UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission File Number: 001-39761
ONDAS HOLDINGS INC.
(Exact name of registrant as specified in its charter)
One Marina Park Drive, Suite 1410, Boston,
MA02210
(Address of principal executive offices) (Zip Code)
(888)657-2377
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 ONDS The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates
of the registrant as of June 28, 2024 (the last business day of the registrant’s most recently completed second fiscal quarter)
was approximately $34.6 million. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant
are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors, or 10% beneficial
owners are, in fact, affiliates of the registrant.
The number of shares outstanding of the issuer’s common stock
as of March 11, 2025 was 105,730,826.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
From time to time we make
statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions
and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements.
Forward-looking statements may appear throughout this report, including without limitation, the following sections: Item 1 “Business,”
Item 1A “Risk Factors,” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.” “Forward-looking statements generally can be identified by words such as “anticipates,” “believes,”
“estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,”
“will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements
are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to
differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include
those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Risk Factors”
in Item 1A and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). We undertake
no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law.
Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
We caution you that assumptions,
beliefs, expectations, intentions, and projections about future events may and often do vary materially from actual results. Therefore,
we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements.
A summary of some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements,
including forward-looking statements contained in this Annual Report on Form 10-K, is provided below under “Risk Factor Summary.”
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included
in this Annual Report on Form 10-K and our other filings with the SEC. Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking
statements. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us
to predict all of them. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions,
joint ventures, investments, or other strategic transactions we may make. You should not place undue reliance on our forward-looking statements.
Each forward-looking statement
speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements
whether as a result of new information, future developments or otherwise, except as required by law.
i
Risk Factor Summary
Our
business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Item 1A. Risk Factors”
in this Annual Report on Form 10-K. Some of these principal risks include the following:
Risks Related to Our Business and Industry
ii
Risks Related to Regulatory Requirements
Risks Related to our Intellectual Property
Risks Related to our Financial Results
● We will need to generate significant sales to achieve profitable operations.
iii
Risks Related to our Common Stock
Risks Related to the Notes
iv
Item 1. Business.
This business description
should be read in conjunction with our audited Consolidated Financial Statements and accompanying notes thereto appearing elsewhere in
this Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”), which are incorporated herein
by this reference.
The use of the words “we,”
“our,” the “Company” and “Ondas Holdings” in this Form 10-K refer to Ondas Holdings Inc. and its subsidiaries.
Corporate Overview
Ondas Holdings Inc. is a leading
provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks Inc., a Texas corporation (“Ondas
Networks”), Ondas Autonomous Systems Inc., a Nevada corporation (“OAS”), which wholly-owns Airobotics, Ltd., an Israeli
company (“Airobotics”), and American Robotics, Inc., a Delaware corporation (“American Robotics”).
Ondas Networks provides wireless
connectivity solutions. OAS provides drone and automated data solutions through its subsidiaries Airobotics and American Robotics. Ondas
Networks and OAS together provide users in rail, energy, mining, public safety and critical infrastructure and government markets with
improved connectivity, data collection capabilities, and data collection and information processing capabilities. We operate Ondas Networks
and OAS as separate business segments, and the following is a discussion of each segment. See Note 1, Note 2, and Note 12 of the accompanying
Consolidated Financial Statements for further information regarding our segments.
Ondas Networks
Ondas Networks provides wireless
connectivity solutions enabling mission-critical Industrial Internet applications and services. We refer to these applications as the
Mission-Critical Internet of Things (“MC-IoT”). Our wireless networking products are applicable to a wide range of MC-IoT
applications, which are most often located at the very edge of large industrial networks. These applications require secure, real-time
connectivity with the ability to process large amounts of data at the edge of large industrial networks. Such applications are required
in all of the major critical infrastructure markets, including rail, electric grids, drone operations, oil and gas, and public safety,
homeland security and government, where secure, reliable and fast operational decisions are required in order to improve efficiency and
ensure a high degree of safety and security. Our MC-IoT intellectual property has been adopted by the Institute of Electrical and Electronics
Engineers (“IEEE”), the leading worldwide standards body in data networking protocols, and forms the core of the IEEE 802.16
standard. Because standards-based communications solutions are preferred by our mission-critical customers and ecosystem partners, we
continue to take a leadership position in IEEE as it relates to wireless networking for industrial markets.
We design, develop, manufacture,
sell and support FullMAX, our patented, Software Defined Radio (“SDR”) platform for secure, private, wide-area broadband networks.
Our customers install FullMAX systems in order to upgrade and expand their legacy wide-area network infrastructure. By upgrading their
legacy systems, customers benefit from significant increases in data throughput which enables new applications. We have targeted the North
American freight rail operators for the initial adoption of our FullMAX platform. These rail operators currently operate legacy communications
systems utilizing dated narrowband wireless technologies for voice and data communications. These legacy wireless networks have limited
data capacity and are unable to support the adoption of new, intelligent train control and management systems. The freight rail operators
through the Association of American Railroads (“AAR”), its advisory subsidiary MxV Rail, as well as the American Railway Engineering
and Maintenance Association (“AREMA”), have adopted the IEEE 802.16 standard for future private wireless networks.
