Ondas Inc.

**ONDAS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

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

OAS focuses on autonomous and unmanned aerial and ground systems and integrated mission solutions for defense, homeland security, public safety, and other critical infrastructure and industrial end markets. Through its product company subsidiaries, OAS develops, commercializes and delivers integrated capabilities across Counter-Unmanned Aerial System (“CUAS”), aerial Intelligence, Surveillance, and Reconnaissance (“ISR”), and Unmanned Ground Vehicle (“UGV”) applications. Ondas Networks provides mission-critical private wireless connectivity solutions for Industrial Internet of Things (IOT) applications, enabling secure, reliable, wide-area communications and edge data transport in demanding critical infrastructure environments. Ondas Capital supports our growth strategy through strategic investments, partnerships, and capital formation initiatives intended to accelerate technology development, expand market access, and enhance long-term value creation across the Ondas platform.

We manage these business units as distinct operating platforms aligned to complementary end markets and customer requirements. Our approach is designed to combine advanced autonomy, secure communications, and integrated operating capabilities to help customers improve situational awareness, operational resilience, and safety and security outcomes in complex, regulated, and often contested environments.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements include the consolidated accounts of the Company and its wholly-owned, controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying Consolidated Financial Statements present the Company’s historical financial position, results of operations, changes in stockholders’ equity and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Events occurring subsequent to December 31, 2025 have been evaluated for potential recognition or disclosure in the consolidated financial statements.

Business Combinations

The Company accounts for business combinations in accordance with ASC 805, Business Combinations. Assets acquired, liabilities assumed, and noncontrolling interests are measured at fair value at the acquisition date. Any excess of the consideration transferred over the estimated fair value of net assets acquired is recorded as goodwill.

Goodwill and Intangible Assets

Goodwill and other intangible assets result from the Company’s acquisition of existing businesses. In accordance with accounting standards related to business combinations, goodwill is not amortized; however, certain finite-lived identifiable intangible assets, primarily customer relationships and acquired technology, are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized. The Company reviews identified intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company also tests intangible assets with indefinite lives and goodwill for impairment at least annually. Refer to Notes 6 and 7 for additional information about the Company’s goodwill and other intangible assets.

Revenue Recognition

The Company derives revenues primarily from the Ondas Networks and OAS products and services. Revenue is recognized when control of the promised products or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under Accounting Standards Codification (“ASC”) 606,* Revenue from Contracts with Customers*. Significant judgments related to revenue recognition include the determination of performance obligations, the timing of transfer of control, and the selection of appropriate methods to measure progress toward satisfaction of performance obligations.

Product Revenues

Product revenues are generated from the sale of hardware and related products. For product sales, control generally transfers to the customer at a point in time. In determining when control transfers, the Company considers, among other indicators, whether it has a present right to payment, legal title has transferred, the customer has obtained the significant risks and rewards of ownership, and customer acceptance has occurred, where acceptance is not considered a formality. The Company’s principal shipping terms are Free On Board (“FOB”) Shipping Point, or equivalent. Generally, revenue is recognized upon shipment of the product when control transfers based on the contractual shipping terms and customer acceptance provisions. For sales arrangements with shipping terms other than FOB Shipping Point, revenue recognition is evaluated based on the specific contractual shipping terms and customer obligations. Shipping and handling activities are not assessed as separate performance obligations as they are considered fulfillment activities.

If a performance obligation related to a product sale remains unsatisfied after shipment—typically installation or customer acceptance—revenue related to that performance obligation is deferred until the obligation has been satisfied. The Company estimates expected product returns at the time of sale and records them as a reduction of revenue. Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are accounted for as variable consideration and recorded as a reduction of revenue at the time of sale. Estimates of product returns, customer allowances, and rebates are based on historical experience, current trends, and known contractual terms.

Revenue related to extended warranty and service arrangements is recognized over the term of the arrangement, as control of the services transfers to the customer over time. Revenue from other long-term product-related contracts is recognized over time using a cost-to-cost input method, which measures progress based on costs incurred relative to total estimated costs, provided the criteria for over-time recognition under ASC 606 are met. This method requires management to make estimates of total expected costs, which are reviewed and updated periodically and may change as the contract progresses.

Service Revenues

Service revenues consist primarily of (i) routine support and maintenance services, (ii) product training, installation, and onsite deployment services, and (iii) engineering and professional services related to the development and customization of software and hardware applications. Support and maintenance services represent stand-ready obligations to provide ongoing technical support and updates and are recognized ratably over the service period, as the customer simultaneously receives and consumes the benefits of the services. Training, installation, and onsite deployment services are generally distinct performance obligations that are recognized at a point in time, when the related services have been performed and control has transferred to the customer. Engineering and professional services are recognized over time, as the services create or enhance assets that the customer controls or have no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. Revenue for these arrangements is recognized using a cost-to-cost input method, under which revenue is recognized based on the ratio of actual costs incurred to total estimated costs. Management has determined that this method provides the best measure of progress toward satisfaction of the related performance obligations.

For arrangements containing multiple service performance obligations, the transaction price is allocated to each performance obligation based on its relative standalone selling price, as stated in the Company’s contracts.

Development Revenues

Development revenues are derived from customer contracts that include research, development, and engineering services. These arrangements include substantive, contractually defined development milestones, each of which represents a measure of progress toward satisfaction of the related performance obligation. Revenue from development arrangements is recognized upon achievement of the applicable milestone, as milestone achievement corresponds with the transfer of control of the underlying services to the customer. The Company has determined that the use of milestone achievement as an output method provides a faithful depiction of performance in accordance with ASC 606. These arrangements include substantive, contractually defined development milestones, each of which represents a measure of progress toward satisfaction of a performance obligation and is not contingent solely upon billing or customer funding events.

Remaining Performance Obligations

The Company discloses remaining performance obligations for contracts with an original expected duration of greater than one year. The Company has elected the practical expedient in ASC 606-10-50-14 and therefore does not disclose information about remaining performance obligations for (i) contracts with an original expected duration of one year or less and (ii) performance obligations for which revenue is recognized in the amount to which the Company has the right to invoice.

As of December 31, 2025, the aggregate amount of transaction price allocated to remaining performance obligations for contracts not subject to the practical expedients described above was $472 thousand and recorded within Other long-term liabilities on the Consolidated Balance Sheets. The Company expects to recognize this amount as revenue during 2027 and 2028.

Use of Estimates

The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to allocation of consideration for business combinations to identifiable tangible and intangible assets, revenue recognition, inventory write-downs to reflect net realizable value, fair values of financial instruments and goodwill, assumptions used in the valuation of stock-based awards, derivative warrant liabilities, and valuation allowances against deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents, and Restricted Cash

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Restricted cash includes cash that is not readily available for use in the Company’s operating activities. At December 31, 2025, $37.6 million of our restricted cash balance relates to funds held in escrow in connection with the acquisition of Sentrycs which will be released when the remaining payments are due pursuant to the Sentrycs Agreement. The remaining restricted cash balance at December 31, 2025 and 2024 is attributable to (i) minimum cash reserves required to be maintained to cover bank guarantees issued for new customer orders and operating leases, and (ii) minimum cash reserve requirements for credit cards.

The Company periodically monitors its positions with, and the credit quality of, the financial institutions with which it invests. Periodically throughout the year, and as of December 31, 2025, the Company has maintained balances in excess of federally insured limits. As of December 31, 2025, the Company was approximately $549 million in excess of federally insured limits.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are stated at a gross invoice amount less an allowance for credit losses as well as net of any discounts or other forms of variable consideration. We estimate allowance for credit losses by evaluating specific accounts where information indicates our customers may have an inability to meet financial obligations, such as customer payment history, credit worthiness, and receivable amounts outstanding for an extended period beyond contractual terms. We use assumptions and judgments, based on the best available facts and circumstances, to record an allowance to reduce the receivable to the amount expected to be collected. These allowances are evaluated and adjusted as additional information is received. We had allowance for credit losses as of December 31, 2025 and 2024 of $389 thousand and $0, respectively. During the years ended December 31, 2025 and 2024, we recognized$0 and $993 thousand of expense related to credit losses, respectively.

Short-term investments

The Company’s short-term investments consist of certificates of deposit carried at amortized cost and marketable equity securities, which are measured at fair value at each reporting date, with unrealized gains and losses recognized in Other income (expense), net in the Company’s Consolidated Statements of Operations. Realized gains and losses on sales of marketable equity securities are determined using the specific identification method and are included in Other income (expense), net in the Company’s Consolidated Statements of Operations. Dividend income is recognized on the ex-dividend date.

Inventory

Inventories, which consist solely of raw materials, work in process and finished goods, are stated at the lower of cost (first-in, first-out) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. On December 31, 2025 and 2024, such reserves were $1.7 million and $221 thousand, respectively.

Inventory consists of the following:

As of December 31, 2025 and 2024, the Company reclassified $0 and $2.29 million of machinery and equipment, net into inventory, as OAS has shifted its focus from service revenue, selling a data subscription service to its customers based on the information collected by their autonomous systems, to product revenue, primarily selling their Optimus System™ and Iron Drone Raider™.

Property and Equipment

All additions, including improvements to existing facilities, are recorded at cost. Maintenance and repairs are charged to expense as incurred. Depreciation of property and equipment is principally recorded using the straight-line method over the estimated useful lives of the assets. The estimated useful lives typically are 3 to 17 years for machinery and equipment. Leasehold improvements are amortized on astraight-line basis over the shorter of the lease term or the estimated useful life of the asset. Upon the disposal of property, the asset and related accumulated depreciation accounts are relieved of the amounts recorded therein for such items, and any resulting gain or loss is recorded in operating expenses in the year of disposition.

Impairment of Long-Lived Assets

Long-lived assets are evaluated whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Such indicators include significant technological changes, adverse changes in market conditions and/or poor operating results. The carrying value of a long-lived asset group is considered impaired when the projected undiscounted future cash flows are less than its carrying value. The amount of impairment loss recognized is the difference between the estimated fair value and the carrying value of the asset or asset group. Fair market value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved. There wasno impairment of long-lived assets for the years ended December 31, 2025 and 2024.

Other Assets

Other long-term assets generally consist of right-of-use assets resulting from leases, long-term portion of prepaid expenses, and refundable deposits that are not expected to be received in the next twelve months.

Other Liabilities

Other liabilities generally consist of operating lease liabilities, accrued interest, contingent consideration, long-term deferred revenue, and refundable sub-lease deposit that are not expected to be repaid in the next twelve months.

Government Grants

The Company receives government grants from the Israel Innovation Authority (the “IIA”) to finance its research and development programs in Israel, through which we have received IIA participation payments of $365 thousand and $300 thousand for December 31, 2025 and 2024, respectively. The grant funds are royalty-bearing grants and are repayable to the extent that future economic benefits are expected from the research project that will result in royalty-bearing sales. Repayments are calculated at a rate of 3% of future sales of the developed products, up to 100% of the amounts of grants received plus interest at LIBOR.

The liability for grants received is first measured at fair value using a discounted cash flow model based on forecasted future sales of the products developed using the grant funds, using a discount rate that reflects a market rate of interest. The difference between the amount of the grant received and the fair value of the liability is accounted for as a government grant and recognized as a reduction of research and development expenses.

At each reporting date, the Company determines the fair value of the government grant liability based on 3% of forecasted future sales of the products developed using the grant funds, discounted using a discounted cash flow model, and recognizes the change in the government grant liability through other income (expense). Amounts paid as royalties are treated as a reduction of the liability. Royalty payments are due every nine months. There is no maturity date. The liability exists until it is paid in full through royalty payments, or the Company reports to the IIA that there will be no further sales.

The Company made royalty payments of $342 thousand and $277 thousand during the years ended December 31, 2025 and 2024, respectively.

The Company’s royalty liability to the IIA as of December 31, 2025 and 2024 was $3.7 million and $2.6 million, respectively. We recognized a loss of $204 thousand related to the change in fair value of the government grant liability, including LIBOR interest expense accrued, for the year ended December 31, 2025. We recognized a gain of $95 thousand related to the change in fair value of the government grant liability, including LIBOR interest expense accrued, for the year ended December 31, 2024. Refer to Note 14, Government grants, for the reconciliation of the beginning and ending balances for the Level 3 government grant liability measured at fair value and the Company’s assumptions.

Noncontrolling Interests

Noncontrolling interests represents the minority shareholders’ proportionate share of the Company’s majority-owned subsidiaries. The portion of net income (loss) attributable to noncontrolling interests is presented as net loss attributable to noncontrolling interest in the consolidated statements of operations, and the portion of other comprehensive income (loss) of these noncontrolling interests is presented in the consolidated statements of stockholders’ equity.

Redeemable Noncontrolling Interests

Redeemable noncontrolling interests represent equity interests in consolidated subsidiaries that are not attributable to the Company and that are subject to redemption upon the occurrence of events that are not solely within the Company’s control, including temporary equity classified instruments and put options embedded in the noncontrolling interest.

Redeemable noncontrolling interests are initially measured at their fair value. Noncontrolling interests which are currently redeemable are measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date or the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. For noncontrolling interests which are probable of becoming redeemable, the Company uses the accretion method for instruments with fixed redemption amounts or the immediate method for instruments redeemable at fair value or based on a formula, if such amounts are greater than the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. Adjustments to the carrying value of the redeemable noncontrolling interests are recorded through additional paid-in capital.

Further information regarding the Company’s redeemable noncontrolling interests is included in Note 13 – Redeemable Noncontrolling Interests.

Derivative Warrant Liabilities

The Company classifies as equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any warrants that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control), (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement) or (iii) that contain reset provisions that do not qualify for the scope exception. The Company assesses classification of its common stock warrants and other freestanding warrant instruments at each reporting date to determine whether a change in classification between assets and liabilities is required.

Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified. Warrants that are determined to require asset or liability classification are measured at fair value upon issuance and are subsequently remeasured to fair value at each balance sheet date with any change in fair value recognized in the consolidated statements of operations.

Embedded Derivatives

Features embedded into contracts are assessed to determine if they represent embedded derivatives which require bifurcation and separate recognition. Embedded derivatives requiring bifurcation are accounted for at fair value, with subsequent changes in fair value recognized in the consolidated statements of operations.

