Ondas Inc. (ONDS) reported a truly transformative first quarter in 2026, marked by explosive revenue growth, a massive equity capital raise, and a strategic repositioning through multiple acquisitions that have reshaped the Company's business profile. The Company, which develops and commercializes autonomous systems for defense, homeland security, and critical infrastructure markets through its Ondas Autonomous Systems (OAS) and Ondas Capital business units, generated net income of $361.3 million for the quarter ended March 31, 2026—a dramatic swing from a net loss of $14.1 million in the prior-year period—driven largely by non-cash gains on warrant liabilities and the deconsolidation of Ondas Networks [Item 2 - MD&A, ¶7-8]. This Quarterly Report on Form 10-Q, signed on May 15, 2026, by Chief Executive Officer Eric A. Brock and Chief Financial Officer Neil J. Laird, provides a comprehensive look at a company in the midst of rapid transformation [Item 6 - Exhibits, ¶1].

I. Financial Performance and Results of Operations

Ondas Inc. delivered extraordinary top-line growth in the first quarter of 2026, with total revenue surging to $50.1 million, up from $4.2 million in the prior-year period—representing year-over-year growth of approximately 1,080% [Item 2 - MD&A, ¶4]. This explosive growth was entirely attributable to the OAS segment, with $34.7 million generated by companies acquired after March 31, 2025, including $15.8 million from Sentry CS Ltd., and $11.4 million from Airobotics through sales of the Optimus System™ and Iron Drone Raider™ [Item 2 - MD&A, ¶4]. The revenue trajectory underscores the impact of the Company's aggressive acquisition strategy and its success in scaling autonomous systems sales to government and industrial customers.

Gross margin improved significantly to 51% in Q1 2026 compared to 35% a year earlier, as higher product sales volumes helped offset fixed service delivery costs at OAS [Item 2 - MD&A, ¶4]. Despite this margin expansion, total operating expenses grew substantially to $67.3 million from $11.8 million in the prior-year period. General and administrative expenses rose 633% to $43.3 million, driven by $11.5 million in higher stock-based compensation, $8.4 million in software costs, $7.7 million in professional fees (including $5.8 million in acquisition-related costs), $7.1 million from acquired companies, and $2.7 million from increased headcount. Sales and marketing expenses increased 332% to $10.5 million, and research and development expenses rose 291% to $13.5 million [Item 2 - MD&A, ¶5-6].

The operating loss widened to $42.7 million from $10.3 million in the prior year due to these higher expense levels [Item 1 - Financial Statements, Table 5]. However, the Company reported net income of $361.3 million for Q1 2026, compared to a net loss of $14.1 million in Q1 2025, driven by $404.2 million in other income, net. This included a $389.5 million net gain from changes in the fair value of warrant liabilities and a $51.5 million gain on the deconsolidation of Ondas Networks, partially offset by a $46.2 million loss on the acquisition of Indo Earth and $2.6 million in unrealized losses on equity investments [Item 2 - MD&A, ¶7-8].

Net income attributable to Ondas Inc. stockholders was $361.7 million. Basic earnings per share were $0.58, and diluted earnings per share were $0.56, compared to a basic and diluted loss per share of $(0.15) in the prior-year period [Item 1 - Financial Statements, Table 5]. These results highlight the transformative but complex nature of the quarter, where operational losses were more than offset by substantial non-cash gains from financial instruments and corporate restructuring activities.

II. Liquidity, Capital Resources, and Going Concern

The Company's liquidity position was dramatically strengthened during the quarter, primarily through the January 2026 Offering. As of March 31, 2026, Ondas held cash and cash equivalents of approximately $1.03 billion, restricted cash of $11.1 million, and short-term investments of $447.8 million. Total cash, cash equivalents, and restricted cash stood at $1.04 billion at period end, a substantial increase from $594.4 million at the beginning of the period [Item 1 - Financial Statements, Table 4]. Restricted cash primarily relates to minimum cash reserves required for bank guarantees on customer orders and operating leases, as well as credit card reserve requirements [Item 1 - Financial Statements, ¶13].

