Ondas Holdings Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed April 1, 2024. The filing reports full-year results, not standalone fourth-quarter figures.
Business context
Ondas provides private wireless networking and autonomous-drone solutions through two segments: Ondas Networks, which sells its FullMAX wireless platform primarily for rail and other critical-infrastructure markets, and Ondas Autonomous Systems, which sells Optimus data-collection drones, Iron Drone counter-drone systems, and related services. Ondas acquired Airobotics in January 2023; results include Airobotics from January 24, 2023 onward.
Financial results and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $15.69 million | $2.13 million |
| Gross profit / margin | $6.38 million / 41% | $1.11 million / 52% |
| Operating expenses | $46.11 million | $70.54 million |
| Operating loss | $(39.73) million | $(69.43) million |
| Net loss | $(44.84) million | $(73.24) million |
| Net loss per share, basic and diluted | $(0.88) | $(1.73) |
| Cash used in operating activities | $(34.02) million | $(37.96) million |
| Cash, cash equivalents and restricted cash at year-end | $15.02 million | $29.78 million |
- Segment revenue was $6.72 million for Ondas Networks and $8.97 million for Autonomous Systems. Product sales were $12.10 million; service and subscription revenue was $2.13 million; development revenue was $1.46 million.
- Revenue growth reflected the Airobotics acquisition, increased Siemens-related development revenue, and higher product sales to Siemens. Gross margin fell year over year, which management attributed mainly to lower-margin Ondas Networks product sales.
- Operating expenses declined 35%, principally because 2022 included a $19.42 million goodwill impairment and 2023 benefited from integration-related cost reductions. 2023 also included a $1.50 million impairment of the Dynam.AI investment and approximately $2.51 million of impairment charges related to the Waltham lease asset group.
- Year-end working capital deficit was approximately $12.33 million. The balance sheet reported current convertible notes, net, of $25.69 million; long-term convertible notes, net, of $2.81 million; and other notes payable of $0.30 million. The notes generally bear 3% interest and have maturities in 2025; installment payments may be required in cash if specified equity conditions are not met.
- Ondas reported an accumulated deficit of $198.36 million. The company recorded no income-tax provision and maintained a full valuation allowance against net deferred tax assets.
Material changes and notable developments
- Revenue increased by $13.57 million from 2022, while net loss narrowed by $28.40 million. The comparison is affected by the Airobotics acquisition and the prior-year goodwill impairment.
- The AAR selected IEEE 802.16 as the standard for the new 900 MHz railroad network in 2023; the legacy 900 MHz band is expected to be retired by September 2025, with the replacement network substantially built by April 2026. Ondas and Siemens were pursuing railroad deployments and orders. In February 2024, Siemens received an order to develop and supply a next-generation radio for the Northeast Corridor, according to the filing.
- Optimus received FAA Type Certification in September 2023. The filing describes this as an important regulatory milestone for expanding operations, including potential beyond-visual-line-of-sight deployments; actual deployment still depends on operational approvals and customer adoption.
- Autonomous Systems reported 2023 UAE orders including $2.6 million for additional Optimus systems and support, and a $3.6 million SkyGo order. These orders and other customer pipeline expectations are not guarantees of future revenue.
- Cash declined by $14.75 million during 2023. Financing cash inflows included $14.69 million from redeemable preferred stock in Ondas Networks and $9.31 million of net proceeds from convertible notes; the company also issued 14.0 million common shares for note installments during the year.
Outlook, risks and contingencies
- Going concern: Management and the auditor disclosed substantial doubt about Ondas’s ability to continue as a going concern for one year from April 1, 2024. Management expects to rely on year-end cash, 2024 financing, future gross profits, possible customer prepayments, warrant proceeds and additional financing; the filing says these plans had not alleviated the substantial doubt.
- Subsequent financing: In February 2024, Ondas raised approximately $4.1 million gross from a common-stock and warrant offering, and Ondas Networks raised $4.5 million gross through preferred stock and warrants. These transactions provide additional funding but include potential dilution and preferred-stock rights.
- Execution and market risks: The company remains loss-making and depends on converting a limited customer pipeline into commercial deployments. Railroad sales cycles can be lengthy; revenue timing may vary with customer acceptance, regulatory approvals, product delivery and supplier availability. Three customers represented a very large share of 2023 revenue.
- Financing and dilution: Convertible-note installments, cash repayment obligations, financing covenants and potential equity issuance may constrain liquidity or dilute shareholders. The filing lists approximately 109.2 million potentially dilutive securities excluded from diluted loss per share as anti-dilutive at year-end.
- Other risks: Israeli conflict temporarily affected staffing, suppliers and inventory production; the company said those constraints had eased and there had been no material disruption to date, but escalation could adversely affect operations. Other material risks include drone safety and product liability, FAA/FCC and export regulation, cybersecurity, third-party manufacturing and supply, foreign-exchange movements, and dependence on Siemens and a small number of customers.
- Management outlook: The filing gives no formal numerical revenue, margin or earnings guidance. Management plans to pursue rail network opportunities, expand Optimus deployments in the U.S. and internationally, and develop defense and counter-drone sales. These plans are forward-looking and subject to significant execution and financing risks.
- The auditor issued an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not engaged to audit internal controls. No material legal proceeding was identified in the filing.
Most important facts for investors to verify
- Available cash, cash burn, working-capital needs and financing runway, including whether the disclosed going-concern doubt is alleviated by subsequent financing or future cash generation.
- Convertible-note balances, installment terms, maturity and cash-payment triggers, as well as potential dilution from notes, warrants, preferred stock and other securities.
- Whether railroad pilots and Siemens programs convert into funded commercial orders on the industry’s stated 2025–2026 network timetable.
- Whether UAE and other announced drone orders are delivered, accepted and recognized as revenue, and whether pipeline opportunities become recurring deployments.
- Customer concentration figures: MD&A cites three 2023 customers at approximately 43%, 33% and 22%, while a financial-statement note reports 42%, 33% and 22%; confirm the precise percentages and underlying revenue amounts.