Fair Value of Financial Instruments

Our financial assets measured at fair value on a recurring basis consist primarily of cash equivalents such as money market funds, and short-term investments, such as publicly traded stock and warrants exercisable for publicly traded stock. Our financial liabilities measured at fair value on a recurring basis consist primarily of government grant liabilities. The carrying amount of receivables, accounts payable, and accrued expenses approximates our fair value because of the short-term maturity of such instruments. In connection with the business combinations completed during the year ended December 31, 2025, the Company recognized identifiable intangible assets, including developed technology, customer relationships, trade names, and non-compete agreements. These intangible assets were measured at fair value on a non-recurring basis as of their respective acquisition dates in accordance with ASC 805,Business Combinations. These measurements are not subsequently remeasured and the assets are amortized over their estimated useful lives. Refer to Note 14 for the fair values of the Company’s assets and liabilities.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with U.S. GAAP, we recognize the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. We recognize both interest and penalties related to uncertain tax positions as part of the income tax provision.

Stock-based Compensation

We calculate stock-based compensation expense for option awards (“Stock-based Award(s)”) based on the estimated grant/issue date fair value using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) and recognize the expense on a straight-line basis over the vesting period. We account for forfeitures as they occur.

The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period in determining the fair value of Stock-based Awards. The expected term is based on the “simplified method”, due to the Company’s limited option exercise history. Under this method, the term is estimated using the weighted average of the service vesting period and contractual term of the option award. As the Company does not yet have sufficient history of its own volatility, the Company has identified several public entities of similar size, complexities and industry and calculates historical volatility based on the volatilities of these companies. Although we believe our assumptions used to calculate stock-based compensation expense are reasonable, these assumptions can involve complex judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to our assumptions could significantly impact the amount of expense recorded in a given period.

We recognize restricted stock unit expense over the period of vesting or the period that services will be provided. Compensation associated with shares of the Company’s Common Stock, par value $0.0001 (the “Common Stock”), issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date, which is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided.

Shipping and Handling

We expense all shipping and handling costs as incurred. These costs are included in Cost of Goods Sold on the accompanying Consolidated Statements of Operations.

Advertising and Promotional Expenses

We expense advertising and promotional costs as incurred. We recognized expenses of $359 thousand and $76 thousand for the years ended December 31, 2025, and 2024, respectively. These costs are included in Sales and marketing on the accompanying Consolidated Statements of Operations.

Research and Development

Costs for research and development are expensed as incurred except for research and development equipment with alternative future use. Research and development expenses consist primarily of salaries, salary-related expenses and costs of contractors and materials.

Product Warranty

We offer service-type and assurance-type warranties, the terms and conditions of which vary depending upon the product sold. For assurance-type warranties, we accrue a liability for the estimated cost of the assurance-type warranty at the time the product is sold. For service-type warranties, costs are expensed as incurred and the transaction price attributable to the service-type warranty performance obligation is recognized over the warranty period. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants.

Leases

Under Topic 842,Leases, operating lease expense is generally recognized evenly over the term of the lease. We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement. If we determine the arrangement is a lease, or contains a lease, at lease inception, we then determine whether the lease is an operating lease or a finance lease. Operating and finance leases result in recording a right-of-use (“ROU”) asset and lease liability on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancellable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. This rate is generally consistent with the interest rate we pay on borrowings under our credit facilities, as this rate approximates our collateralized borrowing capabilities over a similar term of the lease payments. We have elected not to recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying assets. We have elected not to separate lease and non-lease components for any class of underlying asset.

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss available to common stockholders’ (the numerator) by the weighted average number of shares of Common Stock outstanding for each period (the denominator).

The computation of diluted net loss per share is similar to the computation of basic net loss per share except that the numerator may have to adjust for any dividends and income or loss associated with potentially dilutive securities that are assumed to have resulted in the issuance of shares of common stock, and the denominator may have to adjust to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued during the period to reflect the potential dilution that could occur from shares of common stock issuable through stock options, warrants, restricted stock units, or convertible preferred stock. For purposes of determining diluted earnings per common share, the treasury stock method is used for stock options, warrants, and restricted stock units. Because of the net loss for the years ended December 31, 2025 and 2024, the impact of including this in our computation of diluted net loss per share was anti-dilutive.

The following potentially dilutive securities for the years ended December 31, 2025 and 2024 have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive.

Concentration of Customers

A small number of customers have accounted for a substantial amount of our revenue. Revenue from significant customers, those representing 10% or more of total revenue, was composed of two customers accounting for 55% and 11% of the Company’s revenue for the year ended December 31, 2025, respectively. Three customers accounted for 52%,26% and 10% of the Company’s revenue for the year ended December 31, 2024, respectively.

Accounts receivable from significant customers, those representing 10% or more of the total accounts receivable, were composed of one customer accounting for 73% of the Company’s accounts receivable balance as of December 31, 2025, respectively. Two customers accounted for 78% and 10% of the Company’s accounts receivable balance as of December 31, 2024, respectively.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09,Improvements to Income Tax Disclosures, which enhances the transparency of income tax disclosures in ASC 740,* Income Taxes*, primarily related to the rate reconciliation and income taxes paid information. The ASU is effective for fiscal years beginning after December 15, 2024, may be applied retrospectively and early adoption is permitted. The Company first applied the ASU to the Company’s annual disclosures for the year ended December 31, 2025. The ASU will be applied prospectively.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03,Income Statement — reporting Comprehensive Income — Expense Disaggregation Disclosures. The ASU requires entities to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation and intangible asset amortization for each income statement line item that contains those expenses. This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The Company is currently assessing the impact of this ASU on its disclosures in the Consolidated Financial Statements.

In July 2025, the Financial Accounting Standards Board issued ASU 2025-05,Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides practical expedients to simplify the estimation of expected credit losses for current accounts receivable and contract assets. The guidance is effective for annual reporting periods beginning after December 15, 2025. The Company does not expect adoption of this ASU to have a material impact on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06,Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting model for capitalizing internal-use software costs by replacing the project-stage approach with a principles-based recognition threshold. The guidance is effective for annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company does not expect adoption of this ASU to have a material impact on its consolidated financial statements.

In December 2025, the Financial Accounting Standards Board issued ASU 2025-10,Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance for the recognition, measurement, presentation, and disclosure of government grants received by business entities. The amendments expand Topic 832 by introducing a comprehensive accounting framework, largely based on International Accounting Standard 20, and are effective for public business entities for annual reporting periods beginning after December 15, 2028, including interim periods within those annual periods. Early adoption is permitted. The Company receives royalty-bearing research and development grants from the Israel Innovation Authority that are repayable based on future sales of products developed using the grant funding. Accordingly, the Company expects that ASU 2025-10 will be applicable upon adoption and may impact the recognition and presentation of such grants, including the timing of grant income and the accounting for related royalty obligations. The Company is currently evaluating the impact of the amendments, including the transition method to be applied, on its consolidated financial statements and related disclosures.

In December 2025, the Financial Accounting Standards Board issued ASU 2025-11, Interim Reporting (Topic 270):Narrow-Scope Improvements, which clarifies and reorganizes existing interim reporting requirements and introduces a principle requiring disclosure of material events occurring since the end of the prior annual reporting period. The guidance is effective for interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company does not expect adoption of this ASU to have a material impact on its interim financial statements or disclosures.

Reclassification

Certain amounts reported in the prior year financial statements have been reclassified to conform to the current year’s presentation.

NOTE 3 – REVENUE

The following table presents our disaggregated revenues by type, timing and geographical region.

Contract Assets and Liabilities

We recognize a receivable or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract asset is recorded when we have recognized revenue over time in accordance with meeting our performance obligation but are unable to invoice the customer yet based on the contractual invoicing terms. The contract asset is reclassified to a receivable when the right to consideration becomes unconditional. Contract assets are included in Other current assets on the Consolidated Balance Sheet. The table below details the activity in our contract assets during the years ended December 31, 2025 and 2024.

We recognize a contract liability (deferred revenue) when we receive consideration from a customer, or if we have the unconditional right to consideration (i.e., a receivable), prior to satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the activity in our contract liabilities during the years ended December 31, 2025 and 2024.

Revenue recognized during the year ended December 31, 2025 and 2024 that was included in the contract liability opening balance was $81 thousand and $72 thousand, respectively. As of December 31, 2025, $472 thousand of the contract liability balance represents long-term deferred revenue and is included in Other liabilities on the Consolidated Balance Sheets.

NOTE 4 – OTHER CURRENT ASSETS

Other current assets consist of the following:

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Depreciation expense for the years ended December 31, 2025 and 2024 was $946 thousand and $602 thousand, respectively. For the years ended December 31, 2025 and 2024, the Company recognized a loss on disposal of machinery and equipment of $0 thousand and $2 thousand, respectively, which is included in Other income (expense), net in the Company’s Consolidated Statements of Operations. As of December 31, 2025, there was $8.4 million and $32 thousand of net property and equipment located in Israel and Estonia, respectively.

In 2024, the Company reclassified $2.29 million of machinery and equipment, net into inventory, as OAS has shifted their focus from service revenue, selling a data subscription service to its customers based on the information collected by their autonomous systems, to product revenue, primarily selling their Optimus System™ and Iron Drone Raider™.

NOTE 6 – GOODWILL AND BUSINESS ACQUISITIONS

We account for acquisitions in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”). The purchase price, plus the estimated fair value of noncontrolling interest retained by the selling shareholders, less the estimated fair value of net assets acquired in a business combination is recorded as goodwill.

The following table summarizes the change in the Company’s goodwill by segment:

The Company completed the acquisitions detailed below to expand product offerings, add critical technology and enter new markets. Control was obtained through the purchase of the issued and outstanding share capital pursuant to the respective share purchase agreement. Equity consideration issued in connection with the acquisitions was measured at fair value based on the Company’s quoted market price on the respective acquisition dates. All identifiable intangible assets acquired other than goodwill are finite lived. Refer to Note 7 for the related amortization period.

Acquisition-related costs incurred in connection with the 2025 acquisitions were $4.3 million for the year ended December 31, 2025, and were expensed as incurred. These costs are included in General and administrative expense in the accompanying consolidated statements of operations. The accounts receivable acquired across the Company’s 2025 acquisitions were not material, either individually or in the aggregate. Accordingly, the Company has not separately disclosed the gross contractual amounts receivable or the best estimate of contractual cash flows not expected to be collected. The unaudited pro forma financial information reflected below includes adjustments that are directly attributable to the acquisitions and factually supportable, including incremental amortization of acquired intangible assets, incremental depreciation related to fair value adjustments of property and equipment, and the elimination of acquisition-related costs that are not expected to recur.

Apeiro Motion Ltd.

On August 31, 2025, the Company completed the acquisition of Apeiro Motion Ltd. (Apeiro), pursuant to the Share Purchase Agreement (the “Apeiro Acquisition Agreement”), by and among the Company, Apeiro, and the Apeiro shareholders. Pursuant to the Apeiro Acquisition Agreement, the Company acquired 100% of the issued and outstanding share capital of Apeiro. The following table summarizes the consideration paid for Apeiro and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

The intangible assets acquired include $4.0 million allocated to developed technology. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. During the three months ended December 31, 2025, the Company recorded measurement period adjustments related to purchase price working capital adjustments, which resulted in an increase to goodwill of $75 thousand. These adjustments reflect additional information obtained about facts and circumstances that existed as of the acquisition date. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets, including goodwill, and (3) other changes to assets and liabilities.

Apeiro generated revenue of $6.6 million, and a net loss of $122 thousand, since the acquisition date that is recognized in the Consolidated Statement of Operations for the period ended December 31, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Apeiro had occurred on January 1, 2024. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable to the business combinations included in the unaudited reported pro forma revenue and earnings.

Smart Precision Optics S.P.O Ltd.

On October 3, 2025, the Company completed the acquisition of Smart Precision Optics S.P.O ltd. (“SPO”)., a company organized under the laws of the State of Israel, pursuant to (i) the SPO Share Purchase Agreement, dated August 20, 2025, by and among the Company, SPO, Shamir Investment Entrepreneurship ACS LTD., an agricultural cooperative society organized under the laws of the State of Israel (“Shamir”) and (ii) the Side Letter, dated August 20, 2025, by and among the Company, SPO and Shamir (the “Side Letter”) (collectively the “SPO Acquisition Agreement”). In accordance with the terms of the SPO Acquisition Agreement, the Company acquired (i)51% of the issued and outstanding share capital of SPO for an aggregate purchase amount of approximately $6.0 million and (ii)51% of the outstanding capital notes of SPO for an aggregate purchase amount of approximately $0.30 plus the Contingent Consideration, as defined below. The Company allocated the aggregate purchase amount to the purchase consideration and capital notes based on their relative fair value, resulting in $2.8 million in purchase consideration and $3.2 million in capital notes acquired by the Company, which have been eliminated in consolidation.

Additionally, if SPO obtains or receives Qualified Grants (as defined in the SPO Acquisition Agreement) between October 3, 2025 and December 31, 2026, the Company shall be required to make payment to Shamir in an amount equal to 10% of the amount of any such Qualified Grants received by SPO, up to an aggregate amount of approximately $11.9 million of Qualified Grants received (“Contingent Consideration”) (i.e. the maximum Contingent Consideration paid by the Company to Shamir shall be approximately $1.2 million). The Contingent Consideration shall be paid in cash, provided however, that the Company may choose, in its sole discretion, to pay the Contingent Consideration in shares of the Company’s Common Stock.

Subject to the terms of the SPO Acquisition Agreement, Shamir has the right (the “First Put Option”) to cause the Company to purchase all (but not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir, which acquisition shall be accompanied with sale for no additional consideration of any and all capital notes of SPO then held by Shamir (such shares and capital notes, jointly, the “Put Shares”), at a purchase price of approximately $220.69 per share. Shamir may exercise the First Put Option during the period commencing on October 15, 2025 and ending June 30, 2026.

Subject to the terms of the SPO Acquisition Agreement, to the extent that the First Put Option was not exercised, Shamir has the right to appoint a third-party evaluator to determine SPO’s valuation and after receiving such valuation, Shamir may offer to the Company to purchase the Put Shares at such evaluated price (the “Second Put Option” together with the First Put Option, the “SPO Options”). If the Company declines, the Company may make a counter-offer to purchase the Put Shares. If Shamir rejects the Company’s counter-offer, Shamir can initiate a “Forced Sale” process to sell 100% of SPO to a third party during a limited period ofnine months. Alternatively, if no Forced Sale occurs, Shamir can request an updated evaluation for SPO and either sell to the Company pursuant to Company’s offer, or buy all of the Company’s securities in SPO at the updated valuation. Shamir may exercise the foregoing during the period commencing on the second anniversary of the closing of the SPO Acquisition and ending June 30, 2029. The consideration payable by the Company to Shamir upon the consummation of either the First Put Option or the Second Put Option shall be paid in cash, provided however, that the Company may choose, in its sole discretion, to pay Shamir in Common Stock.

