10-Q: Ondas Holdings Q2 Revenue Soars 565%, Resolves Going Concern

Ondas Holdings Inc. reported a significant revenue increase and gross profit turnaround in its second quarter 2025 results, alleviating prior going concern doubts through recent capital raises.

Summary

• Revenue for the six months ended June 30, 2025, increased by $8,938,710 to $10,521,570, a 564.7% increase compared to $1,582,860 for the same period in 2024.
• Gross profit for the six months ended June 30, 2025, was $4,820,620, a significant improvement from a gross loss of $585,877 in the prior year period.
• Gross margin improved to 46% for the six months ended June 30, 2025, from (37%) in the prior year period, primarily due to higher margin product sales at Ondas Autonomous Systems (OAS).
• Net loss for the six months ended June 30, 2025, increased by $6,740,680 to $24,886,500, compared to $18,145,820 in the prior year period.
• Net loss per share improved to $(0.21) for the six months ended June 30, 2025, from $(0.31) for the same period in 2024, despite the higher net loss, due to an increased weighted average number of common shares outstanding.
• Cash and restricted cash totaled approximately $68,551,000 as of June 30, 2025, with working capital of approximately $59,720,000.
• Management concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists as of August 12, 2025, following recent capital raises.
• Operating expenses increased by $7,535,254, or 45%, to $24,380,162 for the six months ended June 30, 2025, driven by higher human resource costs, professional fees, and research and development expenses.

Sentiment

Score: 7

Explanation: The sentiment is positive due to exceptional revenue growth, a significant turnaround in gross profit, and the resolution of the going concern issue, indicating improved financial stability and operational momentum. However, the continued increase in net loss and high operating expenses, along with customer concentration and project delays in one segment, temper the overall positive outlook.

Positives

• Total revenue increased by 564.7% to $10,521,570 for the six months ended June 30, 2025, driven by multi-drone sales at Ondas Autonomous Systems (OAS).
• Gross profit significantly improved to $4,820,620 for the six months ended June 30, 2025, from a gross loss of $585,877 in the prior year, with gross margin increasing to 46%.
• The Company successfully raised approximately $42,677,000 in net proceeds from a registered public offering and $9,963,000 from the exercise of stock options and warrants during the six months ended June 30, 2025.
• Management concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists as of August 12, 2025, due to improved liquidity.
• OAS achieved the first-of-its-kind FAA Type Certification (TC) for the Optimus 1-EX UAV on September 25, 2023, enabling broader and autonomous drone operations.
• All 2022, 2023, and 2024 Convertible Promissory Notes were repaid in full by July 18, 2025, primarily through the issuance of common stock.
• A strategic investment was made in Rift Dynamics AS, a Norway-based defense technology company, with American Robotics gaining exclusive U.S. distribution rights for Rift's Wsp platform.

Negatives

• Net loss increased by $6,740,680 to $24,886,500 for the six months ended June 30, 2025, compared to the prior year period.
• Operating expenses increased significantly by 45% to $24,380,162 for the six months ended June 30, 2025, primarily due to higher human resource costs and professional fees.
• Ondas Networks' development revenue decreased by approximately $562,000 for the six months ended June 30, 2025, due to delays from railroads in implementing the 900 MHz band network.
• The Company continues to incur significant operating losses and has an accumulated deficit of approximately $261,254,000 as of June 30, 2025.

Risks

• The ongoing military operation in Israel, where Airobotics' main offices are located, could adversely affect anticipated milestones, ability to import materials, and ship products.
• Future capital requirements depend on many factors, including progress with technology development, manufacturing, marketing, patent enforcement, collaborative arrangements, and overall economic conditions.
• There is no assurance that the Company will generate revenue and cash as expected in its current business plan.
• If adequate funds are not available on commercially acceptable terms, the ability to fund operations, support business growth, or respond to competitive pressures could be significantly delayed or limited.
• Cash balances held at financial institutions are in excess of FDIC insurance limits, with approximately $66,418,510 in excess as of June 30, 2025, posing a concentration of credit risk.
• A small number of customers account for a substantial amount of revenue, with three customers representing 50%, 27%, and 19% of revenue for the three months ended June 30, 2025, indicating customer concentration risk.
• Delays by North American freight rail operators in implementing the 900 MHz band network could continue to impact Ondas Networks' development revenue.

Future Outlook

The Company expects to fund its operations for the next twelve months from cash on hand as of June 30, 2025, gross profits from revenue growth, potential prepayments from customers, potential proceeds from outstanding warrants, and additional funds sought through equity or debt offerings. Future capital requirements will depend on progress in developing, manufacturing, and marketing technologies, patent-related costs, collaborative arrangements, marketing activities, and market developments. The Company's ability to generate revenue and achieve profitability relies on successfully marketing and securing purchase orders from current and new customers, and efficiently manufacturing and delivering equipment.

