Ondas Holdings Inc.

Executive Summary

Company Overview

Business Model: Ondas Holdings Inc. is a provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks Inc. and Ondas Autonomous Systems Inc. (OAS). Ondas Networks Inc. delivers wireless connectivity solutions for Mission-Critical Internet of Things (MC-IoT) applications, primarily targeting industrial and critical infrastructure markets. OAS develops and integrates drone-based solutions, including fully autonomous drone platforms for aerial data capture and analytics, and interceptor drones for counter-drone operations, serving government and Tier-1 commercial enterprises. Revenue generation for Ondas Networks Inc. includes systems sales, software and hardware maintenance agreements, licensing/royalties, and ancillary services. OAS monetizes its solutions through direct sales and service, as well as Drone Infrastructure and Data-as-a-Service (DaaS) models, offering annual subscriptions for bundled hardware, software, operations, and maintenance.

Market Position: Ondas Networks Inc. holds a leadership position in the Institute of Electrical and Electronics Engineers (IEEE) 802.16 standard, which forms the core of its patented FullMAX Software Defined Radio (SDR) platform. This standard has been adopted by the Association of American Railroads (AAR) and American Railway Engineering and Maintenance Association (AREMA) for future private wireless networks, positioning Ondas Networks Inc. for the North American freight rail market, estimated at approximately $1.3 billion. OAS is a leader in autonomous drone solutions, having secured the first-of-its-kind Type Certification (TC) from the Federal Aviation Administration (FAA) for its Optimus 1-EX UAV on September 25, 2023, enabling Beyond Visual Line-of-Sight (BVLOS) operations without a human operator on-site. The total addressable market for OAS is estimated at over $100 billion, with the global drone market projected to grow from $83.7 billion in 2025 to $160.6 billion by 2030, and the Counter-Unmanned Aircraft Systems (C-UAS) market from $3.1 billion to $10.6 billion in the same period.

Recent Strategic Developments:

• Ondas Networks Inc.: Continues to develop partnerships in the rail sector, including a collaboration with Siemens Mobility to market FullMAX-based technology and jointly develop wireless communication products for the North American Rail Industry. Engaged in field installation activities with multiple railroads and Indian Railways.
• OAS:
  • Acquired the assets of Iron Drone Ltd. in March 2023, integrating its counter-drone technology.
  • Expanded collaboration with a local governmental entity in Dubai, deploying additional Optimus Systems for public safety and municipal services.
  • Received purchase orders from a major Israeli semiconductor manufacturer for Optimus System™ and from major Israeli defense companies and a government military customer for Iron Drone Raider™ systems, including a $5.4 million order for Optimus System™ and $9 million in Q3 2024 for Iron Drone Raider™.
  • Awarded a $1 million grant from the Israeli Innovation Authority (IIA) in November 2024 to enhance the Iron Drone Raider™.
  • Secured a contract with the U.S. Coast Guard for maritime emissions monitoring at the Ports of Los Angeles and Long Beach.
  • Established strategic reseller partnerships in Europe with HHLA Sky and C-Astral Aerospace.
  • Plans to secure Green UAS List designation for the Optimus System™ to accelerate U.S. governmental acceptance.

Geographic Footprint: Ondas Holdings Inc. is headquartered in Boston, Massachusetts. Ondas Networks Inc. operates from Sunnyvale, California. American Robotics, Inc. has offices in Sparks, Maryland. Airobotics, Ltd. maintains offices and facilities in Petah Tikva, Israel, and Dubai, United Arab Emirates. The Company's revenue is geographically distributed across the United States (25.4% of total revenue in 2024), Israel (59.6%), United Arab Emirates (10.5%), United Kingdom (4.3%), and India (0.2%).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 5% (2024), 41% (2023)
• Operating Margin: -481.2% (2024)
• Net Margin: -528.4% (2024)

Investment in Growth:

• R&D Expenditure: $12.5 million (173.5% of revenue)
• Capital Expenditures: $1.6 million
• Strategic Investments: Acquisition of Airobotics, Ltd. for $6.0 million (2023); acquisition of Iron Drone Ltd. assets for $0.2 million (2023); impairment charge of $1.5 million related to long-term equity investment in Dynam.AI, Inc. (2023).

Business Segment Analysis

Ondas Networks Inc.

Financial Performance:

• Revenue: $1.9 million (-71.3% YoY)
• Operating Margin: -709.85% (segment operating loss of $(13.7) million)
• Key Growth Drivers: Adoption of the IEEE 802.16 standard by North American freight rail operators, FCC mandate for 900 MHz band network upgrade by April 2026, and ongoing development of Next Generation Head of Train / End of Train (NGHE) devices.