Additionally, subject to the terms of the SPO Acquisition Agreement, in the event that the Second Put Option is exhausted without being exercised, the Company shall have the right (the “Call Option”) to require Shamir to sell all (and not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir in consideration for the amount reflecting SPO’s valuation on a cash free-debt free basis of approximately $59.5 million, which acquisition shall be accompanied with sale for no additional consideration of any and all capital notes of SPO then held by Shamir, payable in cash. The Company may exercise the Call Option during the period commencing on the end of the Second Put Option Period and ending 18 months later.

The following table summarizes the consideration paid for SPO and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired, liabilities assumed and noncontrolling interest retained by SPO shareholders at the acquisition date.

The noncontrolling interest was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of SPO, using the purchase consideration paid for the Company’s 51% ownership as an observable input. The implied equity value was extrapolated to a 100% basis, and the 49% noncontrolling interest ownership percentage was applied to determine the fair value of the noncontrolling interest. The noncontrolling interest, inclusive of the embedded First Put Option, is reflected within redeemable noncontrolling interest in the consolidated balance sheets.

The intangible assets acquired include $3.2 million allocated to customer relationships. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as customer relationships, as well as goodwill, and (3) other changes to assets and liabilities.

SPO generated revenue of $430 thousand, and a net loss of $2.5 million, since the acquisition date that is recorded in the Consolidated Statement of Operations for the period ended December 31, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of SPO had occurred on January 1, 2024. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro forma revenue and earnings.

Insight Intelligent Sensors Ltd.

On October 27, 2025, the Company completed the acquisition of Insight Intelligent Sensors Ltd. (“Insight”), pursuant to the Share Purchase Agreement (the “Insight Acquisition Agreement”), by and among the Company, Insight, and the Insight shareholders. Pursuant to the Insight Acquisition Agreement, the Company acquired 51% of the issued and outstanding share capital of Insight, representing a controlling interest. The following table summarizes the consideration paid for Insight and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired, liabilities assumed and noncontrolling interest retained by Insight shareholders at the acquisition date.

The noncontrolling interest was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of Insight, using the purchase consideration paid for the Company’s 51% ownership interest as an observable input. The implied equity value was extrapolated to a 100% basis, and the 49% noncontrolling interest ownership percentage was applied to determine the fair value of the noncontrolling interest.

The intangible assets acquired include $2.4 million allocated to developed technology. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

Insight did not generate revenues during the period ended December 31, 2025. Insight generated a net loss of $202 thousand since the acquisition date that is recorded in the Consolidated Statement of Operations for the period ended December 31, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Insight had occurred on January 1, 2024. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported pro forma revenue and earnings.

4M Defense Ltd.,

On October 29, 2025, the Company completed the acquisition of a controlling interest in 4M Defense Ltd. (“4M”), a company registered in the State of Israel, pursuant to the Share Purchase Agreement, dated October 24, 2025 (the “4M Acquisition Agreement”), by and among the Company, 4M, Chirokka Holding Ltd., a company registered in the State of Israel (“HoldCo”), and the 4M shareholders. HoldCo held 100% of the share capital of 4M. In accordance with the terms of the 4M Acquisition Agreement, the Company acquired 70% of the issued and outstanding share capital of HoldCo (“HoldCo Shares”) for the purchase price of (i) $2.4 million in cash and (ii)801,068 shares of Common Stock, in exchange for the HoldCo Shares (the “4M Acquisition”). Pursuant to the 4M Acquisition Agreement, the 4M shareholders have agreed, subject to certain customary exceptions, not to sell, transfer or dispose of 480,641 shares of Common Stock for a period of twelve (12) months after the closing of the 4M Acquisition, at which time they shall be permitted to sell, transfer or otherwise dispose of, on a calendar quarterly basis, up to twelve and one-half percent (12.5%) of such shares of Common Stock, until all such shares have been released from the lock-up restrictions.

Pursuant to the 4M Acquisition Agreement, between January 1, 2026 and December 31, 2027, (i) the Company shall have an irrevocable right, exercisable in whole (and not in part), at the Company’s sole discretion to acquire 100% of the remaining share capital in HoldCo following the closing of the 4M Acquisition (the “Call Option”) and (ii) the 4M shareholders shall have an irrevocable right, exercisable in whole (and not in part), at the 4M shareholders sole discretion, to request the Company to acquire from the 4M shareholders 100% of the remaining share capital in HoldCo following the closing of the Acquisition (the “Put Option”). The applicable consideration payable by the Company to the 4M shareholders upon the consummation of either the Call Option or the Put Option shall be paid in cash, provided however, that the Company may choose, in its sole discretion, to pay Nir in Common Stock. The noncontrolling interest, inclusive of the embedded Call Option and Put Option, is reflected within redeemable noncontrolling interest in the consolidated balance sheets.

The following table summarizes the consideration paid for 4M and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired, liabilities assumed and noncontrolling interest retained by 4M shareholders at the acquisition date.

The noncontrolling interest was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of 4M, using the purchase consideration paid for the Company’s 70% ownership interest as an observable input. The implied equity value was derived by extrapolating the purchase consideration to a 100% basis and applying the 30% noncontrolling interest ownership percentage.

The intangible assets acquired include $0.9 million allocated to developed technology, $1.4 million allocated to customer relationships, and $137 thousand allocated to backlog. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

4M generated revenue of $2.2 million, and net income of $217 thousand, since the acquisition date that is recorded in the Consolidated Statement of Operations for the period ended December 31, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of 4M had occurred on January 1, 2024. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro forma revenue and earnings.

Sentry CS Ltd.

On November 17, 2025, the Company completed the acquisition of Sentry CS Ltd., (“Sentrycs”) pursuant to the Share Purchase Agreement (the “Sentrycs Acquisition Agreement”), entered into by and among the Company, Sentrycs, a company organized under the laws of the State of Israel, Sentrycs’s shareholders, (the “Sentrycs Major Shareholders”), and Sagitta Holdco SARL, a private limited liability company organized under the laws of the Grand Duchy of Luxembourg. The Company acquired 100% of the issued and outstanding share capital of Sentrycs for an aggregate purchase price of $224.6 million consisting of $134.1 million in cash and shares of the Company’s common stock valued at $90.6 million. This aggregate purchase price reflects the working capital adjustments made at closing pursuant to the Sentrycs Acquisition Agreement.

The Sentrycs Acquisition Agreement detailed that the purchase price consideration of $224.6 million would be paid over four payment dates, with the first payment made upon closing at November 17, 2025. The Company paid $149.6 million on November 17, 2025, consisting of $120.2 million in cash and 4,096,700 shares of Common Stock valued at $29.4 million. The remaining three payments would be made 30-days, 45-days and 120-days after closing. These three payments would total $25 million each and consist of $4.6 million in cash and shares of Common Stock valued at $20.4 million. At December 31, 2025, the Company recorded a liability for these payments in the amount of $75 million classified as Accrued Purchase Consideration on the Company’s Consolidated Balance Sheets. The Company issued 1,671,899 and 1,622,607 shares of Common Stock on January 8, 2026 and January 22, 2026, respectively, related to the second and third payments.

The Company also paid $37.5 million into an escrow account which we own (the “Ondas Escrow Amount”). On second, third and fourth payment dates, $10 million will be returned to the Company, and $2.5 million will be transferred from the Ondas Escrow Amount to the Indemnity Escrow Account. Under the Indemnity Escrow terms and agreement, the funds will be held until the one-year anniversary of the Sentrycs Acquisition Agreement, during which time the Company may make indemnification claims. Any balance remaining after 1 year will be released to the sellers.

Amounts transferred to the Indemnity Escrow Account serve as security for the sellers’ indemnification obligations. Under the Indemnity Escrow Agreement, these funds will be held until the one-year anniversary of the Sentrycs Acquisition Agreement. During this period, the Company may assert indemnification claims in accordance with the agreement. Any balance remaining in the Indemnity Escrow Account after the one-year period, net of any amounts reserved for outstanding claims, will be released to the sellers. The Ondas Escrow Amount is included in Restricted cash on the Company’s Consolidated Balance Sheets, as the scheduled releases to the Company are considered short-term in nature. Amounts transferred to the Indemnity Escrow Account are recognized as part of the purchase consideration.

The following table summarizes the consideration paid for Sentrycs and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

The intangible assets acquired include $66 million allocated to developed technology, $3.7 million allocated to trademarks, and $2.7 million allocated to customer relationships. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

Sentrycs generated revenue of $10.7 million, and net income of $1.8 million, since the acquisition date that is recognized in the Consolidated Statement of Operations for the period ended December 31, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Sentrycs had occurred on January 1, 2024. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro forma revenue and earnings.

Robo-Team Holdings Ltd.

On December 17, 2025, the Company completed the acquisition of Robo-Team Holdings Ltd. (“Robo-Team”), pursuant to the Share Purchase Agreement, dated November 23, 2025 (the “Robo-Team Acquisition Agreement”), by and among the Company, Robo-Team, and the Robo-Team shareholders. Pursuant to the Robo-Team Acquisition Agreement, the Company acquired 100% of the issued and outstanding share capital of Robo-Team. The following table summarizes the consideration paid for Robo-Team and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

The intangible assets acquired include $12.7 million allocated to developed technology, $14.6 million allocated to customer relationships, and $3.5 million allocated to non-compete agreements. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

Robo-Team generated revenue of $7 million, and net income of $3.6 million, since the acquisition date that is recorded in the Consolidated Statement of Operations for the period ended December 31, 2025. The following unaudited pro forma information presents the Company’s results of operations as if the acquisition of Robo-Team had occurred on January 1, 2024. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2024 or what the Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro forma revenue and earnings.

Goodwill Impairment

The Company reviews goodwill for impairment annually on December 31, and whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company performed a qualitative analysis on December 31, 2025 concluding there were no indications of impairment with respect to the goodwill recorded at December 31, 2025.

In December 2024, the Company bypassed the qualitative analysis and proceeded directly to a quantitative analysis with respect to the goodwill recorded at December 31, 2024. The Company engaged a third-party service provider to carry out a valuation of the OAS reporting unit. Using a discounted cash flow model and market approach model with updated forecasts for revenue and cash flows, the Company determined that the fair value of the OAS reporting unit was higher than the carrying value as of December 31, 2024, and no impairment was necessary.

NOTE 7 – INTANGIBLE ASSETS

The components of intangible assets, all of which are finite-lived, were as follows:

Amortization expense for the year ended December 31, 2025 and 2024 was $5.8 million and $4.2 million, respectively. Other intangible assets represent patents, licenses, software, backlog and other marketing-related assets. During the year ended December 31, 2025, the carrying value and accumulated amortization of fully amortized intangibles were derecognized and totaled $1.2 million. Expected amortization expense for intangible assets subject to amortization as of December 31, 2025 is as follows:

NOTE 8 – LONG-TERM EQUITY INVESTMENTS

On August 12, 2025, the Company purchased a non-controlling interest in Rift Dynamics AS (“Rift”), a Norway-based defense technology company specializing in affordable, mass-producible combat drone systems, for the aggregate price of $587 thousand, representing approximately 10% ownership in Rift.

On November 20, 2025, the Company purchased Series B-3 Preferred Stock in Performance Drone Works (“PDW”), a veteran-led defense-technology engineer and manufacturer of advanced robotics for mission-critical national security missions, for the aggregate price of $35 million, representing approximately 3% ownership in PDW. The Series B-3 Preferred Stock is convertible into PDW common stock at the option of the holder and ranks senior to PDW’s common stock with respect to liquidation and dividend rights. The investment is subject to customary transfer restrictions and provides the Company with certain investor rights, including information rights and the right to appoint a non-voting observer to PDW’s board of directors, subject to specified conditions.

These long-term equity investments consist of equity investments in private companies through common and preferred stock. The Company accounts for these equity securities under the measurement alternative because they do not have a readily determinable fair value and do not qualify for the equity method of accounting. Accordingly, the investments are carried at cost, less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company concluded that it does not have significant influence over either of the investees. Amounts are classified as a long-term equity investment on our Consolidated Balance Sheets. Dividends or other distributions, if and when declared by the investee, are recognized by the Company as investment income upon receipt with adjustments recognized in Other (expense) income, net on our Consolidated Statements of Operations. The Company has determined that the equity investments do not have a readily determinable fair value and elected the measurement alternative. Therefore, the equity investments’ carrying amount will be adjusted to fair value at the time of the next observable price change for the identical or similar investment of the same issuer or when an impairment is recognized. Each reporting period, the Company performs a qualitative assessment to evaluate whether the investment is impaired. The assessment includes a review of recent operating results and trends, recent transactions involving the investee securities, and other publicly available data. If the investment is impaired, the Company writes it down to its estimated fair value. No impairment charges were recognized for the year ended December 31, 2024 or 2025. As of December 31, 2025 the long-term equity investments had a carrying value of $35.6 million.

NOTE 9 – LEASES

The Company has operating leases for office space, warehouses, and certain equipment, primarily automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for up to 10 years. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect inflation and/or changes in other indexes.

Lease Costs

Lease Positions as of December 31, 2025 and 2024

ROU lease assets are recorded in Other assets, the current portion of lease liabilities for our operating leases are recorded in Accrued expenses and other liabilities, and thelong-term portion of ourlease liabilities for our operating leases are recorded in Other long-term liabilities on the Consolidated Balance Sheets as follows:

Other Leases Information

Undiscounted Leases Cash Flows

Future lease payments included in the measurement of lease liabilities on the Consolidated Balance Sheets as of December 31, 2025, for the following five years and thereafter as follows (in thousands):

NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

NOTE 11 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

In 2025, we raised $829.52 million of net proceeds from the sale of common stock and warrants, $30.84 million from the exercise of stock options and warrants, $1.16 million from the exercise of warrants in OAS, and $923 thousand from issuance of convertible notes in Ondas Networks (collectively referred to as “the 2025 Offerings”).

Ondas Inc. Convertible Notes Payable

2017 Convertible Promissory Note

On September 14, 2017, the Company and an individual entered into a convertible promissory note with unilateral conversion preferences by the individual (the “2017 Convertible Promissory Note”). On July 11, 2018, the Company’s Board approved certain changes to the 2017 Convertible Promissory Note wherein the conversion feature was changed from unilateral to mutual between the individual and the Company. The note matures on September 14, 2027.