Our software-based FullMAX
platform is an important and timely upgrade solution for privately-owned and operated wireless wide-area networks, leveraging Internet
Protocol-based communications to provide security, more reliability and significant data throughput for our mission-critical infrastructure
customers. We believe industrial and critical infrastructure markets throughout the globe have reached an inflection point where legacy
serial and analog based protocols no longer meet industry needs. In addition to offering enhanced data throughput, FullMAX is an intelligent
networking platform enabling the adoption of sophisticated operating systems and equipment supporting next-generation MC-IoT applications
over wide field areas. These new MC-IoT applications and related equipment require more processing power at the edge of large industrial
networks and the efficient utilization of network capacity and scarce bandwidth.
1
OAS
Our OAS business unit develops
and integrates drone-based solutions focusing on high-performance critical applications for government and Tier-1 commercial enterprises.
Ondas is marketing comprehensive drone-based solutions to address the needs of governmental and commercial customers based on its commercially
available platforms: the Optimus SystemTM, a fully autonomous drone platform capable of continuous and multipurpose aerial data capturing
and analytics, and the Iron Drone RaiderTM , a fully autonomous interceptor drone designed to neutralize small hostile drones.
Our unique, fully autonomous
platforms enable cutting-edge aerial capabilities and are designed to serve and protect critical infrastructure and operations. Our business
focuses on end-user entities in defense, homeland security, public safety, smart city, airport authorities, and other governmental entities
together with commercial operators of critical industrial and technology facilities such as oil & gas, seaports, mining, and heavy
construction as well as for data centers and semiconductor fabs. For these industries, OAS provides specialized real-time aerial data
capturing and aerial protection solutions in the most complex environments such as urban areas, sensitive and critical facilities and
field area operations, and high-priority projects. In addition, we offer a wide suite of supplementary, enabling services for successful
implementation such as AI data analytics, data automation, IT implementation, safety planning, certification, training, and maintenance,
handling all the complex aspects of such high-performance drone operations.
Our portfolio companies, American
Robotics and Airobotics, form a unique, powerful, and synergistic combination covering all the aspects required for successful Aerospace
business together with data technologies and services for digital transformation industries. Our companies are specialized in addressing
all the challenges arising along these types of product lifecycles including research and development, manufacturing, certification, and
ongoing support.
OAS and its portfolio companies
have already gained a track record of industry-leading regulatory successes including the securing of the first-of-its-kind Type Certification
(TC) from the FAA for the Optimus 1-EX UAV on September 25, 2023, becoming the first autonomous security data capture UAV to achieve this
distinction. TC, recognized as the highest echelon of Airworthiness Certification, streamline operational approvals for broad flight operations
over people and infrastructure. The certification verifies the compliance of the system’s design with the required FAA airworthiness
and noise standards, ensuring safe operation within the US National Airspace System (NAS) thereby significantly broadening the range of
operational scenarios and scaling up of operations for automated UAS. Achieving FAA Type Certification will enable drone operations beyond-visual-line-of-sight
(BVLOS) without a human operator on-site. With a strong footprint in the US market and worldwide, we believe that OAS is well-positioned
with proven technology, a unique offering, and strong capabilities to strategically transform critical operations with our cutting-edge
drone tech and capabilities.
Industry Partnerships
Ondas Networks continues to
develop partnerships in the rail space to develop and market wireless communications products and services based on Ondas Networks’
technology. Our partnership with Siemens Mobility (“Siemens”) is geared to market our FullMAX-based networking technology
and services and to jointly develop certain wireless communications products for the North American Rail Industry based on Siemens’
Advanced Train Control System (“ATCS”) protocol and our FullMAX MC-IoT platform. We are working with other industry partners
to commercialize our platform technologies for specific use cases and to drive broad industry adoption of dot16 applications.
Our Strategy
Our goal is to be a global
leader in providing turnkey data solutions for industrial, public safety and government markets by offering i) secure wireless connectivity
solutions enabling high-bandwidth, mission-critical Industrial Internet applications and services through Ondas Networks and ii) aerial
security and data collection and analysis via automated drone platforms through OAS.
2
The key elements of our growth
strategy include the following:
Our Business Model
Ondas Networks
We sell our FullMAX MC-IoT
wireless products and services globally through a direct sales force and value-added sales partners to industrial and critical infrastructure
providers including major rail operators, with growth opportunities in other markets such as commercial and industrial drone operators,
electric and gas utilities, water and wastewater utilities, oil and gas producers and pipeline operators, and for other critical infrastructure
applications in areas such as public safety, homeland security and defense, and transportation. We continue to develop our value-added
reseller relationships for the development of new types of wireless connectivity for the North American Rail market as well as selected
global markets in both Europe and Asia.
