NOTE 12 – STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Stockholders’ Equity

As of December 31, 2025 and 2024, the Company had 800,000,000 and 300,000,000 shares of Common Stock authorized for issuance, respectively, of which 380,763,481 and 93,173,191 shares of our Common Stock were issued and outstanding, respectively.

As of December 31, 2025 and 2024, the Company had 10,000,000 shares of preferred stock, par value $0.0001, authorized, of which 5,000,000 shares are designated as Series A Convertible Preferred Stock (“Series A Preferred”) and 5,000,000 shares are non-designated (“blank check,” together with the Series A Preferred, the “Preferred Shares”) shares. As of December 31, 2025 and 2024, the Company had no preferred stock outstanding.

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 $175 million, which represents $150 million under the prior Form S-3 and an additional $25 million (the “Form S-3”), 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. The Form S-3 was declared effective by the SEC on February 15, 2024.

On April 18, 2025, the Company initially filed with the SEC a new shelf Registration Statement on Form S-3 for up to $225 million (the “2025 Form S-3”), 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. The 2025 Form S-3 was declared effective by the SEC on April 25, 2025.

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 year ended December 31, 2025, the Company issued 73,857,218 shares of its Common Stock to the lenders in lieu of cash payments for $2.1 million of interest and $51.2 million of outstanding principal on the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes (Refer to Note 11 further details).

The Company issued 21,284,556 shares of its Common Stock during the year ended December 31, 2024 to the lenders in lieu of cash payments for $27 thousand of interest and $14.2 million of outstanding principal on the 2022 Convertible Promissory Notes (Refer to Note 11 for further details).

Sale of Common Stock and Capital Raises

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 22,400,000 shares (the “June 2025 Firm Shares”) of its Common Stock and pre-funded warrants (the “June Pre-Funded Warrants”) to purchase up to 9,600,000 shares of Common Stock (the “June Pre-Funded Warrant Shares”). Pursuant to the June 2025 Underwriting Agreement, the Company also granted the Underwriter a 30-day option (the “June Option”) to purchase an additional 4,800,000 shares of Common Stock (the “June Option Shares,” and together with the June Firm Shares, the “June Shares”).

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 2025 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 $1.25 and the public offering price for each June Pre-Funded Warrant was $1.2499. The June Pre-Funded Warrants have an exercise price of $0.0001 per share, are immediately exercisable and will expire three years from the date of issuance. As of December 31, 2025, the June Pre-Funded Warrants have been exercised in full. The net proceeds to the Company from the June 2025 Public Offering was $42.7 million after deducting underwriting discounts and commissions and offering expenses payable by the Company.

The table below details the net proceeds of the June 2025 Public Offering.

The Company intends to 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 46,160,000 shares (the “August Firm Shares”) of its Common Stock. Pursuant to the August 2025 Underwriting Agreement, the Company also granted the August Underwriters a 30-day option (the “August Option”) to purchase an additional 6,924,000 shares of Common Stock (the “August Option Shares,” and together with the August Firm Shares, the “August Shares”).

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 2025 Form S-3. The public offering price for each August Share was $3.25. The net proceeds to the Company from the August 2025 Public Offering was $162.6 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The table below details the net proceeds of the August 2025 Public Offering.

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 40,000,000 shares (the “September Firm Shares”) of its Common Stock. Pursuant to the September 2025 Underwriting Agreement, the Company also granted the September Underwriters a 30-day option (the “September Option”) to purchase an additional 6,000,000 shares of Common Stock (the “September Option Shares,” and together with the September Firm Shares, the “September Shares”). On September 9, 2025, the Underwriters exercised the September Option in full.

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 $5.00. The net proceeds to the Company from the September 2025 Offering was $217 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The table below details the net proceeds of the September 2025 Offering.

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.

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) 19,560,000 shares (the “October Shares”) of Common Stock, or (ii) in lieu of Common Stock, pre-funded warrants (the “October Pre-Funded Warrants,” together with the October Shares, the “October Common Stock Equivalents”) to purchase up to 17,400,000 shares of Common Stock (the “October Pre-Funded Warrant Shares”). The October Common Stock Equivalents were accompanied by warrants (the “October Common Warrants,” together with the October Pre-Funded Warrants, the “October Warrants”) to purchase a total of 73,920,000 shares of Common Stock (the “October Common Warrant Shares,” together with the October Pre-Funded Warrant Shares, the “October Warrant Shares”).

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 $11.50 and (ii) each October Pre-Funded Warrant and accompanying October Common Warrant to purchase two (2) shares of Common Stock was $11.50 (with a nominal exercise price of $0.0001 per share remaining unpaid as of the issuance date). The October Pre-Funded Warrants are immediately exercisable and will expire seven years from the date of issuance. As of December 31, 2025, the October Pre-Funded Warrants have been exercised in full.