The most significant capital event during the period was the January 2026 Offering, which closed on January 12, 2026. The Company sold 19,000,000 shares of common stock, pre-funded warrants to purchase up to 41,790,274 shares, and common warrants to purchase up to 121,580,548 shares. The net proceeds to the Company totaled approximately $959.1 million after deducting underwriting discounts and commissions. The common warrants have an exercise price of $28.00 per share and expire seven years from issuance. Because share settlement of these warrants is not within the Company's control, they were classified as a liability with an initial fair value of $1.19 billion, resulting in a recognized loss of $234.9 million upon issuance [Item 1 - Financial Statements, ¶100]. On the debt side, the Company's 2022, 2023, and 2024 convertible notes were repaid in full as of December 31, 2025 [Item 1 - Financial Statements, ¶84]. As of March 31, 2026, the Company had net long-term borrowings of approximately $3.6 million and short-term borrowings of approximately $779 thousand, including accrued interest [Item 2 - MD&A, ¶13].

For the three months ended March 31, 2026, Ondas used $51.3 million in operating activities, reflecting the funding of current operating expenses to service and support customers. Investing activities consumed $474.2 million, primarily due to $429.1 million in net purchases of short-term investments, $31.8 million in cash paid for acquisitions (net of cash acquired), and $5.0 million in purchases of long-term equity investments. Financing activities provided $968.5 million, overwhelmingly driven by the January 2026 Offering [Item 1 - Financial Statements, Table 8].

Management has expressed a strong assessment of the Company's liquidity position. As of March 31, 2026, Ondas had working capital of approximately $1.5 billion. Based on these resources, management believes the Company has sufficient liquidity to fund its operations and planned capital expenditures for at least the next twelve months and does not believe additional financing is required to support near-term operating needs [Item 2 - MD&A, ¶12-13]. The Company's accumulated deficit stood at $5.4 million as of March 31, 2026, a significant reduction from $368.4 million at December 31, 2025, primarily due to the $361.3 million net income reported for the quarter [Item 2 - MD&A, ¶8]. While the Company has incurred losses since inception and historically funded operations through equity and debt financings, no going concern uncertainty has been identified by management. The Company may seek additional capital to support strategic initiatives or accelerate growth opportunities, but does not currently anticipate the need for additional financing to support near-term operations [Item 2 - MD&A, ¶14].

III. Risk Factors and Market Risks

Ondas Inc. faces a range of business and operational risks that could materially affect its financial condition and results of operations. The Company has confirmed that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025, which should be read in conjunction with this quarterly update [Item 1A - Risk Factors, ¶1]. Among the most significant operational risks is the Company's history of operating losses and its accumulated deficit, which underscores the challenges of scaling a defense and critical infrastructure technology business [Item 2 - MD&A, ¶13]. Ondas has historically funded its operations through equity and debt financings, and while it currently holds substantial liquidity, its ability to achieve sustained profitability remains subject to execution risk. The Company's recent growth has been heavily driven by acquisitions, including the addition of Sentry CS Ltd. and Airobotics, and the deconsolidation of Ondas Networks effective January 16, 2026, introduces complexity in managing a shifting corporate structure and integrating acquired entities [Item 2 - MD&A, ¶3]. These acquisition-related activities carry inherent risks related to integration, cultural alignment, and the realization of anticipated synergies.

Ondas is exposed to several financial risks, including interest rate risk, equity price risk, and foreign exchange risk. As a smaller reporting company, Ondas is not required to provide the quantitative and qualitative disclosures about market risk typically mandated by SEC rules; however, the Company has stated that there have been no material changes to its market risk exposure from that previously disclosed in its 2025 Form 10-K [Item 3 - Market Risk, ¶1]. A notable financial risk arises from the Company's warrant liability, which is marked to fair value each reporting period. For the three months ended March 31, 2026, Ondas recorded a net gain of $389.5 million related to the change in fair value of its warrant liability, alongside a $51.5 million gain on the deconsolidation of Ondas Networks [Item 2 - MD&A, ¶7]. These non-cash gains contributed to net income of $361.3 million for the period, but they also highlight the volatility that fair value accounting can introduce into reported earnings. Conversely, the Company recorded a $46.2 million loss on the acquisition of Indo Earth and $2.6 million in net unrealized losses on equity security investments, demonstrating exposure to equity market fluctuations and acquisition-related valuation risks [Item 2 - MD&A, ¶8]. Foreign exchange risk is also present, as the Company's international operations and acquisitions expose it to currency fluctuations.