3
In executing our go-to-market
strategy, we intend to monetize our software-based intellectual property and grow revenue and cash flow with embedded FullMAX software
sales, Software-as-a-Service (“SaaS”) arrangements, IP royalties based on Ondas Networks software and through additional services
provided to customers and ecosystem partners. Customers deploy our connectivity and Fog-computing platform in private networks that are
designed for lifetimes of 10 – 15 years or even longer. Our FullMAX platform is software-defined and offers customers flexibility
to expand capacity and evolve network utilization. Similarly, our ecosystem partners often integrate our FullMAX software and wireless
capability into their own long-lived equipment and systems which their customers purchase and deploy. As such, we believe our software
solutions provide ongoing revenue opportunities related to both connectivity value and edge computing capability. Customers and ecosystem
partners will require ongoing FullMAX system and security enhancements and for us to design additional features which create opportunities
for additional, recurring revenue and profit streams. Our monetization strategies include:
Systems sales: Our
FullMAX deployments are typically large, mission-critical wide-area networks deployed and privately operated by our industrial and government
customers. These end-to-end system deployments involve sales consisting of both base stations and edge radio end points with embedded
FullMAX software and network management software and tools.
Software and hardware maintenance
agreements: Our customers contract with us for extended software and hardware maintenance which provide them with critical ongoing
support for their installed network. These contracts provide revenue to us in the year following an initial installation. Software maintenance
licenses entitle the customer to ongoing software and security upgrades as well as enabling the provision of additional system features.
Similarly, hardware maintenance programs provide customers with extended equipment warranty terms for an installed network.
These arrangements allow our
customers to continue to maintain a modern, flexible and upgradeable network over a long period of time. These agreements may extend for
multiple years given the long average life of the installed and growing network.
Licensing / Royalties:
In certain system deployments, our ecosystem partners may choose to embed FullMAX software into their own hardware and software platforms
providing us with an ongoing per device multi-year revenue stream. Licensing is an effective way for an ecosystem partner to jumpstart
customer activity. Alternatively, a partner may choose to develop software based on our intellectual property generating royalty revenue.
Other Services: We
provide ancillary services directly related to the sale of our wireless communications products which include wireless network design,
systems engineering, radio frequency planning, software configuration, product training, installation, and onsite support. Furthermore,
we also provide engineering and product development services to ecosystem partners who are interested in integrating their intelligent
equipment with our FullMAX SDR platform and need our expertise to do so.
OAS
OAS markets aerial solutions
based on its Optimus SystemTM and Iron Drone RaiderTM platforms via direct sales to enterprises and government customers. Additionally,
OAS utilizes channel marketing strategies, building a network of partners and agents to distribute our solutions. We focus on identifying
and qualifying large, sophisticated customers with active drone programs who have the ability and intent to expand those programs and
eventually deploy fleets of automated drones across their portfolio of assets. Our unique value proposition is based on our core strategic
capability to provide holistic solutions, being a trusted one-stop-shop for major entities, and de-risking innovative complex drone implementation
processes.
After initial customer qualification,
contracting and the receipt of a purchase order, we ship and install our platforms and solutions on the customer premises. Via American
Robotics and Airobotics staff, we are planning our customers deployments providing complete support for all stages of implementation.
Our field service personnel remain on location for a short period of time to ensure the programmed automated drone operations are meeting
customer and regulatory requirements and implemented successfully on-prem, on-time and on-budget.
4
We offer our solutions in
several business models designated to allow the required flexibility and benefits for our customers and creating recurring revenues and
organic growth within our accounts:
Our Products and Services
Ondas Networks
Ondas Networks has developed
a next-generation radio platform specifically to meet the evolving data needs of large industrial and government customers and markets.
These markets are differentiated from consumer markets in that the customers assets are dispersed over very wide and remote geographies
with specific challenges to installation, maintenance, and upgrades. These challenges led us to design a new type of software-based radio
platform capable of supporting a long useful life to the network hardware. Our software defined radio (“SDR”) architecture
allows us to customize almost any aspect of the air interface protocol, the key components of which are patented and have been incorporated
into new IEEE wireless standards. The ability to constantly improve customer networks and hosted software applications with flexible,
over-the-air software upgrade helps create customer loyalty.
Our FullMAX SDR platform is
designed to enable highly secure and reliable industrial-grade connectivity for truly mission-critical applications. An end-to-end FullMAX
network consists of connected wireless base stations, fixed and mobile edge radios and supporting technology all enabled by critical software
developed and owned by Ondas Networks. The Fog-computing capability integrated in our end-to-end FullMAX SDR platform, primarily through
docker container technology, is valued by our customers and ecosystem partners as they seek to leverage the value of MC-IoT applications
for improved safety, efficiency, and profitability. Our IEEE 802.16s compliant equipment is designed to optimize the performance of unused
or underutilized VHF / UHF low frequencies licensed radio spectrum and narrower channels. We do this through various patented software
algorithms including via “spectrum harvesting” techniques which aggregate narrowband channels to create increased broadband
network capacity. Our channel aggregation algorithms include the ability to aggregate hard to utilize, non-contiguous narrowband channels
and are a hallmark feature of a FullMAX broadband system.
