[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended June 30, 2025, show a significant increase in total assets to $152.0 million from $109.6 million at year-end 2024, primarily driven by a substantial rise in cash from financing activities. Revenues for the second quarter and first half of 2025 grew dramatically to $6.3 million and $10.5 million, respectively, compared to the prior year, leading to a positive gross profit. However, increased operating expenses resulted in a higher net loss of $24.9 million for the six-month period. Cash flow from financing activities was a strong inflow of $53.9 million, mainly from a public offering and warrant exercises, which significantly improved the company's liquidity position [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets increased to $152.0 million from $109.6 million at December 31, 2024, largely due to a significant rise in cash to $67.6 million. Total liabilities decreased to $39.3 million from $73.7 million, primarily from the repayment of convertible notes. Consequently, total stockholders' equity improved substantially to $90.8 million from $16.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $67,568 | $29,958 | | Total current assets | $91,210 | $47,521 | | Total assets | $151,951 | $109,622 | | **Liabilities & Equity** | | | | Total current liabilities | $31,490 | $50,577 | | Total liabilities | $39,293 | $73,678 | | Total stockholders' equity | $90,821 | $16,583 | | **Total liabilities and stockholders' equity** | **$151,951** | **$109,622** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2025, revenues significantly increased to $6.3 million and $10.5 million, respectively, compared to the same periods in 2024. This drove a shift from a gross loss to a gross profit of $3.3 million for the quarter and $4.8 million for the six-month period. Despite revenue growth, higher operating and interest expenses led to an increased net loss attributable to common stockholders of $12.0 million for the quarter and $27.4 million for the six months Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $6,273 | $958 | $10,522 | $1,583 | | Gross profit (loss) | $3,332 | $(191) | $4,821 | $(586) | | Operating loss | $(9,249) | $(8,304) | $(19,560) | $(17,431) | | Net loss | $(10,750) | $(8,270) | $(24,887) | $(18,146) | | Net loss attributable to common stockholders | $(12,019) | $(9,378) | $(27,362) | $(20,227) | | Net loss per share | $(0.08) | $(0.14) | $(0.21) | $(0.31) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $15.1 million, a slight improvement from $16.3 million in the prior year period. Investing activities used a minimal $0.3 million. Financing activities provided a substantial $53.9 million in cash, primarily from a $42.7 million public offering and $10.0 million from the exercise of options and warrants. This resulted in a significant increase in cash and restricted cash, which ended the period at $68.6 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,063) | $(16,275) | | Net cash used in investing activities | $(306) | $(2,315) | | Net cash provided by financing activities | $53,921 | $8,543 | | **Increase (decrease) in cash** | **$38,552** | **$(10,047)** | | Cash, beginning of period | $29,999 | $15,022 | | **Cash, end of period** | **$68,551** | **$4,975** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business structure, comprising Ondas Networks and Ondas Autonomous Systems (OAS), and key accounting policies. A significant development is the alleviation of substantial doubt about the company's ability to continue as a going concern, following successful capital raises in Q2 2025. The notes also provide breakdowns of revenue by type and geography, details on debt instruments (many of which were repaid in 2025), equity transactions including a major public offering, segment performance showing strong revenue growth in the OAS segment, and related party transactions - The company operates through two business segments: Ondas Networks (private wireless connectivity) and Ondas Autonomous Systems (OAS), which provides drone and automated data solutions[22](index=22&type=chunk) - Management concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists as of August 12, 2025, following capital raises of approximately **$42.7 million** from a public offering and **$9.0 million** from warrant/option exercises in Q2 2025[34](index=34&type=chunk)[35](index=35&type=chunk) - As of July 18, 