Ondas Holdings Review

I am really adrift with my portfolio. Seems that Dreamer is, also. Of course, the 2020-2022 market has left a lot of us uncertain in our investing lives. On top of that, I have my MF subscriptions expiring next month. This is not a critique of MF services. They don’t cost that much. It is just that I had 76% cash last time I updated my data, I am expecting (hoping for?) a retreat of comp.idx, and I do not have conviction on any list of stocks “after the fall”. Not on my list (which I don’t really have) nor on MF’s. That being the case, I picked one of my holdings and tried to answer “why do I own this” and should I look to buy, sell or hold? Don’t look for an answer here, but this is what I wrote down about Ondas Holdings:

ONDAS HOLDINGS

Ondas Holdings Inc. is a leading provider of private wireless data solutions via Ondas Networks Inc. and commercial drone solutions through American Robotics, Inc. and Airobotics LTD which we operate as a separate business unit called Ondas Autonomous Systems.

The story here is not the private wireless data solutions. This solution provides a backup radio communication system in case of network outages. This is for operational control of systems, primarily rail.

The investing story comes from the commercial drone solutions. Among the applications is the concept of not just unmanned aerial vehicles, but totally autonomous operation of launch, navigate, data collect, data transmit, return to land, and recharge. A drone-in-a-box. This targets smart cities, pipelines, the monitoring of any outside resource or operation. But there are other critical applications. Here is a list of recent events:

July 25, 2023. Ondas Holdings announced today that its wholly-owned subsidiary Airobotics Ltd. has partnered with Aero A2Z Services Pvt. Ltd. and will be presenting its UAS and C-UAS solutions at the International Drone Expo in New Delhi India. By partnering with Aero A2Z, Airobotics has expanded into the growing Indian markets, offering advanced drone infrastructures for Indian cities as well as industrial and critical infrastructure facilities.

Airobotics and Aero A2Z will offer the Optimus System, a fully automated drone system and Iron Drone on July 26 - 27, 2023, a fully automated drone interceptor. Optimus Systems are deployed performing various automated aerial missions 24/7 without human intervention. Iron-Drone C-UAS is an advanced, patented counter-drone solution designed to defend assets against hostile drones in complex environments with minimal collateral damage. The Iron Drone platform is agnostic to any detection solutions and is designed to physically capture hostile drones when identified.

August 1, 2023 / Ondas Holdings Inc. a leading provider of private industrial wireless networks and commercial drone and automated data solutions and Skyfire Consulting, the most trusted and experienced public safety UAS consulting group, announced today that Skyfire and Ondas’ business unit Ondas Autonomous Systems are partnering to bring advanced autonomous drone solutions and services to public safety and Drone First Responder (DFR) markets in the United States.

August 8, 2023 / Ondas Holdings Inc., a leading provider of private industrial wireless networks and commercial drone and automated data solutions, and Saudi Excellence Holding Company, a holding company affiliated with the Al-Ramez International Group, announced today the signing of a Strategic Alliance Agreement between Saudi Excellence and Ondas’ subsidiary Airobotics Ltd. Saudi Excellence and Airobotics plan to jointly establish a local office in the Kingdom of Saudi Arabia (KSA), to localize Airobotics autonomous drone systems and solutions and provide aerial data solutions to local governmental and commercial entities.

August 30, 2023 Ondas Holdings Inc. announced today that the Israel Innovation Authority has awarded a grant worth NIS 2.1 million (approximately $540,000) to support further development of its Iron Drone Raider counter-uncrewed aircraft system (UAS) owned by its wholly-owned subsidiary Airobotics LTD.

Earlier this year, Airobotics acquired the assets of Iron Drone, an Israel-based company specializing in the development of autonomous counter-drone systems. The Iron Drone Raider uses AI technologies to identify and intercept hostile drones and can be integrated into a variety of drone detection systems. The Raider physically intercepts small, hostile drones using an incredibly swift autonomous drone equipped with interception mechanisms and combined with a highly automated docking station capable of simultaneously addressing several hostile drone targets.

September 6, 2023 / Ondas Holdings Inc. announced today that the U.S. Federal Aviation Administration (FAA) has granted the Optimus-1EX system a Type Certificate that will streamline operational approvals for broad flight operations over people and infrastructure. The certification verifies the compliance of the system’s design with the required FAA airworthiness and noise standards, ensuring safe operation within the National Airspace System (NAS) thereby significantly broadening the range of operational scenarios and scaling up of operations for automated Uncrewed Aircraft (UAs).

September 26, 2023 Ondas Holdings, Inc. a leading provider of private industrial wireless networks and commercial drone and automated data solutions, announced today that its wholly owned subsidiary Airobotics has successfully completed a proof-of-concept (PoC) of the Optimus Drone Infrastructure in the Haifa port area.

During the PoC, the Optimus System was deployed in the port area under challenging maritime environmental conditions. The system was connected to the central command and control room of the port and was assessed in responding to routine surveillance tasks and emergency incidents. The Optimus System demonstrated its high value capabilities which included automatically launching drone flights one after another, providing real-time video and thermal imaging, tracking fast-moving ships and boats, and relieving the workload of crewed security boats.