OAS
We provide our customers with
turnkey data and security aerial solutions designed to meet their unique requirements in complex environments. Our solutions combine our
platforms the Optimus SystemTM and Iron Drone RaiderTM together with a wide suite of supplementary services to insure successful
deployment and integration of the solution on-prem.
5
The Optimus SystemTM
The Optimus SystemTM
is a fully autonomous drone platform capable of continuous and multipurpose drone operations for various applications. As one of the world’s
first “drone-in-a-box” solutions, the Optimus SystemTM is marketed as an “Aerial Drone Infrastructure”, designed
for aerial data collection and analysis in security, surveillance, and supervision applications across governmental and commercial markets.
The Optimus SystemTM provides a cutting-edge solution for public safety, security, industrial Smart City initiatives, and other critical
operations. The platform enables routine, high-resolution, on-demand aerial response alongside automated aerial mapping, surveying, and
inspection capabilities—essential in the digital transformation and Gov-Tech sectors, including Public Services, Oil & Gas,
Infrastructure, Heavy Construction, Rail, Ports, and more.
The Optimus SystemTM,
in combination with the KestrelTM system, enhances autonomous operations with advanced Detect and Avoid (DAA) capabilities, airspace
safety and surveillance, and Counter-Unmanned Aircraft Systems (C-UAS) solutions. The integration of KestrelTM enables the Optimus
SystemTM to operate Beyond Visual Line of Sight (BVLOS), as demonstrated through an FAA-approved BVLOS waiver. This critical capability
allows for autonomous, long-range operations across multiple mission sets, expanding the system’s deployment potential in complex
airspace environments.
The Optimus SystemTM
consists of (i) OptimusTM, a highly automated, AI-powered drone with advanced imaging payloads, (ii) the AirbaseTM, a ruggedized,
weatherproof base station enabling housing, battery swapping, battery charging, payload swapping, data processing, and cloud transfer,
and (iii) InsightfulTM, a secure web portal and API that enables remote interaction with the system, data, and analytics from anywhere
in the world. These subsystems are interconnected through a suite of supporting technologies. The AirbaseTM features internal robotic
mechanisms that facilitate automated battery and payload swaps. This allows for 24/7 operations, as the OptimusTM drone can be immediately
redeployed after returning to the dock for a battery swap. Similarly, the autonomous swapping of sensors and payloads without human intervention
allows the Optimus SystemTM to support multiple applications and use cases from a single deployment.
We design, develop, and manufacture
the Optimus SystemTM, providing high-fidelity, ultra-high-resolution aerial security and data collection to enterprise and government
customers. Our turnkey aerial intelligence solution enables continuous asset digitization, real-time monitoring, and data-driven decision-making
for mission-critical operations. Designed from the ground up as an end-to-end autonomous solution, the Optimus SystemTM operates
seamlessly in real-world environments. Leveraging advancements in robotics automation, machine vision, edge computing, and AI, deployed
OptimusTM units form an interconnected drone infrastructure, enabling autonomous, unattended security and data collection with unmatched
reliability and operational efficiency.
The Iron Drone RaiderTM System
In March 2023, Airobotics
acquired the assets of Iron Drone Ltd, an Israeli counter-drone company, and fully integrated its team and technology into the Company.
We offer The Iron Drone RaiderTM
system, which is a state-of-the-art counter-drone solution designed to counter small drones as they are a growing threat in many defense,
homeland security, and public safety aspects. As a cutting-edge technology, it is specifically marketed to military, government, and enterprise
customers, offering robust defense and security for critical infrastructure, valuable assets, and human lives.
The Iron Drone RaiderTM
is comprised of a docking station and intercepting drones and can be integrated into any mobile drone detection system. The heart of the
RaiderTM lies in its level of autonomy, allowing it to fly without GPS, day, or night, and safely neutralize small suspicious drones
with minimal collateral damage, lowering them to the ground with a designated parachute. The system uses AI technologies and onboard cameras
and computers to enable it to detect and intercept unauthorized or hostile drones effectively, capable of addressing multiple hostile
drone targets simultaneously. It can seamlessly integrate with various existing drone detection systems, making it adaptable and versatile
for different operational contexts.
During 2024 we upgraded the Iron Drone RaiderTM system to address
the needs of the Israel and global defense industries market and end users, which included enhancements of the on-board sensor capabilities
for intelligent navigation in complex GNSS-denied areas, which support the most advanced requirements and the efforts of protecting military
and civil operations against the threat of small kamikaze and surveillance hostile drones.
6
OAS Services
OAS provides specialized real-time
aerial data capturing and analytics together with aerial protection services based on its systems. In addition, we offer a wide suite
of supplementary enabling services for successful implementation and customization such as AI data analytics, data automation, IT implementation,
safety planning, certification, training, and maintenance, handling all the complex aspects of such high-performance drone operations.
