Ondas Holdings Inc.

Previous wording

The following discussion and analysis provide information which our management believes to be relevant to an assessment and understanding of the results of operations and financial condition of Ondas Holdings Inc. (“Ondas,” “we” or the “Company”). This discussion should be read together with our unaudited Condensed Consolidated Financial Statements and the notes included therein, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025, including the audited consolidated financial statements and notes included therein as of and for the year ended December 31, 2024 (“2024 Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. For a description of factors that may cause our actual results to differ materially from those anticipated in these forward-looking statements, please refer to the below section of this Report titled “Cautionary Note Regarding Forward-Looking Statements.” The reported results will not necessarily reflect future results of operations or financial condition.

Current wording

The following discussion and analysis provide information which our management believes to be relevant to an assessment and understanding of the results of operations and financial condition of Ondas Holdings Inc. (“Ondas Holdings,” “we,” “our,” or the “Company”). This discussion should be read together with our unaudited Condensed Consolidated Financial Statements and the notes included therein, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2025, including the audited consolidated financial statements and notes included therein as of and for the year ended December 31, 2024 (“2024 Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. For a description of factors that may cause our actual results to differ materially from those anticipated in these forward-looking statements, please refer to the below section of this Report titled “Cautionary Note Regarding Forward-Looking Statements.” The reported results will not necessarily reflect future results of operations or financial condition.

Previous wording

Ondas Holdings Inc. (“Ondas Holdings,” the “Company,” “we” or “our”) is a leading provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks Inc., a Texas corporation (“Ondas Networks”), Ondas Autonomous Systems Inc., a Nevada corporation (“OAS”), which wholly-owns Airobotics Ltd., an Israeli company (“Airobotics”), and American Robotics, Inc., a Delaware corporation (“American Robotics”).

Current wording

Ondas Holdings is a leading provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks Inc., a Texas corporation (“Ondas Networks”), Ondas Autonomous Systems Inc., a Nevada corporation (“OAS”), which wholly-owns Airobotics Ltd., an Israeli company (“Airobotics”), and American Robotics, Inc., a Delaware corporation (“American Robotics”).

Previous wording

We design, develop, manufacture, sell and support FullMAX, our patented, Software Defined Radio (“SDR”) platform for secure, private, wide-area broadband networks. Our customers install FullMAX systems in order to upgrade and expand their legacy wide-area network infrastructure. By upgrading their legacy systems, customers benefit from significant increases in data throughput which enables new applications. We have targeted the North American freight rail operators for the initial adoption of our FullMAX platform. These rail operators currently operate legacy communications systems utilizing dated narrowband wireless technologies for voice and data communications. These legacy wireless networks have limited data capacity and are unable to support the adoption of new, intelligent train control and management systems. The freight rail operators through the Association of American Railroads (“AAR”), its advisory subsidiary MxV Rail, as well as the American Railway Engineering and Maintenance Association (“AREMA”), have adopted the IEEE 802.16 standard for future private wireless networks. The IEEE 802.16t Direct Peer-to-Peer (“DPP”) protocol has been selected by the AAR as the new standard for Next Generation head-of-train / end-of-train (“HOT-EOT”) communications or “NGHE Gen4.” This new protocol for train telemetry operations enables new safety and operational improvements to existing HOT-EOT applications.

Current wording

We design, develop, manufacture, sell and support FullMAX, our patented, Software Defined Radio platform for secure, private, wide-area broadband networks. Our customers install FullMAX systems in order to upgrade and expand their legacy wide-area network infrastructure. By upgrading their legacy systems, customers benefit from significant increases in data throughput which enables new applications. We have targeted the North American freight rail operators for the initial adoption of our FullMAX platform. These rail operators currently operate legacy communications systems utilizing dated narrowband wireless technologies for voice and data communications. These legacy wireless networks have limited data capacity and are unable to support the adoption of new, intelligent train control and management systems. The freight rail operators through the Association of American Railroads (“AAR”), its advisory subsidiary MxV Rail, as well as the American Railway Engineering and Maintenance Association, have adopted the IEEE 802.16 standard for future private wireless networks. The IEEE 802.16t Direct Peer-to-Peer protocol has been selected by the AAR as the new standard for Next Generation head-of-train / end-of-train (“HOT-EOT”) communications or “NGHE Gen4.” This new protocol for train telemetry operations enables new safety and operational improvements to existing HOT-EOT applications.