Ondas operates in highly regulated defense, homeland security, and critical infrastructure markets. Its business units develop and commercialize autonomous systems, including Counter-Unmanned Aerial Systems (CUAS), aerial ISR, and Unmanned Ground Vehicle (UGV) applications for government and industrial customers [Item 2 - MD&A, ¶2]. These end markets are subject to stringent government contracting requirements, export controls, and national security regulations. Changes in defense spending priorities, government budget cycles, or regulatory frameworks could materially impact the Company's revenue pipeline and contract awards. Additionally, the Company's reliance on government customers introduces risks related to procurement delays, contract terminations, and compliance with complex federal acquisition regulations.

Ondas maintains a strong liquidity position that partially mitigates its market risk exposures. As of March 31, 2026, the Company held $1.0 billion in cash, cash equivalents, and restricted cash, along with $448 million in short-term investments and working capital of approximately $1.5 billion [Item 2 - MD&A, ¶12]. Management believes these resources are sufficient to fund operations and planned capital expenditures for at least the next twelve months. In January 2026, the Company raised approximately $1 billion in gross proceeds from the sale of common stock and warrants, further bolstering its balance sheet [Item 2 - MD&A, ¶14]. However, the Company may still seek additional capital to support strategic initiatives or accelerate growth, and its future capital requirements could increase depending on market conditions and the timing of growth initiatives. While the Company has no off-balance sheet arrangements, it may be required to make cash payments related to contingent earn-out and milestone arrangements tied to acquisitions, though these are not currently expected to impact near-term liquidity [Item 2 - MD&A, ¶15].

IV. Internal Controls and Procedures

As of March 31, 2026, Ondas Inc.'s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 [Item 4 - Controls, ¶1]. Based on this evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2026. This determination reflects management's assessment that the controls in place are adequate to ensure that information required to be disclosed in SEC filings is recorded, processed, summarized, and reported within the time periods specified by SEC rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

With respect to the quarter ended March 31, 2026, management identified no changes in the Company's internal control over financial reporting pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting [Item 4 - Controls, ¶1]. This indicates that there were no modifications to the Company's internal control framework during the reporting period that would have a significant impact on the reliability of financial reporting or the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company's evaluation did not identify any material weaknesses or significant deficiencies in internal control over financial reporting as of March 31, 2026. The absence of reported material weaknesses suggests that management has maintained an internal control environment that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. However, it is important to note that no control system, regardless of its design and operational rigor, can provide absolute assurance against all potential misstatements or losses.

Management acknowledges the inherent limitations of any control system. In designing and evaluating disclosure controls and procedures and internal control over financial reporting, management recognizes that even well-designed and well-operated controls can provide only reasonable, not absolute, assurance of achieving the desired control objectives [Item 4 - Controls, ¶1]. This recognition is grounded in the practical realities of resource constraints and the necessity for management to exercise judgment in weighing the benefits of potential controls and procedures against their associated costs. These limitations mean that there is an inherent risk that material misstatements may not be prevented or detected on a timely basis, and the Company's control framework is designed to manage, rather than eliminate, this risk.

V. Legal Proceedings and Contingencies

As of the quarter ended March 31, 2026, Ondas Inc. has disclosed that it may be involved in legal proceedings, claims, and assessments arising in the ordinary course of business. However, the Company has stated that as of the balance sheet date there are no loss contingencies included in the financial statements related to such matters [Item 1 - Financial Statements, ¶128]. The Item 1 - Legal Proceedings section of the filing cross-references the detailed discussion contained in Note 16 — Commitments and Contingencies within the financial statements, confirming that no material pending or threatened legal actions required separate accrual or disclosure as of March 31, 2026 [Item 1 - Legal, ¶1]. The Company notes that such matters are subject to many uncertainties and outcomes are not predictable with assurance, but that no specific loss contingencies have been recorded.

While the Company does not report material litigation loss contingencies, it does disclose significant commitments and contingent obligations that could result in future financial exposure. On March 28, 2026, the Company entered into an agreement with World View Enterprises Inc. under which it guaranteed payment of certain vendor invoices totaling $20.9 million (the "World View Guarantee") [Item 1 - Financial Statements, ¶19]. The fair value of this guarantee was recorded within accrued expenses and other current liabilities, and the corresponding amount was also recorded as an advanced payment for the pending acquisition of World View, which was subsequently completed on April 1, 2026.