Product Portfolio:

• Major product lines: FullMAX Software Defined Radio (SDR) platform, including wireless base stations, fixed and mobile edge radios, and network management software.
• New product launches or major updates: Ongoing development of IEEE 802.16t compatible technology and NGHE devices.

Market Dynamics:

• Competitive positioning: Differentiated by its patented SDR architecture, Fog-computing capability, and spectrum harvesting techniques, enabling substantial data capacity increases utilizing existing licensed radio frequencies.
• Key customer types and market trends: North American freight rail operators (six Class I Railroads), Indian Railways, and other critical infrastructure markets (electric grids, oil and gas, public safety).

Ondas Autonomous Systems Inc. (OAS)

Financial Performance:

• Revenue: $5.3 million (-41.3% YoY)
• Operating Margin: -367.83% (segment operating loss of $(19.4) million)
• Key Growth Drivers: FAA Type Certification for Optimus 1-EX UAV, increasing demand for autonomous drone solutions in defense and critical infrastructure, and strategic international partnerships.

Product Portfolio:

• Major product lines: Optimus System™ (fully autonomous drone platform for data capture and analytics, including Optimus™ drone, Airbase™, and Insightful™ web portal) and Iron Drone Raider™ (fully autonomous interceptor drone for counter-drone operations).
• New product launches or major updates: Integration of Kestrel™ system for advanced Detect and Avoid (DAA) capabilities, and 2024 upgrades to Iron Drone Raider™ for intelligent navigation in GNSS-denied areas.

Market Dynamics:

• Competitive positioning: Unique fully autonomous platforms, industry-leading regulatory successes (FAA Type Certification), and comprehensive turnkey solutions for complex drone operations.
• Key customer types and market trends: Defense, homeland security, public safety, smart city, airport authorities, and commercial operators of critical industrial facilities (oil & gas, seaports, mining, data centers, semiconductor fabs).

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: None during the quarter ended December 31, 2024.
• Dividend Payments: Ondas Holdings Inc. has never declared or paid cash dividends and does not intend to do so in the foreseeable future.
• Dividend Yield: 0%

Balance Sheet Position:

• Cash and Equivalents: $30.0 million (2024)
• Total Debt: $56.8 million (net of unamortized debt discount and issuance costs) (2024)
• Net Cash Position: $(26.8) million (2024)
• Debt Maturity Profile: $17.3 million in convertible notes payable due in 2026, and $0.3 million in notes payable due in 2027.

Cash Flow Generation:

• Operating Cash Flow: $(33.5) million (2024)
• Free Cash Flow: $(35.1) million (2024)

Operational Excellence

Production & Service Model: Ondas Holdings Inc. utilizes outsourced manufacturing partners for product fabrication and assembly, allowing its subsidiaries to focus on design, development, and sales. Ondas Networks Inc. designs printed circuit boards and enclosures, with physical manufacturing outsourced to industrial contract manufacturers, followed by in-house testing, software programming, and system-level quality assurance. OAS designs its Optimus System™ and Iron Drone Raider™ platforms, specifying components, and outsources building to specialized contract manufacturers, with in-house software loading and system-level quality assurance. Service delivery includes comprehensive support such as network design, systems engineering, RF planning, software configuration, product training, installation, onsite support, AI data analytics, data automation, IT implementation, safety planning, certification, and maintenance.

Supply Chain Architecture: Key Suppliers & Partners:

• Manufacturing Partners: Ondas Networks Inc. maintains multiple domestic and international contract manufacturers. OAS works with a select group of contract manufacturers for its drone and Airbase™ components.
• Component Suppliers: Relies on a limited group of suppliers for certain hardware components, subsystems, and systems, some of which are sole source. The Company does not have long-term supply agreements with guaranteed pricing, exposing it to price fluctuations and potential supply shortages, particularly for electronic components and semiconductors.

Facility Network:

• Manufacturing: Outsourced to contract manufacturers.
• Research & Development: Ondas Networks Inc. R&D activities are based in Sunnyvale, California. OAS R&D activities are based in Petah Tikva, Israel.
• Distribution: Not explicitly detailed, but products are shipped to customer locations for installation.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Ondas Networks Inc. employs a direct sales force globally. OAS utilizes direct sales to enterprise and government customers.
• Channel Partners: Ondas Networks Inc. leverages value-added sales partners. OAS builds a network of partners and agents, including strategic reseller partnerships in Europe with HHLA Sky and C-Astral Aerospace.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Ondas Networks Inc. is active with six Class I Railroads in North America and Indian Railways. OAS serves a local governmental entity in Dubai, a major Israeli semiconductor manufacturer, major Israeli defense companies, a government military customer, the U.S. Coast Guard, and a technology infrastructure provider in Texas.
• Strategic Partnerships: Ondas Networks Inc. partners with Siemens Mobility. OAS has reseller partnerships in Europe.
• Customer Concentration: In 2024, three customers accounted for 52%, 26%, and 10% of total revenue. Accounts receivable as of December 31, 2024, showed two customers accounting for 78% and 10% of the total balance.

Geographic Revenue Distribution:

• United States: 25.4% of total revenue
• United Arab Emirates: 10.5% of total revenue
• United Kingdom: 4.3% of total revenue
• Israel: 59.6% of total revenue
• India: 0.2% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Ondas Holdings Inc. operates in highly competitive industries characterized by rapidly evolving technologies, standards, and regulations. The Mission-Critical Internet of Things (MC-IoT) market demands secure, real-time connectivity and significant data processing at the network edge. The commercial Unmanned Aircraft Systems (UAS) market is nascent and highly dependent on customer perception, regulatory approvals, and technological differentiation. The Counter-UAS (C-UAS) market is experiencing significant growth due to increasing drone threats.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Ondas Networks Inc.: Competes with alternative wireless technologies, public cellular data networks, and other private wireless networking product manufacturers (e.g., Wi-Fi, private licensed narrowband wireless radios, satellite technologies, Low-Power Wide Area Networks (LP-WANs)).
• OAS: Competes with other drone Original Equipment Manufacturers (OEMs) offering solutions for inspection, security, and asset tracking.

Competitive Response Strategy: Ondas Holdings Inc. focuses on standards-based solutions, continuous technological innovation, and strategic partnerships to maintain its competitive advantage. This includes expanding the applications of its FullMAX technology, achieving regulatory milestones like FAA Type Certification for its drone platforms, and developing comprehensive, integrated data solutions.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company operates in evolving markets, making future prospects difficult to evaluate. Adoption of new wireless broadband standards (IEEE 802.16t) is uncertain. Growth is dependent on strategic partnerships and expanding customer relationships. The commercial UAS market's expansion relies on customer satisfaction, cost-effectiveness, and timely regulatory approvals. Negative customer perception of the commercial UAS industry could adversely affect demand. Economic uncertainty may decrease demand and increase costs. Significant dependence on a small number of customers poses a concentration risk. Failure to respond to technological changes could lead to product obsolescence.

Operational & Execution Risks

Supply Chain Vulnerabilities: Reliance on a small number of third-party contract manufacturers reduces control over quality, costs, and supply. Scarcity or unavailability of critical components (e.g., semiconductors) or raw materials could delay manufacturing and development. The absence of long-term supply contracts exposes the Company to price fluctuations. Production & Service Model: Products may contain defects or fail, leading to liability, warranty claims, recalls, and reputational damage. Operations in hazardous industrial environments carry inherent safety risks. The Optimus System™'s lithium-ion batteries pose fire risks if not managed properly. Development and manufacturing involve flammable materials, which could cause disruptions. The relatively new nature of the Company's technology means limited full-scale field performance assessment, potentially leading to unforeseen operational challenges.

Financial & Regulatory Risks

Market & Financial Risks: Ondas Holdings Inc. has incurred significant operating losses since inception, with an accumulated deficit of $236.4 million as of December 31, 2024, and there is substantial doubt about its ability to continue as a going concern for one year from March 12, 2025. The sales cycle for products is lengthy, and revenue recognition is complex and often deferred. The Company's exposure to foreign currency exchange rate fluctuations has increased due to international operations. Ineffective internal controls over financial reporting could lead to inaccurate financial reporting. Goodwill and other intangible assets are subject to impairment. Regulatory & Compliance Risks: The Company and its customers operate in a highly regulated environment, and changes in regulations could impose costs or make products less economical. Failure to obtain necessary FAA or other governmental approvals for UAS operations, or limitations on drone use, could restrict sales expansion. Wireless networking products depend on licensed radio frequencies regulated by the FCC, and changes could necessitate costly product modifications. As a commercial UAS manufacturer, the Company is subject to various government regulations, including product safety and consumer protection laws. Compliance with data protection, privacy, and information security laws is critical, and non-compliance could lead to litigation and reputational harm. Israeli defense export policy regulates the sale of certain systems, limiting market access.