That is the story: the right product at this unfortunate, right time.

Manned military aviation went through this phase in 1915. UAV, a hundred years later.

As far as financials are concerned, they are losing more than 100% of revenue. Hmmm. O.k. Revenue, year over year for 6 months, increased 7.95 times. For the quarter, Y-o-Y revenue increase was 9.05 times. Gross margin, 6 months was 50.8% vs 52.7% a year ago. For the latest quarter, GM was 56.1 versus 52.7 a year ago. So those numbers are going in the right direction. Of course, Airobotics was purchased in January 2023 so the revenue numbers by themselves don’t mean a lot.

Ondas has two business segments that generate revenue: Ondas Networks and Ondas Autonomous Systems. Ondas Networks generates revenue from product sales, services, and development projects. Ondas Autonomous Systems, which includes American Robotics and Airobotics, generates revenue from product sales, services, and data subscription services. Ondas Networks is engaged in the development, marketing, and sale of wireless radio systems for secure, wide area mission-critical, business-to-business networks. Ondas Networks generates revenue primarily from the sale of our FullMAX System and the delivery of related services, along with non-recurring engineering (“NRE”) development projects with certain customers. American Robotics generates revenue by selling a data subscription service to its customers based on the information collected by their autonomous systems. The customer pays for a monthly, annual, or multi-annual subscription service to remotely access the data collected by their autonomous systems.

Subscription and service revenue for latest quarter increased from 19.9% to 22.5% of total revenue.

So this is 0.5% of my IRA portfolio down 50% on the shares I still own. Don’t know how all the shares I used to own performed Those shares join the list of the 3 most useless things in the world (now 4). The sky above you, the runway behind you, the airspeed you used to have, the stocks you used to own.

I ask myself if the time spent to review Ondas was worth it. What is the thesis for owning it. I guess just that the equipment and services they provide fill a growing need for data gathering, system performance and security monitoring. There is a little moat from the FAA type certification and they have a level of real world experience, and they might be partnered with the right entities in places such as Saudi, Israel, India, etc.

KC

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Hmm… from a brief look at the financials…

Revenue increased to a record $5.4 million last quarter, compared to $0.6 million last year. That’s good, I guess. On the other hand they’re burning cash (CFFO) at a rate of $8 to $13 million per quarter, and it looks like they’re down to $3.1 million in cash.

This won’t add up. Am I missing something here?

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Thank you. I needed a smile this morning.
Not the stock market bringing me down, as i an more or less stuck where i have been all year.

More a work thing, and I may be scarce for the next few weeks or even rest of this 4thQ.

I keep calling recession bc I see it around me. My business sells to majority of major enterprise logos and fed/sled. Budgets are down. Sales are down.

On a personal level it is hunker down time bc this is the oart of the story where heads start to roll, whether your fault or not. Layoffs will be the theme, I predict, for a good chunk of 2024. So be visible, be productive, and make sure you have a chair when the music stops.

As for Ondas….penny stock and all story and as you mention they will need to keep raising money. Why hasnt Siemens just acquired them?

As for their drones…totally a gut feel, but i wonder if their solution isnt like a hardened Satellite phone when all you need is an iPhone12.

Of course, stock could go up 100% in a day on real news at these levels. Or just go out of business or get sold for $5m.

Nice story though.

Enjoy the weekend all!
Dreamer

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Raylight, Dreamer,

Thanks for the comments. I have been having issues (not health, but my local projects) that have sucked up all the oxygen. I hope to cobble together a reply this week. At least I sent off the foreign bank account reports before the 15th so I don’t have to worry about a Treasury Department SWAT team showing up…, well, maybe…

KC

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O.k., let’s get this one out of the way.

Raylight talked about ugly financials and cash drain. Funny thing, management last talked about how they had solidified the balance sheet. ONDS has the weirdest set of financials that I have seen in a long time. They bought a company, issued convertible debt, and it seems that somehow those transactions passed through the R&D, SG&A, … Don’t know.
As far as the product and market, well, the “this is dumb” aspect to me is the interceptor drone. Right. Take out snooping drones, but don’t crash them into the ground. Capture them. Sounds like WWI and biplanes. ONDAS in an arms race with half of the countries on the planet.

0.6% holding.

KC

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Ondas passed another milestone:

Ondas Holdings Inc. (NASDAQ:ONDS) (“Ondas” or the “Company”), a leading provider of private industrial wireless networks and commercial drone and automated data solutions, announced today that its wholly-owned subsidiary, American Robotics Inc. (“American Robotics”), has received a waiver from the Federal Aviation Administration (FAA) allowing for remote drone operations Beyond Visual Line of Sight (BVLOS) in complex airspace, marking another milestone in its journey to unlock routine autonomous drone operations for infrastructural tasks.

American Robotics’ Optimus System, the only Drone-in-a-Box (DiaB) platform with a drone Type Certified by the FAA as airworthy, along with its advanced automation and artificial intelligence, reshapes drone operations across the spectrum in both commercial and defense sectors.

Stock up 13.6%. That plus 12% on PGY and 5% on ENVX went a long way to erase Tuesday’s vomit.

KC

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