2025, the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes have been repaid in full, significantly deleveraging the balance sheet[32](index=32&type=chunk) Disaggregated Revenue by Type (Six Months Ended June 30) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Product revenue | $6,828,993 | $24,758 | | Service and subscription revenue | $3,304,768 | $608,140 | | Development revenue | $387,809 | $949,962 | | **Total revenue** | **$10,521,570** | **$1,582,860** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant revenue growth in the first half of 2025 to the Ondas Autonomous Systems (OAS) segment, which had multi-drone sales with associated services. This led to a substantial improvement in gross profit, turning a loss in H1 2024 into a $4.8 million profit in H1 2025. However, operating expenses also rose by 45% due to increased headcount, stock-based compensation, and R&D investment, resulting in a higher operating loss. The company's liquidity has been significantly strengthened by a $42.7 million public offering and nearly $10 million from warrant exercises, alleviating previous going concern doubts [Results of Operations](index=54&type=section&id=Results%20of%20Operations) Comparing the first six months of 2025 to 2024, revenue surged by $8.9 million to $10.5 million, driven by the OAS segment's product and service sales. This resulted in a gross profit of $4.8 million, a $5.4 million improvement from the prior year's loss. Operating expenses increased by $7.5 million, primarily due to higher human resource costs (including $2.8 million in stock-based compensation), professional fees, and R&D investments. The combination of these factors led to a net loss of $24.9 million, an increase from $18.1 million in the prior year Financial Performance Comparison (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue, net | $10,521,570 | $1,582,860 | | Gross profit (loss) | $4,820,620 | $(585,877) | | Operating loss | $(19,559,542) | $(17,430,785) | | Net loss | $(24,886,500) | $(18,145,820) | - The increase in revenue was primarily driven by the OAS segment, which grew by **$9.5 million** year-over-year due to multi-drone orders. The Ondas Networks segment saw a revenue decrease of **$0.6 million**[273](index=273&type=chunk) - Operating expenses rose by **45%** (**$7.5 million**), with key drivers being a **$6.5 million** increase in human resource costs (including a **$2.8 million** increase in stock-based compensation) and an **$0.8 million** increase in professional fees[280](index=280&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position has significantly improved. As of June 30, 2025, cash and restricted cash stood at $68.6 million. This was bolstered by financing activities in the first half of 2025, including approximately $42.7 million net proceeds from a public offering and $10.0 million from the exercise of stock options and warrants. These funds have alleviated the substantial doubt about the company's ability to continue as a going concern, and management believes there is sufficient capital to fund operations for the next twelve months - As of June 30, 2025, the company had cash and restricted cash of approximately **$68.6 million** and working capital of approximately **$59.7 million**[290](index=290&type=chunk) - Key financing activities in H1 2025 included raising **$42.7 million** from a registered public offering and **$10.0 million** from the exercise of stock options and warrants[292](index=292&type=chunk) - Management has concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists[295](index=295&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide information under this item - As a smaller reporting company, Ondas Holdings Inc. is exempt from the requirement to provide quantitative and qualitative disclosures about market risk[303](index=303&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report (June 30, 2025)[304](index=304&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[305](index=305&type=chunk) [PART II - OTHER INFORMATION](index=66&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or operating results - The company states it is not currently involved in any legal proceeding or investigation that it believes will have a material adverse effect on its business[308](index=308&type=chunk) [Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and the Quarterly Report on Form 10-Q for the period ended March 31, 2025 - No material changes to the Risk Factors have occurred