Previous wording

Ondas Networks continues to develop partnerships in the rail space to develop and market wireless communications products and services based on Ondas Networks’ technology. Our partnership with Siemens Mobility (“Siemens”) is geared to market our FullMAX-based networking technology and services and to jointly develop certain wireless communications products for the North American Rail Industry based on Siemens’ Advanced Train Control System (“ATCS”) protocol and our FullMAX MC-IoT platform. We are working with other industry partners to commercialize our platform technologies for specific use cases and to drive broad industry adoption of dot16 applications.

Current wording

Ondas Networks continues to develop partnerships in the rail space to develop and market wireless communications products and services based on Ondas Networks’ technology. Our partnership with Siemens Mobility (“Siemens”) is geared to market our FullMAX-based networking technology and services and to jointly develop certain wireless communications products for the North American Rail Industry based on Siemens’ Advanced Train Control System protocol and our FullMAX MC-IoT platform. We are working with other industry partners to commercialize our platform technologies for specific use cases and to drive broad industry adoption of dot16 applications.

Previous wording

OAS and its portfolio companies have already gained a track record of industry-leading regulatory successes including the securing of the first-of-its-kind Type Certification (TC) from the FAA for the Optimus 1-EX UAV on September 25, 2023, becoming the first autonomous security data capture UAV to achieve this distinction. TC, recognized as the highest echelon of Airworthiness Certification, streamline operational approvals for broad flight operations over people and infrastructure. The certification verifies the compliance of the system’s design with the required FAA airworthiness and noise standards, ensuring safe operation within the US National Airspace System (NAS) thereby significantly broadening the range of operational scenarios and scaling up of operations for automated UAS. Achieving FAA Type Certification will enable drone operations beyond-visual-line-of-sight (BVLOS) without a human operator on-site. With a strong footprint in the US market and worldwide, we believe that OAS is well-positioned with proven technology, a unique offering, and strong capabilities to strategically transform critical operations with our cutting-edge drone tech and capabilities.

Current wording

OAS and its portfolio companies have already gained a track record of industry-leading regulatory successes including the securing of the first-of-its-kind Type Certification (“TC”) from the Federal Aviation Administration (“FAA”) for the Optimus 1-EX UAV on September 25, 2023, becoming the first autonomous security data capture UAV to achieve this distinction. TC, recognized as the highest echelon of Airworthiness Certification, streamline operational approvals for broad flight operations over people and infrastructure. The certification verifies the compliance of the system’s design with the required FAA airworthiness and noise standards, ensuring safe operation within the US National Airspace System thereby significantly broadening the range of operational scenarios and scaling up of operations for automated UAS. Achieving FAA TC will enable drone operations beyond-visual-line-of-sight without a human operator on-site. With a strong footprint in the US market and worldwide, we believe that OAS is well-positioned with proven technology, a unique offering, and strong capabilities to strategically transform critical operations with our cutting-edge drone tech and capabilities.

Previous wording

Our revenues increased by $3,623,173 to $4,248,182 for the three months ended March 31, 2025, compared to $625,009 for the three months ended March 31, 2024. Revenues during the three months ended March 31, 2025, included $3,223,973 for products, $808,841 for service and subscriptions, and $215,368 for development agreements, primarily with Siemens. Revenues during the three months ended March 31, 2024, included $2,274 for products, $309,587 for service and subscriptions, and $313,148 for development agreements primarily with Siemens. The increase in our revenues were primarily the result of approximately $3,224,000 in increased product sales and $502,000 in increased service revenue at OAS, which had multi-drone sales with associated services in the three months ended March 31, 2025, but no comparable sales in the three months ended March 31, 2024. These increases were partially offset by a decrease of approximately $98,000 in development revenue, primarily with Siemens, and a decrease of approximately $5,000 in product and service revenue at Ondas Networks, as further orders have been delayed by the railroads as they work on implementing the 900 MHz band network.

