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Ondas Holdings Reports First Quarter 2021 Financial Results

NANTUCKET, Mass.–()–Ondas Holdings Inc. (NASDAQ: ONDS), a developer of proprietary, software-based wireless broadband technology for large established and emerging industrial markets (“Ondas” or the “Company”), today announced financial and operating results for the first quarter of 2021 with record revenue growth. Management is hosting an earnings conference call and audio webcast to discuss results today, May 17, 2021, at 8:30 a.m. ET.

“During the first quarter of 2021, Ondas continued to realize business development progress across the Company’s three primary large, high-priority areas for 2021, which include: 1) the multiple network opportunities with the Class 1 Freight Rail operators beginning with the 900 MHz network, 2) our partnership with Siemens Mobility to drive platform adoption with the Class 1 Freight Rail operators both domestically and internationally, and 3) the UAS / Drone C2 network we are developing in partnership with AURA Network Systems (“AURA”). We believe our first quarter 2021 performance including new product development agreements from both Siemens and AURA is indicative of the growing and substantial pipeline for Ondas,” said Eric Brock, Ondas’ Chairman and CEO.

“Ondas started the year strongly, with continued progress on our key areas of business focus, all of which advanced nicely in the first quarter,” said Brock. “We started a second product development agreement with Siemens, demonstrating the breadth of our opportunity across global Rail markets,” Brock continued. “In addition, AURA and Ondas are building momentum on AURA’s wireless platform and ecosystem development with Ondas positioned as the prime contractor for the commercialization of the first nationwide UAS network using the exclusive 450 MHz air to ground frequency band. In addition, our work on the 900 MHz network for the Class I Rails continues to move forward with the pending MC-IoT Rail lab marking an important step towards commercial rollout.”

Q1 2020 & Recent Highlights

  • First quarter revenues achieved record levels, growing 480% year-over-year primarily driven by Ondas’ strategic partnership with Siemens and continued expansion of our business development activity with AURA, our nationwide US drone customer. We believe development revenue is a precursor to long term revenue growth for new products and services in the Rail and Drone markets.
  • Siemens has begun to secure purchase orders from its rail customers for the new dual mode ATCS / MC IoT products in the greenfield 900 MHz licensed band.
  • Siemens is also now launching Airlink, the Siemens-branded version of Ondas’ MC-IoT technology for the North American Rail market. The initial focus of this product line will be the nationwide 900 MHz network, which the US Federal Communications Commission (FCC) awarded to Class 1 Rails operators in August 2020.
  • Ondas and Siemens initiated a new joint development program for the global Rail market in the first quarter of 2021, the development of which is expected to be completed by the end of 2021.
  • Ondas entered into a strategic partnership with Rogue Industries in the first quarter of 2021 to advance the adoption of Ondas’ MC-IoT platform in US government and defense markets.
  • Ondas has advanced the next phase of the joint-development program with AURA to finalize the transitional UAS command and control platform to provide AURA and its customers with testing equipment and demonstration network kits for its nationwide UAS wireless navigation system.

First Quarter 2021 Financial Highlights

Revenues for the first quarter of 2021 were approximately $1.2 million, an increase of $1.0 million compared to the same period in 2020. Gross profit was approximately $0.6 million in the first quarter of 2021, an increase of approximately $0.6 million compared to the same period in 2020. The increases in revenue and gross profit were driven primarily by Ondas’ joint development programs with Siemens in the North American Rail Market and the continued system commercialization effort with strategic partner AURA for their nationwide UAS navigation network.

Operating expenses were approximately $3.5 million in the first quarter of 2021, an increase of approximately $1.1 million compared to the same period in 2020. The increase was primarily due to non-cash stock-based compensation expense of approximately $1.3 million.

The Company realized an operating loss of approximately $2.9 million in the first quarter of 2021 with higher revenue and gross profit offset by higher operating expenses. Net loss was approximately $3.1 million in the first quarter of 2021, an increase of approximately $0.3 million compared to the same period in 2020.

The Company held cash and cash equivalents of approximately $24.0 million as of March 31, 2021, compared to approximately $26.1 million as of December 31, 2020.

Outlook

Ongoing investments in market expansion and deeper penetration of select verticals are expected to continue supporting bookings and revenue growth in 2021, as Ondas advances its long-term strategy to drive commercial adoption of its proprietary technology across multiple markets. The Company continues to work closely with Class 1 Rails and its strategic rail partner Siemens to advance the adoption of Ondas’ FullMAX platform in the 900 MHz network, greenfield spectrum. We expect to receive a purchase order from the Class 1 Rails related to the MC-IoT Rail lab by the end of the second quarter of 2021, an important step on the roadmap to commercial adoption. Currently, the Company anticipates that initial commercial bookings from the Rails will commence in the second half of 2021.

In addition, commercialization efforts with AURA, the Company’s drone partner continue to progress. AURA achieved a major milestone in January 2021 in which the FCC approved a waiver to use the 450 MHz air to ground band for UAS. We expect to complete the current project focused on optimizing our FullMAX network equipment for testing and demonstration network purposes in the second quarter of 2021. Planning for the next phase of FAA commercialization technical development is continuing in parallel with AURA which we expect will result in additional purchase orders in the second quarter of 2021. In addition to the ongoing network development work, we expect initial equipment orders from AURA for testing and network expansion for AURA’s UAS customers and ecosystem partners during the year.

Ondas intends to continue pursuing additional bookings and deployments of its proprietary technology in security and other addressable markets throughout 2021.

Bookings and revenue growth can fluctuate from quarter-to-quarter given timing of development activity in front of the targeted commercial rollout for the Rail 900 MHz network. As such, at this time, we are only providing financial guidance for the second quarter of 2021. For the second quarter of 2021, the Company expects revenue between $1.0 and $1.5 million generated primarily from current backlog. Operating expenses are expected to be between $2.5 and $3.0 million on a cash basis for the second quarter of 2021, excluding non-cash expenses such as stock-based compensation.

Earnings Conference Call & Audio Webcast Details

An earnings conference call is scheduled for today, May 17, 2021, at 8:30 a.m. ET. Investors may access a live webcast of the earnings conference call via the “News / Events” page of the Company’s Investor Relations website at https://ir.ondas.com. Following the presentation, a replay of the webcast will be available for 30 days in the same location of the Company’s website.

About Ondas Holdings Inc.

Ondas Holdings Inc., through its wholly owned subsidiary, Ondas Networks Inc., is a developer of proprietary, software-based wireless broadband technology for large established and emerging industrial markets. The Company’s standards-based, multi-patented, software-defined radio FullMAX platform enables Mission-Critical IoT (MC-IoT) applications by overcoming the bandwidth limitations of today’s legacy private licensed wireless networks. Ondas Networks’ customer end markets include railroads, utilities, oil and gas, transportation, aviation (including drone operators) and government entities whose demands span a wide range of mission critical applications. These markets require reliable, secure broadband communications over large and diverse geographical areas, many of which are within challenging radio frequency environments. Customers use the Company’s FullMAX technology to deploy their own private licensed broadband wireless networks. The Company also offers mission-critical entities the option of a managed network service. Ondas Networks’ FullMAX technology supports IEEE 802.16s, the new worldwide standard for private licensed wide area industrial networks. For additional information, visit www.ondas.com or follow Ondas Networks on Twitter and LinkedIn.

Forward-Looking Statements

This press release may contain “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as “expects,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including, the risks discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”), in our Quarterly Reports on Form 10-Q filed with the SEC, and in our other filings with the SEC. We undertake no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise that occur after that date, except as required by law.

 

ONDAS HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

 

December 31,

 

 

 

 

2021

 

 

 

2020

 

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,026,187

 

 

$

26,060,733

 

Accounts receivable, net

 

 

19,226

 

 

 

47,645

 

Inventory, net

 

 

1,152,247

 

 

 

1,152,105

 

Other current assets

 

 

1,003,482

 

 

 

629,030

 

Total current assets

 

 

26,201,142

 

 

 

27,889,513

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

196,223

 

 

 

163,084

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Intangible assets, net

 

 

332,603

 

 

 

379,530

 

Lease deposits

 

 

118,577

 

 

 

28,577

 

Deferred offering costs

 

 

99,958

 

 

 

 

Operating lease right of use assets

 

 

 

 

 

51,065

 

Total other assets

 

 

551,138

 

 

 

459,172

 

Total assets

 

$

26,948,503

 

 

$

28,511,769

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,934,803

 

 

$

2,368,203

 

Operating lease liabilities

 

 

 

 

 

56,168

 

Accrued expenses and other current liabilities

 

 

2,181,299

 

 

 

2,832,780

 

Secured promissory note, net of debt discount of $59,914 and $120,711, respectively

 

 

7,064,364

 

 

 

7,003,568

 

Deferred revenue

 

 

56,184

 

 

 

165,035

 

Notes payable

 

 

104,343

 

 

 

59,550

 

Total current liabilities

 

 

11,340,993

 

 

 

12,485,304

 

 

 

 

 

 

 

 

 

 

Long-Term Liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

861,748

 

 

 

906,541

 

Accrued interest

 

 

36,829

 

 

 

36,329

 

Total long-term liabilities

 

 

898,577

 

 

 

942,870

 

Total liabilities

 

 

12,239,570

 

 

 

13,428,174

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock – par value $0.0001; 5,000,000 and 10,000,000 shares authorized; at

   March 31, 2021 and December 31, 2020, respectively, and none issued or outstanding

   at March 31, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Preferred stock, Series A – par value $0.0001; 5,000,000 shares authorized; Common

   stock – par value $0.0001; 116,666,667 shares authorized; 26,672,040 and 26,540,769

   issued and outstanding, respectively

 

 

 

 

 

 

 

 

March 31, 2021 and December 31, 2020, respectively

 

 

2,667

 

 

 

2,654

 

Additional paid in capital

 

 

83,093,932

 

 

 

80,330,488

 

Accumulated deficit

 

 

(68,387,666

)

 

 

(65,249,547

)

Total stockholders’ equity

 

 

14,708,933

 

 

 

15,083,595

 

Total liabilities and stockholders’ equity

 

$

26,948,503

 

 

$

28,511,769

 

 

ONDAS HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Revenues, net

 

$

1,164,764

 

 

$

200,198

 

Cost of goods sold

 

 

555,350

 

 

 

181,092

 

Gross profit

 

 

609,414

 

 

 

19,106

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administration

 

 

2,408,854

 

 

 

908,587

 

Sales and marketing

 

 

187,372

 

 

 

549,018

 

Research and development

 

 

894,576

 

 

 

892,929

 

Total operating expenses

 

 

3,490,802

 

 

 

2,350,534

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(2,881,388

)

 

 

(2,331,428

)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(34,176

)

 

 

9,013

 

Interest income

 

 

32

 

 

 

92

 

Interest expense

 

 

(222,587

)

 

 

(484,962

)

Total other income (expense)

 

 

(256,731

)

 

 

(475,857

)

 

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

 

(3,138,119

)

 

 

(2,807,285

)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(3,138,119

)

 

 

(2,807,285

)

 

 

 

 

 

 

 

 

 

Net loss per share – basic and diluted

 

$

(0.12

)

 

$

(0.14

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding, basic and diluted

 

 

26,672,040

 

 

 

19,756,154

 

 

ONDAS HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITES

 

 

 

 

 

 

 

 

Net loss

 

$

(3,138,119

)

 

$

(2,807,285

)

Adjustments to reconcile net loss to net cash flows used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

25,142

 

 

 

24,648

 

Amortization of deferred financing costs

 

 

60,797

 

 

 

159,378

 

Amortization of intangible assets

 

 

12,750

 

 

 

640

 

Amortization of right of use asset

 

 

51,065

 

 

 

66,079

 

Loss on Intellectual Property

 

 

34,178

 

 

 

 

Stock-based compensation

 

 

1,348,462

 

 

 

25,599

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

28,419

 

 

 

14,446

 

Inventory

 

 

(142

)

 

 

(132,891

)

Other current assets

 

 

(374,452

)

 

 

51,299

 

Accounts payable

 

 

(433,400

)

 

 

547,420

 

Deferred revenue

 

 

(108,851

)

 

 

(53,091

)

Operating lease liability

 

 

(56,168

)

 

 

(115,160

)

Accrued expenses and other current liabilities

 

 

(515,880

)

 

 

245,164

 

Net cash flows used in operating activities

 

 

(3,066,199

)

 

 

(1,973,754

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Patent costs

 

 

 

 

 

(24,499

)

Purchase of equipment

 

 

(58,281

)

 

 

 

Proceeds from sub-lease deposit

 

 

 

 

 

19,331

 

Security deposit

 

 

(90,000

)

 

 

2,775

 

Net cash flows used in investing activities

 

 

(148,281

)

 

 

(2,393

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from exercise of warrants

 

 

1,279,892

 

 

 

 

Payments for deferred offering costs

 

 

(99,958

)

 

 

 

Net cash flows provided by financing activities

 

 

1,179,934

 

 

 

 

 

 

 

 

 

 

 

 

 

Decrease in cash and cash equivalents

 

 

(2,034,546

)

 

 

(1,976,147

)

Cash and cash equivalent, beginning of period

 

 

26,060,733

 

 

 

2,153,028

 

Cash and cash equivalents, end of period

 

$

24,026,187

 

 

$

176,881

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

11,705

 

 

$

3,187

 

Cash paid for income taxes

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forgiveness of accrued officers salary

 

$

135,103

 

 

$

150,002

 

 

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