since those disclosed in the 2024 Form 10-K and the Q1 2025 Form 10-Q[310](index=310&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None - There were no unregistered sales of equity securities during the period[312](index=312&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) On August 11, 2025, the company's Compensation Committee approved an Amended and Restated Non-Employee Director Compensation Policy, which increased the quarterly cash retainer to $12,500 and the annual value of restricted stock units to $100,000 - The company amended its Non-Employee Director Compensation Policy to increase the quarterly cash retainer to **$12,500** and the annual RSU value to **$100,000**[315](index=315&type=chunk) [Exhibits](index=67&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed, including a Certificate of Amendment, Form of Pre-Funded Warrant, an employment agreement, an amendment to the 2021 Incentive Stock Plan, a letter agreement, the amended director compensation policy, and various officer certifications and XBRL data files

Financial Performance & Outlook - Ondas reported revenue of $63 million in Q2 2025, a 555% increase compared to $957851 in Q2 2024[19,35] - The company is targeting at least $25 million in revenue for the full year 2025[19] - Ondas' consolidated backlog has grown to $22 million, up from $10 million at the end of Q4 2024[22] - The company's cash balance as of Q2 2025 was $686 million[22,37] - Adjusted EBITDA improved by $905k year-over-year[36] Ondas Autonomous Systems (OAS) - OAS generated $61 million in revenues for Q2 2025 and captured $233 million in orders year-to-date[58] - OAS secured $38 million in orders for the Optimus Drone Network in the UAE[58] - OAS secured $143 million Optimus System order from a major defense customer[58] Ondas Networks & dot16 Technology - IEEE 80216t (dot16) wireless standard was ratified, with Ondas leading the development[19,46] - dot16 was selected as the NGHE communications platform by the AAR[19] - The company is launching a field trial in Q3 2025 to demonstrate converting a 160 MHz network to dot16[51]

Financial Highlights - Ondas expects to report approximately $6 million in revenue for Q2 2025, a 6-fold increase compared to Q2 2024[29] - The company estimates its backlog at $22.8 million, adjusted for the expected Q2 2025 revenue[29] - Ondas anticipates total revenue of $25 million for Ondas Holdings in 2025, with at least $20 million expected from OAS[29] - Convertible notes outstanding were reduced to $5.4 million at the end of Q2 2025[29] - The company's cash position is fortified with over $67 million as of Q2 2025[29] Market and Growth Strategy - NATO's commitment to increase defense spending to 5% of GDP by 2035 represents a significant shift, potentially leading to $1.2 trillion in annual defense outlays[40, 41] - The FY2025 bill allocates approximately $21.2 billion to programs relevant to Ondas' capabilities and services for governmental defense and security applications in the U.S[44] - The Optimus drone-in-a-box market is projected to reach $1.5 billion in 2025[118] - The counter-drone market, relevant to Iron Drone Raider, is projected to reach $3 billion in 2025[121] Future Outlook - OAS targets revenue of $40 million in 2026[176] - OAS aims to achieve positive EBITDA in the second half of 2026[174, 180] - OAS projects revenue between $140 million and $150 million and EBITDA between $40 million and $45 million by 2030[180]

Summary of Ondus Autonomous Systems (OAS) Investor Day Conference Company Overview - **Company**: Ondus Holdings, specifically its subsidiary Ondus Autonomous Systems (OAS) - **Headquarters**: Baltimore, Maryland, and Petit Tikva, Israel, with commercial locations in Dubai and Singapore - **Employee Count**: 117 employees - **Investment**: Over $165 million invested in advanced autonomous drone platforms serving military, homeland security, public safety, and critical infrastructure customers [8][10] Core Technologies and Solutions - **Flagship Platforms**: - **IronDrone Raider**: A counter UAS system designed for securing critical locations against intruder drones - **Optimus System**: Provides autonomous aerial security inspection and emergency response [9][10] - **Operational Capabilities**: Both platforms are fully autonomous, military-grade, and designed for 24/7 deployment in complex environments [16][41] Financial Performance - **Revenue Projections**: Expected to report $6 million in revenue for Q2 2025, a more than six-fold increase from the previous year [14] - **Backlog Growth**: Increased from approximately $10 million at the end of 2024 to an estimated $22.8 million [15] - **Liquidity Position**: Over $67 million in cash as of the end of Q2 2025, indicating a strong financial foundation for growth [16] Market Dynamics - **Defense Spending Growth**: Non-U.S. NATO members committed to increasing defense spending to 5% of GDP by 2035, potentially growing annual defense spending from $440 billion to over $1.2 trillion [25] - **Demand for Autonomous Systems**: Accelerating procurement cycles and expanding budgets for AI-enabled defense and security technologies [13][26] Strategic Initiatives - **M&A Program**: Targeting high-quality, synergistic businesses to deepen technology portfolio and expand market presence [20] - **Go-to-Market Strategy**: Focused on high-value sectors like defense, homeland security, public safety, and critical infrastructure [21][84] Technology and Innovation - **Full Stack Physical AI**: Integrates hardware and software for autonomous decision-making and mission execution [30][39] - **Kestrel System**: An integrated airspace awareness platform enabling safe drone operations without visual observers [73] Market Opportunities - **Total Addressable Market (TAM)**: - **Optimus**: Projected growth from $1.5 billion in 2025 to over $3.5 billion by 2030 [89] - **IronDrone Raider**: Expected to grow from approximately $3 billion today to over $10 billion by 2030 [90] - **Serviceable Available Market (SAM)**: Estimated at $2.1 billion for IronDrone in military and security use cases, and $3.2 billion for Optimus [95][97] Conclusion - **Positioning**: Ondus Autonomous Systems is strategically positioned to capitalize on significant macroeconomic and policy tailwinds, with a strong focus on scalability and operational efficiency in the defense and security sectors [20][26][86]

[Announcement of Investor Day and Preliminary Q2 2025 Financial Results](index=2&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) Ondas Holdings Inc. announced a virtual Investor Day and preliminary unaudited Q2 2025 financial results - The company announced a virtual Investor Day to be held on July 9, 2025, at 1:00 p.m. Eastern Time[5](index=5&type=chunk) - Simultaneously, the company reported preliminary select financial results for the quarter ended June 30, 2025, via a press release (Exhibit 99.1)[5](index=5&type=chunk) - The financial information provided is explicitly stated as unaudited, preliminary, and not fully representative of the company's financial condition or operational results for Q2 2025[6](index=6&type=chunk) - The information furnished under Item 2.02, including the press release, is not considered "filed" for the purposes of Section 18 of the Exchange Act[7](index=7&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements, subject to risks and uncertainties, with no commitment to future updates - Statements in the report that are not historical facts are defined as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995[8](index=8&type=chunk) - The company cautions that actual results may differ materially from those expressed in forward-looking statements due to various risk factors detailed in its Form 10-K and 10-Q filings[8](index=8&type=chunk) [Financial Statements and Exhibits](index=2&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section lists exhibits filed with the Form 8-K, including the press release with preliminary financial results Exhibits | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release, dated July 9, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

Core Viewpoint - Ondas Holdings Inc. is conducting its Q1 2025 earnings conference call, indicating a focus on financial performance and strategic direction for the upcoming quarter [1]. Company Participants - The call features key executives including Eric Brock (Chairman, President, and CEO), Neil Laird (Interim CFO), Oshri Lugassy (Co-CEO, Autonomous Systems), and Markus Nottelmann (CEO, Ondas Networks) [1]. Conference Call Structure - The conference call is structured to allow participants to listen only, with an emphasis on forward-looking statements that may contain risks and uncertainties [2]. - The company has provided a reconciliation of non-GAAP financial measures to GAAP measures, highlighting the importance of these metrics for understanding business trends [3].

Financial Data and Key Metrics Changes - Revenues increased over 500% to $4,200,000 in Q1 2025 from $600,000 in Q1 2024 [14] - Gross profit was $1,500,000 representing a 35% gross margin in Q1 2025 compared to a gross loss of $400,000 in Q1 2024 [15] - Operating expenses increased to $11,800,000 for Q1 2025 from $8,700,000 in Q1 2024 [16] - Cash held was $25,400,000 as of March 31, 2025, down from $30,000,000 as of December 31, 2024 [17] Business Line Data and Key Metrics Changes - OAS revenues were $4,000,000, an increase of over 600% from Q1 2024 [14] - Revenue from OnDaaS Networks was $200,000, relatively flat compared to $300,000 in Q1 2024 [14] - The backlog grew to $16,800,000, with over $9,000,000 in additional orders secured year to date [7] Market Data and Key Metrics Changes - OAS is expanding its presence with new defense and homeland security customers across Europe, the Middle East, and the U.S. [8] - The Iron Drone Raider system is operational in a live combat environment, demonstrating its effectiveness [8] - The company is seeing strong global demand for Iron Drone as nations seek multi-layered kinetic counter UAS solutions [39] Company Strategy and Development Direction - The company anticipates a record year of revenue growth in 2025, primarily driven by OAS [5] - The strategy includes capturing programs of record and expanding those programs to generate recurring business activity [41] - The company aims to secure additional military customers and expand its partner ecosystem to support global sales and marketing [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for 2025 and beyond, citing strong demand and a growing backlog [46] - The company is focused on advancing U.S.-based manufacturing plans to align with defense procurement priorities [40] - Management highlighted the importance of capitalizing on emerging investment cycles in defense and security markets globally [49] Other Important Information - The company plans to host a second OAS-focused Investor Day in June to provide updates on business plans and financial outlook [52] - A significant debt reduction was achieved through the conversion of convertible notes to equity, reducing outstanding convertible debt to $20,600,000 [18][20] Q&A Session Summary Question: Follow-on orders and their size - Management indicated that initial orders are often pilot programs, with significant expansions expected thereafter [54][55] Question: Opportunities in Europe - Management confirmed ongoing discussions with other countries in Europe, highlighting increased defense spending due to geopolitical tensions [56] Question: Growth opportunities for Optimus - Management noted existing customers will expand programs, with significant opportunities in public safety and defense sectors [61][62] Question: Budget sources for U.S. public safety - Funding for public safety initiatives is coming from both state/local governments and federal sources, with increasing budgets for drone technology [63][64] Question: Impact of tariffs on supply chain - Management acknowledged potential impacts from tariffs but emphasized careful sourcing and plans to move production to the U.S. [72][76] Question: Pipeline breakdown between current customers and new logos - Management indicated significant expansion opportunities with new customers, alongside growth with existing customers [81][82]

Financial Data and Key Metrics Changes - Revenues increased over 500% to $4,200,000 in Q1 2025 from $600,000 in Q1 2024 [17] - Gross profit was $1,500,000 representing a 35% gross margin in Q1 2025 compared to a gross loss of $400,000 in Q1 2024 [18] - Operating expenses increased to $11,800,000 for Q1 2025 from $8,700,000 in Q1 2024 [19] - Cash held was $25,400,000 as of March 31, 2025, down from $30,000,000 as of December 31, 2024 [20] Business Line Data and Key Metrics Changes - OAS revenues were $4,000,000, an increase of over 600% from Q1 2024, driven by military customer programs and deployments in the UAE [17][18] - Revenues from OnDaaS Networks were $200,000, relatively flat compared to $300,000 in Q1 2024 [17] Market Data and Key Metrics Changes - OAS is expanding its presence with new defense and homeland security customers across Europe, the Middle East, and the U.S. [8] - The Iron Drone Raider system is operational in a live combat environment, demonstrating its effectiveness [9] Company Strategy and Development Direction - The company anticipates a record year of revenue growth in 2025, primarily driven by OAS [5] - The strategy includes capturing programs of record and expanding those programs to generate recurring business activity [45] - The company aims to secure additional military customers and expand its partner ecosystem in 2025 [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for 2025, supported by a growing backlog and customer pipeline [50] - The company expects to add more military and homeland security customers beyond the initial goals set for 2025 [12][48] Other Important Information - The company announced a shelf registration statement for $225,000,000 to support future growth opportunities [53] - Joe Popolo will be stepping down from the board to take on new responsibilities as the U.S. Ambassador to the Netherlands [51] Q&A Session Summary Question: Follow-on orders and their size - Management indicated that initial orders are often pilot programs, with significant expansions expected thereafter [59][60] Question: Discussions with NATO and other countries - Management confirmed ongoing discussions with other countries, particularly in light of increased defense spending in Europe [61] Question: Opportunities for Optimus in the U.S. - Management highlighted existing customers expanding programs and targeting public safety and critical infrastructure markets [66][68] Question: Margin profile of recent orders - Management stated that Iron Drone margins are better than Optimus, with both systems having margins north of 50% [74] Question: Supply chain and tariff risks - Management noted that while tariffs on China are significant, they are managing supply chain risks by sourcing away from China [78][80] Question: Pipeline breakdown between current customers and new logos - Management expects significant expansion opportunities with both current customers and new logos in 2025 and beyond [84][86]

Financial Performance & Outlook - Ondas reported a significant revenue increase of 580% for Q1 2025, reaching $4,248,182 compared to $625,009 in Q1 2024[17, 18] - The company is targeting at least $25 million in revenue for the full year 2025[14] - Cash and restricted cash stood at $25.4 million at the end of Q1 2025, compared to $14.6 million a year ago[19, 20] - Convertible debt was reduced by $19.2 million to $25.4 million at the end of Q1 2025[22] Ondas Autonomous Systems (OAS) - OAS secured $9.3 million in new orders year-to-date, increasing the backlog to $16.8 million[14] - OAS generated $4.0 million in revenues for Q1 2025[38] - The company estimates a combined Total Addressable Market (TAM) of $5.3 billion for Iron Drone Raider and Optimus System in Defense & HLS markets[40] Ondas Networks - dot16 was selected as the communications protocol for future Next Generation Head-of-Train / End-of-Train (NGHE) devices[14, 28] - Ondas Networks is supporting 900 MHz system deployments, including a follow-on order from Metra[34] - The company expects delivery of PTC data radios for Amtrak in early Q3 2025[34]

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Q1 2025 revenue increased to **$4.25 million** with positive gross profit, but net loss widened to **$14.1 million** as total assets decreased to **$104.6 million** and liabilities to **$58.0 million**, indicating going concern doubts [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$104.6 million** by March 31, 2025, primarily due to reduced cash, while total liabilities significantly decreased to **$58.0 million**, boosting stockholders' equity Condensed Consolidated Balance Sheet Summary (Unaudited) | Balance Sheet Items | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $25,363,853 | $29,958,106 | | Total current assets | $43,396,551 | $47,520,551 | | Goodwill, net | $27,751,921 | $27,751,921 | | Total assets | **$104,600,639** | **$109,622,288** | | **Liabilities & Equity** | | | | Total current liabilities | $50,417,322 | $50,576,622 | | Total long-term liabilities | $7,533,698 | $23,101,154 | | Total liabilities | **$57,951,020** | **$73,677,776** | | Redeemable noncontrolling interest | $20,568,332 | $19,361,205 | | Total stockholders' equity | $26,081,287 | $16,583,307 | | Total liabilities and stockholders' equity | **$104,600,639** | **$109,622,288** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 revenues surged to **$4.25 million** with a **$1.49 million** gross profit, but increased operating expenses led to a wider net loss of **$14.1 million** compared to the prior year Consolidated Statement of Operations Summary (Unaudited) | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Revenues, net | $4,248,182 | $625,009 | | Gross profit (loss) | $1,488,550 | $(394,982) | | Operating loss | $(10,310,438) | $(9,127,195) | | Net loss | $(14,136,350) | $(9,876,084) | | Net loss per share - basic and diluted | $(0.15) | $(0.17) | | Weighted average shares outstanding | 105,004,818 | 63,035,122 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to **$6.7 million** in Q1 2025, but a sharp decline in financing activities led to a **$4.6 million** decrease in total cash, ending at **$25.4 million** Consolidated Statement of Cash Flows Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash flows used in operating activities | $(6,659,264) | $(7,455,524) | | Net cash flows used in investing activities | $(195,019) | $(1,212,413) | | Net cash flows provided by financing activities | $2,264,936 | $8,236,646 | | **Decrease in cash, cash equivalents, and restricted cash** | **$(4,589,347)** | **$(431,291)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's segment structure, significant customer concentration, complex debt instruments, and critically, management's conclusion of substantial doubt about its ability to continue as a going concern - The company operates through two business