months ended September 30, 2025, included $5,444,398 for products, $4,591,346 for service and subscriptions, and $62,566 for development agreements. Revenues during the three months ended September 30, 2024, included $150,668 for products, $887,747 for service and subscriptions, and $442,377 for development agreements. The increase in our revenues were primarily the result of approximately $5,294,000 in increased product sales and approximately $3,704,000 in increased service and subscription revenue at OAS from sales of our Optimus System™, Iron Drone Raider™, and Apeiro ground robots with associated services in the three months ended September 30, 2025, but no comparable sales in the three months ended September 30, 2024. These increases were partially offset by a decrease of approximately $380,000 in development revenue at Ondas Networks.
Cost of goods sold
| Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Cost of goods sold | ||||||||||||
| Ondas Networks | $ | 408,242 | $ | 525,673 | $ | (117,431 | ) | |||||
| OAS | 7,085,673 | 907,559 | 6,178,114 | |||||||||
| Total | $ | 7,493,915 | $ | 1,433,232 | $ | 6,060,683 | ||||||
Our cost of goods sold increased by $6,060,683 to $7,493,915 for the three months ended September 30, 2025, compared to $1,433,232 for the three months ended September 30, 2024. The increase in cost of goods sold was primarily a result of increased revenue at OAS for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Cost of goods sold at OAS did not increase in the same ratio as revenue due to the increase in product revenue at OAS, which included sales of our Optimus System™ and Iron Drone Raider™, which have higher margins compared to the service and non-recurring engineering development revenue recognized for the three months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.
Gross profit (loss)
| Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Gross profit (loss) | ||||||||||||
| Ondas Networks | $ | (326,725 | ) | $ | (80,385 | ) | $ | (246,340 | ) | |||
| OAS | 2,931,120 | 127,945 | 2,803,175 | |||||||||
| Total | $ | 2,604,395 | $ | 47,560 | $ | 2,556,835 | ||||||
Our gross profit increased by $2,556,835 to $2,604,395 for the three months ended September 30, 2025 compared to a gross profit of $47,560 for the three months ended September 30, 2024. Gross profit for the three months ended September 30, 2025 and 2024 was 26% and 3%, respectively. The increase in gross profit of 23% is primarily related to the increase in product revenue at OAS, which has higher gross profit margins as compared to the service and non-recurring engineering development revenue recognized in the three months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.
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Operating Expenses
| Three Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Operating expenses: | ||||||||||||
| General and administrative | $ | 10,595,469 | $ | 4,114,986 | $ | 6,480,483 | ||||||
| Sales and marketing | 2,999,720 | 1,410,944 | 1,588,776 | |||||||||
| Research and development | 4,512,756 | 3,182,345 | 1,330,411 | |||||||||
| Total | $ | 18,107,945 | $ | 8,708,275 | $ | 9,399,670 | ||||||
Our principal operating costs include the following items as a percentage of total expense.
| Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Human resource costs, including benefits | 61 | % | 38 | % | ||||
| Travel and entertainment | 2 | % | 2 | % | ||||
| Other general and administrative costs: | ||||||||
| Professional fees and consulting expenses | 8 | % | 11 | % | ||||
| Other expense | 6 | % | 10 | % | ||||
| Depreciation and amortization | 8 | % | 15 | % | ||||
| Other research and deployment costs, excluding human resources and travel and entertainment | 12 | % | 20 | % | ||||
| Other sales and marketing costs, excluding human resources and travel and entertainment | 3 | % | 4 | % | ||||
Operating expenses increased by $9,399,670, or 108%, as a result of the following items:
| Human resource costs, including benefits | $ | 7,783,893 | ||
| Travel and entertainment | 247,758 | |||
| Other general and administrative costs: | ||||
| Professional fees and consulting expenses | 467,574 | |||
| Other expense | 131,846 | |||
| Depreciation and amortization | 88,955 | |||
| Other research and development costs, excluding human resources and travel and entertainment | 483,583 | |||
| Other sales and marketing costs, excluding human resources and travel and entertainment | 196,061 | |||
| $ | 9,399,670 |
The increase in operating expenses was primarily due to:
| (i) | An increase of approximately $7,784,000 in human resource costs, including an increase in stock-based compensation at the Company of approximately $4,935,000 for vesting of stock options and Restricted Stock Units (“RSUs”) during the three months ended September 30, 2025, an increase of approximately $1,192,000 in salary and benefit expense related to an increase in headcount and bonus expense in our general and administrative department as we build out our management team at OAS and Ondas Holdings, an increase of approximately $596,000 in salary and benefit expense related to an increase in headcount in our research and development department, an increase of approximately $1,061,000 in salary and benefit expense related to increased headcount in our sales and marketing department to support our growing pipeline; |
| (ii) | An increase of approximately $248,000 in travel and entertainment, primarily related to increased travel for sales and product demonstration opportunities and increased trade show attendance; |
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| (iii) | An increase of approximately $468,000 in professional fees and consulting expenses, primarily related to an increase of approximately $770,000 in legal fee costs associated with acquisitions during the quarter, pending acquisitions completed in the fourth quarter, and other corporate matters and strategic initiatives, offset by a decrease of approximately $302,000 in consulting, contractor and other professional expenses as needs were filled through internal hires; |
| (iv) | An increase of approximately $132,000 in other expense, primarily related to company events at Ondas Capital and Airobotics; |
| (v) | An increase of approximately $484,000 in other research and development costs, excluding human resources and travel and entertainment, which primarily relates to cloud-based software expenses as we invest in improving our current product line; and |
| (vi) | An increase of approximately $196,000 in other sales and marketing costs, excluding human resources and travel and entertainment, which primarily relates to increased consulting expenses, and increased attendance at trade shows and other marketing events and equipment purchases and costs association with demonstrations. |
Operating Loss
| Three Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Operating loss | $ | (15,503,550 | ) | $ | (8,660,715 | ) | $ | (6,842,835 | ) | |||
As a result of the foregoing, our operating loss increased by $6,842,835, or 79%, to $15,503,550 for the three months ended September 30, 2025, compared with $8,660,715 for the three months ended September 30, 2024. Operating loss increased as a result of the increase of $9,399,670 in operating expenses described above for the three months ended September 30, 2025, partially offset by the increase of $2,556,835 in gross profit for the three months ended September 30, 2025.
Total Other Income (Expense), net
| Three Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Total other income (expense), net | $ | 8,330,150 | $ | (865,553 | ) | $ | 9,195,703 | |||||
Total other income, net increased by $9,195,703, to $8,330,150 for the three months ended September 30, 2025, compared with total other expense, net of $865,553 for the three months ended September 30, 2024. Total other income, net increased primarily as a result of the increase of approximately $8,764,000 in interest and dividend income and unrealized gain on our equity security investments from the cash raised from our 2025 Offerings, see Note 11 – Stockholders’ Equity for a summary of the cash raised from financing activities. Combined with a decrease of approximately $427,000 in interest expense, amortization of debt discount and issuance costs for the 2022 Convertible Exchange Notes and 2023 Additional Notes during the three months ended September 30, 2025, which were repaid in full during the nine months ended September 30, 2025. For a summary of our outstanding Notes Payable, see Note 10 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