Management Comments

• Management believes recent capital raises sufficiently alleviate previously identified conditions that raised substantial doubt about the Company's ability to continue as a going concern.
• Management has concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists as of the issuance date of these unaudited condensed consolidated financial statements (August 12, 2025).
• The Company is closely monitoring how the military operation in Israel could adversely affect its anticipated milestones and Israel-based activities, including the ability to import materials and ship products.

Industry Context

Ondas operates in the critical infrastructure and defense markets, providing private wireless (MC-IoT) and autonomous drone solutions. The adoption of IEEE 802.16 standard for future private wireless networks by the Association of American Railroads (AAR) positions Ondas Networks' FullMAX platform as a key upgrade solution for legacy rail communication systems. In the drone sector, OAS's FAA Type Certification for the Optimus 1-EX UAV is a significant regulatory achievement, streamlining operational approvals for broad flight operations over people and infrastructure, which is crucial for scaling automated UAS operations in defense, homeland security, and commercial critical infrastructure.

Comparison to Industry Standards

• The FAA Type Certification for the Optimus 1-EX UAV on September 25, 2023, is an industry-leading regulatory success, making it the first autonomous security data capture UAV to achieve this distinction. This streamlines operational approvals for broad flight operations over people and infrastructure, a key differentiator in the autonomous drone market.
• The adoption of the IEEE 802.16 standard by the Association of American Railroads (AAR) for future private wireless networks, including the IEEE 802.16t Direct Peer-to-Peer (DPP) protocol for Next Generation head-of-train / end-of-train (HOT-EOT) communications (NGHE Gen4), positions Ondas Networks' FullMAX platform as a standards-based solution for a critical and evolving market segment.
• The strategic investment in Rift Dynamics AS and American Robotics' exclusive U.S. distribution rights for Rift's Wsp platform indicates a move to expand into the combat drone systems market, aligning with global defense technology trends towards affordable, mass-producible drone solutions.

Management Changes

Corporate Governance

Legal Proceedings

• The Company reached a settlement agreement for legal proceedings related to Ardenna, receiving $550,000 in reimbursements for legal fees.
• Airobotics received a favorable ruling from the Abu Dhabi Civil Court of Appeals for $2,138,945 plus interest and expenses in a non-payment case. A second settlement agreement was entered into on June 17, 2025, waiving the outstanding balance in exchange for inventory return.

Related Party Transactions

• Charles & Potomac Capital, LLC (C&P), affiliated with former director Joseph Popolo, is involved in several convertible notes and a secured note with Ondas Networks and OAS, and participated in the 2024 Direct Registered Offering and Networks Series A-2 Preferred Stock offering.
• Privet Ventures LLC, affiliated with Eric Brock (Chairman and CEO), purchased a Convertible Note in OAS for $1,000,000.
• The Company itself holds $2,000,000 in January 2025 Networks Convertible Notes, which are eliminated in consolidated financials.

Stakeholder Impact

• Shareholders: Experienced significant dilution from equity raises (e.g., 66.9M shares for debt repayment, 32M shares from public offering), but benefit from improved liquidity, resolution of going concern, and potential for future growth from strategic initiatives and revenue increases.
• Employees: Increased headcount, salary, and benefit expenses, along with significant stock-based compensation grants, indicate investment in human capital and potential for employee retention and motivation.
• Customers: Benefit from improved connectivity and data solutions, particularly in critical infrastructure and defense. However, rail customers may experience delays in network implementation.
• Creditors: Convertible notes have been repaid in full, reducing certain debt obligations, while new related-party notes have extended maturity dates.

Next Steps

• Fund operations for the next twelve months using cash on hand, gross profits, potential customer prepayments, and proceeds from outstanding warrants.
• Seek additional funds through equity or debt offerings and/or borrowings under additional notes payable or lines of credit if needed.
• Successfully market and secure purchase orders for products and services from identified sales pipeline and new customers.
• Efficiently manufacture and deliver equipment on purchase orders.
• Continue research and development efforts for technologies.
• Integrate the strategic investment in Rift Dynamics AS and facilitate American Robotics' exclusive U.S. distribution of the Wsp platform.

Key Dates

Recommendation

While Ondas Holdings demonstrated impressive revenue growth and a significant gross profit turnaround, coupled with the crucial resolution of its going concern issue, the Company continues to incur substantial net losses and high operating expenses. The recent capital raises, while improving liquidity, have also led to significant share dilution. The strategic investment in Rift Dynamics and FAA certification are positive long-term indicators, but the company's ability to achieve sustained profitability and manage its high cost structure remains a key challenge. A 'hold' recommendation reflects the positive momentum and strategic positioning, balanced against the ongoing financial losses and the need for continued execution to achieve profitability.

Keywords

Ondas Holdings, ONDS, Quarterly Report, SEC Filing, Drone Technology, Autonomous Systems, Private Wireless, MC-IoT, FAA Type Certification, Financial Results, Capital Raise, Risk Factors, Corporate Governance, Defense Technology