Ondas Holdings Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparative period is Q1 2023. Unaudited consolidated results cover Ondas Networks and Ondas Autonomous Holdings (OAH), including Airobotics and American Robotics. The company supplies private wireless connectivity and autonomous drone and data solutions.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $0.625 million | $2.596 million |
| Gross profit (loss) | $(0.395) million; (63%) margin | $1.027 million; 40% margin |
| Operating expenses | $8.732 million | $13.680 million |
| Operating loss | $(9.127) million | $(12.653) million |
| Net loss | $(9.876) million | $(14.456) million |
| Net loss attributable to common stockholders | $(10.849) million | $(14.456) million |
| Basic and diluted loss per share | $(0.17) | $(0.30) |
| Operating cash flow | $(7.456) million | $(12.832) million |
| Investing cash flow | $(1.212) million | $0.864 million |
| Financing cash flow | $8.237 million | $(3.649) million |
- At March 31, cash was $14.549 million and restricted cash was $0.042 million. Current assets were $23.507 million versus current liabilities of $37.944 million, a $14.438 million working-capital deficit.
- Current convertible notes were $27.378 million net of discounts and issuance costs; long-term convertible notes were $1.666 million net. The filing reports short-term borrowings of approximately $28.018 million and net long-term borrowings of approximately $4.173 million. Lease liabilities totaled $6.403 million.
- Total assets were $91.616 million, total liabilities $47.930 million, redeemable noncontrolling interest $15.922 million, and stockholders’ equity $27.764 million. Accumulated deficit was $208.236 million.
Changes versus Q1 2023
- Revenue fell $1.971 million, or approximately 76%. OAH revenue decreased $1.153 million and Ondas Networks revenue decreased $0.818 million.
- Management attributed the decline principally to the absence of OAH’s prior-year multi-drone order and delayed additional Siemens product orders. These declines were partly offset by higher development revenue at Ondas Networks and higher OAH service revenue.
- Product revenue was only $2,274, compared with $2.356 million; service and subscription revenue rose to $0.310 million from $0.080 million, and development revenue rose to $0.313 million from $0.160 million.
- Gross margin turned negative, primarily due to lower revenue and fixed OAH manufacturing costs. Operating expenses declined 36%, including lower personnel, professional fees, and research and development costs; management cited integration synergies, reduced headcount and stock-based compensation, and prior-year one-time development-contract termination costs.
- Net loss narrowed by $4.579 million, while operating cash use improved by $5.377 million. Financing cash flow was positive primarily from equity and preferred-stock transactions.
Outlook, risks and unusual items
- Going concern: Management expects to fund operations for the next twelve months using cash, financing proceeds, prospective revenue and customer prepayments, warrant proceeds, and potential additional financing. The filing states substantial doubt remains about the company’s ability to continue as a going concern for one year from May 15, 2024; funding plans may not succeed and additional financing may be unavailable or unacceptable.
- Commercial outlook: The filing provides no quantified revenue or earnings guidance. Management describes Siemens’ selection by Amtrak in February 2024 to deliver next-generation radios based on Ondas technology, and points to rail-market opportunities. Orders and timing remain uncertain; delayed Siemens orders contributed to the quarter’s revenue decline.
- Operational risks: The ongoing war in Israel has affected workforce availability, supplier activity, production timing, and international flights. Management reported no material adverse effect as of the filing date but warned escalation could materially affect operations; it disclosed no specific contingency plan.
- Concentration and dilution: Three customers represented 48%, 20%, and 19% of Q1 revenue. The company reported 112.4 million potentially dilutive securities excluded from diluted loss per share as anti-dilutive, compared with 65.6 million common shares outstanding at quarter-end.
- Financing and equity: February 2024 transactions generated approximately $4.05 million gross from common stock and OAH warrants and $4.5 million gross from Ondas Networks redeemable preferred stock and warrants. The preferred securities accrue 8% dividends and carry redemption rights after five years; they are classified as temporary equity. The company issued 3.62 million common shares in the common-stock offering.
- Subsequent events: An April 5 vendor settlement involved issuing 320,026 common shares and returning inventory; management expects approximately $0.5 million reduction in accrued expenses in Q2 2024. After quarter-end, approximately 341,000 shares were issued through installment conversion of convertible notes.
- The company reported no material legal proceedings or off-balance-sheet arrangements. Management concluded disclosure controls were effective as of March 31, 2024; no material change in internal control was reported.
Important facts for investors to verify
- Whether Ondas can secure sufficient financing and improve liquidity, given the $14.438 million working-capital deficit and explicit going-concern doubt.
- Whether delayed Siemens orders, including the Amtrak program, convert into purchase orders and revenue, and whether OAH product sales recover from the prior-year comparison.
- Whether gross margins improve as revenue scales and fixed manufacturing costs are absorbed.
- The cash, conversion, maturity, and dilution consequences of the convertible notes, preferred securities, warrants, and other potential share issuances.
- Whether Israel-related workforce, supplier, production, and logistics disruptions worsen, and how customer concentration affects revenue and collections.