Current wording

Our revenues increased by $5,315,537 to $6,273,388 for the three months ended June 30, 2025, compared to $957,851 for the three months ended June 30, 2024. Revenues during the three months ended June 30, 2025, included $3,605,020 for products, $2,495,927 for service and subscriptions, and $172,441 for development agreements, primarily with Siemens. Revenues during the three months ended June 30, 2024, included $22,484 for products, $298,553 for service and subscriptions, and $636,814 for development agreements, primarily with Siemens. The increase in our revenues were primarily the result of approximately $3,583,000 in increased product sales and approximately $2,197,000 in increased service and subscription revenue, primarily due to OAS having multi-drone sales with associated services in the three months ended June 30, 2025, but no comparable sales in the three months ended June 30, 2024. These increases were partially offset by a decrease of approximately $464,000 in development revenue, primarily with Siemens, as further orders have been delayed by the railroads as they work on implementing the 900 MHz band network.

Previous wording

Our cost of goods sold increased by $1,739,641 to $2,759,632 for the three months ended March 31, 2025, compared to $1,019,991 for the three months ended March 31, 2024. The increase in cost of goods sold was primarily a result of increased revenue for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. Cost of goods sold at OAS did not increase in the same ratio as revenue due to fixed manufacturing costs.

Current wording

Our cost of goods sold increased by $1,792,572 to $2,941,318 for the three months ended June 30, 2025, compared to $1,148,746 for the three months ended June 30, 2024. The increase in cost of goods sold was primarily a result of increased revenue for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Cost of goods sold at OAS did not increase in the same ratio as revenue due to the increase in product revenue at OAS, which included sales of our Iron Drone Raider™, which has higher margins compared to service and non-recurring engineering development revenue recognized for the three months ended June 30, 2024.

Previous wording

Our gross profit increased by $1,883,532 to $1,488,550 for the three months ended March 31, 2025 compared to a gross loss of 394,982 for the three months ended March 31, 2024. Gross margin for the three months ended March 31, 2025 and 2024 was 35% and (63%), respectively. The increase in gross margin of 98% is primarily related to the increase in product revenue at OAS, which has higher gross margins as compared to the service and subscription revenue recognized in the three months ended March 31, 2024.

Current wording

Our gross profit increased by $3,522,965 to $3,332,070 for the three months ended June 30, 2025 compared to a gross loss of $190,895 for the three months ended June 30, 2024. Gross margin for the three months ended June 30, 2025 and 2024 was 53% and (20%), respectively. The increase in gross margin of 73% is primarily related to the increase in product revenue at OAS, which has higher gross margins as compared to the service and non-recurring engineering development revenue recognized in the three months ended June 30, 2024.

Previous wording

Operating expenses increased by $3,066,775, or 35%, as a result of the following items:

Current wording

Operating expenses increased by $4,468,479, or 55%, as a result of the following items:

Previous wording

As a result of the foregoing, our operating loss increased by $1,183,243, or 13%, to $10,310,438 for the three months ended March 31, 2025, compared with $9,127,195 for the three months ended March 31, 2024. Operating loss increased as a result of the increase of $3,066,775 in operating expenses described above for the three months ended March 31, 2025, partially offset by the increase of $1,883,532 in gross profit for the three months ended March 31, 2025.

Current wording

As a result of the foregoing, our operating loss increased by $945,514, or 11%, to $9,249,104 for the three months ended June 30, 2025, compared with $8,303,590 for the three months ended June 30, 2024. Operating loss increased as a result of the increase of $4,468,479 in operating expenses described above for the three months ended June 30, 2025, partially offset by the increase of $3,522,965 in gross profit for the three months ended June 30, 2025.

Previous wording

As a result of the net effects of the foregoing, net loss increased by $4,260,266, or 43%, to $14,136,350 for the three months ended March 31, 2025, compared with $9,876,084 for the three months ended March 31, 2024. Net loss per share of Common Stock, basic and diluted, was $(0.15) for the three months ended March 31, 2025, compared with $(0.17) for the three months ended March 31, 2024.

Current wording

As a result of the net effects of the foregoing, net loss increased by $2,480,414, or 30%, to $10,750,150 for the three months ended June 30, 2025, compared with $8,269,736 for the three months ended June 30, 2024. Net loss per share of Common Stock, par value $0.0001 (“Common Stock”), basic and diluted, was $(0.08) for the three months ended June 30, 2025, compared with $(0.14) for the three months ended June 30, 2024.

Previous wording

Total other expense, net increased by $3,077,023, to $3,825,912 for the three months ended March 31, 2025, compared with $748,889 for the three months ended March 31, 2024. Total other expense, net increased primarily as a result of the increase in interest expense, amortization of debt discount, and amortization of debt issuance costs for the 2024 Additional Notes, Ondas Networks Convertible Notes, OAS Convertible Notes, and Networks Secured Note. For a summary of our outstanding Notes Payable, see Note 7 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Current wording

Total other expense, net increased by $4,611,923, to $5,326,958 for the six months ended June 30, 2025, compared with the other expense, net of $715,035 for the six months ended June 30, 2024. Other expense, net increased primarily as a result of the increase of approximately $3,942,000 in interest expense, amortization of debt discount and issuance costs for the 2024 Additional Notes, Ondas Networks Convertible Notes, OAS Convertible Notes, and Networks Secured Note. For a summary of our outstanding Notes Payable, see Note 7 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements. Combined with an increase in other expense of approximately $816,000 from the change in fair value of government grant liability, offset by an increase in interest income of approximately $266,000 from interest earned on cash deposits.

Previous wording

The principal use of cash in operating activities for the three months ended March 31, 2025, was to fund the Company’s current expenses primarily related to operating activities necessary to allow us to service and support customers.

Current wording

The principal use of cash in operating activities for the six months ended June 30, 2025, was to fund the Company’s current expenses primarily related to operating activities necessary to allow us to service and support customers.

Previous wording

The increase in cash flows used in operating activities of approximately $796,000 was primarily due to an increase in net loss of approximately $4,260,000, of which approximately $4,008,000 related to non-cash and credits, including depreciation, amortization of debt discount and issuance costs, amortization of intangibles assets and right of use asset, change in fair value of government grant liability, and stock-based compensation, offset by changes in operating assets and liabilities resulting in a cash inflow of approximately $1,048,000.

Current wording

The decrease in cash flows used in operating activities of approximately $1,212,000 was primarily due to an increase in net loss of approximately $6,741,000, of which approximately $7,634,000 related to non-cash and credits, including depreciation, amortization of debt discount and issuance costs, amortization of intangibles assets, amortization of right of use asset, change in fair value of government grant liability, and stock-based compensation, offset by changes in operating assets and liabilities resulting in a cash inflow of approximately $319,000.

Previous wording

The decrease in cash flows used in investing activities of approximately $1,017,000 relates to a decrease in in purchases of equipment in the three months ended March 31, 2025.

Current wording

The decrease in cash flows used in investing activities of approximately $2,009,000 primarily relates to a decrease in purchases of equipment in the six months ended June 30, 2025.

