DEF 14A: Ondas Holdings Seeks Stockholder Approval for Director Elections, Auditor Ratification, Executive Compensation, and Incentive Plan Amendment

Ondas Holdings Inc. is soliciting proxies for its 2024 Annual Meeting of Stockholders to vote on director elections, auditor ratification, executive compensation, and an amendment to the 2021 Stock Incentive Plan.

Summary

• Ondas Holdings Inc. is holding its 2024 Annual Meeting of Stockholders on November 18, 2024.
• Stockholders will vote on the election of five directors.
• They will also vote to ratify the selection of Rosenberg Rich Baker Berman, P.A. as the company's independent certified public accountants for the fiscal year ending December 31, 2024.
• An advisory vote on the company's executive compensation (Say on Pay) is also on the agenda.
• Stockholders will vote on a proposal to approve an amendment to the 2021 Stock Incentive Plan to increase the number of shares of Common Stock authorized for issuance under the plan.
• The Board of Directors recommends voting FOR all director nominees, the auditor ratification, the Say on Pay proposal, and the incentive plan amendment.
• As of October 17, 2024, there were 76,094,733 shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting.

Sentiment

Score: 6

Explanation: The document is neutral in tone, providing factual information about the upcoming annual meeting and proposals. While there are some positive aspects, such as the Board's recommendations, there are also potential risks and concerns related to executive compensation and related party transactions.

Positives

• The Board is recommending 'FOR' votes on all proposals, indicating confidence in the company's direction and management.
• The proxy statement provides detailed information on each director nominee, allowing stockholders to make informed decisions.
• The company is seeking to increase the number of shares available under the 2021 Stock Incentive Plan, which could help attract and retain talent.

Negatives

• The company incurred net losses of $(44,844,872) in 2023, $(73,241,805) in 2022 and $(15,023,842) in 2021.
• Several executive officers have left the company in the past two years, including the CFO, Treasurer, Secretary and President.
• The company has entered into several related party transactions with Charles & Potomac Capital, LLC, an entity affiliated with Joseph Popolo, a Board Member of the Company.

Risks

• Failure to approve the incentive plan amendment could limit the company's ability to attract and retain key employees.
• The advisory vote on executive compensation could reflect stockholder dissatisfaction with current pay practices.
• Related party transactions could raise concerns about potential conflicts of interest.
• The company's dependence on key personnel, such as Eric Brock, could pose a risk if they were to leave.

Future Outlook

The company is requesting an increase of authorized shares of Common Stock to support anticipated grant activity for at least two years.

Management Comments

• The Board believes the Chief Executive Officer is in the best position to direct the independent directors attention on the issues of greatest importance to the Company and its stockholders.
• Our compensation philosophy reects our belief that equity compensation is a critical means of aligning the interests of employees with those of stockholders.

Industry Context

Proxy statements are a standard part of corporate governance, providing stockholders with information needed to make informed decisions about the company's direction and management.

Comparison to Industry Standards

• The director compensation policy appears to be in line with industry standards, with a mix of cash and equity compensation.
• The engagement of Alliance Advisors, LLC for proxy solicitation is a common practice among publicly traded companies.
• The company's audit committee composition and responsibilities align with the requirements of the Sarbanes-Oxley Act and Nasdaq listing rules.