Net Loss
| Three Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Decrease | ||||||||||
| Net loss | $ | (7,480,856 | ) | $ | (9,526,268 | ) | $ | 2,045,412 | ||||
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As a result of the net effects of the foregoing, offset by an increase of approximately $307,000 in our provision for income taxes associated with Apeiro, net loss decreased by $2,045,412, or 21%, to $7,480,856 for the three months ended September 30, 2025, compared with $9,526,268 for the three months ended September 30, 2024. Net loss per share of Common Stock, basic and diluted, was $(0.03) for the three months ended September 30, 2025, compared with $(0.15) for the three months ended September 30, 2024.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Revenue, net | $ | 20,619,880 | $ | 3,063,652 | $ | 17,556,228 | ||||||
| Cost of goods sold | 13,194,865 | 3,601,969 | 9,592,896 | |||||||||
| Gross profit (loss) | 7,425,015 | (538,317 | ) | 7,963,332 | ||||||||
| Operating expenses: | ||||||||||||
| General and administrative | 22,583,398 | 12,177,062 | 10,406,336 | |||||||||
| Sales and marketing | 7,695,545 | 4,040,798 | 3,654,747 | |||||||||
| Research and development | 12,209,164 | 9,335,323 | 2,873,841 | |||||||||
| Total operating expenses | 42,488,107 | 25,553,183 | 16,934,924 | |||||||||
| Operating loss | (35,063,092 | ) | (26,091,500 | ) | (8,971,592 | ) | ||||||
| Total other income (expense), net | 3,003,192 | (1,580,588 | ) | 4,583,780 | ||||||||
| Loss before provision for income taxes | (32,059,900 | ) | (27,672,088 | ) | (4,387,812 | ) | ||||||
| Provision for income taxes | 307,456 | - | 307,456 | |||||||||
| Net loss | $ | (32,367,356 | ) | $ | (27,672,088 | ) | $ | (4,695,268 | ) | |||
Revenues
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Revenue, net | ||||||||||||
| Ondas Networks | $ | 488,042 | $ | 1,416,418 | $ | (928,376 | ) | |||||
| OAS | 20,131,838 | 1,647,234 | 18,484,604 | |||||||||
| Total | $ | 20,619,880 | $ | 3,063,652 | $ | 17,556,228 | ||||||
Our revenues increased by $17,556,228 to $20,619,880 for the nine months ended September 30, 2025, compared to $3,063,652 for the nine months ended September 30, 2024. Revenues during the nine months ended September 30, 2025, included $12,273,391 for products, $7,896,114 for service and subscriptions, and $450,375 for development agreements. Revenues during the nine months ended September 30, 2024, included $175,426 for products, $1,495,887 for service and subscriptions, and $1,392,339 for development agreements. The increase in our revenues were primarily the result of approximately $12,098,000 in increased product sales and approximately $6,400,000 in increased service and subscription revenue at OAS from sales of our Optimus System™, Iron Drone Raider™, and Apeiro ground robots with associated services in the nine months ended September 30, 2025, but no comparable sales in the nine months ended September 30, 2024. These increases were offset by a decrease of approximately $942,000 in development revenue at Ondas Networks during the nine months ended September 30, 2025.
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Cost of goods sold
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Cost of goods sold: | ||||||||||||
| Ondas Networks | $ | 1,236,132 | $ | 1,515,774 | $ | (279,642 | ) | |||||
| OAS | 11,958,733 | 2,086,195 | 9,872,538 | |||||||||
| Total | $ | 13,194,865 | $ | 3,601,969 | $ | 9,592,896 | ||||||
Our cost of goods sold increased by $9,592,896 to $13,194,865 for the nine months ended September 30, 2025, compared to $3,601,969 for the nine months ended September 30, 2024. The increase in cost of goods sold was primarily the result of increased revenue for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. Cost of goods sold at OAS did not increase in the same ratio as revenue due to the increase in product revenue at OAS, which included sales of our Optimus System™ and Iron Drone Raider™, which has higher margins compared to service and non-recurring engineering development revenue recognized for the nine months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.
Gross profit (loss)
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||
| Gross profit (loss): | ||||||||||||
| Ondas Networks | $ | (748,090 | ) | $ | (99,356 | ) | $ | (648,734 | ) | |||
| OAS | 8,173,105 | (438,961 | ) | 8,612,066 | ||||||||
| Total | $ | 7,425,015 | $ | (538,317 | ) | $ | 7,963,332 | |||||
Our gross profit increased by $7,963,332 to $7,425,015 for the nine months ended September 30, 2025, compared to a gross loss of $538,317 for the nine months ended September 30, 2024. Gross profit for the nine months ended September 30, 2025 and 2024 was 36% and (18%), respectively. The increase in gross profit of 54% is primarily related to the increase in product revenue at OAS, which has higher gross profit margins as compared to the service and non-recurring engineering development revenue recognized in the nine months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.