The Company may at any time on or after a qualified public offering convert any unpaid repayment at the IPO conversion price. The conversion price is the lesser of the (i) price per share of Common Stock sold in the Qualified Public Offering, discounted by 20%, and (ii) the price per share of Common Stock based on a pre-money Company valuation of $50 million on a Fully Diluted Basis.

As of December 31, 2025 and 2024, the total outstanding balance of the 2017 Convertible Promissory Note was $300 thousand and is included in Notes payable, less current portion on the Consolidated Balance Sheets. The maturity date of the 2017 Convertible Promissory Note is based on the payment of 0.6% of quarterly gross revenue until 1.5 times the amount of the Note is paid. Accrued interest as of December 31, 2025 and 2024 was $27 thousand and $20 thousand, respectively. Interest expense for both years ended December 31, 2025 and 2024 was $15 thousand.

2022 Convertible Promissory Notes

On October 28, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors pursuant to which we issued convertible notes (“2022 Convertible Promissory Notes”) in the principal amount of $34.5 million, with a debt discount of $4.5 million and issuance costs of $2.3 million, resulting in net proceeds of approximately $27.7 million. The Company used the net proceeds of the 2022 Convertible Promissory Notes for general corporate purposes, including funding capital, expenditures, or the expansion of its business and providing working capital. The 2022 Convertible Promissory Note was amended on January 20, 2023 and July 21, 2023.

The 2022 Convertible Promissory Notes, as amended, bear interest at the rate of 3% per annum and were payable in monthly installments beginning on November 1, 2022, through the maturity date of April 28, 2025 (each such date, an “Installment Date”). On each Installment Date, we were subject to make monthly payments by converting the applicable “Installment Amount”, defined as (i) for all Installment Dates other than the maturity date, the lesser of (x) the Holder Pro Rata Amount of $1,437,500 and (y) the principal amount then outstanding under the Note; and (ii) on the maturity date, the principal amount then outstanding under the Note, into shares of our Common Stock (an “Installment Conversion”), subject to satisfaction of certain equity conditions, including a minimum $1.50 share price, $500,000 minimum daily volume, and maintaining continued Nasdaq listing requirements among other conditions. If these conditions were not met, installments could be requested in cash. At each Installment Date the note holder could defer some or all of the amount due until the subsequent Installment Date. In between Installment Dates, the note holder also had the option to accelerate certain portions of principal due, up to eight times the minimum Installment Amount of $1.4 million. At each Installment Date the price used to exchange outstanding notes into Common Stock was based on the lower of (A)92% of the lowest VWAP of the respective previous five trading days; and (B) the Floor Price ($0.32 as of December 31, 2024). The maximum conversion price is $1.50 per share.

For the years ended December 31, 2025 and 2024, we issued 8,956,671 and 21,284,556 common shares as a result of Installment Conversions, respectively. As of December 31, 2025, the 2022 Convertible Promissory Notes have been repaid in full, and the remaining unamortized debt discount and issuance costs of $34 thousand was taken to additional paid in capital.

2023 Additional Notes

On July 24, 2023, pursuant to the terms of the Purchase Agreement, as amended, an Investor elected to purchase 3% Series B-2 Senior Convertible Notes in the aggregate original principal amount of $11.5 million (the “2023 Additional Notes”), which 2023 Additional Notes are convertible into shares of Common Stock under certain conditions more fully described in the 2022 Convertible Promissory Notes discussed above. The 2023 Additional Notes have an original issue discount of approximately thirteen percent (13%) resulting in gross proceeds to the Company of $10.0 million. The Company used the net proceeds for general corporate purposes, which included funding capital expenditures and working capital. The 2023 Additional Notes have a maturity date of July 25, 2025. The 2023 Additional Notes were issued pursuant to the second supplemental indenture, dated as of July 25, 2023, between the Company and the Trustee (the “Second Supplemental Indenture,” and together with the Base Indenture, the “Second Indenture”). The Second Supplemental Indenture supplements the Base Indenture. The Second Indenture has been qualified under the Trust Indenture Act of 1939, and the terms of the Additional Notes include those set forth in the Second Indenture and those made part of the Indenture by reference to the Trust Indenture Act.

The 2023 Additional Notes bear interest at the rate of 3% per annum. The 2023 Additional Notes are payable in monthly installments beginning on August 1, 2023 through the maturity date of July 24, 2025 (each such date, a “2023 Installment Date”). On each 2023 Installment Date, we will make monthly payments by converting the applicable 2023 Installment Amount (as defined above under the 2022 Convertible Promissory Notes) into shares of our Common Stock (a “2023 Installment Conversion”), subject to satisfaction of certain equity conditions, including a minimum $1.50 share price, $500,000 minimum daily volume, and maintaining continued Nasdaq listing requirements among other conditions. If these conditions are not met, installments can be requested in cash. At each 2023 Installment Date the note holder may defer some or all of the amount due until the subsequent 2023 Installment Date. In between 2023 Installment Dates, the note holder also has the option to accelerate certain portions of principal due. At each 2023 Installment Date the price used to exchange outstanding notes into Common Stock is based on the greater of (x) the Floor Price ($0.40 as of December 31, 2024) and (y)92% of the lowest VWAP of the prospective five trading days. The maximum conversion price is $1.45 per share. For the years ended December 31, 2025 and 2024, we made no cash payments. For the years ended December 31, 2025 and 2024, we issued 15,636,297 and 0 common shares as a result of 2023 Installment Conversions, respectively.

As of December 31, 2025, the 2023 Additional Notes have been repaid in full, and the remaining unamortized debt discount and issuance costs of $174 thousand was taken to additional paid in capital.

2024 Additional Notes

On December 3, 17, and 31, 2024, pursuant to the terms of the Purchase Agreement, as amended, an Investor elected to purchase 3% Series B-2 Senior Convertible Notes in the aggregate original principal amount of $4.1 million, $11.5 million, and $18.9 million, respectively, (the “2024 Additional Notes,” together with the 2022 Convertible Promissory Notes and 2023 Additional Notes, the “Notes”), which 2024 Additional Notes are convertible into shares of Common Stock under certain conditions more fully described in the 2022 Convertible Promissory Notes discussed above. The 2024 Additional Notes have an original issue discount of approximately thirteen percent (13%) resulting in net proceeds to the Company of $30.1 million. The Company used the net proceeds for general corporate purposes and to support the growth of our drone business at OAS. The 2024 Additional Notes have a maturity date of December 3, 17, and 31, 2026, respectively. The 2024 Additional Notes were issued pursuant to an indenture entered into by and between the Company and the Trustee, dated as of December 3, 2024 (the “2024 Base Indenture”). The 2024 Base Indenture was supplemented by three supplemental indentures (the “2024 Indentures”, dated as of December 3, 17 and 31, 2024, between the Company and the Trustee. The 2024 Indentures have been qualified under the Trust Indenture Act of 1939, and the terms of the 2024 Additional Notes include those set forth in the 2024 Indentures and those made part of the 2024 Indentures by reference to the Trust Indenture Act.

The 2024 Additional Notes bear interest at the rate of 3% per annum. The 2024 Additional Notes are payable in monthly installments beginning on January 1, 2025, through the maturity date of December 3, 17, and 31, 2026, respectively, (each such date, a “2024 Installment Date”). On each 2024 Installment Date, we will make monthly payments by converting the applicable 2024 Installment Amount (as defined above under the 2022 Convertible Promissory Notes) into shares of our Common Stock (a “2024 Installment Conversion”), subject to satisfaction of certain equity conditions, including a minimum $1.50 share price, $500,000 minimum daily volume, and maintaining continued Nasdaq listing requirements among other conditions. If these conditions are not met, installments can be requested in cash. At each 2024 Installment Date the note holder may defer some or all of the amount due until the subsequent 2024 Installment Date. In between 2024 Installment Dates, the note holder also has the option to accelerate certain portions of principal due. At each 2024 Installment Date the price used to exchange outstanding notes into Common Stock is based on the greater of (x) the Floor Price ($0.17, $0.20, and $0.50, respectively, as of December 31, 2024) and (y)92% of the lowest VWAP of the prospective five trading days. The maximum conversion price is $0.80, $0.88, and $1.60 per share, respectively. For the years ended December 31, 2025 and 2024, we made no cash payments. For the years ended December 31, 2025 and 2024, we issued 49,264,250 and 0 common shares as a result of 2024 Installment Conversions, respectively.

As of December 31, 2025, the 2024 Additional Notes have been repaid in full, and the remaining unamortized debt discount and issuance costs of $2.79 million was taken to additional paid in capital.

As of December 31, 2024, the total outstanding principal on the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes was $44.6 million, net of unamortized debt discount of $4.8 million and unamortized issuance costs of $1.8 million. Accrued interest as of December 31, 2025 and December 31, 2024 was $0 and $1.6 million, respectively, and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

For the year ended December 31, 2025, we recognized interest expense of $495 thousand and amortization expense of $3.6 million related to the debt discount and issuance costs for the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes. For the year ended December 31, 2024, we recognized interest expense of $933 thousand and amortization expense of $1.9 million related to the debt discount and issuance costs for the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes.

SPO Convertible Capital Notes

In connection with the acquisition of SPO (refer to Note 6), the Company assumed outstanding convertible capital notes issued by SPO (the “SPO Convertible Capital Notes”). Immediately prior to the acquisition, the SPO Convertible Capital Notes were held entirely by the existing shareholders of SPO. Upon acquisition,51% of the outstanding SPO Convertible Capital Notes, corresponding to the Company’s ownership interest, were considered intercompany balances and therefore eliminated in consolidation. The remaining 49% of the SPO Convertible Capital Notes, held by noncontrolling interest holders, remain outstanding and are reflected in the Company’s Consolidated Balance Sheets.

Concurrent with the acquisition, the SPO Convertible Capital Notes were amended to include the following terms: (i) any repayment of the SPO Convertible Capital Notes is subject to prior written consent of the Company, as the majority shareholder of SPO, (ii) the Company, as the majority shareholder of SPO, has the right, at its sole discretion, to require conversion of any or all SPO Convertible Capital Notes into common shares of SPO after a minimum holding period of five years from the original issuance date of the SPO Convertible Capital Notes, but no earlier than January 1, 2027, at a conversion price reflecting the fair market value of SPO’s common shares as determined by SPO’s board of directors at the relevant time and (iii) each holder of the SPO Convertible Capital Notes may assign all or a portion of its SPO Convertible Capital Notes solely to a transferee of SPO common shares on a pro rata basis, in proportion to the number of shares transferred.

The SPO Convertible Capital Notes do not bear interest and do not have a stated maturity date. The SPO Convertible Capital Notes were accounted for as part of the business combination in accordance with ASC 805, Business Combinations, and were initially measured at fair value as of the acquisition date. Because the SPO Convertible Capital Notes are non-interest-bearing and their settlement is contingent upon the timing of future conversion or repayment, the Company recorded the noncontrolling interest portion of the SPO Convertible Capital Notes at a discount to face value.

Subsequent to initial recognition, the outstanding portion of the SPO Convertible Capital Notes is accounted for as a liability and measured at amortized cost. The Company accretes the discount to the SPO Convertible Capital Notes’ face value using the effective interest method, with the resulting accretion recognized as Interest expense in the Company’s Consolidated Statements of Operations.

As of December 31, 2025, the total outstanding balance of the SPO Convertible Capital Notes subject to repayment or conversion by noncontrolling interest holders was $3.5 million. For the year ended December 31, 2025, the Company recognized $329 thousand of accretion, which is included in Interest expense on the Consolidated Statements of Operations.

Ondas Networks Convertible Notes

On July 8, 2024 and July 23, 2024, Charles & Potomac Capital, LLC, (“C&P”), an entity affiliated with Joseph Popolo, a former director of the Company, elected to purchase Convertible Notes in the aggregate original principal amount of $700 thousand and $800 thousand, respectively, (the “July Networks Convertible Notes”). The July Networks Convertible Notes are convertible into common stock of Ondas Networks at $0.00001 par value per share (“Networks Common Stock”) or Preferred Stock under certain conditions. The Company used the net proceeds for general corporate purposes, which includes funding capital expenditures and working capital. The July Networks Convertible Notes bear interest at the rate of 6% per annum.

On November 13, 2024, pursuant to the Securities Purchase Agreement, dated November 13, 2024, by and between Networks and a private investor group (the “November Networks SPA”), multiple investors elected to purchase Convertible Notes in the aggregate original principal amount of $2.1 million (the “November Networks Convertible Notes”), of which $1 million was purchased by C&P. The November Networks Convertible Notes are convertible into shares of Networks Common Stock or preferred stock of Ondas Networks at $0.00001 par value per share (“Networks Preferred Stock”) under certain conditions. The Company used the net proceeds for general corporate purposes, which includes funding capital expenditures and working capital.

On January 15, 2025, pursuant to the Securities Purchase Agreement, dated January 15, 2025, by and between Networks, the Company, and a private investor group(the “January Networks SPA,” together with the November Networks SPA, the “Networks SPA”), multiple investors elected to purchase Convertible Notes in the aggregate original principal amount of $2.9 million (the “January 2025 Networks Convertible Notes,” together with the July Networks Convertible Notes and November Networks Convertible Notes, the “Ondas Networks Convertible Notes”), of which $2 million was from the Company. The November Networks Convertible Notes and January 2025 Networks Convertible Notes will (i) bear an interest rate of 10% per annum, (ii) have an amended maturity date of December 31, 2025, (iii) be secured by all assets of Networks, provided however such secured obligation shall be subordinate to that certain secured note, dated September 3, 2024, by and between Networks and C&P, and (iv) at the option of C&P be convertible into equity securities of Networks upon the closing (a) a Corporate Transaction (as defined in the November Networks Convertible Notes and January 2025 Networks Convertible Notes) or (b) a subsequent offering of securities of Networks. The $2 million in Convertible Notes held by the Company has been eliminated in the consolidated financials.

On November 13, 2024 and January 15, 2025, in connection with the November Networks Convertible Notes and January 2025 Networks Convertible Notes, respectively, Networks issued the investors warrants (“Networks Warrants”) to purchase $2.1 million and $2.9 million, respectively, in shares of Networks Preferred Stock at an exercise price of $20.65 per share, of which $2 million is to the Company and has been eliminated in the consolidated financials. The number of warrants exercisable under the Networks SPA is calculated by $5 million divided by the Conversion Price, which is the amount equal to the price per share of the most senior series of Networks Preferred Stock issued to investors in Networks’ next equity financing date, or if none, then $41.3104. The warrants are exercisable commencing November 13, 2024 through November 13, 2029 and January 15, 2025 through January 15, 2030, respectively. The Company engaged a third-party service provider to carry out an appraisal of the warrants, who ran a Black-Scholes Model to determine the fair value of the warrants as of November 13, 2024 and January 15, 2025, which were $1.2 million and $549 thousand, respectively. The initial valuation was assigned to the November Networks Convertible Notes and January 2025 Networks Convertible Notes and the warrants based on their relative fair values, resulting in a total relative fair value of $1.1 million for the warrants, which was recorded as debt discount.