This unique combination makes our enterprise a one-stop-shop of visionary drone installations.
Certification and Aviation
Regulatory Services. American Robotics and Airobotics have industry leading regulatory successes which include having the first drone
system approved by the FAA for automated operation BVLOS without a human operator or visual observer on-site. American Robotics’
FAA approvals were enabled by integrating a suite of proprietary technologies, including Detect-and-Avoid (“DAA”) and other
proprietary intelligent safety systems into its autonomous drone platform, which we plan to integrate into the Optimus SystemTM.
Our regulatory team has been working closely with Civil Aviation Authorities worldwide since 2016 to explore new and innovative approaches
for approving complex automated BVLOS flights over people. Our regulatory strategy has consistently proven successful, leading to numerous
pioneering regulatory accomplishments worldwide, cementing our position as a leader in the global drone industry. Our team of experts
actively participates in rule-making advisory committees, drone associations, and maintains direct communication with regulators in each
country we operate in. We are committed to staying ahead of the curve in terms of drone regulations and compliance. Working with us allows
customers to certify and coordinate complicated drone operations with regulators worldwide.
Training, Maintenance and
Remote Operations. American Robotics and Airobotics have gained substantial experience in drone operations worldwide. This includes
training, maintenance and remote operations services. Our operational teams are highly qualified in all of the drone operation roles,
including drone piloting, training, and maintenance. As an aerospace developer, manufacturer, and operator our operational capabilities
enable our customers to overcome many operational challenges and reach operational readiness fast.
Implementation and customization.
American Robotics and Airobotics have gained substantial experience in implementation and customization of our solutions to our customers.
We offer support and engineering services to our customers in order to successfully integrate our aerial platforms with the highest levels
of both automation and data security, quickly and efficiently.
The Market for Our Products and Services
Ondas Networks
We have targeted the North
American rail operators for the initial adoption of our FullMAX platform. These rail operators currently operate legacy communications
systems utilizing serial-based narrowband wireless technologies for voice and data communications. These legacy wireless networks have
limited data capacity and are unable to support the adoption of new, intelligent train control and management systems. In addition to
data capacity challenges, rail operators need to reliably cover the vast and often remotely located rail track and related infrastructure
which extends nationwide. The rail operators require a next-generation, robust system with significantly increased data throughput capacity
and flexibility to adopt new applications. We believe a transition to integrated Fog-computing wireless communications systems will enable
the rail operators to drive more intelligence to the edge of their operating environments enabling real time automation and better operator
control of many critical operating systems related to train control, crossing safety, train and track integrity and drone operations.
Network upgrades will support enhanced safety, improved efficiency, and increased profitability of train operations.
The North American Rail Network
is vast in scale, consisting of 140,000 miles of track, 25,000 locomotives, and 1.6 million railcars. Within this large footprint there
are 200,000 highway crossings, with at least 65,000 of the crossings equipped with electronic systems today, a number which is expected
to increase in the coming years. Applications that improve grade crossing safety are enabled by our FullMax platform. The Class I railroads
currently operate four separate private wireless networks in support of train operations. Those networks are deployed using spectrum in
the 160 MHz, 220 MHz, 450 MHz and 900 MHz bands. We believe a significant portion of the communications infrastructure has been in operation
for more than 20 years and now requires a technological upgrade to support new applications and increased capacity requirements. Our FullMAX
MC-IoT platform offers an excellent migration path for these applications. The Class I Railroads value the ability of our frequency agnostic
SDR architecture to enable a substantial data capacity increase utilizing the railroad’s existing wireless infrastructure and dedicated
FCC licensed radio frequencies, as well as the flexibility to adapt to and take advantage of future changes in spectrum availability,
as well as future business and operational requirements. Based upon management estimates, we believe the addressable market for the four
private North American Railroad networks is approximately $1.3 billion.
7
OAS
The total addressable market
(“TAM”) of OAS is measured at over $100 billion in size according to management estimates and independent third-party research.
The TAM comprises the potential value of Ondas’ Optimus System in the global defense and civil UAV market and in the drone services
market and the addressable market of the Iron-Drone Raider system in the Counter-Unmanned Aircraft Systems (C-UAS) markets.
Ondas competes in the large
drone markets which was valued by a study by Grand View Research at $83.7 billion in 2025 and forecasted to grow further at a compound
annual growth rate of 14% reaching $160.6 billion by 2030. In addition, Ondas provides drone services including drone data and data analytics
based on multiple various sensors, in addition to maintenance, repair and operational service. According to Fortune Business Insights,
drone market services is valued at $32.1 billion in 2025 and projected to grow to $213.9 billion by 2032. In the US, the FAA anticipates
that the growth rate in the commercial drone sector will remain high over the next few years. This is primarily driven by the regulatory
clarity that Part 107 rules continues to provide to industry. This is further supported by the Operations Over People final rule, published
on December 28, 2020, which is the latest incremental step towards further integration of small drones into the national airspace. Ondas
has secured a key position within this market, holding the first FAA Airworthiness Type Certificate, allowing it to apply to fly its drones
in complex populated environments.