Operating Expenses
| Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Operating expenses: | ||||||||||||
| General and administrative | $ | 22,583,398 | $ | 12,177,062 | $ | 10,406,336 | ||||||
| Sales and marketing | 7,695,545 | 4,040,798 | 3,654,747 | |||||||||
| Research and development | 12,209,164 | 9,335,323 | 2,873,841 | |||||||||
| Total | $ | 42,488,107 | $ | 25,553,183 | $ | 16,934,924 | ||||||
Our principal operating costs include the following items as a percentage of total expense.
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| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Human resource costs, including benefits | 58 | % | 41 | % | ||||
| Travel and entertainment | 3 | % | 2 | % | ||||
| Other general and administrative costs: | ||||||||
| Professional fees and consulting expenses | 8 | % | 9 | % | ||||
| Other expense | 5 | % | 12 | % | ||||
| Depreciation and amortization | 10 | % | 14 | % | ||||
| Other research and deployment costs, excluding human resources and travel and entertainment | 13 | % | 19 | % | ||||
| Other sales and marketing costs, excluding human resources and travel and entertainment | 3 | % | 3 | % | ||||
Operating expenses increased by $16,934,924, or 66%, as a result of the following items:
| Nine Months Ended September 30, 2025 | ||||
| Human resource costs, including benefits | $ | 14,270,825 | ||
| Travel and entertainment | 431,795 | |||
| Other general and administrative costs: | ||||
| Professional fees and consulting costs | 1,280,791 | |||
| Other expense | (722,430 | ) | ||
| Depreciation and amortization | 272,779 | |||
| Other research and development costs, excluding human resources and travel and entertainment | 838,310 | |||
| Other sales and marketing costs, excluding human resources and travel and entertainment | 562,854 | |||
| $ | 16,934,924 | |||
The increase in operating expenses was primarily due to:
| (i) | An increase of approximately $14,271,000 in human resource costs, including an increase in stock-based compensation at the Company of approximately $7,718,000 for vesting of new stock options and RSUs granted during the nine months ended September 30, 2025, an increase of approximately $1,928,000 related to an increase in taxable fringe benefit expense, for tax on employee benefits such as Company subsidized vehicles, meals, and other expenses, at OAS primarily as the result of an audit by the Israeli government for previous years, an increase of approximately $1,641,000 in salary and benefit expense related to an increase in headcount and bonus expense in our general and administrative department as we build out our management team at OAS and Ondas Holdings, an increase of approximately $1,460,000 in salary and benefit expense related to an increase in headcount and bonus expense in our research and development department, and an increase of approximately $1,524,000 in salary and benefit expense related to an increase in headcount and bonus expense in our sales and marketing department to support our growing pipeline; |
| (ii) | An increase of approximately $432,000 in travel and entertainment, primarily related to increased travel for sales and product demonstration opportunities and increased trade show attendance; |
| (iii) | An increase of approximately $1,281,000 in professional fees and consulting expenses, of which an increase of approximately $901,000 relates to legal fee costs associated with acquisitions during the quarter, pending acquisitions completed in the fourth quarter, debt repayments, and other corporate matters and strategic initiatives, combined with the $550,000 recovery of legal fees from the settlement agreement for legal proceedings related to Ardenna, which reduced our legal fee expenses during the nine months ended September 30, 2024. These increases were partially offset by a decrease of approximately $170,000 in consulting, contractor and other professional expenses as needs were filled through internal hires; |
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| (iv) | A decrease of approximately $722,000 in other expense, primarily related to a decrease of approximately $603,000 in rent and facilities charges primarily at Ondas Networks which was paying two office leases during the nine months ending September 30, 2024 as compared to one lease during the nine months ended September 30, 2025 and a reduction in common area shared expenses under their new lease, and approximately $111,000 relates to a reduction in the Company’s D&O, E&O and general liability insurance expense; |
