Ondas(US:ONDS)2022-11-14 12:54Business Operations - Ondas Holdings operates through two subsidiaries, Ondas Networks and American Robotics, providing private wireless, drone, and automated data solutions across critical infrastructure markets [197]. - Ondas Networks' FullMAX platform is a Software Defined Radio (SDR) solution that enhances connectivity for mission-critical Industrial Internet applications, supporting a wide range of MC-IoT applications [198][199]. - The North American Rail Network spans 140,000 miles with 25,000 locomotives, and Ondas targets the 900 MHz network for its wireless platform, which is expected to increase capacity using existing infrastructure [202]. - A strategic partnership with Siemens was established to develop wireless communications products for the North American Rail Industry, leading to the launch of Siemens-branded MC-IoT systems [203][206]. - American Robotics' Scout System™ provides automated drone solutions, capable of continuous operations and data collection, marketed under a Robot-as-a-Service (RaaS) model [212][215]. - Ondas Networks received a purchase order from AURA Networks for FullMAX base stations to support a nationwide drone command and control network, meeting FAA requirements for long-distance operations [208][209]. - The company has initiated multiple joint development programs with Siemens, including a Next Generation Radio Board for global rail markets, with targeted completion dates in 2022 [204][206]. - Ondas has expanded its technology applications into Integrated Coastal Surveillance Systems (ICSS) for defense contractors, with additional orders expected in 2023 [211]. - The acquisition of Airobotics aims to enhance Ondas' capabilities in autonomous unmanned aircraft systems and automated data analysis [218]. - The AIRO Merger is expected to close in the first quarter of 2023, with Airobotics becoming a wholly owned subsidiary of the Company, exchanging each ordinary share for 0.16806 of a share of the Company's common stock [221][219]. Financial Performance - For the three months ended September 30, 2022, the Company reported net revenue of $632,489, an increase of $349,160 (123.2%) compared to $283,329 for the same period in 2021 [230][232]. - Gross profit for the three months ended September 30, 2022, was $399,488, reflecting an increase of $385,875 compared to $13,613 in the same period of 2021, resulting in a gross margin of 63% [230][234]. - Operating expenses for the three months ended September 30, 2022, totaled $13,948,232, an increase of $9,021,268 (183.5%) compared to $4,926,964 in the same period of 2021 [235]. - Revenues from Ondas Networks for the three months ended September 30, 2022, were $566,784, an increase of $306,148 compared to $260,636 in 2021 [232]. - The cost of goods sold decreased to $233,001 for the three months ended September 30, 2022, down from $269,716 in the same period of 2021, primarily due to improved margins on product revenue [233]. - Net loss for the nine months ended September 30, 2022, increased by $24,106,008, or 222%, totaling $34,980,165 compared to $10,874,157 for the same period in 2021 [250]. - Revenue decreased by $688,620 to $1,646,905 for the nine months ended September 30, 2022, compared to $2,335,525 for the same period in 2021 [242]. - Gross profit decreased by $89,450 for the nine months ended September 30, 2022, with a gross margin of 51% compared to 40% in 2021 [244]. - Operating loss for the nine months ended September 30, 2022, increased by $23,980,121, or 219%, to $34,913,165 compared to $10,933,044 for the same period in 2021 [248]. - Human resource costs, including benefits, accounted for 41% of total operating expenses for the nine months ended September 30, 2022, up from 34% in 2021 [246]. - The company reported a decrease in other income (expense) of $125,887, or 214%, to $67,000 for the nine months ended September 30, 2022 [249]. - The company had cash flows used in operating activities of $(26,198,673) for the nine months ended September 30, 2022, compared to $(11,623,656) in 2021 [252]. - Cash and cash equivalents decreased to $15,283,557 as of September 30, 2022, down from $47,496,527 at the end of the same period in 2021 [252]. Capital and Funding - The Company issued $34.5 million in 3% senior convertible notes due 2023, with net proceeds of approximately $27.75 million after fees and expenses from the offering [225][226]. - The Company provided Airobotics with a loan agreement increasing available credit to $2.0 million to fund inventory for known customer demand, with $1.75 million already borrowed [228]. - In the quarter ended June 30, 2022, the Company sold 852,679 ATM Shares at an average price of $7.29, resulting in net proceeds of $6.03 million [259]. - For the quarter ended September 30, 2022, the Company sold 11,995 ATM Shares at an average price of $5.62, generating net proceeds of $0.65 million [260]. - The Company anticipates future capital requirements will depend on various factors, including technology development and marketing efforts, with no assurances of generating expected revenue and cash flow [261]. Risks and Challenges - The Company experienced disruptions in sales and marketing efforts due to COVID-19, impacting business development and field activities [222][224]. - The Company anticipates ongoing impacts from COVID-19, including supply chain constraints and difficulties in attracting employees, affecting future business operations [224]. - Forward-looking statements made by the Company are subject to risks and uncertainties that could cause actual results to differ materially [267]. Accounting and Compliance - As of September 30, 2022, the Company reported no off-balance sheet arrangements [262]. - The Company is classified as a smaller reporting company and is not required to provide certain disclosures, including contractual obligations and market risk [264][269]. - There have been no significant changes in critical accounting policies since the 2021 Form 10-K filing [265]. - The Company does not expect recent accounting pronouncements to materially impact its financial statements [266].