In addition to the Optimus
System and its related drone services, Ondas also competes in the C-UAS market providing the Iron-Drone Raider system for counter drone
kinetic interception. The growing C-UAS technology market has been valued at $3.1 billion in a recent study published by Grand View Research
in 2025 and is forecasted to grow at a compound annual growth rate of 27.2% to $10.6 billion by 2030. We believe these studies underestimate
the potential market size, because they don’t fully consider the potential effect of security vulnerabilities on the value of the
activities the C-UAS equipment protects and enables, in sensitive locations such as major sporting events, and the protection of industrial
assets such as in the energy and utility sectors. Notably, although the North American C-UAS marketplace is the largest by revenue, twelve
other regions of the world are also active in C-UAS. High-profile events in other countries involving UAS such as the war in Ukraine and
Israel. Recent research and reports from 2024 onwards highlight a significant increase in unauthorized drone activities near airports,
raising concerns about aviation safety and security. According to the US Federal Aviation Administration (FAA) over 100 reports of drone
sightings were received, near airports each month. Between November 2014 and December 2024, there were 18,891 reported drone sightings,
averaging nearly 155 per month. In the first four months of 2024 alone, the FAA recorded 326 drone-related incidents near aircraft and
airports, underscoring the escalating security risks.
Customer Activity
Ondas Networks
The majority of Ondas Networks
customer activity has been with railroad operators and partners, including Siemens, in North America. North American railroad operators
run multiple, frequency-specific networks for different applications. Our FullMAX platform has the flexibility to operate in all these
frequency bands and will allow these customers the opportunity to better utilize their existing radio spectrum, avoid expensive additional
spectrum purchases, and add more high-value, data-intensive applications to their operations. Our initial focus with these rail customers
has been for train control applications and related safety systems in the 900 MHz frequency band where the FCC has recently awarded our
railroad customers new radio spectrum.
We have worked
extensively with MxV Rail, a subsidiary of the AAR, to validate the performance of our dot16 platform. In March 2023, the
Association of American Railroads (“AAR”) formally announced that IEEE 802.16 standard would be the wireless platform
for the greenfield 900 MHz network. In April 2023, the American Railway Engineering and Maintenance-of-Way Association (AREMA) voted
to require the use of 802.16 in the 900 MHz greenfield band; The AAR also confirmed they have agreed with the Federal Communications
Committee to retire the legacy 900 MHz band by September 2025 and that the wireless network in the new 900 MHz band would be
substantially built by April 2026.
We are currently engaged in
field installation activities with multiple railroads. We expect a 900 MHz network upgrade cycle across all Class I railroad systems over
the next few years in order to comply with FCC license requirements and meet business needs related to safety and profitability. We are
also engaged in supplying rail operators in the important Northeast Corridor with key communications equipment upgrades.
We have also engaged the AAR
and the WCC on the technical roadmap for the legacy 160 MHz wireless network used by the railroads in North America. We believe the 160
MHz network will be the next major wireless network the railroads upgrade utilizing IEEE 802.16t technology.
As of December 31, 2024, Ondas
Networks was active with six of the Class 1 Rails in North America and with one of the largest railroads in the world, Indian Railways,
for a multi-year delivery program of locomotive radios for on-board telemetry applications.
8
OAS
Our Optimus SystemTM
and Iron Drone RaiderTM continue to gain strong traction across enterprise, industrial, and government markets. The platform has
been extensively tested internally and externally, with customers validating its reliability, safety, and performance in real-world deployments.
In the United Arab Emirates,
Airobotics expanded its collaboration with a local governmental entity in Dubai, deploying additional Optimus Systems as part of the world’s
first drone network infrastructure for public safety and municipal services. A renewed and expanded services agreement ensures continued
operational support and maintenance, allowing the fleet to conduct thousands of autonomous flights each month in densely populated areas.
In Israel, Airobotics received
a purchase order from one of the world’s largest semiconductor manufacturers to extend the deployment of our Optimus SystemTM
for aerial security and data services at a critical semiconductor fabrication facility. The system, in continuous operation since 2016,
remains one of the few fully automated aerial data capture solutions functioning within a high-security industrial environment while seamlessly
complying with national airspace regulations.
The Iron Drone RaiderTM
counter-UAS platform saw increased demand, securing an initial purchase order in May 2024 from a major Israeli defense company for the
first RaiderTM systems. The first deployment phase is underway, with follow-on orders expected in the second and third quarters,
as the system undergoes operational validation in defense environments.
In July 2024, we received
an initial purchase order from a major government military customer for the Iron Drone RaiderTM, supporting border security and protection
of critical assets from hostile drones. This was followed by an expansion order in August, which included enhanced system features and
long-term operational support. As a structured, multi-stage deal, additional orders are expected based on performance in combat conditions.