Geopolitical & External Risks

Geopolitical Exposure: Business operations may be adversely affected by regional or global instability, such as the ongoing military operations in Israel, which could impact anticipated milestones, material imports, and product shipments.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Ondas Networks Inc.: Focuses on its patented FullMAX Software Defined Radio (SDR) platform, which forms the core of the IEEE 802.16 standard for Mission-Critical Internet of Things (MC-IoT). R&D efforts are directed at expanding FullMAX technology applications across various spectrum bands used by rail operators and integrating Fog-computing capabilities for edge processing.
• OAS: Concentrates on fully autonomous drone systems, including the AI-powered Optimus System™ with advanced imaging payloads and the Iron Drone Raider™ interceptor drone. R&D is enhancing Detect and Avoid (DAA) solutions and integrating new payloads to broaden functionality, with a focus on intelligent navigation in GNSS-denied areas for the Iron Drone Raider™.

Intellectual Property Portfolio:

• Patent Strategy: Ondas Networks Inc. holds 8 issued U.S. patents and 6 international issued patents, with 7 U.S. and 5 international pending applications, expiring between 2029 and 2044. OAS holds 6 issued U.S. patents and 22 international issued patents, with 4 international pending applications, expiring between 2034 and 2048. The IP incorporates internally developed software and hardware design, machine/computer vision, and AI/machine learning techniques.
• Licensing Programs: Ondas Networks Inc. aims to generate revenue through licensing fees and royalties for the use of its patented technologies.

Technology Partnerships: Ondas Networks Inc. collaborates with Siemens Mobility for joint product development in the North American Rail Industry. OAS engages in strategic alliances and research collaborations, including reseller partnerships in Europe.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors comprises seven members: Eric A. Brock, Neil J. Laird, Richard M. Cohen, Joseph Popolo, Randall P. Seidl, Jaspreet Sood, and Ron Stern. Messrs. Cohen, Popolo, Seidl, and Ms. Sood are designated as independent directors under Nasdaq rules. The Board includes an "audit committee financial expert" (Richard M. Cohen) and members with extensive experience in finance, technology, sales, and venture capital. The Board has established an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, all composed of independent directors.

Human Capital Strategy

Workforce Composition: As of March 12, 2025, Ondas Holdings Inc. has 124 employees (113 full-time, 11 part-time). Ondas Networks Inc. employs 27 full-time and 2 part-time employees, while OAS employs 86 full-time and 9 part-time employees. The Company also utilizes 12 consultants for various support functions and contractors for manufacturing and system deployment.

Talent Management: The Company's future success depends on its ability to attract, retain, and motivate highly skilled management, product development, operations, sales, and technical personnel. Competition for such talent is intense. The Company offers a 401(k) Savings Plan for U.S. employees and post-employment benefits for Airobotics, Ltd.'s Israeli employees.

Environmental & Social Impact

Social Impact Initiatives: The Company's products, such as the Optimus System™ and Iron Drone Raider™, contribute to public safety, smart city initiatives, and critical infrastructure protection. The Optimus System™ is also used for maritime emissions monitoring in support of EPA Clean Port initiatives.

Business Cyclicality & Seasonality

Demand Patterns: The Company does not believe the industry in which Ondas Networks Inc. and OAS compete is subject to seasonal sales fluctuations. However, demand for its products and services is sensitive to adverse changes in the economy.

Regulatory Environment & Compliance

Regulatory Framework: The Company operates in a highly regulated environment. Ondas Networks Inc.'s wireless products are subject to Federal Communications Committee (FCC) regulations regarding licensed radio frequencies. OAS's drone solutions are subject to Federal Aviation Administration (FAA) and other global Civil Aviation Authority regulations, including Part 107 Rules and evolving rules for Beyond Visual Line-of-Sight (BVLOS) operations. As a manufacturer of commercial UAS, the Company is subject to product safety and consumer protection regulations. Critical infrastructure customers are often regulated by national, state, and local bodies. Israel’s defense export policy regulates the sale of certain systems and products from Airobotics, Ltd.

Trade & Export Controls: The Company is subject to global trade laws and regulations, including economic sanctions and export controls. Israeli law requires licenses for defense-related exports and regulates "dual use" items.

Legal Proceedings: The Company is not currently involved in any legal proceedings or investigations believed to have a material adverse effect. Airobotics, Ltd. successfully appealed a non-payment case in Abu Dhabi Civil Courts, resulting in an award of $2.1 million plus interest and expenses.

Tax Strategy & Considerations

Tax Profile: The Company reported a 0% effective tax rate for 2024 and 2023 due to a full valuation allowance against its net deferred tax assets, as future utilization remains uncertain. Ondas Networks Inc. is no longer part of the Company's consolidated U.S. tax filing as of July 21, 2023.

Insurance & Risk Transfer

Risk Management Framework: Ondas Holdings Inc. maintains general liability, aviation flight testing, aircraft liability, and directors and officers insurance. While the Company believes its coverage is customary and adequate, the nascent unmanned aerial systems industry lacks a formative insurance market, potentially exposing the Company to uninsured risks.