segments: Ondas Networks (private wireless solutions) and Ondas Autonomous Systems (OAS) (drone and automated data solutions)[23](index=23&type=chunk) - Due to a history of losses, a working capital deficit of approximately **$7.0 million**, and reliance on external financing, there is substantial doubt about the Company's ability to continue as a going concern for one year from May 15, 2025[31](index=31&type=chunk)[34](index=34&type=chunk) - Revenue is highly concentrated. For Q1 2025, three customers accounted for **43%**, **36%**, and **14%** of total revenue[109](index=109&type=chunk) - The company has multiple complex debt instruments, including convertible notes with related parties, which are detailed in Note 7 and Note 13[125](index=125&type=chunk)[139](index=139&type=chunk)[216](index=216&type=chunk) - Subsequent to the quarter end, the company increased its authorized common stock from **300 million** to **400 million** shares and increased the shares available under its 2021 Equity Incentive Plan[231](index=231&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=50&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights **579%** revenue growth from OAS multi-drone sales, improving gross margin to **35%**, but operating expenses rose to **$11.8 million**, exacerbating liquidity concerns and substantial doubt about going concern [Results of Operations](index=52&type=section&id=Results%20of%20Operations) Q1 2025 revenues increased by **$3.6 million** driven by OAS multi-drone sales, improving gross profit, but a **$3.1 million** rise in operating expenses led to a wider net loss of **$14.1 million** Q1 2025 vs Q1 2024 Performance | Metric | Q1 2025 ($) | Q1 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Revenue, net | $4,248,182 | $625,009 | $3,623,173 | | Gross Profit (Loss) | $1,488,550 | $(394,982) | $1,883,532 | | Operating Expenses | $11,798,988 | $8,732,213 | $3,066,775 | | Operating Loss | $(10,310,438) | $(9,127,195) | $(1,183,243) | | Net Loss | $(14,136,350) | $(9,876,084) | $(4,260,266) | - The increase in revenue was primarily driven by approximately **$3.2 million** in increased product sales and **$0.5 million** in increased service revenue at the OAS segment, related to multi-drone sales[246](index=246&type=chunk) - Operating expenses increased mainly due to a **$2.9 million** rise in human resource costs, which included a **$1.2 million** increase in stock-based compensation and a **$1.3 million** increase in taxable fringe benefit expense at OAS resulting from an Israeli government audit[251](index=251&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces a **$7.0 million** working capital deficit and **$25.4 million** in cash, with management concluding substantial doubt about its going concern ability, relying on revenue growth and future financing - As of March 31, 2025, the company had cash and restricted cash of approximately **$25.4 million** and a working capital deficit of about **$7.0 million**[261](index=261&type=chunk) - The company has raised significant capital through various financing activities in 2024 and early 2025, including convertible notes, common stock sales, and redeemable preference shares[262](index=262&type=chunk)[263](index=263&type=chunk) - The company explicitly states there is substantial doubt about its ability to continue as a going concern, and future funding depends on revenue growth and the ability to raise additional capital[264](index=264&type=chunk)[265](index=265&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[272](index=272&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter ended March 31, 2025[273](index=273&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company won a **$2.14 million** judgment in an Abu Dhabi legal dispute, but collection is not guaranteed and no receivable has been recorded - On October 9, 2024, the Abu Dhabi Civil Court of Appeals ruled in favor of Airobotics for **$2,138,945** plus interest and expenses in a non-payment case against a customer. Collection is being pursued, but success is not guaranteed and no receivable is recorded[212](index=212&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors, except for a new risk concerning U.S. trade policy, which could increase costs and disrupt the supply chain - A new risk factor was added regarding changes in U.S. trade policy, including tariffs, which could increase costs, disrupt the supply chain, and adversely impact business operations and financial condition[280](index=280&type=chunk)[281](index=281&type=chunk) [Other Information](index=61&type=section&id=Item%205.%20Other%20Information) Director Joseph Popolo resigned from the board, and the Compensation Committee approved a **$400,000** annual salary and **$50,000** discretionary bonus for CEO Eric Brock - Director Joseph Popolo resigned from the board effective May 14, 2025, in connection with his nomination to be a U.S. Ambassador[286](index=286&type=chunk) - The Compensation Committee approved a **$400,000** annual salary (effective April 1, 2025) and a **$50,000** discretionary bonus for CEO Eric Brock[287](index=287&type=chunk)