Management Changes

Related Party Transactions

• On July 21, 2023, Ondas Networks completed the first tranche of a private placement with Stage 1 Growth Fund LLC (Series WAVE, Class A) (the SPV), with respect to the sale of (i) 329,238 shares of preferred stock of Ondas Networks, $0.00001 par value per share (Networks Preferred Stock), at a purchase price of $34.955 per share, convertible into shares of common stock of Ondas Networks, par value $0.00001 (Networks Common Stock) and (ii) warrants to purchase 7,825,792 shares of Common Stock of the Company, at an exercise price of $0.89 per share for gross proceeds to Ondas Networks of $11,508,517 (the 2023 Private Placement).
• On August 14, 2023, Ondas Networks completed the second tranche of the 2023 Private Placement with SPV, with respect to the sale of an additional (i) 99,885 shares of Networks Preferred Stock, at a purchase price of $34.955 per share, convertible into shares of Networks Common Stock and (ii) warrants to purchase 2,374,208 shares of Common Stock of the Company, at an exercise price of $0.89 per share for gross proceeds to Ondas Networks of an additional $3,491,483.
• C&P is the proxy for the members of the SPV, and the manager of the SPV must act in accordance with C&Ps direction with respect to exercise and voting of the issuers securities and derivative securities held by the SPV.
• Joseph Popolo, a director of the Company, is the sole control person of C&P.
• On February 26, 2024, Ondas Networks completed a private placement with certain purchasers with respect to the sale of (i) 108,925 shares of preferred stock of Networks Preferred Stock, at a purchase price of $41.3104 per share convertible into shares of Networks Common Stock and (ii) warrants to purchase 3,015,000 shares of Common Stock of the Company, at an exercise price of $1.26 per share for gross proceeds to Ondas Networks of $4,500,000 (the 2024 Private Placement).
• In connection with the 2024 Private Placement, C&P paid $250,000 for 6,051 shares of Networks Preferred Stock and warrants to purchase 167, 5000 shares of Common Stock of the Company.
• Joseph Popolo, a director of the Company, is the sole control person of C&P.
• Also on February 26, 2024, the Company completed a direct registered offering with certain purchasers with respect to the sale of (i) an aggregate of 3,616,071 shares Common Stock of the Company and (ii) warrants to purchase an aggregate of 3,616,071 shares of OASs common stock $0.0001 par value per share, at an exercise price of $1.29 for gross proceeds of $4,050,000 (the 2024 Direct Registered Offering).
• In connection with the 2024 Direct Registered Offering, C&P paid $2,000,000 for 1,785,714 shares of Common Stock of the Company and warrants to purchase 1,785,714 shares of OAS common stock.
• Joseph Popolo, a director of the Company, is the sole control person of C&P.
• On July 8, 2024 and July 23, 2024, C&P elected to purchase Convertible Notes in the aggregate original principal amount of $700,000 and $800,000, respectively, (the Networks Convertible Notes).
• Joseph Popolo, a director of the Company, is the sole control person of C&P.
• On September 3, 2024, Ondas Networks entered into that certain Security Note Agreement (the Networks Security Agreement), by and among Ondas Networks, as borrower, and C&P as lender, pursuant to which, Ondas Networks may draw, and C&P shall loan Networks, up to One Million Five Hundred Thousand Dollars ($1,500,000) (the Secured Loan).
• Joseph Popolo, a director of the Company, is the sole control person of C&P.
• On October 10, 2024, OAS entered into that certain Securities Purchase Agreement (the OAS Agreement), for an aggregate investment of $3.5 million in OAS (the Offering).
• The OAS Agreement was entered into by and among OAS and a private investor group, including (i) Privet Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company and OAS, and (ii) Charles & Potomac Capital, LLC, an entity affiliated with Joseph Popolo, a Board Member of the Company, for the sale of convertible promissory notes in the aggregate amount of $3.5 million (the OAS Notes).

Stakeholder Impact

• Approval of the incentive plan amendment could positively impact employees by providing them with equity-based compensation.
• Stockholders will be impacted by the decisions made at the Annual Meeting, including the election of directors and the approval of executive compensation.
• The selection of auditors impacts the reliability of the company's financial reporting.

Next Steps

• Stockholders should review the proxy statement and cast their votes before the deadlines.
• The company will hold its Annual Meeting on November 18, 2024.
• The Board will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.

Key Dates

Keywords

proxy statement, annual meeting, director election, auditor ratification, executive compensation, incentive plan, corporate governance, Ondas Holdings