In September 2024, Airobotics secured a $5.4 million purchase order for the Optimus SystemTM from a major government military customer,
with deployments planned for military bases and border security applications under extreme environmental conditions. This order further
demonstrates the system’s versatility in high-security defense and infrastructure monitoring operations.
In Europe, we expanded our
market reach through strategic reseller partnerships with HHLA Sky and C-Astral Aerospace, enabling us to offer drone services for terminal
operations and critical infrastructure in Germany, Slovenia, and other European markets. With multiple demonstrations planned for defense
and critical infrastructure clients, we anticipate securing new customer orders in 2025.
American Robotics continued
its expansion in the U.S. market, securing a contract with the U.S. Coast Guard for maritime emissions monitoring in support of EPA Clean
Port initiatives at the Ports of Los Angeles and Long Beach. This marks our first operational contract with a federal agency, opening
doors for expanded drone services in maritime security and environmental monitoring.
In the third quarter, Airobotics
secured $9 million in purchase orders from a major government military customer for Iron Drone RaiderTM system deployments, upgrades,
and full-scale operational rollouts to protect national borders, military units, and high-security facilities.
Airobotics was also
awarded a $1 million grant from the Israeli Innovation Authority (IIA) in November to accelerate development and enhance the Iron
Drone RaiderTM with advanced autonomous counter-drone capabilities. In addition to completing the U.S. Coast Guard contract
discussed above, American Robotics expanded its market presence by securing key demonstrations with a technology infrastructure
provider in Texas. These engagements highlight the Optimus SystemTM’s ability to perform fully autonomous
beyond-visual-line-of-sight (BVLOS) missions for infrastructure and security monitoring.
As we closed 2024, Airobotics
secured another purchase order for the Iron Drone RaiderTM from a major defense company, reinforcing our strong position in the counter-drone
security market.
With record-breaking purchase
orders, an expanding global footprint, and continued market momentum, the demand for our Optimus SystemTM and Iron Drone RaiderTM
continues to accelerate. As awareness and adoption of autonomous drone solutions grow, we anticipate further expansion in our customer
pipeline across the U.S., Middle East, and Europe, strengthening our leadership in autonomous aerial security and infrastructure monitoring.
9
Manufacturing, Availability and Dependence
upon Suppliers
Ondas Networks and OAS utilize
outsourced manufacturing partners in the building of product to fulfill customer orders. Utilizing contract manufacturers allows us to
focus on designing, developing and selling our products. Furthermore, outsourced manufacturing allows us to leverage the economies of
scale and expertise of specialized outsourced manufacturers, reduce manufacturing and supply chain risk and distribution costs.
Ondas Networks designs the
printed circuit boards and enclosures for our radios. The physical manufacturing of FullMAX circuit boards is outsourced to best-in-class
industrial contract manufacturers. The contract manufacturer is responsible for sourcing the majority of components, assembling the components
onto the printed circuit boards and then delivering the final boards to us. Once at our facility, the boards are tested, then placed into
enclosures and programmed with the appropriate software. The radios are then configured according to the requirement of the network and
run through system level tests before being packaged and shipped to the customer. Ondas Networks maintains multiple contract manufacturers,
both domestically and internationally, to ensure competitive pricing and to reduce the risk from a single manufacturer.
OAS designs the Optimus SystemTM
and the Iron DroneTM and specifies all components including the raw materials, sub-assemblies, intermediate assemblies, sub-components,
parts and the quantities of each needed to manufacture the end product. These assemblies incorporate a combination of custom-developed
components and COTS components. The building of an Optimus SystemTM and the Iron DroneTM is outsourced to best-in-class contract
manufacturers for fabrication and assembly. We utilize different contract manufacturers for the OptimusTM drone, the Iron DroneTM,
and AirbaseTM. Once complete, the contract manufacturers deliver the finished products to our facility where software is loaded,
and system-level quality assurance is performed before being packaged and shipped to the customer location for installation. OAS works
with a select group of contract manufacturers and has access to a large number of other comparable contract manufacturers.
Research & Development
Our ability to develop state-of-the-art
and cost-effective solutions relative to our competitors can only be achieved through our continued research and development efforts.
Ondas Networks research and
development activities are headed by Menashe Shahar, our Chief Technology Officer, based in our Sunnyvale, California headquarters. Mr.
Shahar is a co-founder of Ondas Networks and has over 30 years of telecommunications system development experience, including the design
and implementation of broadband wireless data systems for top tier system integrators and service providers including WorldCom, Nortel
and ADC. Mr. Shahar has been awarded multiple patents in the data communications industry and has been an active participant in major
wireless standardization activities including IEEE 802.16. In addition to internal research and development efforts, we also engage third
party consultants to assist us in our research and development activities. Mr. Shahar and his team are currently focused on expanding
the applications of our FullMAX technology in all spectrum bands used by rail operators in North America.