The October Common Warrants have an exercise price of $20.00 per share, are exercisable beginning October 7, 2025 and will expire seven years from the date of issuance. The October Common Warrants may be cash settled, at the option of the holders, upon a change of control event. Because share settlement of the October Common Warrants is not within the Company’s control, the October Common Warrants were initially classified as a liability with a fair value of $534.1 million, and the Company recognized a loss of $126.9 million. Refer to Note 14 for further discussion of the warrant liability.

The net proceeds to the Company from the October Offering was $407.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company and excluding any proceeds that may be received from the exercise of the October Warrants.

The table below details the net proceeds of the October 2025 Offering.

(dollars in thousands)

The Company intends to use the net proceeds of the October 2025 Offering for corporate development and strategic growth, including acquisitions, joint ventures and investments.

Sale of Common Stock and Warrants in Ondas Inc.

On August 28, 2024, the Company entered into a Securities Purchase Agreement, (the “Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investor an aggregate of 5,333,334 shares of Common Stock (the “Ondas Inc. Shares”), together with Series A warrants (“Series A Warrants”) to purchase up to 5,333,334 shares of Common Stock and Series B warrants (“Series B Warrants,” and together with the Series A Warrants, the “Warrants”) to purchase up to 5,333,334 shares of Common Stock. The Series A Warrants have an exercise price of $0.8073 per share and are exercisable at any time from February 28, 2025 through March 1, 2027. The Series B Warrants have an exercise price of $0.8073 per share and are exercisable at any time from February 28, 2025 through February 28, 2030.

Each share of Common Stock and accompanying Series A Warrant and Series B Warrant were sold together at a combined offering price of $0.75, for gross proceeds of $4 million before deducting the placement agent’s fees and related offering expenses, which totaled $555 thousand. The offering closed on August 30, 2024.

The Company used the Black-Scholes-Merton option model (the “Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company, which is $4.9 million. See the table below for the assumptions used in the Black-Scholes Model. The initial valuation was allocated to the Ondas Inc. Shares and the Warrants based on their relative fair values, with the initial valuation of the Ondas Inc. Shares being $1.8 million and Warrants being $2.2 million.

Sale of Common Stock in Ondas Inc. 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 3,616,071 shares (the “Ondas Inc. Shares”) of Common Stock and (ii) warrants to purchase an aggregate of 3,616,071 shares of OAS’ common stock $0.0001 par value per share, at an exercise price of 80% of the lowest price of Common Shares of OAS issued in a subsequent financing of at least $10 million to the Company, and exercisable commencing ninety days following the date of issuance through the fifth anniversary of the date of issuance (the “OAS Warrants,” and together with the Ondas Inc. Shares, the “Ondas Offering Securities”), for gross proceeds of $3.9 million, net of offering costs (the “Ondas Offering”). The purchase price paid by the Ondas Purchasers for the Ondas Inc. Shares was $1.12 per share.

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 $1.6 million. The initial valuation was assigned to the Ondas Inc. Shares and the OAS Warrants based on their relative fair values, with the initial valuation of the Ondas Inc. Shares being $2.9 million, net of offering costs of $190 thousand, and OAS Warrants being $955 thousand.

As of December 31, 2025, there were 267,857 OAS Warrants outstanding, which were exercised and exchanged for Common Stock in January 2026 as part of the January closing of the OAS Exchange. As of December 31, 2024, there were 3,616,071 OAS Warrants outstanding, with a weighted average remaining contractual life of 4.16 years.

Noncontrolling interest

Noncontrolling interest in OAS

On September 11, 2025, certain OAS warrant holders exercised their warrants for 669,643 common stock in OAS for exercise proceeds of $1.2 million, of which $334 thousand was attributed to noncontrolling interest in OAS, representing an ownership interest of approximately 0.77% in OAS. The Company retained a controlling interest of approximately 99.23% in OAS. The transaction was accounted for as an equity transaction in accordance with ASC 810-10-45-23, with no gain or loss recognized in the Consolidated Statements of Operations.

On December 17, 2025, in conjunction with the OAS Exchange, 44,643 shares of OAS Common Stock were exchanged for Common Stock, reducing the noncontrolling interest in OAS to 0.71%. The Company attributed $116 thousand of OAS’ net loss to the remaining noncontrolling interest in OAS for the year ended December 31, 2025. As of December 31, 2025, the carrying value of the noncontrolling interest in OAS was $196 thousand.

Noncontrolling interest in Insight

On October 27, 2025, the Company completed the acquisition of a controlling interest of 51% in Insight and recognized noncontrolling interest for the remaining 49% at an initial fair value of $3.9 million. The noncontrolling interest in Insight was initially recognized at $3.9 million, decreased by $99 thousand for its share of Insight’s net loss, and increased by $23 thousand for foreign currency translation gains, resulting in a carrying value of $3.8 million as of December 31, 2025.

Networks Equity Transactions

Warrants to Purchase Preferred Stock of Networks

On September 3, 2024 and October 7, 2024, in connection with the Networks Secured Note, pursuant to the Agreement, Networks issued C&P warrants to purchase $1 million and $500 thousand, respectively, in shares of Networks Preferred Stock, at an exercise price of $20.65 per share. (Refer to Note 11 for further details).