| (v) | An increase of approximately $273,000 in depreciation and amortization related to intangibles acquired in our acquisitions and additional purchases of equipment and leasehold improvements during the nine months ended September 30, 2025; |
| (vi) | An increase of approximately $838,000 in other research and development costs, excluding human resources and travel and entertainment, of which an increase of approximately $2,051,000 occurred at OAS related to an increase of approximately $911,000 in cloud-based software expenses, an increase of approximately $548,000 in use of third-party consultants and allocation of general expenses to research and development, and a one-time settlement of approximately $592,000 for of all amounts due to a vendor under previous development and manufacturing agreements, which reduced other research and development costs, excluding human resources and travel and entertainment, during the nine months ended September 30, 2024. This increase was offset by a decrease of approximately $1,213,000 at Ondas Networks primarily related to a decrease in use of third-party research and development contractors and consultants; and |
| (vii) | An increase of approximately $563,000 in other sales and marketing costs, excluding human resources and travel and entertainment, of which approximately $272,000 relates to an increase in use of sales and marketing third-party contractors and consultants, and approximately $291,000 relates to increased attendance at trade shows and other marketing events and equipment purchases and costs association with demonstrations. |
Operating Loss
| Nine Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Operating loss | $ | (35,063,092 | ) | $ | (26,091,500 | ) | $ | (8,971,592 | ) | |||
As a result of the foregoing, our operating loss increased by $8,971,592 or 34%, to $35,063,092 for the nine months ended September 30, 2025, compared with $26,091,500 for the nine months ended September 30, 2024. Operating loss increased as a result of the increase of $16,934,924 in operating expenses described above for the nine months ended September 30, 2025, partially offset by the increase of $7,963,332 in gross profit for the nine months ended September 30, 2025.
Total Other Income (Expense), net
| Nine Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Total other income (expense), net | $ | 3,003,192 | $ | (1,580,588 | ) | $ | 4,583,780 | |||||
Total other income, net increased by $4,583,780, to $3,003,192 for the nine months ended September 30, 2025, compared with the other expense, net of $1,580,588 for the nine months ended September 30, 2024. Total other income, net increased primarily as a result of the increase of approximately $9,030,000 in interest and dividend income and unrealized gain on our equity security investments from the cash raised from our 2025 Offerings, see Note 11 – Stockholders’ Equity for a summary of the cash raised from financing activities. Offset by an increase of approximately $3,515,000 in interest expense, amortization of debt discount and issuance costs for the 2024 Additional Notes, Ondas Networks Convertible Notes, OAS Convertible Notes, and Networks Secured Note. For a summary of our outstanding Notes Payable, see Note 10 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements. Further offset by an increase in other expense of approximately $931,000 from the change in fair value of government grant liability and foreign exchange loss, net.
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Net Loss
| Nine Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Increase | ||||||||||
| Net loss | $ | (32,367,356 | ) | $ | (27,672,088 | ) | $ | (4,695,268 | ) | |||
As a result of the net effects of the foregoing, combined with an increase of approximately $307,000 in our provision for income taxes associated with Apeiro, net loss increased by $4,695,268, or 17%, to $32,367,356 for the nine months ended September 30, 2025, compared with $27,672,088 for the nine months ended September 30, 2024. Net loss per share of Common Stock, basic and diluted, was $(0.21) for the nine months ended September 30, 2025, compared with $(0.46) for the nine months ended September 30, 2024.
Summary of (Uses) and Sources of Cash
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash flows used in operating activities | $ | (26,017,625 | ) | $ | (25,360,649 | ) | ||
| Net cash flows used in investing activities | (18,743,619 | ) | (1,659,366 | ) | ||||
| Net cash flows provided by financing activities | 448,155,480 | 14,871,301 | ||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 403,394,236 | (12,148,714 | ) | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 29,999,321 | 15,022,000 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 433,393,557 | $ | 2,873,286 | ||||
The principal use of cash in operating activities for the nine months ended September 30, 2025, was to fund the Company’s current expenses primarily related to operating activities necessary to allow us to service and support customers.
The increase in cash flows used in operating activities of approximately $657,000 was primarily due to an increase in net loss of approximately $4,695,000, of which approximately $5,460,000 related to non-cash and credits, including investment gains, depreciation, amortization of debt discount and issuance costs, amortization of intangibles assets, amortization of right of use assets, change in fair value of government grant liability, and stock-based compensation, offset by changes in operating assets and liabilities resulting in a cash outflow of approximately $1,422,000.
The increase in cash flows used in investing activities of approximately $17,084,000 primarily relates to the purchase of equity securities and long-term equity investment of approximately $11,587,000 and cash paid for acquisitions of approximately $6,659,000, offset by a decrease in purchases of equipment of approximately $1,169,000 in the nine months ended September 30, 2025.
The increase in cash flows provided by financing activities of approximately $433,284,000 primarily relates to the combined net proceeds of approximately $422,309,000 received from 2025 Offerings during the nine months ended September 30, 2025, compared to the net proceeds received from the sale of Common Stock in the Company of approximately of $7,327,000 during the nine months ended September 30, 2024, combined with proceeds of approximately $1,158,000 from the exercise of warrants in OAS, the increase in proceeds from the exercise of stock options and warrants of approximately $23,541,000 during the three months ended September 30, 2025. These increases were partially offset by the decrease in net proceeds of approximately $1,937,000 from the issuance of notes payable and convertible notes payable, a decrease in net proceeds of approximately $4,375,000 from the sale of preferred stock in Ondas Networks during the nine months ended September 30, 2024, and a decrease in proceeds, net of repayments, of approximately $85,000 from government grants.
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Liquidity and Capital Resources
We have incurred losses since inception and have funded our operations primarily through debt and the sale of capital stock. As of September 30, 2025, we had an accumulated deficit of approximately $268,723,000. As of September 30, 2025, we had net long-term borrowings outstanding of approximately $2,489,000 and short-term borrowings outstanding of approximately $12,541,000, net of debt discount and issuance costs of approximately $177,000, including accrued interest of approximately $712,000, of which approximately $456,000 is due to related parties. As of September 30, 2025, we had cash and restricted cash of approximately $433,394,000 and working capital of approximately $447,568,000. We had approximately $26,018,000 of net cash flows used in operations for the nine months ended September 30, 2025.
In 2024, we raised approximately $36,997,000 of net proceeds from issuance of convertible notes in Ondas Holdings, Ondas Networks, and OAS; approximately $1,422,000 of net proceeds from issuance of secured notes in Ondas Networks; approximately $7,304,000 of net proceeds from issuing Common Stock, warrants in Ondas Holdings, and warrants in OAS; and approximately $4,375,000 in net proceeds from issuing additional redeemable preference shares in Ondas Networks and warrants in Ondas Holdings.
During the nine months ended September 30, 2025, we raised approximately $422,309,000 in proceeds, net of issuance costs, from registered offerings, $24,708,000 from the exercise of stock options and warrants, $923,000 in proceeds, net of issuance costs, from issuance of convertible notes in Ondas Networks, and $365,000 in Israeli government grants to Airobotics.
The Company’s audited consolidated financial statements as of December 31, 2024 included in the Company’s most recent Annual Report on Form 10-K and unaudited condensed consolidated financial statements included in the Company’s Form 10-Q as of and for the three months ended March 31, 2025, management concluded that substantial doubt existed about the Company’s ability to continue as a going concern due to recurring operating losses and limited liquidity resources.
Management believes the actions discussed above sufficiently alleviate the previously identified conditions that raised substantial doubt, and the Company will have sufficient capital resources to fund its operations for the next twelve months from the date these interim financial statements are issued.