In the event Ondas Networks consummates an additional equity financing prior to the maturity date, the principal balance and unpaid accrued interest on the Ondas Networks Convertible Notes will be convertible at the option of the Investor into conversion shares upon closing of the next round of equity financing.

On July 3, 2025, the Company amended the Ondas Networks Convertible Notes to extend the maturity date to December 31, 2025. The amendment was accounted for as a debt modification under ASC 470-50.

As of December 31, 2025, the total outstanding principal on the Ondas Networks Convertible Notes was $4.5 million. As of December 31, 2024, the total outstanding principal on the July Networks Convertible Notes and November Networks Convertible Notes was $2.9 million, net of an unamortized debt discount of $651 thousand, and unamortized issuance costs of $44 thousand. Accrued interest as of December 31, 2025 and December 31, 2024 was $456 thousand and $41 thousand, respectively, and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2025, we recognized interest expense of $415 thousand and amortization expense of $1.1 million to debt discount and issuance costs. For the year ended December 31, 2024, we recognized interest expense of $41 thousand and amortization expense of $132 thousand related to debt discount and issuance costs.

On January 16, 2026, Networks consummated an additional equity financing round. Pursuant to the Securities Purchase Agreement, the principal balance and accrued interest on the Ondas Networks Convertible Notes were converted into shares of Networks Preferred Stock. Refer to Note 19, Networks Investment.

OAS Convertible Notes

In October and December 2024, multiple investors (collectively, the “Holders”) elected to purchase Convertible Notes in the aggregate original principal amount of $5.2 million, (the “OAS Convertible Notes”), of which $2 million was purchased by C&P and $1 million was purchased by Privet Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company and OAS. The OAS Convertible Notes are convertible into shares of OAS Common Stock, par value per share $0.0001 (the “OAS Common Stock”), or Preferred Stock under certain conditions. The Company used the net proceeds for general corporate purposes, which includes funding capital expenditures and working capital. The OAS Convertible Notes bear interest at the rate of 5% per annum. On September 29, 2025, the Company amended the OAS Convertible Notes to extend the maturity date from September 30, 2025, to January 1, 2026. The amendment was accounted for as a debt modification under ASC 470-50.

On December 17, 2025, the Company and OAS entered into agreements with the Holders of the OAS Convertible Notes to convert the principal and accrued interest outstanding as of November 30, 2025 into OAS Common Stock under the original conversion terms of the OAS Convertible Notes, at a conversion price of $0.7189, which was equal to the quotient resulting from dividing (x) the Valuation Cap of $65 million by (y) the fully diluted shares outstanding as of November 30, 2025.

At each Holder’s election, the Holder could elect to defer the conversion to January 5, 2026, as the Company and the Holder may agree. Seven of the eleven Holders that elected to participate in the Exchange, elected to defer their closing to January 5, 2026, (the “January Converters”). For the year ended December 31, 2025, OAS converted $3.3 million and $173 thousand of principal and accrued interest, respectively, into OAS Common Stock for four of the eleven Holders, including C&P, (the “December Converters”). Immediately following the conversion, the OAS Common Stock was exchanged for Common Stock (Refer to Note 12, OAS Exchange, for further details). OAS made cash payments of $33 thousand to the December Converters, representing accrued interest on the OAS Convertible Notes from December 1 to December 16, 2025.

As of December 31, 2025, the remaining total outstanding principal on the OAS Convertible Notes was $1.9 million. As of December 31, 2024, the total outstanding principal on the OAS Convertible Notes was $5.2 million, net of unamortized issuance costs of $37 thousand. Accrued interest as of December 31, 2025 and 2024 was $110 thousand and $37 thousand, respectively, and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2025, we recognized interest expense of $279 thousand and amortization expense of $37 thousand related to the issuance costs. For the year ended December 31, 2024, we recognized interest expense of $37 thousand and amortization expense of $7 thousand related to the issuance costs. Interest expense and amortization expense related to issuance costs are included in Interest expense on the Consolidated Statements of Operations.

On January 5, 2026, OAS converted $1.2 million and $100 thousand of principal and accrued interest, respectively, into common shares of OAS for the January Converters, which were immediately exchanged for Ondas Inc. Common Stock. Although the conversion of the OAS Convertible Notes for January Converters was agreed upon prior to December 31, 2025, the debt remained outstanding at year-end, because it had not been legally settled until January 5, 2026.

Ondas Networks Secured Note

On September 3, 2024, Networks entered into a Security Note Agreement (the “Security Agreement”) with C&P, in which, Networks may draw, and C&P shall loan Networks, up to $1.5 million (the “Networks Secured Loan”). Pursuant to the Security Agreement, Networks issued C&P a secured note in the amount of $1.5 million, which amount may be increased or decreased by the mutual written agreement of the parties thereto (the “Networks Secured Note”). The Networks Secured Note (i) bears interest at a rate of 8% per annum, (ii) has an amended maturity date of December 31, 2025, and (iii) is secured by all assets of Networks. As of December 31, 2024, Networks has drawn a total of $1.5 million on the Networks Secured Note.

On September 3, 2024 and October 7, 2024, pursuant to the C&P Security Agreement, Networks issued C&P warrants to purchase $1 million and $500 thousand, respectively, in shares of Networks Preferred Stock, at an exercise price of $20.65 per share. The number of warrants exercisable under the C&P Security Agreement is calculated by $1.5 million divided by the Conversion Price, which is the amount equal to the price per share of the most senior series of Networks Preferred Stock issued to investors in Networks’ next equity financing date, or if none, then $41.3104. The warrants are exercisable commencing September 3, 2024 through September 3, 2029 and October 7, 2024 through October 7, 2029, respectively. The Company engaged a third-party service provider to carry out an appraisal of the warrants, who ran a Black-Scholes Model to determine the fair value of the warrants as of September 3, 2024 and October 7, 2024, which was $590 thousand and $295 thousand, respectively. The initial valuation was allocated to the Networks Secured Note and the warrants based on their relative fair values, resulting in a total relative fair value of $557 thousand for the warrants, which was recorded as debt discount.

As of December 31, 2025, the total outstanding principal on the Networks Secured Note was $1.5 million. As of December 31, 2024, the total outstanding principal on the Networks Secured Note was $1.3 million, net of unamortized debt discount of $201 thousand and unamortized issuance costs of $26 thousand. Accrued interest as of December 31, 2025 and 2024 was $155 thousand and $37 thousand, respectively, and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2025, we recognized interest expense of $118 thousand and amortization expense of $227 thousand related to the debt discount and issuance costs. For the year ended December 31, 2024, we recognized interest expense of $37 thousand and amortization expense of $407 thousand related to the debt discount and issuance costs. Interest expense and amortization expense related to issuance costs are included in Interest expense on the Consolidated Statements of Operations.

On January 16, 2026, the Networks Secured Note maturity date was amended to December 31, 2027.

NOTE 12 – STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Stockholders’ Equity

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

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

Form S-3

On February 2, 2024, the Company initially filed with the Securities and Exchange Commission (the SEC”) a new shelf Registration Statement on Form S-3 for up to $175 million, which represents $150 million under the prior Form S-3 and an additional $25 million (the “Form S-3”), for shares of its Common Stock; shares of its preferred stock, which the Company may issue in one or more series or classes; debt securities, which the company may issue in one or more series; warrants to purchase its Common Stock, preferred stock or debt securities; and units. The Form S-3 was declared effective by the SEC on February 15, 2024.

On April 18, 2025, the Company initially filed with the SEC a new shelf Registration Statement on Form S-3 for up to $225 million (the “2025 Form S-3”), for shares of its Common Stock; shares of its preferred stock, which the Company may issue in one or more series or classes; debt securities, which the company may issue in one or more series; warrants to purchase its Common Stock, preferred stock or debt securities; and units. The 2025 Form S-3 was declared effective by the SEC on April 25, 2025.

On September 9, 2025, the Company filed with the SEC an automatic shelf Registration Statement on Form S-3ASR (the “Form S-3ASR”) and was automatically effective upon filing on September 9, 2025, for shares of its Common Stock; shares of its preferred stock, which the Company may issue in one or more series or classes; debt securities, which the company may issue in one or more series; warrants to purchase its Common Stock, preferred stock or debt securities; and units.

Stock Issued for Convertible Debt

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

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

Sale of Common Stock and Capital Raises

June 2025 Public Offering

On June 9, 2025, the Company entered into an underwriting agreement (the “June 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as sole underwriter (the “June Underwriter”), relating to the Company’s underwritten public offering (the “June 2025 Public Offering”) of 22,400,000 shares (the “June 2025 Firm Shares”) of its Common Stock and pre-funded warrants (the “June Pre-Funded Warrants”) to purchase up to 9,600,000 shares of Common Stock (the “June Pre-Funded Warrant Shares”). Pursuant to the June 2025 Underwriting Agreement, the Company also granted the Underwriter a 30-day option (the “June Option”) to purchase an additional 4,800,000 shares of Common Stock (the “June Option Shares,” and together with the June Firm Shares, the “June Shares”).

On June 10, 2025, the June Underwriter exercised the June Option in full. The June Shares and June Pre-Funded Warrants were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the 2025 Form S-3.

On June 11, 2025, the Company closed the June 2025 Public Offering and issued the June Shares and June Pre-Funded Warrants. The public offering price for each June Share was $1.25 and the public offering price for each June Pre-Funded Warrant was $1.2499. The June Pre-Funded Warrants have an exercise price of $0.0001 per share, are immediately exercisable and will expire three years from the date of issuance. As of December 31, 2025, the June Pre-Funded Warrants have been exercised in full. The net proceeds to the Company from the June 2025 Public Offering was $42.7 million after deducting underwriting discounts and commissions and offering expenses payable by the Company.

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

The Company intends to use the net proceeds of the June 2025 Public Offering for general corporate purposes, including funding capital expenditures and providing working capital.

August 2025 Public Offering

On August 13, 2025, the Company entered into an underwriting agreement (the “August 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the several underwriters (the “August Underwriters”), relating to the Company’s underwritten public offering (the “August 2025 Public Offering”) of 46,160,000 shares (the “August Firm Shares”) of its Common Stock. Pursuant to the August 2025 Underwriting Agreement, the Company also granted the August Underwriters a 30-day option (the “August Option”) to purchase an additional 6,924,000 shares of Common Stock (the “August Option Shares,” and together with the August Firm Shares, the “August Shares”).

On August 14, 2025, the August Underwriters exercised the August Option in full, and the Company closed the August 2025 Public Offering and issued the August Shares. The August Shares were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the 2025 Form S-3. The public offering price for each August Share was $3.25. The net proceeds to the Company from the August 2025 Public Offering was $162.6 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

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

The Company intends to use the net proceeds of the August 2025 Public Offering for working capital, general corporate purposes and potential strategic transactions, including acquisitions of businesses or assets, joint ventures or investments in businesses, products or technologies.

September 2025 Offering

On September 9, 2025, the Company entered into an underwriting agreement (the “September 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the several underwriters (the “September Underwriters”), relating to the Company’s underwritten offering (the “September 2025 Offering”) of 40,000,000 shares (the “September Firm Shares”) of its Common Stock. Pursuant to the September 2025 Underwriting Agreement, the Company also granted the September Underwriters a 30-day option (the “September Option”) to purchase an additional 6,000,000 shares of Common Stock (the “September Option Shares,” and together with the September Firm Shares, the “September Shares”). On September 9, 2025, the Underwriters exercised the September Option in full.

On September 10, 2025, the Company closed the September 2025 Offering and issued the September Shares. The September Shares were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the Form S-3ASR. The offering price for each September Share was $5.00. The net proceeds to the Company from the September 2025 Offering was $217 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

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

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

October 2025 Offering

On October 6, 2025, the Company entered into an underwriting agreement (the “October 2025 Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the several underwriters (the “October Underwriters”), relating to the Company’s underwritten offering (the “October 2025 Offering”) of (i)19,560,000 shares (the “October Shares”) of Common Stock, or (ii) in lieu of Common Stock, pre-funded warrants (the “October Pre-Funded Warrants,” together with the October Shares, the “October Common Stock Equivalents”) to purchase up to 17,400,000 shares of Common Stock (the “October Pre-Funded Warrant Shares”). The October Common Stock Equivalents were accompanied by warrants (the “October Common Warrants,” together with the October Pre-Funded Warrants, the “October Warrants”) to purchase a total of 73,920,000 shares of Common Stock (the “October Common Warrant Shares,” together with the October Pre-Funded Warrant Shares, the “October Warrant Shares”).

The October Shares and October Warrants were offered, issued, and sold pursuant to a prospectus supplement and accompanying prospectus that form part of the Form S-3ASR.

On October 7, 2025, the Company closed the October 2025 Offering and issued the October Shares and October Warrants. The offering price for (i) each October Share and accompanying October Common Warrant to purchase two (2) shares of Common Stock was $11.50 and (ii) each October Pre-Funded Warrant and accompanying October Common Warrant to purchase two (2) shares of Common Stock was $11.50 (with a nominal exercise price of $0.0001 per share remaining unpaid as of the issuance date). The October Pre-Funded Warrants are immediately exercisable and will expire seven years from the date of issuance. As of December 31, 2025, the October Pre-Funded Warrants have been exercised in full.

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

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

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

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

Sale of Common Stock and Warrants in Ondas Inc.

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

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

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

Sale of Common Stock in Ondas Inc. and Warrants to Purchase Common Stock of OAS

On February 26, 2024, the Company entered into a Securities Purchase Agreement (the “Ondas Agreement”) with certain purchasers named therein (the “Ondas Purchasers”) for the purchase and sale of (i) an aggregate of 3,616,071 shares (the “Ondas Inc. Shares”) of Common Stock and (ii) warrants to purchase an aggregate of 3,616,071 shares of OAS’ common stock $0.0001 par value per share, at an exercise price of 80% of the lowest price of Common Shares of OAS issued in a subsequent financing of at least $10 million to the Company, and exercisable commencing ninety days following the date of issuance through the fifth anniversary of the date of issuance (the “OAS Warrants,” and together with the Ondas Inc. Shares, the “Ondas Offering Securities”), for gross proceeds of $3.9 million, net of offering costs (the “Ondas Offering”). The purchase price paid by the Ondas Purchasers for the Ondas Inc. Shares was $1.12 per share.

The Company engaged a third-party service provider to carry out an appraisal of the OAS Warrants, who ran a Monte Carlo simulation to determine the fair value of the OAS Warrants as of February 26, 2024, which is $1.6 million. The initial valuation was assigned to the Ondas Inc. Shares and the OAS Warrants based on their relative fair values, with the initial valuation of the Ondas Inc. Shares being $2.9 million, net of offering costs of $190 thousand, and OAS Warrants being $955 thousand.

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

Noncontrolling interest

Noncontrolling interest in OAS

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

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

Noncontrolling interest in Insight

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

Networks Equity Transactions

Warrants to Purchase Preferred Stock of Networks

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

On November 13, 2024 and January 15, 2025, in connection with the November Networks Convertible Notes and January 2025 Networks Convertible Notes, Networks issued the investors warrants to purchase $2.1 million and $2.9 million, respectively, in shares of Networks Preferred Stock, at an exercise price of $20.65 per share, of which $2 million is to the Company and has been eliminated in consolidation. (Refer to Note 11 for further details).

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

Warrants to Purchase Common Stock of Networks

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

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

Stock-Based Compensation

Warrants to Purchase Common Stock of the Company

We use the Black-Scholes-Merton option model (the “Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company. The Black-Scholes Model is an acceptable model in accordance with U.S GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the warrant.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price.

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

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

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

Equity Incentive Plans

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

In 2021, our stockholders adopted the Ondas Inc. 2021 Stock Incentive Plan (the “2021 Plan”). The purpose of the 2021 Plan is to enable the Company to attract, retain, reward, and motivate eligible individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum efforts for the growth and success of the Company, so as to strengthen the mutuality of the interests between the eligible individuals and the shareholders of the Company. The 2021 Plan provides for the issuance of awards including stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards. On November 18, 2024, stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares of the Company’s Common Stock authorized for issuance under the 2021 Plan from 8,000,000 to 11,000,000 shares. On May 12, 2025, stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares of the Company’s Common Stock authorized for issuance under the 2021 Plan from 11,000,000 to 26,000,000 shares. On November 20, 2025, stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares of the Company’s Common Stock authorized for issuance under the 2021 Plan from 26,000,000 to 61,000,000 shares. As of December 31, 2025, the balance available to be issued under the 2021 Plan was 27,091,223.

Stock Options to Purchase Common Stock

The Company awards stock options to certain employees, directors, and consultants, which represent the right to purchase common shares on the date of exercise at a stated exercise price. Stock options granted to employees generally vest over a two to four-year period and are contingent on ongoing employment. Compensation expenses related to these awards is recognized straight-line over the applicable vesting period. Stock options granted to consultants are subject to the attainment of pre-established performance conditions. The actual number of shares subject to the award is determined at the end of the performance period and may range from zero to 100% of the target shares granted depending upon the terms of the award. Compensation expenses related to these awards is recognized when the performance conditions are satisfied.

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

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

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

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

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

Restricted Stock Units

The Company awards Restricted Stock Units (“RSUs”) to certain employees and directors, which represent a right to receive common stock for each RSU that vests. RSUs generally vest over a one to four-year period and are contingent on ongoing employment or service as directors. Compensation expenses related to these awards is recognized straight-line over the applicable vesting period.

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

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

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

NOTE 13 – REDEEMABLE NONCONTROLLING INTERESTS

Networks Series A-1 Preferred Stock

On July 9, 2023, Ondas Networks entered into a Preferred Stock Purchase Agreement (the “Original Networks Agreement”) with an initial purchaser named therein (the “2023 Initial Purchaser”) to purchase Networks Preferred Stock and the issuance of warrants to purchase 10,200,000 shares of Ondas Inc. (the “2023 Networks Offering”).

The Preferred Stock accrues dividends at the rate per annum of eight percent (8%) of the original issue price, of $34.955 per share (the “2023 Original Issue Price”). Such dividends are payable in cash or additional shares of Networks Preferred Stock, with such valuation based on the 2023 Original Issue Price. Each share of Networks Preferred Stock is convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Networks Common Stock (as defined below) as is determined by dividing the 2023 Original Issue Price by the conversion price in effect at the time of conversion, which initially is set at $34.955. In lieu of any fractional shares to which the holder would otherwise be entitled, the number of shares of Networks Common Stock to be issued upon conversion of the Networks Preferred Stock shall be rounded to the nearest whole share. The Networks Preferred Stock can be redeemed at the request of the holder at any time after the fifth anniversary for the greater of two times the initial investment plus accrued dividends or the amount that would be due if the Networks Preferred Stock was converted into Networks Common Stock as described above.

On July 21, 2023, Ondas Networks entered into a certain Amendment to Preferred Stock Purchase Agreement (the “2023 Networks Amendment,” together with the Original Networks Agreement, the “2023 Networks Agreement”). Pursuant to the 2023 Networks Amendment, in exchange for an initial sale of shares of Networks Preferred Stock, the 2023 Initial Purchaser acquired the following (the “Initial Networks Closing”), for gross proceeds to Ondas Networks of $11.5 million: (i)329,238 shares of Networks Preferred Stock, at a purchase price of $34.955 per share (the “Per Share Price”), convertible into shares of Networks Common Stock and (ii) warrants to purchase 7,825,792 shares of the Common Stock, at an exercise price of $0.89 per share, exercisable commencing ninety days following the date of issuance through the fifth anniversary of the date of issuance (the “2023 Initial Warrants”). Also, pursuant to the 2023 Networks Amendment, the 2023 Initial Purchaser agreed to purchase, and Ondas Networks agreed to sell and issue to the 2023 Initial Purchaser, an additional 99,885 shares of Networks Preferred Stock, at the Per Share Price (the “Second Initial Purchaser Closing”) and warrants to purchase 2,374,208 shares of Common Stock, at an exercise price of $0.89 per share, exercisable commencing ninety days following the date of issuance through the fifth anniversary of the date of issuance (the “Second Initial Purchaser Warrants”), within thirty days of the Initial Networks Closing.

Ondas Networks will use the proceeds from the sale of the Networks Preferred Stock for working capital and other general corporate purposes, including fees related to the transactions contemplated by the 2023 Networks Agreement. No portion of the proceeds will be distributed to the Company.

Also on July 21, 2023, Ondas Networks completed the Initial Networks Closing. In connection with the Initial Networks Closing, the Company issued the Initial Warrants. Also, in connection with the Initial Closing, the parties entered into an indemnification agreement, investors’ rights agreement, right of first refusal agreement, and voting agreement. Forms of each of these agreements are attached to Exhibit 10.1 to Form 8-K filed on July 28, 2023.

On August 11, 2023, Ondas Networks completed the Second Initial Purchaser Closing. In connection with the Second Initial Purchaser Closing, the Company issued Second Initial Purchaser Warrants. Following the Second Initial Purchaser Closing, the Initial Purchaser has invested an aggregate of $15 million and owns a minority interest of approximately 28% of Ondas Networks.

The Company assessed the Networks Preferred Stock in accordance with ASC 480 and determined that it should be recorded as temporary equity and not as a liability. The initial valuation was assigned to the Networks Preferred Stock and the 2023 Initial Warrants and Second Initial Purchaser Warrants on relative fair values, with the initial valuation of the noncontrolling interest being $10.4 million and warrants being $4.59 million. It is being accreted using the effective interest rate method over the five-year period to achieve the redemption value of $30 million plus accrued dividends.

Networks Series A-2 Preferred Stock

On February 26, 2024, Ondas Networks entered into a second Preferred Stock Purchase Agreement (the “2024 Networks Agreement”) for an investment of $4.5 million in Networks (the “2024 Networks Offering”). The 2024 Networks Agreement was entered into with purchaser named therein (the “2024 Networks Purchasers”)for the sale (i)108,925 shares of Series A-2 Networks Preferred Stock (the “Series A-2 Networks Preferred Stock”), at a purchase price of $41.3104 per share (the “2024 Per Share Price”), convertible into shares of Networks Common Stock and (ii) warrants to purchase 3,015,000 shares of Common Stock, at an exercise price of $1.26 per share, exercisable commencing ninety days following the date of issuance through the fifth anniversary of the date of issuance (the “2024 Ondas Inc. Warrants,” and together with the Series A-2 Networks Preferred Stock, the “2024 Networks Offering Securities”). The 2024 Networks Offering was consummated on February 26, 2024.

The Series A-2 Networks Preferred Stock accrues dividends at the rate per annum of eight percent (8%) of the original issue price, of $41.3104 per share (the “2024 Original Issue Price”). Dividends shall be payable only when, as, and if declared by the board of directors of Networks and Networks shall be under no obligation to pay such dividends. Such dividends are payable in cash or additional shares of Series A-2 Networks Preferred Stock, with such valuation based on the Original Issue Price. Each share of Series A-2 Networks Preferred Stock is convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Networks Common Stock as is determined by dividing the 2024 Original Issue Price by the conversion price in effect at the time of conversion, which initially is set at $41.3104. In lieu of any fractional shares to which the holder would otherwise be entitled, the number of shares of Networks Common Stock to be issued upon conversion of the Series A-2 Networks Preferred Stock shall be rounded to the nearest whole share. The Series A-2 Networks Preferred Stock can be redeemed at the request of the Holder at any time after the fifth anniversary for the greater of the initial investment plus accrued dividends or the amount that would be due if the Series A-2 Networks Preferred Stock was converted into Networks Common Stock as described above.

Pursuant to the Networks Agreement, the Company entered into a registration rights agreement with the 2024 Networks Purchasers to register the resale of the Common Stock underlying the 2024 Ondas Inc. Warrants pursuant to a registration statement to be filed no later 180 days following the closing of the 2024 Networks Offering. Also, pursuant to the 2024 Networks Agreement, the 2024 Networks Purchasers became parties to those certain investors’ rights agreement, right of first refusal agreement, and voting agreement, dated July 21, 2023.

Networks used the proceeds from the sale of the 2024 Networks Offering Securities to immediately redeem an amount of shares of Networks Common Stock at the 2024 Per Share Price held by the Company that was equivalent to the amount of proceeds raised in the sale of the 2024 Networks Offering Securities.

The issuance of the 2024 Networks Offering Securities was exempt from registration requirements of the Securities Act pursuant to Section 4(2) of such Securities Act and Regulation D promulgated thereunder based upon the representations of each of the 2024 Networks Purchasers that it was an “accredited investor” (as defined under Rule 501 of Regulation D) and that it was purchasing such securities without a present view toward a distribution of the securities. In addition, there was no general advertisement conducted in connection with the sale of the 2024 Networks Offering Securities. See the Current Report on Form 8-K filed with the SEC on February 26, 2024 for further details.

The Company assessed the Networks Series A-2 Preferred Stock in accordance with ASC 480 and determined that it should be recorded as temporary equity and not as a liability. The initial valuation was allocated to the Networks Series A-2 Preferred Stock and the Warrants based on relative fair values, with the initial valuation of the noncontrolling interest being $3 million and warrants being $1.5 million. It is being accreted using the effective interest rate method over the five-year period to achieve the redemption value of $4.5 million plus accrued dividends.

The Company recorded accrued dividends of $1.56 million and accretion of $3.59 million for the year ended December 31, 2025 for the Networks Series A-1 and A-2 Preferred Stock. The Company recorded accrued dividends of $1.5 million and accretion of $2.91 million for the year ended December 31, 2024 for the Networks Series A-1 and A-2 Preferred Stock.

Redeemable Noncontrolling Interest in SPO

In connection with the acquisition of SPO (Refer to Note 6), Shamir retained a noncontrolling equity interest. Shamir has the right (the “First Put Option”) to cause the Company to purchase all (but not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir at a purchase price of approximately $220.69 per share, including all capital notes of SPO then held by Shamir for no additional consideration. Shamir may exercise the First Put Option during the period commencing on October 15, 2025, and ending June 30, 2026.

The redeemable noncontrolling interest was initially recognized at its acquisition date fair value of $2.7 million. During the year ended December 31, 2025, the Company attributed $1.2 million of SPO’s net loss and $30 thousand of foreign currency translation gains to the carrying value of Shamir’s noncontrolling interest. Since the noncontrolling interest is currently redeemable, the Company recorded accretion of $744 thousand during the year ended December 31, 2025, to increase the carrying amount of the noncontrolling interest to its fixed redemption value of $2.3 million as of December 31, 2025.

Redeemable Noncontrolling Interest in 4M

In connection with the acquisition of 4M (Refer to Note 6), the 4M shareholders retained a noncontrolling equity interest. The 4M shareholders have the right to cause the Company to purchase all (but not less than all) of the remaining issued and outstanding share capital of 4M at an aggregate purchase price equal to 30% of 90% of 4M’s EBITDA during the 12-month period ending on the first day of the calendar quarter during which such calculation is made. The 4M shareholders may exercise the redemption right during the period from January 1, 2026 through December 31, 2027.

The redeemable noncontrolling interest was initially recognized at its acquisition date fair value of $2.9 million. During the year ended December 31, 2025, the Company attributed $65 thousand of 4M’s net income and $10 thousand of foreign currency translation gains to the noncontrolling interest. The carrying value of $3 million exceeded the estimated redemption value as of December 31 2025.

NOTE 14 – FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows.

A summary of financial assets and liabilities that are measured atfair value on a recurring basis were as follows:

Short-term investments

The Company holds marketable equity securities consisting of publicly traded common stock and warrants exercisable for publicly traded common stock measured at fair value of $18.9 million, and certificates of deposit carried at amortized cost of $2.85 million as of December 31, 2025, which are excluded from the fair value hierarchy table because they are not measured at fair value on a recurring basis. Our investments in marketable equity securities are concentrated in three publicly traded companies, representing 46%,29%, and 25% of total investments in equity securities as of December 31, 2025. As of December 31, 2025, our beneficial ownership in each of the three publicly traded companies is less than 5%. The Company classifies its warrants within Level 3 in the fair value hierarchy because it uses unobservable inputs related to volatility to determine fair value. There were no transfers between Level 1 and Level 3 during the year ended December 31, 2025. The following table summarizes the Company’s investments in marketable equity securities:

During the year ended December 31, 2025, the Company recognized gross unrealized gains of $6.41 million and gross unrealized losses of $1.02 million. The Company’s investment in warrants exercisable for publicly traded stock allow us to purchase up to 500,000 shares of publicly traded common stock at an exercise price of $6.00 per share. The warrants are exercisable in whole or in part until August 20, 2028.

The Company had no Level 3 assets that were required to be measured at fair value as of December 31, 2024. The Company had Level 3 assets that are required to be measured at fair value as of December 31, 2025, and at each subsequent reporting period for as long as the warrants remain outstanding. The fair value of the Company’s investment in warrants in a publicly traded company was determined using a Black-Scholes Model. For the year ended December 31, 2025, the key assumptions used in the Black-Scholes Model are as follows:

The following table provides a reconciliation of the beginning and ending balances for the Level 3 warrant assets measured at fair value using significant unobservable inputs:

Government grants

The Company had Level 3 liabilities that are required to be valued at fair value as of December 31, 2025, and 2024. The fair value of the government grant liability is determined as the sum of 3% royalty payments on forecasted future sales of the products developed using the grant funds, discounted using a discounted cash flow model. As of December 31, 2025, the Company made the following assumptions: (i) royalty payments will be made on certain forecasted future sales through 2031, and (ii) using a discount rate of 19%. The following table provides a reconciliation of the beginning and ending balances for the Level 3 government grant liability measured at fair value using significant unobservable inputs:

Warrant liability

The fair value of the warrants was determined using Level 3 inputs in a Black-Scholes option-pricing model. Inherent in the valuation were assumptions related to the expected stock-price volatility, expected term, risk-free interest rate, and dividend yield. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the warrant term. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price. The expected term was assumed to be equivalent to the warrants’ remaining contractual term. The risk-free interest rate was estimated using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term. The dividend yield was based on the historical rate, which the Company anticipates remaining at zero.

The assumptions used to estimate the fair value of warrants during the period were as follows:

Non-recurring fair value measurements

In connection with the business combinations completed during the year ended December 31, 2025, the Company recognized identifiable intangible assets, including developed technology, customer relationships, trade names, and non-compete agreements. These intangible assets were measured at fair value on a non-recurring basis as of their respective acquisition dates in accordance with ASC 805,Business Combinations. These measurements are not subsequently remeasured and the assets are amortized over their estimated useful lives.

The fair value of the acquired intangible assets was determined using valuation techniques consistent with the income approach, including discounted cash flow models such as the multi-period excess earnings method for developed technology and customer relationships, the relief-from-royalty method for trade names, and the with-and-without method for non-compete agreements.

These fair value measurements are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including projected future revenues, operating margins, customer attrition rates, royalty rates, and discount rates, which reflect management’s assumptions regarding the expected economic benefits derived from the acquired assets. The fair value measurements were determined as of the respective acquisition dates and represent non-recurring measurements.

NOTE 15 – SEGMENT INFORMATION

Operating segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The Company’s CODM is its Chief Executive Officer. Segment operating loss and segment loss before provision for income taxes are the measure of profit and loss used by the CODM to assess performance and to decide how to allocate resources for each of the Company’s reportable segments. Segment operating loss and segment loss before provision for income taxes are used to monitor actual results versus planned and prior period results for each segment based on their respective profitability objectives and business models. Segment operating loss and segment loss before provision for income taxes are also used to allocate human and capital resources among the reportable segments. The Company determined it hastwo reportable segments, Ondas Networks and OAS, as the CODM reviews financial information for these two businesses separately. The Company has no inter-segment sales. The following table presents segment information for years ended December 31):

Additional segment information is set forth below as of and for the year ending December 31,

NOTE 16 – INCOME TAXES

Loss from operations before income taxes for the years ending December 31 were as follows:

The provision (benefit) from income taxes was as follows:

The effective income tax rate from operations for the years ended December 31 varies from the U.S. statutory federal income tax rate as follows. Periods presented that are prior to the adoption of ASU 2023-09 have not been adjusted.

On July 4, 2025, an act to provide for reconciliation to title II of H. Con. Res. 14 (known commonly as the One Big Beautiful Bill Act (“OBBBA”)) was enacted into law. The OBBBA includes eliminating the requirement to capitalize U.S. R&D, permanent extension of certain provisions of the Tax Cuts & Jobs Act of 2017 and other corporate tax impacts. The Company has considered the impact on the Consolidated and Combined Financial Statements and concluded it is immaterial.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

The change in the Company’s valuation allowance is as follows:

A reconciliation of the provision for income taxes with the amounts computed by applying the Federal income tax rate to income from operations before the provision for income taxes is as follows for the year ended December 31, 2024:

In assessing the realization of deferred tax assets, including the net operating loss carryforwards (NOLs), the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. Based on its assessment, the Company has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time.

As of December 31, 2025 and 2024, the Company and Networks, respectively, had Federal NOLs of approximately $1 million and $15 million generated in 2007 to 2017 which will begin to expire in 2027 through 2037. Additionally, as of December 31, 2025 and December 31, 2024, the Company and Networks, respectively, had Federal NOLs of $93 million and $69 million, and of $73 million and $59 million, generated in 2018 through 2025 that have no expiration. As of December 31, 2025 and 2024, the Company and Networks, respectively, had State NOLs available to offset future taxable income of $45 million and $93 million, and of $49 million and $93 million, expiring from 2038 through 2045. As of December 31, 2025 and 2024, Networks had approximately $752 thousand of Federal research and development credits available to offset future tax liability expiring from 2038 through 2040. As of December 31, 2025 and December 31, 2024, the Company had approximately $218 million and $134 million of Israeli NOL’s, respectively. The Company’s Federal income tax returns for the 2022 to 2024 tax years remain open to examination by the IRS. Upon utilization of Federal NOLs in the future, the IRS may examine records from the year the loss occurred, even if outside the three-year statute of limitations. The Company’s State tax returns also remain open to examination. The Company’s Israeli income tax returns for the 2021 to 2024 tax years remain open to examination.

The Company applies the FASB’s provisions for uncertain tax positions. The Company utilizes the two-step process to determine the amount of recognized tax benefit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties associated with uncertain tax positions as a component of income tax expense.

As of December 31, 2025, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

NOTE 17 – COMMITMENTS AND CONTINGENCIES

We may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such loss contingencies that are included in the financial statements as of December 31, 2025.

On October 27, 2023, the Company reached a settlement agreement for legal proceedings related to Ardenna in which the Company is entitled to receive $600 thousand in reimbursements for legal fees related to the proceedings. As of December 31, 2025, the Company received $550 thousand from the settlement agreement, of which$0 and $550 thousand is recorded as a reduction in General and administrative expense on the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024.

On June 6, 2024, Airobotics filed a Notice of Non-Payment with the Abu Dhabi Civil Courts in connection with a customer’s lack of payment relating to a purchase order and breach of a settlement agreement in relation to such purchase order. A performance order was filed on July 11, 2024, and rejected on July 17, 2024 by the Abu Dhabi Civil Courts. On July 30, 2024, Airobotics appealed the rejection of the performance order. On August 28, 2024, the Abu Dhabi Civil Court of Appeals accepted the appeal and appointed an expert to review the case. On October 9, 2024, the Abu Dhabi Civil Court of Appeals ruled in favor of Airobotics for the full amount of the initial purchase order less amounts paid to date by the customer (without taking into consideration the terms of the settlement agreement breached by the customer), which resulted in a total award of $2.14 million plus interest and expenses.

Subsequently, on June 17, 2025, Airobotics entered into a second settlement agreement pursuant to which the Company agreed to waive the remaining balance owed by the customer in consideration for the return of the related inventory. The inventory was duly returned, and all obligations under the settlement agreement were fully performed. Accordingly, inventory with an aggregate value of approximately $1 million was recognized by Airobotics, with a corresponding reduction in Cost of goods sold on the Consolidated Statements of Operations for the year ended December 31, 2025.

War in Israel

On October 7, 2023, the State of Israel, where Airobotics’ main offices and facilities are located, suffered a surprise attack by hostile forces from the Gaza Strip, which led to the Security Cabinet of the State of Israel declaring a state of war in Israel. This military operation and related activities are on-going as of the date of this filing.

The Company is closely monitoring how the military operation and related activities could adversely affect its anticipated milestones and its Israel-based activities to support future operations, including the Company’s ability to import materials that are required to construct the Optimus System™ and to ship them outside of Israel. Although there have been disruptions in our business and operations, the Company has determined that there have not been any materially adverse effects on its business or operations. The Company does not believe the disruptions in its business and operations will have an enduring impact on its business and operations, but it continues to monitor the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company’s Israeli office to support the Company’s activities. The Company does not have any specific contingency plans in the event of any such escalation or change.

NOTE 18 – RELATED PARTY TRANSACTIONS

As of December 31, 2025 and 2024, the Company owed $701 thousand to independent directors related to taxes collected on RSU shares delivered and $13 thousand related to accrued compensation, respectively, which is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Networks Convertible Notes (Refer to Note 11)

On July 8, 2024, July 23, 2024, and November 13, 2024 C&P elected to purchase Convertible Notes in Networks in the aggregate original principal amount of $700 thousand, $800 thousand, and $1 million, respectively, (the “C&P Networks Convertible Notes”). Joseph Popolo, a former director of the Company, was the sole control person of C&P.

Along with the November 13, 2024 Networks Convertible Notes, Networks issued C&P warrants to purchase $1 million in shares of Networks Preferred Stock at an exercise price of $20.65 per share (the “C&P Warrants”). The number of C&P warrants exercisable under the Security Agreement is calculated by $1 million divided by the Conversion Price, which is the amount equal to the price per share of Networks’ most senior series of Preferred Stock issued to investors in Networks’ next equity financing date, or if none, then $41.3104. The C&P Warrants are exercisable commencing November 13, 2024 through November 13, 2029 and have a relative fair value of $371 thousand, which was recorded as debt discount.

As of December 31, 2025, the total outstanding principal on the C&P Networks Convertible Notes was $2.5 million. Accrued interest as of December 31, 2025 was $245 thousand and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2025, we recognized interest expense of $191 thousand and amortization expense of $341 thousand related to debt discount and issuance costs. Interest expense and amortization expense related to debt discount and issuance costs are included in Interest expense on the Consolidated Statements of Operations. No principal or interest has been paid since the C&P Networks Convertible Notes were issued.

As of December 31, 2024, the total outstanding principal on the C&P Networks Convertible Notes was $2.5 million, net of unamortized debt discount of $315 thousand and unamortized issuance costs of $26 thousand. Accrued interest as of December 31, 2024 was $54 thousand and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2024, we recognized interest expense of $54 thousand and amortization expense of $68 thousand related to debt discount and issuance costs. Interest expense and amortization expense related to debt discount and issuance costs are included in Interest expense on the Consolidated Statements of Operations. No principal or interest has been paid since the C&P Networks Convertible Notes were issued.

OAS Convertible Notes (Refer to Note 11)

In October and December 2024, C&P elected to purchase Convertible Notes in OAS in the aggregate original principal amount of $2 million (the “C&P OAS Convertible Notes”). Joseph Popolo, a former director of the Company, was the sole control person of C&P. On May 26, 2025, C&P assigned $30 thousand of the C&P OAS Convertible Notes to a non-related party.

On December 17, 2025, in connection with the OAS Exchange, C&P converted $1.97 million in principal and $101 thousand of accrued interest outstanding as of November 30, 2025 into OAS Common Stock under the original conversion terms of the OAS Convertible Notes, which was immediately exchanged for 2,263,516 shares of Common Stock. OAS also made cash payments of $23 thousand to C&P, representing accrued interest on the OAS Convertible Notes from December 1 to December 16, 2025. As of December 31, 2025, the C&P OAS Convertible Notes were repaid in full.

As of December 31, 2024, the total outstanding principal on the C&P OAS Convertible Notes was $2 million, net of unamortized issuance costs of $14 thousand. Accrued interest as of December 31, 2024 was $13 thousand and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

For the year ended December 31, 2025, we recognized interest expense of $111 thousand and amortization expense of $14 thousand related to the issuance costs. For the year ended December 31, 2024, we recognized interest expense of $13 thousand and amortization expense of $3 thousand related to the issuance costs. Interest expense and amortization expense related to issuance costs are included in Interest expense on the Consolidated Statements of Operations.

On October 10, 2024, Privet Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company and OAS, elected to purchase a Convertible Note in OAS in the original principal amount of $1 million (the “Privet OAS Convertible Note”). As of December 31, 2025 and 2024, the total outstanding principal on the Privet OAS Convertible Note was $1 million and $993 thousand, net of net of unamortized issuance costs of $7 thousand, respectively. Accrued interest as of December 31, 2025 and 2024 was $61 thousand and $11 thousand, respectively, which is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2025, we recognized interest expense of $50 thousand and amortization expense of $7 thousand related to the issuance costs. For the year ended December 31, 2024, we recognized interest expense of $11 thousand and amortization expense of $1 thousand related to the issuance costs. Interest expense and amortization expense related to issuance costs are included in Interest expense on the Consolidated Statements of Operations. As of December 31, 2025, no principal or interest had been paid since the Privet OAS Convertible Note was issued.

On January 5, 2026, in connection with the OAS Exchange, Privet Ventures LLC converted $1 million in principal and $61 thousand of accrued interest on the Privet OAS Convertible Note into OAS Common Stock under the original conversion terms of the OAS Convertible Notes, which was immediately exchanged for 1,153,625 shares of Common Stock, repaying the Privet OAS Convertible Note in full. Refer to Note 19, Deferred OAS Exchange.

Networks Secured Note (Refer to Note 11)

On September 3, 2024, Networks entered into the C&P Security Agreement, in which Networks may draw, and C&P shall loan Networks, up to $1.5 million. Pursuant to the C&P Security Agreement, Networks issued C&P the Networks Secured Note. As of December 31, 2024, Networks has drawn a total of $1.5 million on the Networks Secured Note.

On September 3, 2024 and October 7, 2024, pursuant to the C&P Security Agreement, Networks issued C&P warrants to purchase $1 million and $500 thousand, respectively, in shares of Networks Preferred Stock at an exercise price of $20.65 per share. The number of warrants exercisable under the C&P Security Agreement is calculated by $1.5 million divided by the Conversion Price, which is the amount equal to the price per share of the most senior series of Networks Preferred Stock issued to investors in Networks’ next equity financing date, or if none, then $41.3104. The C&P Warrants are exercisable commencing September 3, 2024 through September 3, 2029 and October 7, 2024 through October 7, 2029, respectively. The C&P Warrants have a total relative fair value of $557 thousand, which was recorded as debt discount. Joseph Popolo, a former director of the Company, was the sole control person of C&P.

As of December 31, 2025 and 2024, the total outstanding principal on the Networks Secured Note was $1.5 million and $1.3 million, net of unamortized debt discount of $201 thousand and unamortized issuance costs of $26 thousand, respectively. Accrued interest as of December 31, 2025 and 2024 was $155 thousand and $37 thousand, respectively, which is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2025, we recognized interest expense of $118 thousand and amortization expense of $227 thousand related to the debt discount and issuance costs. For the year ended December 31, 2024, we recognized interest expense of $37 thousand and amortization expense of $407 thousand related to the debt discount and issuance costs. No principal or interest has been paid since the Networks Secured Note was issued.

Sale of Common Stock in Ondas Inc. and Warrants to Purchase Common Stock of OAS (Refer to Note 12)

On February 26, 2024, the Company completed the 2024 Ondas Offering with respect to the sale of (i) an aggregate of 3,616,071 shares Common Stock and (ii) the OAS Warrants for gross proceeds of $4,050 thousand. Refer to Note 12, Sale of Common Stock in Ondas Inc. and Warrants to Purchase Common Stock of OAS, for further details. In connection with the 2024 Ondas Offering, C&P paid $2 million for 1,785,714 shares of Common Stock of the Company and OAS Warrants to purchase 1,785,714 shares of OAS common stock. Joseph Popolo, a former director of the Company, was the sole control person of C&P.

Networks Series A-1 Preferred Stock (Refer to Note 13)

On July 21, 2023 and August 11, 2023, Networks completed the 2023 Networks Offering. Refer to Note 13, Networks Series A-1 Preferred Stock, for further details. C&P is the proxy for the members of the 2023 Initial Purchaser, and the manager of the 2023 Initial Purchaser must act in accordance with C&P’s direction with respect to exercise and voting of the issuer’s securities and derivative securities held by the 2023 Initial Purchaser. Joseph Popolo, a former director of the Company, was the sole control person of C&P.

Networks Series A-2 Preferred Stock (Refer to Note 13)

On February 26, 2024, Ondas Networks completed a private placement with certain purchasers with respect to the sale of (i) the Series A-2 Networks Preferred Stock and (ii) 2024 Ondas Warrants. Refer to Note 13, Networks Series A-2 Preferred Stock, for further details. In connection with the 2024 Networks Offering, C&P paid $250,000 for 6,051 shares of Series A-2 Networks Preferred Stock and 2024 Warrants to purchase 167,500 shares of Common Stock. Joseph Popolo, a former director of the Company, was the sole control person of C&P.

NOTE 19 – SUBSEQUENT EVENTS

Deferred OAS Exchange

Pursuant to the OAS Exchange Agreements, on January 5, 2026, the Company issued 2,389,203 shares of Common Stock to the OAS Holders that deferred the closing of the OAS Exchange. After giving effect to the OAS Exchange, the Company owns approximately 99% of OAS on a fully diluted basis.

Networks Investment

On January 16, 2026, Networks entered into a Series B Preferred Stock Purchase Agreement (the “2026 Networks Agreement”) for an investment of $8.4 million in Networks (the “2026 Networks Offering”). The 2026 Networks Agreement was entered into with the purchasers named therein (the “2026 Purchasers”) for the sale of shares of Networks Preferred Stock for a purchase of $8.4 million. The 2026 Networks Offering was consummated on January 16, 2026.

Pursuant to the 2026 Networks Agreement, the 2026 Purchasers would acquire the following in the 2026 Networks Offering for gross proceeds to Networks of $8.4 million, which included approximately $6.0 million from the Company and approximately $2.0 million from C&P, as Purchasers: (i)303,250 shares of Networks Preferred Stock (the “Purchased Preferred Stock”), at a purchase price of $27.70 per share (the “2026 Original Issue Price”), convertible into shares of Networks Common Stock; and (ii)667,551 shares of Networks Preferred Stock (the “Networks Converted Preferred Stock,” together with the Networks Purchased Preferred Stock, the “2026 Networks Preferred Stock”), convertible into shares of Networks Common Stock upon the exercise of the Networks Warrants and the conversion of the Ondas Networks Convertible Notes.

The 2026 Networks Preferred Stock accrues dividends at the rate per annum of eight percent (8%) of the 2026 Original Issue Price. Dividends shall be payable only when, as, and if declared by the board of directors of Networks and Networks shall be under no obligation to pay such dividends. Such dividends are payable in cash or additional shares of Networks Preferred Stock, with such valuation based on the 2026 Original Issue Price. Each share of Networks Preferred Stock is convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Networks Common Stock as is determined by dividing the 2026 Original Issue Price by the conversion price in effect at the time of conversion, which initially is set at $27.70. In lieu of any fractional shares to which the holder would otherwise be entitled, the number of shares of Networks Common Stock to be issued upon conversion of the Networks Preferred Stock shall be rounded to the nearest whole share.

Pursuant to the 2026 Networks Agreement, the 2026 Purchasers became parties to those certain investors’ rights agreement, right of first refusal agreement, and voting agreement, dated January 16, 2026.

Also on January 16, 2026, Networks entered into that certain Letter Agreement, by and among Networks and the signatories thereto, pursuant to which the maturity date of the Networks Secured Note was amended to December 31, 2027.

Registrant Direct Offering

On January 9, 2026, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with Oppenheimer & Co. Inc., as representative of the placement agents named in Schedule I thereto (the “Placement Agents”), relating to the Company’s offering (the “2026 Offering”) of (i)19,000,000 shares of Common Stock (the “2026 Shares”), or (ii) in lieu of Common Stock, pre-funded warrants (the “2026 Pre-Funded Warrants,” together with the 2026 Shares, the “2026 Common Stock Equivalents”) to purchase up to 41,790,274 shares of Common Stock (the “2026 Pre-Funded Warrant Shares”). The 2026 Common Stock Equivalents were accompanied by warrants (the “2026 Common Warrants,” together with the 2026 Pre-Funded Warrants, the “2026 Warrants”) to purchase a total of 121,580,548 shares of Common Stock (the “2026 Common Warrant Shares,” together with the 2026 Pre-Funded Warrant Shares, the “2026 Warrant Shares”). The 2026 Common Stock Equivalents with the accompanying 2026 Common Warrants were sold pursuant to the terms of a Securities Purchase Agreement, dated January 9, 2026 (the “2026 SPA”), by and between the Company and each investor listed on the Schedule of Buyers attached thereto (the “2026 Investor”) in connection with the 2026 Offering.

The 2026 Offering price for (i) each 2026 Share and accompanying 2026 Common Warrant to purchase two (2) shares of Common Stock was $16.45 and (ii) each 2026 Pre-Funded Warrant and accompanying 2026 Common Warrant to purchase two (2) shares of Common Stock was $16.45 (with all but a nominal exercise price of $0.0001 per share prepaid as of the issuance date). The 2026 Pre-Funded Warrants were immediately exercisable and will expire seven years from the date of issuance. As of the date hereof, the 2026 Pre-Funded Warrants have been fully exercised. The 2026 Common Warrants have an exercise price of $28.00 per share, were immediately exercisable and will expire seven years from the date of issuance. The net proceeds to the Company from the 2026 Offering are approximately $959.2 million, after deducting placement agent fees and estimated offering expenses payable by the Company and excluding any proceeds that may be received from the exercise of the 2026 Warrants. If the 2026 Common Warrants are fully exercised on a cash basis, the Company has the potential to raise approximately $3.4 billion in additional gross proceeds. No assurance can be given that any of the 2026 Common Warrants will be exercised. The 2026 Offering closed on January 12, 2026, subject to the satisfaction of customary closing conditions.

Acquisitions

Rotron Aero

On February 2, 2026, the Company entered into a definitive agreement to acquire Rotron Aerospace Ltd. (“Rotron”), a UK-based developer of advanced unmanned aerial systems and long-range autonomous platforms designed for extended-reach operations and autonomous strike missions.

Pursuant to that certain Sale and Purchase Agreement (the “Rotron Agreement”), by and among the Company, Gilo Holdings Ltd., a private limited company existing under the laws of England and Wales (“Gilo”) and indirect owner of Rotron, and the shareholders of Gilo (the “Rotron Shareholders”), the Company acquired 100% of the issued share capital of Gilo, for a purchase price of (i) approximately $6,662,046 in cash and (ii)3,334,753 shares (the “Rotron Shares”) of Common Stock (the “Rotron Acquisition”). Pursuant to the Rotron Agreement, the Rotron Shareholders agreed, subject to certain customary exceptions, not to sell, transfer or dispose of 659,731 of the Rotron Shares for a period of twelve (12) months after the closing of the Rotron Acquisition.

Mistral, Inc.

On March 8, 2026, the Company entered into an Agreement and Plan of Merger (the “Mistral Agreement”), by and among the Company, Project Cyclone Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Mistral, Inc., a Delaware corporation (“Mistral”), and Shoshana Banai (the “Mistral Stockholder”).

The Mistral Agreement provides that, upon the terms and subject to the conditions set forth in the Mistral Agreement, the Company will acquire 100% of the issued and outstanding shares of Mistral (the “Mistral Merger”). At the closing of the Mistral Merger, upon the terms and subject to the conditions set forth in the Mistral Agreement, the Company shall pay an aggregate amount of $175 million, comprised of (i) $122.5 million of shares of Common Stock, subject to certain adjustments set forth in the Mistral Agreement, of which (a) $17.5 million shall be deposited into an escrow account for the purpose of securing the obligations of the Mistral Stockholder as set forth in the Mistral Agreement and (b) the remaining $105 million shall be paid in seven equal installments within twenty days following the closing of the Mistral Merger, and (ii) $52.5 million of shares of Common Stock shall be deposited into an escrow account and released as follows: (x) $26.25 million on the first anniversary of the closing of the Mistral Merger, (y) $13.13 million on the second anniversary of the closing of the Mistral Merger, and (z) $13.13 million on the third anniversary of the closing of the Mistral Merger. The Merger is expected to close in the second quarter of 2026.

Bird Aerosystems Ltd.

On March 11, 2026, the Company entered into a Share Purchase Agreement (the “Bird Purchase Agreement”), by and among the Company, Bird Aerosystems Ltd., a company organized under the laws of the State of Israel (“Bird”), Bird’s shareholders, and a General Partnership organized under the laws of the State of Israel, solely in its capacity as the representative, agent and attorney-in-fact of the indemnifying parties (the “Bird Shareholders’ Agent”). Also on March 11, 2026 (the “Bird Closing Date”), pursuant to the Bird Purchase Agreement, the Company acquired 100% of the issued and outstanding share capital (“Bird Shares”) of Bird (the “Bird Transaction”). On the Bird Closing Date, upon the terms and subject to the conditions set forth in the Bird Purchase Agreement, the Company paid an aggregate amount of (i) $5,173,589 in cash and (ii) issued 6,933,110 shares of Common Stock. Pursuant to the Bird Purchase Agreement, on March 18, 2026, the Company (i) paid an additional $320,662 in cash and (ii) issued an additional 3,358,097 shares of Common Stock.

Indo Earth Moving Ltd.

On March 17, 2026, the Company entered into a Share Purchase Agreement (the “Indo Agreement”), by and among the Company, Indo Earth Moving Ltd., a company organized under the laws of the State of Israel (“Indo”), Indo’s shareholders as set forth on Exhibit B thereto (the “Indo Sellers”), and the shareholders’ agent. Pursuant to the Indo Agreement, on March 17, 2026, (the “Indo Closing Date”), the Company acquired 100% of the issued and outstanding share capital of Indo (the “Indo Share Capital”), for a purchase price of $5,663,398 in cash and 5,493,388 shares of Common Stock (the “Indo Shares”), including (a)2,441,506 shares of Common Stock issued on the Indo Closing Date and (b)3,051,882 shares of Common Stock to be issued within five business days following the achievement of the First Milestone (as defined in the Indo Agreement) (the “Indo Acquisition”). Pursuant to the Indo Agreement, the Company may declare that the Indo Acquisition is null and void prior to the First Milestone if Indo is not able to meet the full terms of the Tender (as defined in the Indo Agreement).

Additionally, pursuant to the terms of the Indo Agreement, forthree years after the Indo Closing Date, the Indo Sellers have an opportunity to earn an additional aggregate amount of up to $140,000,000 in contingent earn-out payments, subject to certain milestones as set forth in the Indo Agreement, payable in Common Stock.

World View Enterprises, Inc.

On March 2, 2026, the Company made a $10 million strategic investment in World View Enterprises, Inc. (“World View”), a leader in high-altitude balloon Interconnected Intelligence and stratospheric remote sensing. On March 23, 2026, the Company entered into that certain Agreement and Plan of Merger (the “World View Agreement”), by and among the Company, a wholly owned subsidiary of Parent, World View and Fortis Advisors LLC, a Delaware limited liability company, in its capacity as the Representative (as defined in the World View Agreement).

The World View Agreement provides that, upon the terms and subject to the conditions set forth in the World View Agreement, the Company will acquire 100% of the issued and outstanding shares of World View (the “World View Merger”). At the closing of the World View Merger, upon the terms and subject to the conditions set forth in the World View Agreement, the Company shall pay an aggregate amount of $150 million, subject to certain adjustments set forth in the World View Agreement, comprised of up to approximately $129.5 million of shares of Common Stock, subject to certain adjustments set forth in the World View Agreement. The World View Merger is expected to close in the second quarter of 2026.

4M Defense Ltd.

On March 16, 2026, pursuant to the Supplement to Share Purchase Agreement, dated March 16, 2026, by and between the Company, 4M, HoldCo and Mr. Cohen (the “4M Supplement”), the Company acquired the remaining 30% of the issued and outstanding share capital of HoldCo from Mr. Cohen, for a purchase price of (i)352,968 shares of Common Stock, and (ii) an additional amount of up to $1,400,000 shares of Common Stock in contingent earn-out payments, subject to certain milestones as set forth in the 4M Supplement.

ONBERG Autonomous Systems

On March 18, 2026, the Company announced the formation of ONBERG Autonomous Systems, a 51% owned joint venture with HD Advanced Technologies GmbH (“HDAT”). The joint venture formalizes the Memorandum of Understanding signed in December 2025 and establishes a strategic platform to deliver autonomous drone defense and security systems across Germany and Ukraine in first phase.

Other

On March 12, 2026, the Company entered a strategic partnership between Palantir, the Company and World View.