Business Wire | May 17, 2021 06:00AM EDT

Ondas Holdings Reports First Quarter 2021 Financial Results

May 17, 2021

NANTUCKET, Mass.--(BUSINESS WIRE)--May 17, 2021--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.

Live Listen Only Webcast https://ir.ondas.com

Participant Dial In (toll free) 1-866-777-2509

Participant Dial In (International) 1-412-317-5413

Participant Call Pre-Registration https://dpregister.com/sreg/10152922/(encouraged) e3b695712a

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 2,181,299 2,832,780 liabilities

Secured promissory note, net of debtdiscount of $59,914 and $120,711, 7,064,364 7,003,568 respectively

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 oroutstanding 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 and26,540,769 issued and outstanding, respectively

March 31, 2021 and December 31, 2020, 2,667 2,654 respectively

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 26,672,040 19,756,154 outstanding, basic and diluted

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 (515,880 ) 245,164 liabilities

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 1,179,934 - activities



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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210517005333/en/

CONTACT: Investors:

CONTACT: Michael Bowen ICR, Inc. Michael.Bowen@icrinc.com

CONTACT: Media:

CONTACT: Stewart Kantor, CFO Ondas Holdings Inc. 888.350.9994 Ext. 1009 ir@ondas.com