Previous wording

The decrease in cash flows provided by financing activities of approximately $5,972,000 relates to the proceeds received from the sale of common stock in the Company of approximately of $3,859,000 and the sale of preferred stock in Ondas Networks of approximately $4,375,000 during the three months ended March 31, 2024. These decreases were partially offset set by an increase in proceeds of approximately $982,000 from the exercise of options and warrants, an increase in net proceeds of approximately $923,000 from the January 2025 Networks Convertible Notes, and an increase in proceeds, net of repayments, of approximately $357,000 from government grants during the three months ended March 31, 2025. For a summary of our outstanding Notes Payable, see Note 7 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Current wording

The increase in cash flows provided by financing activities of approximately $45,378,000 primarily relates to the net proceeds of approximately $42,677,000 received from 2025 Public Offering during the six months ended June 30, 2025, compared to the net proceeds received from the sale of Common Stock in the Company of approximately of $3,859,000 during the six months ended June 30, 2024, combined with the increase in proceeds from the exercise of stock options and warrants of approximately $9,954,000, increase in net proceeds of approximately $923,000 from the issuance of convertible notes payable, and an increase in proceeds, net of repayments, of approximately $58,000 from government grants during the three months ended June 30, 2025. These increases were partially offset by the sale of preferred stock in Ondas Networks of approximately $4,375,000 during the six months ended June 30, 2024.

Previous wording

We have incurred losses since inception and have funded our operations primarily through debt and the sale of capital stock. As of March 31, 2025, we had an accumulated deficit of approximately $250,504,000. As of March 31, 2025, we had net long-term borrowings outstanding of approximately $2,558,000 and short-term borrowings outstanding of approximately $38,732,000, net of debt discount and issuance costs of approximately $3,855,000, including accrued interest of approximately $2,178,000, of which approximately $230,000 is due to related parties. As of March 31, 2025, we had cash and restricted cash of approximately $25,410,000 and a working capital deficit of approximately $7,021,000. We had approximately $6,659,000 of net cash flows used in operations for the three months ended March 31, 2025.

Current wording

We have incurred losses since inception and have funded our operations primarily through debt and the sale of capital stock. As of June 30, 2025, we had an accumulated deficit of approximately $261,254,000. As of June 30, 2025, we had net long-term borrowings outstanding of approximately $2,406,000 and short-term borrowings outstanding of approximately $17,644,000, net of debt discount and issuance costs of approximately $1,125,000, including accrued interest of approximately $630,000, of which approximately $342,000 is due to related parties. As of June 30, 2025, we had cash and restricted cash of approximately $68,551,000 and working capital of approximately $59,720,000. We had approximately $15,063,000 of net cash flows used in operations for the six months ended June 30, 2025.

Previous wording

In January 2025, we raised approximately $923,000 in proceeds, net of issuance costs, from issuance of convertible notes in Ondas Networks, $984,000 from the exercise of warrants in Ondas Holdings and $365,000 in Israeli government grants to Airobotics.

Current wording

As of June 30, 2025, we raised approximately $42,677,000 in proceeds, net of issuance costs, from a registered public offering, $9,963,000 from the exercise of stock options and warrants in Ondas Holdings, $923,000 in proceeds, net of issuance costs, from issuance of convertible notes in Ondas Networks, and $365,000 in Israeli government grants to Airobotics. Subsequent to June 30, 2025, the Company issued 6,950,574 shares as a result of Installment Conversions on the 2024 Additional Notes, repaying the 2024 Additional Notes in full. As of July 18, 2025, the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes have been repaid in full.

Previous wording

We expect to fund our operations for the next twelve months from the filing date of this Quarterly Report on Form 10-Q from the cash on hand as of March 31, 2025, gross profits generated from revenue growth, potential prepayments from customers for purchase orders, potential proceeds from warrants issued and outstanding, and additional funds that we may seek through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources. There is substantial doubt that the funding plans will be successful and therefore the conditions discussed above have not been alleviated. As a result, there is substantial doubt about the Company’s ability to continue as a going concern for one year from May 15, 2025, the date the unaudited Condensed Consolidated Financial Statements were issued.

Current wording

We expect to fund our operations for the next twelve months from the filing date of this Quarterly Report on Form 10-Q from the cash on hand as of June 30, 2025, gross profits generated from revenue growth, potential prepayments from customers for purchase orders, potential proceeds from warrants issued and outstanding, and additional funds that we may seek through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources.