Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis provide information which our management believes to be relevant to an assessment and understanding of the results of operations and financial condition of Ondas Holdings Inc. ("Ondas Holdings," "we," "our," or the "Company"). This discussion should be read together with our unaudited Condensed Consolidated Financial Statements and the notes included therein, which are included in this Quarterly Report on Form 10-Q (the "Report"). This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the "SEC") on March 12, 2025, including the audited consolidated financial statements and notes included therein as of and for the year ended December 31, 2024 ("2024 Form 10-K"). This discussion contains forward-looking statements that involve risks and uncertainties. For a description of factors that may cause our actual results to differ materially from those anticipated in these forward-looking statements, please refer to the below section of this Report titled "Cautionary Note Regarding Forward-Looking Statements." The reported results will not necessarily reflect future results of operations or financial condition.

Overview

Ondas Holdings is a leading provider of private wireless, drone, and automated data solutions through its subsidiaries Ondas Networks Inc., a Texas corporation ("Ondas Networks"), Apeiro Motion Ltd., an Israeli company ("Apeiro"), Ondas Capital Inc., a Nevada corporation ("Ondas Capital"), 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, ground robotics and automated data solutions through its subsidiaries Airobotics and American Robotics and Ondas Holdings' subsidiary Apeiro. Ondas Networks and OAS together provide users in defense, homeland security, and critical infrastructure markets with improved connectivity 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 13 of the accompanying unaudited Condensed Consolidated Financial Statements for further information regarding our segments.

Ondas Networks Segment

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 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, have adopted the IEEE 802.16 standard for future private wireless networks. The IEEE 802.16t Direct Peer-to-Peer protocol has been selected by the AAR as the new standard for Next Generation head-of-train / end-of-train ("HOT-EOT") communications or "NGHE Gen4." This new protocol for train telemetry operations enables new safety and operational improvements to existing HOT-EOT applications.

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.

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 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.

OAS Segment

Our OAS business unit develops, integrates, and deploys multi-domain autonomous solutions spanning air, ground, and communication systems for high-performance applications in defense, homeland security, and industrial markets. OAS delivers a unified technology ecosystem that combines autonomous drones, ground robotics, and secure tethered communications to enhance operational intelligence, safety, and resilience across mission-critical environments.

OAS' portfolio includes the Optimus System™, a fully autonomous drone platform designed for persistent aerial intelligence, surveillance, and reconnaissance (ISR), and the Iron Drone Raider™, a fully autonomous interceptor drone engineered to detect, track, and neutralize small hostile drones. Complementing these aerial platforms, Apeiro's advanced ground robots and fiber-spool communication systems extend mission reach, enabling autonomous and resilient operations across complex terrain, underground environments, and communications-denied areas.

Our multi-domain autonomy architecture serves customers across defense, homeland security, public safety, and critical industrial sectors, including smart cities, airports, seaports, oil and gas, mining, heavy construction, data centers, and semiconductor manufacturing. OAS solutions are built for persistent operations in the most demanding conditions - urban areas, sensitive facilities, and remote field deployments - providing unmatched situational awareness, security, and operational continuity.

In addition to our core platforms, OAS provides a wide suite of enabling services to ensure successful deployment and sustainment, including AI-driven data analytics, automation and IT integration, safety and regulatory certification, training, and lifecycle maintenance. These capabilities empower customers to fully harness the benefits of autonomous technology while ensuring compliance and operational safety.

OAS and its portfolio companies - American Robotics, Airobotics, and Apeiro - represent a powerful and synergistic combination of aerospace, robotics, and data technologies. Together, they deliver a comprehensive end-to-end platform that addresses every phase of the product lifecycle, from research and development through manufacturing, certification, and field sustainment.

OAS has achieved multiple industry-leading milestones, including the FAA Type Certification of the Optimus 1-EX UAV on September 25, 2023 - the first autonomous security data-capture UAV to receive this distinction. This certification, the highest echelon of FAA airworthiness recognition, enables broad beyond-visual-line-of-sight (BVLOS) operations over people and infrastructure and validates the system's safety and reliability within the U.S. National Airspace System (NAS).

War in Israel

On October 7, 2023, the State of Israel, where Airobotics' main offices and facilities are located, suffered a surprise attack by hostile forces from the Gaza Strip, which led to the Security Cabinet of the State of Israel declaring a state of war in Israel. This military operation and related activities are on-going as of the date of this filing.

The Company is closely monitoring how the military operation and related activities could adversely affect its anticipated milestones and its Israel-based activities to support future operations, including the Company's ability to import materials that are required to construct the Optimus System™ and to ship them outside of Israel. Although there have been disruptions in our business and operations, the Company has determined that there have not been any materially adverse effects on its business or operations. The Company does not believe the disruptions in its business and operations will have an enduring impact on its business and operations, but it continues to monitor the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company's Israeli office to support the Company's activities. The Company does not have any specific contingency plans in the event of any such escalation or change.

Results of Operations

Three months ended September 30, 2025 compared to three months ended September 30, 2024

		Three Months Ended September 30,
										Increase
		2025				2024				(Decrease)
Revenue, net		$	10,098,310			$	1,480,792			$	8,617,518
Cost of goods sold			7,493,915				1,433,232				6,060,683
Gross profit			2,604,395				47,560				2,556,835
Operating expenses:
General and administrative			10,595,469				4,114,986				6,480,483
Sales and marketing			2,999,720				1,410,944				1,588,776
Research and development			4,512,756				3,182,345				1,330,411
Total operating expenses			18,107,945				8,708,275				9,399,670
Operating loss			(15,503,550	)			(8,660,715	)			(6,842,835	)
Total other income (expense), net			8,330,150				(865,553	)			9,195,703
Loss before provision for income taxes			(7,173,400	)			(9,526,268	)			2,352,868
Provision for income taxes			307,456				-				307,456
Net loss		$	(7,480,856	)		$	(9,526,268	)		$	2,045,412

Revenues

		Three Months Ended September 30,
		2025				2024				Increase (Decrease)
Revenue, net
Ondas Networks		$	81,517			$	445,288			$	(363,771	)
OAS			10,016,793				1,035,504				8,981,289
Total		$	10,098,310			$	1,480,792			$	8,617,518

Our revenues increased by $8,617,518 to $10,098,310 for the three months ended September 30, 2025, compared to $1,480,792 for the three months ended September 30, 2024. Revenues during the three months ended September 30, 2025, included $5,444,398 for products, $4,591,346 for service and subscriptions, and $62,566 for development agreements. Revenues during the three months ended September 30, 2024, included $150,668 for products, $887,747 for service and subscriptions, and $442,377 for development agreements. The increase in our revenues were primarily the result of approximately $5,294,000 in increased product sales and approximately $3,704,000 in increased service and subscription revenue at OAS from sales of our Optimus System™, Iron Drone Raider™, and Apeiro ground robots with associated services in the three months ended September 30, 2025, but no comparable sales in the three months ended September 30, 2024. These increases were partially offset by a decrease of approximately $380,000 in development revenue at Ondas Networks.

Cost of goods sold

		Three Months Ended September 30,
		2025				2024				Increase (Decrease)
Cost of goods sold
Ondas Networks		$	408,242			$	525,673			$	(117,431	)
OAS			7,085,673				907,559				6,178,114
Total		$	7,493,915			$	1,433,232			$	6,060,683

Our cost of goods sold increased by $6,060,683 to $7,493,915 for the three months ended September 30, 2025, compared to $1,433,232 for the three months ended September 30, 2024. The increase in cost of goods sold was primarily a result of increased revenue at OAS for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Cost of goods sold at OAS did not increase in the same ratio as revenue due to the increase in product revenue at OAS, which included sales of our Optimus System™ and Iron Drone Raider™, which have higher margins compared to the service and non-recurring engineering development revenue recognized for the three months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.

Gross profit (loss)

		Three Months Ended September 30,
		2025				2024				Increase (Decrease)
Gross profit (loss)
Ondas Networks		$	(326,725	)		$	(80,385	)		$	(246,340	)
OAS			2,931,120				127,945				2,803,175
Total		$	2,604,395			$	47,560			$	2,556,835

Our gross profit increased by $2,556,835 to $2,604,395 for the three months ended September 30, 2025 compared to a gross profit of $47,560 for the three months ended September 30, 2024. Gross profit for the three months ended September 30, 2025 and 2024 was 26% and 3%, respectively. The increase in gross profit of 23% is primarily related to the increase in product revenue at OAS, which has higher gross profit margins as compared to the service and non-recurring engineering development revenue recognized in the three months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.

Operating Expenses

		Three Months Ended September 30,
		2025				2024				Increase
Operating expenses:
General and administrative		$	10,595,469			$	4,114,986			$	6,480,483
Sales and marketing			2,999,720				1,410,944				1,588,776
Research and development			4,512,756				3,182,345				1,330,411
Total		$	18,107,945			$	8,708,275			$	9,399,670

Our principal operating costs include the following items as a percentage of total expense.

		Three Months Ended September 30,
		2025				2024
Human resource costs, including benefits			61	%			38	%
Travel and entertainment			2	%			2	%
Other general and administrative costs:
Professional fees and consulting expenses			8	%			11	%
Other expense			6	%			10	%
Depreciation and amortization			8	%			15	%
Other research and deployment costs, excluding human resources and travel and entertainment			12	%			20	%
Other sales and marketing costs, excluding human resources and travel and entertainment			3	%			4	%

Operating expenses increased by $9,399,670, or 108%, as a result of the following items:

Human resource costs, including benefits		$	7,783,893
Travel and entertainment			247,758
Other general and administrative costs:
Professional fees and consulting expenses			467,574
Other expense			131,846
Depreciation and amortization			88,955
Other research and development costs, excluding human resources and travel and entertainment			483,583
Other sales and marketing costs, excluding human resources and travel and entertainment			196,061
		$	9,399,670

The increase in operating expenses was primarily due to:

(i)

An increase of approximately $7,784,000 in human resource costs, including an increase in stock-based compensation at the Company of approximately $4,935,000 for vesting of stock options and Restricted Stock Units ("RSUs") during the three months ended September 30, 2025, an increase of approximately $1,192,000 in salary and benefit expense related to an increase in headcount and bonus expense in our general and administrative department as we build out our management team at OAS and Ondas Holdings, an increase of approximately $596,000 in salary and benefit expense related to an increase in headcount in our research and development department, an increase of approximately $1,061,000 in salary and benefit expense related to increased headcount in our sales and marketing department to support our growing pipeline;

(ii)

An increase of approximately $248,000 in travel and entertainment, primarily related to increased travel for sales and product demonstration opportunities and increased trade show attendance;

(iii)

An increase of approximately $468,000 in professional fees and consulting expenses, primarily related to an increase of approximately $770,000 in legal fee costs associated with acquisitions during the quarter, pending acquisitions completed in the fourth quarter, and other corporate matters and strategic initiatives, offset by a decrease of approximately $302,000 in consulting, contractor and other professional expenses as needs were filled through internal hires;

(iv)

An increase of approximately $132,000 in other expense, primarily related to company events at Ondas Capital and Airobotics;

(v)

An increase of approximately $484,000 in other research and development costs, excluding human resources and travel and entertainment, which primarily relates to cloud-based software expenses as we invest in improving our current product line; and

(vi)

An increase of approximately $196,000 in other sales and marketing costs, excluding human resources and travel and entertainment, which primarily relates to increased consulting expenses, and increased attendance at trade shows and other marketing events and equipment purchases and costs association with demonstrations.

Operating Loss

		Three Months Ended
		September 30,
		2025				2024				Increase
Operating loss		$	(15,503,550	)		$	(8,660,715	)		$	(6,842,835	)

As a result of the foregoing, our operating loss increased by $6,842,835, or 79%, to $15,503,550 for the three months ended September 30, 2025, compared with $8,660,715 for the three months ended September 30, 2024. Operating loss increased as a result of the increase of $9,399,670 in operating expenses described above for the three months ended September 30, 2025, partially offset by the increase of $2,556,835 in gross profit for the three months ended September 30, 2025.

Total Other Income (Expense), net

		Three Months Ended
		September 30,
		2025				2024				Increase
Total other income (expense), net		$	8,330,150			$	(865,553	)		$	9,195,703

Total other income, net increased by $9,195,703, to $8,330,150 for the three months ended September 30, 2025, compared with total other expense, net of $865,553 for the three months ended September 30, 2024. Total other income, net increased primarily as a result of the increase of approximately $8,764,000 in interest and dividend income and unrealized gain on our equity security investments from the cash raised from our 2025 Offerings, see Note 11 - Stockholders' Equity for a summary of the cash raised from financing activities. Combined with a decrease of approximately $427,000 in interest expense, amortization of debt discount and issuance costs for the 2022 Convertible Exchange Notes and 2023 Additional Notes during the three months ended September 30, 2025, which were repaid in full during the nine months ended September 30, 2025. For a summary of our outstanding Notes Payable, see Note 10 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Net Loss

		Three Months Ended
		September 30,
		2025				2024				Decrease
Net loss		$	(7,480,856	)		$	(9,526,268	)		$	2,045,412

As a result of the net effects of the foregoing, offset by an increase of approximately $307,000 in our provision for income taxes associated with Apeiro, net loss decreased by $2,045,412, or 21%, to $7,480,856 for the three months ended September 30, 2025, compared with $9,526,268 for the three months ended September 30, 2024. Net loss per share of Common Stock, basic and diluted, was $(0.03) for the three months ended September 30, 2025, compared with $(0.15) for the three months ended September 30, 2024.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

		Nine Months Ended September 30,
		2025				2024				Increase (Decrease)
Revenue, net		$	20,619,880			$	3,063,652			$	17,556,228
Cost of goods sold			13,194,865				3,601,969				9,592,896
Gross profit (loss)			7,425,015				(538,317	)			7,963,332
Operating expenses:
General and administrative			22,583,398				12,177,062				10,406,336
Sales and marketing			7,695,545				4,040,798				3,654,747
Research and development			12,209,164				9,335,323				2,873,841
Total operating expenses			42,488,107				25,553,183				16,934,924
Operating loss			(35,063,092	)			(26,091,500	)			(8,971,592	)
Total other income (expense), net			3,003,192				(1,580,588	)			4,583,780
Loss before provision for income taxes			(32,059,900	)			(27,672,088	)			(4,387,812	)
Provision for income taxes			307,456				-				307,456
Net loss		$	(32,367,356	)		$	(27,672,088	)		$	(4,695,268	)

Revenues

		Nine Months Ended September 30,
		2025				2024				Increase (Decrease)
Revenue, net
Ondas Networks		$	488,042			$	1,416,418			$	(928,376	)
OAS			20,131,838				1,647,234				18,484,604
Total		$	20,619,880			$	3,063,652			$	17,556,228

Our revenues increased by $17,556,228 to $20,619,880 for the nine months ended September 30, 2025, compared to $3,063,652 for the nine months ended September 30, 2024. Revenues during the nine months ended September 30, 2025, included $12,273,391 for products, $7,896,114 for service and subscriptions, and $450,375 for development agreements. Revenues during the nine months ended September 30, 2024, included $175,426 for products, $1,495,887 for service and subscriptions, and $1,392,339 for development agreements. The increase in our revenues were primarily the result of approximately $12,098,000 in increased product sales and approximately $6,400,000 in increased service and subscription revenue at OAS from sales of our Optimus System™, Iron Drone Raider™, and Apeiro ground robots with associated services in the nine months ended September 30, 2025, but no comparable sales in the nine months ended September 30, 2024. These increases were offset by a decrease of approximately $942,000 in development revenue at Ondas Networks during the nine months ended September 30, 2025.

Cost of goods sold

		Nine Months Ended September 30,
		2025				2024				Increase (Decrease)
Cost of goods sold:
Ondas Networks		$	1,236,132			$	1,515,774			$	(279,642	)
OAS			11,958,733				2,086,195				9,872,538
Total		$	13,194,865			$	3,601,969			$	9,592,896

Our cost of goods sold increased by $9,592,896 to $13,194,865 for the nine months ended September 30, 2025, compared to $3,601,969 for the nine months ended September 30, 2024. The increase in cost of goods sold was primarily the result of increased revenue for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. Cost of goods sold at OAS did not increase in the same ratio as revenue due to the increase in product revenue at OAS, which included sales of our Optimus System™ and Iron Drone Raider™, which has higher margins compared to service and non-recurring engineering development revenue recognized for the nine months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.

Gross profit (loss)

		Nine Months Ended September 30,
		2025				2024				Increase (Decrease)
Gross profit (loss):
Ondas Networks		$	(748,090	)		$	(99,356	)		$	(648,734	)
OAS			8,173,105				(438,961	)			8,612,066
Total		$	7,425,015			$	(538,317	)		$	7,963,332

Our gross profit increased by $7,963,332 to $7,425,015 for the nine months ended September 30, 2025, compared to a gross loss of $538,317 for the nine months ended September 30, 2024. Gross profit for the nine months ended September 30, 2025 and 2024 was 36% and (18%), respectively. The increase in gross profit of 54% is primarily related to the increase in product revenue at OAS, which has higher gross profit margins as compared to the service and non-recurring engineering development revenue recognized in the nine months ended September 30, 2024, which was also adversely impacted by fixed service delivery costs at OAS.

Operating Expenses

		Nine Months Ended September 30,
		2025				2024				Increase
Operating expenses:
General and administrative		$	22,583,398			$	12,177,062			$	10,406,336
Sales and marketing			7,695,545				4,040,798				3,654,747
Research and development			12,209,164				9,335,323				2,873,841
Total		$	42,488,107			$	25,553,183			$	16,934,924

Our principal operating costs include the following items as a percentage of total expense.

		Nine Months Ended September 30,
		2025				2024
Human resource costs, including benefits			58	%			41	%
Travel and entertainment			3	%			2	%
Other general and administrative costs:
Professional fees and consulting expenses			8	%			9	%
Other expense			5	%			12	%
Depreciation and amortization			10	%			14	%
Other research and deployment costs, excluding human resources and travel and entertainment			13	%			19	%
Other sales and marketing costs, excluding human resources and travel and entertainment			3	%			3	%

Operating expenses increased by $16,934,924, or 66%, as a result of the following items:

		Nine Months Ended September 30, 2025
Human resource costs, including benefits		$	14,270,825
Travel and entertainment			431,795
Other general and administrative costs:
Professional fees and consulting costs			1,280,791
Other expense			(722,430	)
Depreciation and amortization			272,779
Other research and development costs, excluding human resources and travel and entertainment			838,310
Other sales and marketing costs, excluding human resources and travel and entertainment			562,854
		$	16,934,924

The increase in operating expenses was primarily due to:

(i)

An increase of approximately $14,271,000 in human resource costs, including an increase in stock-based compensation at the Company of approximately $7,718,000 for vesting of new stock options and RSUs granted during the nine months ended September 30, 2025, an increase of approximately $1,928,000 related to an increase in taxable fringe benefit expense, for tax on employee benefits such as Company subsidized vehicles, meals, and other expenses, at OAS primarily as the result of an audit by the Israeli government for previous years, an increase of approximately $1,641,000 in salary and benefit expense related to an increase in headcount and bonus expense in our general and administrative department as we build out our management team at OAS and Ondas Holdings, an increase of approximately $1,460,000 in salary and benefit expense related to an increase in headcount and bonus expense in our research and development department, and an increase of approximately $1,524,000 in salary and benefit expense related to an increase in headcount and bonus expense in our sales and marketing department to support our growing pipeline;

(ii)

An increase of approximately $432,000 in travel and entertainment, primarily related to increased travel for sales and product demonstration opportunities and increased trade show attendance;

(iii)

An increase of approximately $1,281,000 in professional fees and consulting expenses, of which an increase of approximately $901,000 relates to legal fee costs associated with acquisitions during the quarter, pending acquisitions completed in the fourth quarter, debt repayments, and other corporate matters and strategic initiatives, combined with the $550,000 recovery of legal fees from the settlement agreement for legal proceedings related to Ardenna, which reduced our legal fee expenses during the nine months ended September 30, 2024. These increases were partially offset by a decrease of approximately $170,000 in consulting, contractor and other professional expenses as needs were filled through internal hires;

(iv)

A decrease of approximately $722,000 in other expense, primarily related to a decrease of approximately $603,000 in rent and facilities charges primarily at Ondas Networks which was paying two office leases during the nine months ending September 30, 2024 as compared to one lease during the nine months ended September 30, 2025 and a reduction in common area shared expenses under their new lease, and approximately $111,000 relates to a reduction in the Company's D&O, E&O and general liability insurance expense;

(v)

An increase of approximately $273,000 in depreciation and amortization related to intangibles acquired in our acquisitions and additional purchases of equipment and leasehold improvements during the nine months ended September 30, 2025;

(vi)

An increase of approximately $838,000 in other research and development costs, excluding human resources and travel and entertainment, of which an increase of approximately $2,051,000 occurred at OAS related to an increase of approximately $911,000 in cloud-based software expenses, an increase of approximately $548,000 in use of third-party consultants and allocation of general expenses to research and development, and a one-time settlement of approximately $592,000 for of all amounts due to a vendor under previous development and manufacturing agreements, which reduced other research and development costs, excluding human resources and travel and entertainment, during the nine months ended September 30, 2024. This increase was offset by a decrease of approximately $1,213,000 at Ondas Networks primarily related to a decrease in use of third-party research and development contractors and consultants; and

(vii)

An increase of approximately $563,000 in other sales and marketing costs, excluding human resources and travel and entertainment, of which approximately $272,000 relates to an increase in use of sales and marketing third-party contractors and consultants, and approximately $291,000 relates to increased attendance at trade shows and other marketing events and equipment purchases and costs association with demonstrations.

Operating Loss

		Nine Months Ended
		September 30,
		2025				2024				Increase
Operating loss		$	(35,063,092	)		$	(26,091,500	)		$	(8,971,592	)

As a result of the foregoing, our operating loss increased by $8,971,592 or 34%, to $35,063,092 for the nine months ended September 30, 2025, compared with $26,091,500 for the nine months ended September 30, 2024. Operating loss increased as a result of the increase of $16,934,924 in operating expenses described above for the nine months ended September 30, 2025, partially offset by the increase of $7,963,332 in gross profit for the nine months ended September 30, 2025.

Total Other Income (Expense), net

		Nine Months Ended
		September 30,
		2025				2024				Increase
Total other income (expense), net		$	3,003,192			$	(1,580,588	)		$	4,583,780

Total other income, net increased by $4,583,780, to $3,003,192 for the nine months ended September 30, 2025, compared with the other expense, net of $1,580,588 for the nine months ended September 30, 2024. Total other income, net increased primarily as a result of the increase of approximately $9,030,000 in interest and dividend income and unrealized gain on our equity security investments from the cash raised from our 2025 Offerings, see Note 11 - Stockholders' Equity for a summary of the cash raised from financing activities. Offset by an increase of approximately $3,515,000 in interest expense, amortization of debt discount and issuance costs for the 2024 Additional Notes, Ondas Networks Convertible Notes, OAS Convertible Notes, and Networks Secured Note. For a summary of our outstanding Notes Payable, see Note 10 in the accompanying Notes to Unaudited Condensed Consolidated Financial Statements. Further offset by an increase in other expense of approximately $931,000 from the change in fair value of government grant liability and foreign exchange loss, net.

Net Loss

		Nine Months Ended
		September 30,
		2025				2024				Increase
Net loss		$	(32,367,356	)		$	(27,672,088	)		$	(4,695,268	)

As a result of the net effects of the foregoing, combined with an increase of approximately $307,000 in our provision for income taxes associated with Apeiro, net loss increased by $4,695,268, or 17%, to $32,367,356 for the nine months ended September 30, 2025, compared with $27,672,088 for the nine months ended September 30, 2024. Net loss per share of Common Stock, basic and diluted, was $(0.21) for the nine months ended September 30, 2025, compared with $(0.46) for the nine months ended September 30, 2024.

Summary of (Uses) and Sources of Cash

		Nine Months Ended September 30,
		2025				2024
Net cash flows used in operating activities		$	(26,017,625	)		$	(25,360,649	)
Net cash flows used in investing activities			(18,743,619	)			(1,659,366	)
Net cash flows provided by financing activities			448,155,480				14,871,301
Increase (decrease) in cash, cash equivalents, and restricted cash			403,394,236				(12,148,714	)
Cash, cash equivalents, and restricted cash, beginning of period			29,999,321				15,022,000
Cash, cash equivalents, and restricted cash, end of period		$	433,393,557			$	2,873,286

The principal use of cash in operating activities for the nine months ended September 30, 2025, was to fund the Company's current expenses primarily related to operating activities necessary to allow us to service and support customers.

The increase in cash flows used in operating activities of approximately $657,000 was primarily due to an increase in net loss of approximately $4,695,000, of which approximately $5,460,000 related to non-cash and credits, including investment gains, depreciation, amortization of debt discount and issuance costs, amortization of intangibles assets, amortization of right of use assets, change in fair value of government grant liability, and stock-based compensation, offset by changes in operating assets and liabilities resulting in a cash outflow of approximately $1,422,000.

The increase in cash flows used in investing activities of approximately $17,084,000 primarily relates to the purchase of equity securities and long-term equity investment of approximately $11,587,000 and cash paid for acquisitions of approximately $6,659,000, offset by a decrease in purchases of equipment of approximately $1,169,000 in the nine months ended September 30, 2025.

The increase in cash flows provided by financing activities of approximately $433,284,000 primarily relates to the combined net proceeds of approximately $422,309,000 received from 2025 Offerings during the nine months ended September 30, 2025, compared to the net proceeds received from the sale of Common Stock in the Company of approximately of $7,327,000 during the nine months ended September 30, 2024, combined with proceeds of approximately $1,158,000 from the exercise of warrants in OAS, the increase in proceeds from the exercise of stock options and warrants of approximately $23,541,000 during the three months ended September 30, 2025. These increases were partially offset by the decrease in net proceeds of approximately $1,937,000 from the issuance of notes payable and convertible notes payable, a decrease in net proceeds of approximately $4,375,000 from the sale of preferred stock in Ondas Networks during the nine months ended September 30, 2024, and a decrease in proceeds, net of repayments, of approximately $85,000 from government grants.

Liquidity and Capital Resources

We have incurred losses since inception and have funded our operations primarily through debt and the sale of capital stock. As of September 30, 2025, we had an accumulated deficit of approximately $268,723,000. As of September 30, 2025, we had net long-term borrowings outstanding of approximately $2,489,000 and short-term borrowings outstanding of approximately $12,541,000, net of debt discount and issuance costs of approximately $177,000, including accrued interest of approximately $712,000, of which approximately $456,000 is due to related parties. As of September 30, 2025, we had cash and restricted cash of approximately $433,394,000 and working capital of approximately $447,568,000. We had approximately $26,018,000 of net cash flows used in operations for the nine months ended September 30, 2025.