OAS research and development
activities are headed by Meir Kliner, President of OAS and CEO and Founder of Airobotics who is based in Petah Tikva, Israel. Mr. Kliner
has led the development of the Optimus SystemTM since 2014 and has expertise that represents a synthesis of years of managerial experience
combined with command of drone product design. Mr. Kliner’s background includes key roles in developing diverse aerial systems,
ranging from recreational to military applications and has founded several businesses, including Light and Strong, a premier manufacturer
of composites for aerial platforms in the drone industry. Mr. Kliner is supported by a development team based in Petah Tikva,
Israel.
Our research and development
team works closely with our customer support team and incorporates feedback from our customers into our product development plans to improve
our products and address emerging market requirements.
Our research and development expenses were approximately $12.5 million
and approximately $17.1 million for the years ended December 31, 2024 and 2023, respectively.
10
Intellectual Property
We rely primarily on patent,
trademark and trade secret laws to protect our proprietary technologies and intellectual property. As of this filing, the Ondas Networks
segment held a total of eight issued patents in the U.S., six international issued patents, seven pending patent applications in the U.S.,
and five international pending patent applications. The Ondas Networks segment’s patents expire between 2029 and 2044, subject to
any patent extensions that may be available for such patents. Our intellectual property centers around creating and maintaining robust,
private, highly secure, broadband industrial wireless networks using our FullMAX radio technology for our mission critical customers’
networks. We view the Ondas Networks segment’s patents as a key strategic advantage as the markets for industrial wireless connectivity
grows and as these industries move to standardized solutions and will enable us to earn licensing fees and/or royalties for the use of
our patents.
The OAS segment relies primarily
on patent, trademark and trade secret laws to protect our proprietary technologies and intellectual property. As of this filing, the OAS
segment held a total of six issued patents in the U.S., 22 international issued patents, and four international pending patent application.
The OAS segment’s patents expire between 2034 and 2048, subject to any patent extensions that may be available for such patents.
The OAS segment’s intellectual property incorporates internally developed software and hardware design incorporating machine and
computer vision and was developed with artificial intelligence and machine learning techniques. This intellectual property is critical
to the development of end-to-end systems which reliably enable the automated operation of drones in real-world environments.
We have a policy of requiring
our officers, employees, contractors and other service providers and parties with which we do business to enter into confidentiality,
non-disclosure (“NDAs”) and assignment of invention agreements before disclosure of any of our confidential or proprietary
information.
Seasonality
We do not believe that the
industry in which Ondas Networks and OAS competes is subject to seasonal sales fluctuation.
Dependence on a Small Number of Customers
Because we have only recently
invested in our customer service and support organization, a small number of customers have accounted for a substantial amount of our
revenue. During the year ended December 31, 2024, three customers accounted for approximately $3,763,000, $1,902,000, and $745,000 of
our revenue or approximately 52%, 26%, and 10%, respectively. During the year ended December 31, 2023, three customers accounted for approximately
$6,703,000, $5,127,000, and $3,395,000 of our revenue or approximately 43%, 33%, and 22%, respectively.
Competition
Ondas Networks
We compete with alternatives
to wireless technology, public cellular data networks and private wireless networking products from other manufacturers. We believe that
each of these competing solutions has core weaknesses when compared to FullMAX, as described below.
11
Public cellular data networks:
Other private wireless products:
Alternate technologies:
OAS
We compete with other drone
OEMs providing a variety of solutions for inspection, security, asset tracking and other applications. We compete on many dimensions with
system performance being differentiated by the level of autonomous operation, ease of use, reliability, safety, and government regulations.
Further, leading automated data solution providers must provide diverse payload capabilities for data collection, along with robust, advanced
analytics programs that are specific for each industry served.
12
Governmental Regulations
Our operations are subject
to various federal, state and local laws and regulations including: (i) authorization from the FCC and other global communications regulators
for operation in various licensed frequency bands; (ii) FAA and other global Civil Aviation Authority regulations and
approvals unique to the operation of commercial or industrial drones; (iii) customers’ licenses from the FCC; (iv) licensing, permitting
and inspection requirements applicable to contractors, electricians and engineers; (v) regulations relating to worker safety and environmental
protection; (vi) permitting and inspection requirements applicable to construction projects; (vii) wage and hour regulations; (viii) regulations
relating to transportation of equipment and materials, including licensing and permitting requirements; (ix) building and electrical codes;
and (x) special bidding, procurement and other requirements on government projects.
We believe we have the licenses
materially required to conduct our operations, and we are in substantial compliance with applicable regulatory requirements. The operation
of our manufactured products by our customers (network providers and service providers) in the U.S. or in foreign jurisdictions in a manner
not in compliance with local law could result in fines, business disruption, or harm to our reputation. The changes to regulatory
and technological requirements may also alter our product offerings, impacting our market share and business. Failure to comply with applicable
regulations could result in substantial fines or revocation of our operating licenses or could give rise to termination or cancellation
rights under our contracts or disqualify us from future bidding opportunities.