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 $2.1 million and $2.9 million, respectively, in shares of Networks Preferred Stock, at an exercise price of $20.65 per share, of which $2 million is to the Company and has been eliminated in consolidation. (Refer to Note 11 for further details).

As of December 31, 2025, there were 157,339 warrants for shares of Networks Preferred Stock outstanding based on a Conversion Price of $41.3104, with a weighted average exercise price of $20.65 and a weighted average remaining contractual life of 3.92 years.

Warrants to Purchase Common Stock of Networks

On June 3, 2024, the Company issued warrants to purchase 15,391 shares of Networks Common Stock, at an exercise price of $2.75 per share, with a fair value of $303 thousand, in consideration of consulting services for the Company. The warrants vest over a one-year period. The Company engaged a third-party service provider to carry out a valuation of Networks Common Stock to determine its fair value as of May 31, 2024. The Company recorded stock-based compensation of $101 thousand and $202 thousand in General and administrative expense on the Consolidated Statements of Operations for the year ended December 31, 2025, and 2024, respectively, based on the valuation.

As of December 31, 2025, there were 15,391 fully vested warrants for shares of Networks Common Stock outstanding, with a weighted average exercise price of $2.75 and a weighted average remaining contractual life of 3.42 years.

Stock-Based Compensation

Warrants to Purchase Common Stock of the Company

We use the Black-Scholes-Merton option model (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.

The Company did not issue any warrants subject to stock-based compensation during the year ended December 31, 2025. The assumptions used in the Black-Scholes Model for the year ended December 31, 2024 are set forth in the table below.

A summary of our Warrants activity and related information is as follows:

Total stock-based compensation expense for warrants for the years ended December 31, 2025 and 2024 was $182 thousand and $144 thousand, respectively, and is recorded in General and administrative expense on the Consolidated Statements of Operations.

Equity Incentive Plans

In 2018, our stockholders adopted the 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which 3,333,334 shares of our Common Stock has been reserved for issuance to employees, including officers, directors and consultants. The 2018 Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the compensation committee of the Board of the Company (the “Compensation Committee”). Subject to the provisions of the 2018 Plan, the Board and/or the Compensation Committee shall have authority to grant, in its discretion, incentive stock options, or non-statutory options, stock awards or restricted stock purchase offers (“Equity Awards”). As of December 31, 2025, the balance available to be issued under the 2018 Plan was 72,550.

In 2021, our stockholders adopted the Ondas 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 8,000,000 to 11,000,000 shares. On May 12, 2025, 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 11,000,000 to 26,000,000 shares. On November 20, 2025, 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 26,000,000 to 61,000,000 shares. As of December 31, 2025, the balance available to be issued under the 2021 Plan was 27,091,223.

Stock Options to Purchase Common Stock

The Company awards stock options to certain employees, directors, and consultants, which represent the right to purchase common shares 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 zero to 100% of the target shares granted depending upon the terms of the award. Compensation expenses related to these awards is recognized when the performance conditions are satisfied.

On January 7, 2025, the Compensation Committee granted Ron Stern stock options to purchase an aggregate of 2,876,944 shares of Common Stock in connection with his Directorship Agreement. The options have an exercise price of $2.69, a term of 5 years and are contingent on ongoing employment. 1,918,059 options vest upon the earlier of: (a) on a quarterly basis over a two-year period following the grant date, or (b) the expiration of a 30-day period in which the average price per share of the Company in the applicable stock exchange is five dollars (or more) per share (the “Valuation Milestone”). 958,885 options vest upon the Valuation Milestone. The Company engaged a third-party service provider to carry out an appraisal of the options, who ran a Monte Carlo simulation to determine the fair value and the period over which the related expense shall be recognized as of January 7, 2025, which is $4.1 million to be recognized straight-line through November 25, 2026. As of December 31, 2025, the Valuation Milestone was met, the stock options vested, and the Company recognized the remaining unrecognized compensation expense, which is included in compensation expenses.

The assumptions used in the Monte Carlo simulation and Black-Scholes Model are set forth in the table below.  

A summary of our Option activity and related information is as follows:

As of December 31, 2025, total unrecognized compensation expense related to non-vested Options was $39.2 million which is expected to be recognized over a weighted-average period of 2.67 years. The weighted-average grant date fair value per share was $2.36 for options granted during the year ended December 31, 2025.

Total stock-based compensation expense for stock options for the years ended December 31, 2025 and 2024 is as follows:

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. RSUs generally vest over a one to four-year period and are contingent on ongoing employment or service as directors. Compensation expenses related to these awards is recognized straight-line over the applicable vesting period.

A summary of our RSUs activity and related information is as follows:

As of December 31, 2025, there were 12,500 restricted stock units that were vested but not yet released due to administrative timing. As of December 31, 2025, the unrecognized compensation expense for RSUs was $48.4 million which is expected to be recognized over a weighted-average period of 2.70 years.

Total stock-based compensation expense for RSUs for the years ended December 31, 2025 and 2024 is as follows: