Ondas Inc.

Previous wording

Ondas, Inc. (together with its subsidiaries, the “Company,” “Ondas,” “we,” “us,” or “our”) is a defense, security, and critical infrastructure technology company organized around two business units: Ondas Autonomous Systems Inc. (“OAS”), and Ondas Capital Inc. (“Ondas Capital”). Through business units, we develop and commercialize autonomous systems, and strategic investment and partnership initiatives that support the scaling and adoption of mission-critical solutions for governments and industrial customers.

Current wording

Ondas Inc. (together with its subsidiaries, the “Company,” “Ondas,” “we,” “us,” or “our”) is a defense, security, and critical infrastructure technology company organized around two business units: Ondas Autonomous Systems Inc. (“OAS”) and Ondas Capital Inc. (“Ondas Capital”). Through these business units, we develop and commercialize autonomous systems, and strategic investment and partnership initiatives that support the scaling and adoption of mission-critical solutions for governments and industrial customers.

Previous wording

The Company deconsolidated Ondas Networks effective January 16, 2026 and no longer includes the assets, liabilities, and results of operations of Ondas Networks in its consolidated financial statements subsequent to that date. Additionally, our results of operations for the three months ended March 31, 2026 have been affected by recent acquisitions. For additional information see Note 5- GOODWILL AND ACQUISITIONS.

Current wording

The Company deconsolidated Ondas Networks Inc. (“Ondas Networks”) effective January 16, 2026 and no longer includes the assets, liabilities, and results of operations of Ondas Networks in its consolidated financial statements subsequent to that date. Additionally, our results of operations for the three and six months ended June 30, 2026 have been affected by recent acquisitions. For additional information, see Note 5, Goodwill and Acquisitions – of Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

Previous wording

Revenue, net for the three months ended March 31, 2026 and 2025 are as follows:

Current wording

Revenue, net for the three months ended June 30, 2026 and 2025 is as follows:

Previous wording

Revenue, net increased $45.9 million to $50.1 million for the three months ended March 31, 2026 from $4.2 million for the three months ended March 31, 2025. The increase in revenue is primarily attributed to our OAS segment, of which $34.7 million of revenue growth was generated by companies acquired since March 31, 2025 including $15.8 million from Sentry CS Ltd. OAS revenue also increased by $11.4 million at Airobotics, of which approximately $7.9 million relates to product sales and approximately $3.5 million relates to service revenue from sales of our Optimus System™ and Iron Drone Raider™.

Current wording

Revenue, net increased $77.5 million to $83.8 million for the three months ended June 30, 2026 from $6.3 million for the three months ended June 30, 2025. The increase in revenue is primarily attributed to revenue growth generated by companies acquired since June 30, 2025 of $70.0 million, including $21.8 million from Sentry CS Ltd and $13.2 million from Omnisys Ltd. The remaining increase is primarily attributed to an increase of $6.8 million at Airobotics, of which approximately $5.2 million relates to product sales and approximately $1.6 million relates to service revenue from sales of our Optimus System™ and Iron Drone Raider™.

Previous wording

Cost of goods sold increased to $25.5 million for the three months ended March 31, 2026, from $2.8 million for the three months ended March 31, 2025. The $22.7 million increase was primarily due to activity from companies acquired since March 31, 2025 and the increase in Airobotics revenues discussed above, in addition to increased labor and material costs**.**

Current wording

Cost of goods sold increased to $47.6 million for the three months ended June 30, 2026, from $2.9 million for the three months ended June 30, 2025. The $44.7 million increase was primarily due to activity from companies acquired since June 30, 2025 and the increase in Airobotics revenues discussed above, in addition to increased labor and material costs.

Previous wording

Gross margin percentage increased to 51% for the three months ended March 31, 2026, compared to 35% for the three months ended March 31, 2025. The 16% increase in gross margin percentage is primarily due the significant increases in revenue generated by product sales offsetting fixed service delivery costs at OAS.

Current wording

Gross margin percentage decreased to 43% for the three months ended June 30, 2026, compared to 53% for the three months ended June 30, 2025. The 10% decrease in gross margin percentage is primarily due to the amortization of capitalized intellectual property.