Additionally, the Company's numerous acquisitions during the period have resulted in substantial contingent consideration liabilities. These include earn-out and milestone payment arrangements tied to the achievement of specified revenue, program win, and financial performance targets [Item 1 - Financial Statements, ¶121]. For example, in connection with the Indo Earth Moving Ltd. acquisition, the Company agreed to earn-out payments of up to $140 million in cash based on defined post-closing revenue, bookings, and profitability targets [Item 1 - Financial Statements, ¶48]. The Rotron Aerospace Ltd. acquisition includes an earn-out with a program win component capped at £25.0 million and an uncapped revenue-based component [Item 1 - Financial Statements, ¶42]. As of March 31, 2026, the total contingent consideration liabilities carried at fair value amounted to $128.1 million. These liabilities are classified as Level 3 within the fair value hierarchy, with valuation based on scenario-based methods and discounted cash flow techniques that incorporate significant unobservable inputs such as projected revenue and probability of milestone achievement [Item 1 - Financial Statements, ¶122]. The Company did not report any settlements or judgments related to legal proceedings during the three months ended March 31, 2026, and as noted above, no loss contingencies have been accrued as of the balance sheet date [Item 1 - Financial Statements, ¶128].

VI. Other Significant Events and Corporate Developments

During the quarter ended March 31, 2026, Ondas Holdings Inc. issued shares of its common stock and other equity-linked securities in transactions that were not registered under the Securities Act of 1933. These issuances occurred primarily in connection with business combination transactions and private financing arrangements. All unregistered sales during the quarter were previously disclosed in Current Reports on Form 8-K, with one exception: the Company issued 2,389,203 shares of common stock in exchange for shares of OAS common stock pursuant to certain exchange agreements (the "OAS Exchange"), which were exempt from registration under Regulation D. No unregistered equity securities were sold to the public during the fiscal quarter, and no underwriters were involved in any of these transactions [Item 2 - Equity Sales, ¶1].

The Company reported no defaults upon senior securities during the quarter ended March 31, 2026 [Item 3 - Defaults, ¶1]. In Part II, Item 5 (Other Information), the Company reported no additional information requiring disclosure [Item 5 - Other Info, ¶1]. Additionally, under Item 1A (Risk Factors), Ondas stated that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025 [Item 1A - Risk Factors, ¶1]. Item 4 (Mine Safety Disclosures) was not applicable to the Company.

Ondas filed numerous exhibits with this Quarterly Report on Form 10-Q, reflecting significant corporate developments during and shortly after the quarter. Among the key exhibits filed were merger and acquisition agreements, including the Agreement and Plan of Merger with Mistral, Inc. (Exhibit 2.2), a Share Purchase Agreement with Indo Earth Moving Ltd. (Exhibit 2.3), and the Agreement and Plan of Merger with World View Enterprises Inc. (Exhibit 2.4). The Company also filed a Certificate of Amendment to its charter (Exhibit 3.1), Amended and Restated Bylaws (Exhibit 3.2), and various equity award agreements and registration rights agreements [Item 6 - Exhibits, Table 59]. Subsequent to the end of the quarter, Ondas entered into a transaction with World View Enterprises Inc. on April 1, 2026, and entered into the Mistral Agreement on April 24, 2026, which involved the issuance of common stock [Item 6 - Exhibits, ¶30].

Conclusion

Ondas Inc. has emerged from the first quarter of 2026 as a fundamentally transformed enterprise, armed with over $1 billion in cash and a rapidly expanding portfolio of autonomous systems capabilities acquired through an aggressive M&A strategy. The Company's 1,080% revenue growth and swing to net profitability—while heavily influenced by non-cash gains—demonstrate the scale of change underway. With a clean bill of health on internal controls, no material litigation contingencies, and management's confident assessment of liquidity for at least the next twelve months, Ondas appears well-positioned to pursue its strategic objectives in the defense and critical infrastructure markets. However, the substantial operating losses, the complexity of integrating multiple acquisitions, and the volatility introduced by fair value accounting for warrant liabilities remain important factors for stakeholders to monitor as the Company executes on its growth trajectory.