In 2024, we raised approximately $36,997,000 of net proceeds from issuance of convertible notes in Ondas Holdings, Ondas Networks, and OAS; approximately $1,422,000 of net proceeds from issuance of secured notes in Ondas Networks; approximately $7,304,000 of net proceeds from issuing Common Stock, warrants in Ondas Holdings, and warrants in OAS; and approximately $4,375,000 in net proceeds from issuing additional redeemable preference shares in Ondas Networks and warrants in Ondas Holdings.

During the nine months ended September 30, 2025, we raised approximately $422,309,000 in proceeds, net of issuance costs, from registered offerings, $24,708,000 from the exercise of stock options and warrants, $923,000 in proceeds, net of issuance costs, from issuance of convertible notes in Ondas Networks, and $365,000 in Israeli government grants to Airobotics.

The Company's audited consolidated financial statements as of December 31, 2024 included in the Company's most recent Annual Report on Form 10-K and unaudited condensed consolidated financial statements included in the Company's Form 10-Q as of and for the three months ended March 31, 2025, management concluded that substantial doubt existed about the Company's ability to continue as a going concern due to recurring operating losses and limited liquidity resources.

Management believes the actions discussed above sufficiently alleviate the previously identified conditions that raised substantial doubt, and the Company will have sufficient capital resources to fund its operations for the next twelve months from the date these interim financial statements are issued.

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.

We expect to fund our operations for the next twelve months from the filing date of this Quarterly Report on Form 10-Q from the cash on hand as of September 30, 2025, gross profits generated from revenue growth, potential prepayments from customers for purchase orders, potential proceeds from warrants issued and outstanding, and additional funds that we may seek through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources.

Our future capital requirements will depend upon many factors, including progress with developing, manufacturing and marketing our technologies, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, our ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes and overall economic conditions in our target markets. Our ability to generate revenue and achieve profitability requires us to successfully market and secure purchase orders for our products and services from customers currently identified in our sales pipeline as well as new customers. We also will be required to efficiently manufacture and deliver equipment on those purchase orders. These activities, including our planned research and development efforts, will require significant uses of working capital. There can be no assurance that we will generate revenue and cash as expected in our current business plan. We may seek additional funds through equity or debt offerings and/or borrowings under additional notes payable, lines of credit or other sources. We do not know whether additional financing will be available on commercially acceptable terms or at all, when needed. If adequate funds are not available or are not available on commercially acceptable terms, our ability to fund our operations, support the growth of our business or otherwise respond to competitive pressures could be significantly delayed or limited, which could materially adversely affect our business, financial conditions, or results of operations.

Off-Balance Sheet Arrangements

As of September 30, 2025, we had no off-balance sheet arrangements.

Critical Accounting Estimates

Management's discussion and analysis of financial condition and results of operations is based upon our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, as well as related disclosures. We base our estimates and judgments on historical experience and other assumptions that we believe to be reasonable at the time and under the circumstances, and we evaluate these estimates and judgments on an ongoing basis. Information concerning our critical accounting policies with respect to these items is available in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our 2024 Form 10-K. There have been no significant changes in our critical accounting policies since the filing of the 2024 Form 10-K.

Recent Accounting Pronouncements

There have been no material changes to our significant accounting policies as summarized in Note 2 of our 2024 Form 10-K. We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying unaudited Condensed Consolidated Financial Statements.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Forward-looking statements are neither historical facts nor assurances of future performance. These forward-looking statements are based on our current, reasonable expectations and assumptions, which expectations and assumptions are subject to risks and uncertainties that 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, but are not limited to, those discussed in our 2024 Form 10-K, which was filed with the SEC on March 12, 2025, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, which was filed with the SEC on August 12, 2025. Given these risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.