Previous wording

General and administrative expenses (“G&A”) increased $37.4 million, or 633%, to $43.3 million for the three months ended March 31, 2026, from $5.9 million for the three months ended March 31, 2025. This increase is primarily due to (i) an increase of $11.5 million in stock-based compensation for awards granted since March 31, 2025; (ii) an increase of $8.4 million in software costs; (iii) an increase of $7.7 million in professional fees and consulting costs, of which $5.8 million related to legal, accounting and due diligence fees associated with the acquisitions completed during the year; (iv) an increase of $7.1 million related to general and administrative expense attributable to companies acquired since March 31, 2025, of which $2.8 million relates to amortization and depreciation of acquired assets; and (v) an increase of $2.7 million in human resource costs, including benefits, from increased headcount as we build out our management team at both Ondas Inc. and OAS.

Current wording

General and administrative expenses (“G&A”) increased $121.9 million, or 2006%, to $128.0 million for the three months ended June 30, 2026, from $6.1 million for the three months ended June 30, 2025. This increase is primarily due to an increase of $60.3 million in stock-based compensation for awards granted since June 30, 2025, an increase of $26.7 million in software costs, an increase of $7.2 million in professional fees and consulting costs, of which $4.4 million related to legal, accounting and due diligence fees associated with the acquisitions completed during the year. The remaining increase is primarily related to general and administrative expense attributable to companies acquired since June 30, 2025.

Previous wording

Sales and marketing expenses (“S&M”) increased $8.1 million, or 332%, to $10.5 million for the three months ended March 31, 2026, from $2.4 million for the three months ended March 31, 2025. This increase is primarily due to (i) an increase of $5.4 million related to S&M attributable to companies acquired since March 31, 2025, of which $1.8 million relates to amortization and depreciation of acquired assets; (ii) an increase of $861 thousand in human resource costs, including benefits, from increased headcount; (iii) an increase of $893 thousand in other S&M costs primarily related to increased marketing and advertising costs, use of third-party contractors and consultants, and increased attendance at trade shows and other marketing events; and (iv) an increase of $836 thousand related to increased stock-based compensation for awards granted since March 31, 2025.

Current wording

Sales and marketing expenses (“S&M”) increased $18.6 million, or 822%, to $20.9 million for the three months ended June 30, 2026, from $2.3 million for the three months ended June 30, 2025. This increase is primarily due to an increase of $14.5 million related to S&M attributable to companies acquired since June 30, 2025, of which $7.1 million relates to amortization and depreciation of acquired assets, and an increase of $2.0 million related to increased stock-based compensation for awards granted since June 30, 2025. The remaining increase is primarily attributable to increases in human resource costs, including benefits, from increased headcount and increased marketing and advertising costs from increased attendance at trade shows and other marketing events.

Previous wording

Research and development expenses (“R&D”) increased $10.0 million, or 291%, to $13.5 million for the three months ended March 31, 2026, from $3.5 million for the three months ended March 31, 2025, of which $7.8 million related to companies acquired since March 31, 2025. Other increases in R&D include, (i) an increase of $911 thousand in human resource costs, including benefits, from increased headcount, (ii) an increase of $779 thousand is related to increased stock-based compensation for awards granted since March 31, 2025, and (iii) an increase of $534 thousand in other R&D costs primarily related to increased use of third-party consultants and allocation of general expenses to research and development.

Current wording

Research and development expenses (“R&D”) increased $26.8 million, or 631%, to $31.0 million for the three months ended June 30, 2026, from $4.2 million for the three months ended June 30, 2025. This increase is primarily due to an increase of $21.1 million related to R&D attributable to companies acquired since June 30, 2025, of which $7.0 million relates to amortization and depreciation of acquired assets, and an increase of $3.4 million related to increased stock-based compensation for awards granted since June 30, 2025. The remaining increase is primarily attributable to increases in human resource costs, including benefits, from increased headcount.

Previous wording

The Company recorded an income tax provision of $245 thousand for the three months ended March 31, 2026, and an income tax provision of $0 for the three months ended March 31, 2025. The 2026 income tax provision is attributable to earnings in foreign jurisdictions.

Current wording

The Company recorded an income tax benefit of $29.1 million for the three months ended June 30, 2026, and an income tax provision of $0 for the three months ended June 30, 2025. The 2026 income tax benefit is related to current-year tax losses. The benefit was recognized because the associated deferred tax assets are expected to be realized through the reversal of existing deferred tax liabilities.

Previous wording

Net income increased $375.4 million to $361.3 million for the three months ended March 31, 2026, from a net loss of $14.1 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, the Company attributed $1.7 million of net loss to noncontrolling interests (“NCI”), related to the subsidiaries in which we acquired less than 100% ownership during the fourth quarter of 2025. These subsidiaries incurred operating losses due to early-stage operating performance.

Current wording

Net loss increased $78.9 million, to $89.7 million for the three months ended June 30, 2026, from a net loss of $10.8 million for the three months ended June 30, 2025. For the three months ended June 30, 2026, the Company attributed $1.5 million of net loss to noncontrolling interests (“NCI”), related to the subsidiaries in which we acquired less than 100% ownership during the fourth quarter of 2025. These subsidiaries incurred operating losses due to early-stage operating performance.

Previous wording

Total other income, net increased $408 million to $404.2 million for the three months ended March 31, 2026, from total other expense, net of $3.8 million for the three months ended March 31, 2025. Total other income, net increased primarily as a result of the net gain of $389.5 million related to the change in fair value of our warrant liability, an increase of approximately $51.5 million related to the gain on the deconsolidation of Ondas Networks, an increase of approximately $11.9 million in interest and dividend income, and a decrease of approximately $3.5 million in interest expense. This was partially offset by a loss on acquisition of Indo Earth of approximately $46.2 million and the net unrealized losses of approximately $2.6 million on our equity security investments.

Current wording

Total other income, net increased $453.7 million to $448.4 million for the six months ended June 30, 2026, from total other expense, net of $5.3 million for the six months ended June 30, 2025. Total other income, net increased primarily as a result of the net gain of $404.8 million related to the change in fair value of our warrant liability, a net gain of $51.5 million related to the deconsolidation of Ondas Networks, and an increase of approximately $37.4 million in interest and dividend income and realized and unrealized gains on investments, partially offset by a loss on acquisition of Indo Earth Moving Ltd. of approximately $46.2 million.

Previous wording

As required by the rules of the Securities and Exchange Commission (“SEC”), we provide a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measures. These reconciliations are set forth in the tables below.

Current wording

As required by the rules of the SEC, we provide a reconciliation of our non-GAAP financial measures to the most directly comparable U.S. GAAP measures. These reconciliations are set forth in the tables below.

Previous wording

We believe that adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) is a useful supplemental measure for evaluating our operating performance and period to period trends because it eliminates the impact of items that primarily reflect our capital structure, tax position, non-cash accounting charges, acquisition-related transaction costs, and other items that management does not consider indicative of ongoing operating performance. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income (loss) and other measures prepared in accordance with GAAP. Adjusted EBITDA removes the effects of interest and financing-related items, depreciation and amortization, income taxes, stock-based compensation, acquisition-related expenses, and other non-operating gains and losses. Management believes that excluding these items enhances comparability across periods and facilitates analysis of underlying operating trends. Other companies may calculate similarly titled non-GAAP measures differently, and therefore our Adjusted EBITDA may not be comparable to measures used by other companies.

Current wording

We believe that adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") is a useful supplemental measure for evaluating our operating performance and period to period trends because it eliminates the impact of items that primarily reflect our capital structure, tax position, non-cash accounting charges, acquisition-related transaction costs, and other items that management does not consider indicative of ongoing operating performance. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income (loss) and other measures prepared in accordance with U.S. GAAP. Adjusted EBITDA removes the effects of interest and financing-related items, depreciation and amortization, income taxes, stock-based compensation and expense, acquisition-related expenses, change in fair value of contingent consideration and other acquisition related obligations, and other non-operating gains and losses. Management believes that excluding these items enhances comparability across periods and facilitates analysis of underlying operating trends.

Previous wording

Cash Operating Expense is a non-GAAP financial measure that represents total operating expenses excluding depreciation, amortization of intangible assets, acquisition-related expenses, and stock-based compensation. The most directly comparable GAAP measure to Cash Operating Expense is total operating expenses. Management believes Cash Operating Expense provides useful supplemental information by isolating recurring, cash-based operating costs and facilitating meaningful period-to-period comparisons. Management uses this measure for internal cost management, budgeting, and liquidity planning, and to evaluate operating trends exclusive of non-cash accounting charges. Cash Operating Expense should be considered in addition to, and not as a substitute for, total operating expenses prepared in accordance with GAAP.

Current wording

Adjusted Cash Operating Expense is a non-GAAP financial measure that represents total operating expenses excluding depreciation, amortization of intangible assets, acquisition-related expenses, change in fair value of contingent consideration and other acquisition related obligations, and stock-based compensation and expense. The most directly comparable U.S. GAAP measure to Adjusted Cash Operating Expense is total operating expenses. Management believes Adjusted Cash Operating Expense provides useful supplemental information by isolating recurring, cash-based operating costs and facilitating meaningful period-to-period comparisons. Management uses this measure for internal cost management, budgeting, and to evaluate operating trends exclusive of non-cash accounting charges. Adjusted Cash Operating Expense should be considered in addition to, and not as a substitute for, total operating expenses prepared in accordance with U.S. GAAP.

Previous wording

Management uses Adjusted EBITDA and Cash Operating Expense, together with GAAP results, in making operating and planning decisions and in evaluating the Company’s ongoing performance.

Current wording

Management uses Adjusted EBITDA, Adjusted Cash Operating Expense, Adjusted Gross Profit, and Adjusted Gross Margin together with U.S. GAAP results, in making operating and planning decisions and in evaluating the Company's ongoing performance. Other companies may calculate similarly titled non-GAAP measures differently, and therefore our non-GAAP measures may not be comparable to measures used by other companies.

Previous wording

The principal use of cash in operating activities for the three months ended March 31, 2026, was to fund the Company’s current expenses primarily related to operating activities necessary to allow us to service and support customers for the three months ended March 31, 2026.

Current wording

The principal use of cash in operating activities for the six months ended June 30, 2026, was to fund the Company’s current expenses primarily related to operating activities necessary to allow us to service and support customers for the six months ended June 30, 2026.

Previous wording

The increase in cash flows used in operating activities of $44.6 million primarily relates to an increase in net income of $375.4 million, of which approximately $371.8 million related to non-cash charges and credits, which primarily includes gains and losses on investments, acquisitions, and deconsolidation of subsidiary; change in fair value of warrant liability; amortization of debt discount and issuance costs; depreciation and amortization; and stock-based compensation; combined with changes in operating assets and liabilities resulting in a cash outflow of approximately $48.2 million for the three months ended March 31, 2026.

Current wording

The increase in cash flows used in operating activities of $122.3 million primarily relates to an increase in net income of $296.4 million, of which approximately $329.5 million related to non-cash charges and credits, which primarily includes gains and losses on investments, acquisitions, and deconsolidation of subsidiary; change in fair value of warrant liability; amortization of debt discount and issuance costs; depreciation and amortization; and stock-based compensation; combined with changes in operating assets and liabilities resulting in a cash outflow of approximately $89.2 million for the six months ended June 30, 2026.

Previous wording

The increase in cash flows used in investing activities of $474 million primarily relates to an increase of $429.1 million in purchases of short-term investments, net of maturities of $23.1 million; $31.8 million in cash paid, net of cash acquired, for acquisitions; $5 million in purchases of long-term equity investments; $7 million relating to deconsolidation of subsidiary cash; and $1.1 million increase in cash paid for other tangible and intangible assets.

Current wording

The increase in cash flows used in investing activities of $762.7 million primarily relates to an increase of $689.8 million in purchases of short-term investments, net of maturities of $66.5 million and cash proceeds from sale of short-term investments of $5.7 million; $45.2 million in cash paid, net of cash acquired, for acquisitions; $10 million in purchases of long-term equity investments; $7.0 million relating to deconsolidation of subsidiary cash; and $8.8 million increase in cash paid for other tangible and intangible assets.

Previous wording

The increase in cash provided by financing activities of $966.2 million primarily relates to the net proceeds of approximately $959.1 million received from the sale of common stock and warrants, net of issuance costs during the three months ended March 31, 2026, combined with an increase in proceeds of approximately $9 million from the exercise of stock options and warrants during the three months ended March 31, 2026, offset by an increase of approximately $1.9 million in net cash outflow related to debt transactions.

Current wording

The increase in cash provided by financing activities of $917.5 million primarily relates to the increase in net proceeds of approximately $916.4 million received from the sale of common stock and warrants, net of issuance costs during the six months ended June 30, 2026, combined with an increase in proceeds of approximately $2.3 million from the exercise of stock options and warrants during the six months ended June 30, 2026, offset by an increase of approximately $1.2 million in net cash outflow related to debt transactions.

Previous wording

As of March 31, 2026, the Company had a strong liquidity position, including $1.0 billion of cash, cash equivalents, and restricted cash, $448 million of short-term investments, and working capital of approximately $1.5 billion. Based on these resources, management believes the Company has sufficient liquidity to fund its operations and planned capital expenditures for at least the next twelve months. While the Company has incurred losses since inception and historically funded operations through equity and debt financings, management does not believe additional financing is required to support near-term operating needs based on current plans.

Current wording

As of June 30, 2026, the Company had a strong liquidity position, including $666.0 million of cash, cash equivalents, and restricted cash, $727.0 million of short-term investments, and working capital of approximately $1.4 billion. Subsequent to June 30, 2026, the Company completed the acquisitions of High Point UAS, LLC and Cyberhawk Holdings Limited, which included $322.3 million of cash consideration funded from existing cash balances. Refer to Note 18 - Subsequent Events of Item 1, "Financial Statements" of this Quarterly Report on Form 10-Q. Notwithstanding this use of cash resources, management believes the Company has sufficient liquidity to fund its operations and planned capital expenditures for at least the next twelve months and the foreseeable future. While the Company has incurred losses since inception and historically funded operations through equity and debt financings, management does not believe additional financing is required to support near-term operating needs based on current plans.

Previous wording

As of March 31, 2026, the Company had an accumulated deficit of $5.4 million. At that date, the Company had net long-term borrowings outstanding of approximately $3.6 million and short-term borrowings of approximately $779 thousand, including accrued interest.

Current wording

As of June 30, 2026, the Company had an accumulated deficit of $93.7 million. At that date, the Company had net long-term borrowings outstanding of approximately $4.1 million and short-term borrowings of approximately $1.6 million, including accrued interest.

Previous wording

In 2025, the Company raised net proceeds of approximately $829.5 million from the sale of common stock and warrants, $30.8 million from the exercise of stock options and warrants, $1.2 million from the exercise of warrants in OAS, and $923 thousand from the issuance of convertible notes in Ondas Networks (collectively, the “2025 Offerings”). In January 2026, the Company raised approximately $1 billion in gross proceeds from the sale of common stock and warrants.

Current wording

In 2025, the Company raised net proceeds of approximately $829.5 million from the sale of common stock and warrants, $30.8 million from the exercise of stock options and warrants, $1.2 million from the exercise of warrants in OAS, and $0.9 million from the issuance of convertible notes in Ondas Networks (collectively, the “2025 Offerings”). In January 2026, the Company raised approximately $1 billion in gross proceeds from the sale of common stock and warrants.

Previous wording

Management’s discussion and analysis of financial condition and results of operations is based upon our 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 2025 Form 10-K. There have been no significant changes in our critical accounting policies since the filing of the 2025 Form 10-K.

Current wording

Management’s discussion and analysis of financial condition and results of operations is based upon our 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 2025 Form 10-K. Except for the addition of contingent consideration related to the business combinations completed during the six months ended June 30, 2026, there have been no significant changes in our critical accounting estimates since the filing of the 2025 Form 10-K.