Management has concluded that substantial doubt about the Company’s ability to continue as a going concern no longer exists as of the issuance date of these unaudited condensed consolidated financial statements.
We expect to fund our operations for the next twelve months from the filing date of this Quarterly Report on Form 10-Q from the cash on hand as of September 30, 2025, gross profits generated from revenue growth, potential prepayments from customers for purchase orders, potential proceeds from warrants issued and outstanding, and additional funds that we may seek through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources.
Our future capital requirements will depend upon many factors, including progress with developing, manufacturing and marketing our technologies, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our ability to generate revenue and achieve profitability requires us to successfully market and secure purchase orders for our products and services from customers currently identified in our sales pipeline as well as new customers. We also will be required to efficiently manufacture and deliver equipment on those purchase orders. These activities, including our planned research and development efforts, will require significant uses of working capital. There can be no assurance that we will generate revenue and cash as expected in our current business plan. We may seek additional funds through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources. We do not know whether additional financing will be available on commercially acceptable terms or at all, when needed. If adequate funds are not available or are not available on commercially acceptable terms, our ability to fund our operations, support the growth of our business or otherwise respond to competitive pressures could be significantly delayed or limited, which could materially adversely affect our business, financial conditions, or results of operations.
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Off-Balance Sheet Arrangements
As of September 30, 2025, we had no off-balance sheet arrangements.
Critical Accounting Estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, as well as related disclosures. We base our estimates and judgments on historical experience and other assumptions that we believe to be reasonable at the time and under the circumstances, and we evaluate these estimates and judgments on an ongoing basis. Information concerning our critical accounting policies with respect to these items is available in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2024 Form 10-K. There have been no significant changes in our critical accounting policies since the filing of the 2024 Form 10-K.
Recent Accounting Pronouncements
There have been no material changes to our significant accounting policies as summarized in Note 2 of our 2024 Form 10-K. We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying unaudited Condensed Consolidated Financial Statements.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. These forward-looking statements are based on our current, reasonable expectations and assumptions, which expectations and assumptions are subject to risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our 2024 Form 10-K, which was filed with the SEC on March 12, 2025, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, which was filed with the SEC on August 12, 2025. Given these risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 229.10(f)(1) and are not required to provide information under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of September 30, 2025. Based on that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of September 30, 2025.
As permitted by the Securities and Exchange Commission, companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition and management plans to exclude Apeiro from its assessment of internal control over financial reporting as of December 31, 2025.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are not currently involved in any legal proceeding or investigation by a governmental agency that we believe will have a material adverse effect on our business, financial condition or operating results. See Note 15 – Commitments and Contingencies for a description of our legal proceedings.
Item 1A. Risk Factors.
Our business, financial condition, operating results, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025 (the “2024 Form 10-K”), the occurrence of any one of which could have a material adverse effect on our actual results.
There have been no material changes to the Risk Factors previously disclosed in the 2024 Form 10-K, except as disclosed under Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None, other than those previously disclosed in a Current Report on Form 8-K and described below.
The shares of the Common Stock that may be issued, at the Company's sole discretion, pursuant to the SPO Agreement as consideration in connection with the SPO Contingent Consideration and SPO Options, will be exempt from registration under the Securities Act, in accordance with Regulation S thereunder. We relied on this exemption from registration based in part on the representations made by the equity holders. See Note 17. “Subsequent Events – SPO Transaction” for a description of the SPO Acquisition.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5.
None.
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Item 6. Exhibits.
| * | Filed herewith. |
| ** | This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference. |
| + | Schedules and Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DATE: November 13, 2025 | ONDAS HOLDINGS INC. | |
| By: | /s/ Eric A. Brock | |
| Eric A. Brock | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Neil J. Laird | |
| Neil J. Laird | ||
| Chief Financial Officer | ||
|
(Principal Financial Officer and Principal Accounting Officer) | ||
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