# Ondas, Inc. (ONDS) 10-Q SEC filing - Q1 FY2026

- Filed: May 15, 2026, 4:34 PM EDT
- Fiscal quarter: Q1 FY2026
- Calendar quarter: Q1 2026
- Accession: 0001213900-26-057859
- OpenCapital page: https://www.opencapital.sh/filings/0001213900-26-057859
- Markdown URL: https://www.opencapital.sh/filings/0001213900-26-057859.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1646188/000121390026057859/0001213900-26-057859-index.htm

## Filing documents

- [10-Q (ea0290102-10q_ondas.htm)](https://www.sec.gov/Archives/edgar/data/1646188/000121390026057859/ea0290102-10q_ondas.htm)

---

## 10-Q

SEC source: [ea0290102-10q_ondas.htm](https://www.sec.gov/Archives/edgar/data/1646188/000121390026057859/ea0290102-10q_ondas.htm)

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

(Mark One)

☒ **QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the quarterly period ended March 31, 2026

or

☐ **TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from _______ to _______

Commission File Number: **001-39761**

**Ondas Inc.**

(Exact name of registrant as specified in its charter)

**Nevada** **47-2615102**

(State or other jurisdiction of    incorporation or organization) (I.R.S. Employer    Identification No.)

**222 Lakeview Avenue, Suite 800, West Palm
Beach, Florida 33401**

(Address of principal executive offices) (Zip Code)

**(888) 350-9994**

(Registrant’s telephone number, including
area code)

**N/A**

(Former name, former address and former fiscal
year, if changed since last report)

Securities registered pursuant to Section 12(b)
of the Act:

**Title of each class** **Trading Symbol(s)** **Name of each exchange on which registered**

Common Stock par value $0.0001 ONDS The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock
as of May 13, 2026 was 495,762,650.

**ONDAS INC.**

**INDEX TO FORM 10-Q**

|  |  | **Page** |
| --- | --- | --- |
| **PART I -  FINANCIAL INFORMATION** |  |  |
| **Item 1.** | [**Financial Statements**](#a_018) | 1 |
|  | [Condensed Consolidated Balance Sheets](#a_001) | 1 |
|  | [Condensed Consolidated Statements of Operations](#a_002) | 2 |
|  | [Condensed Consolidated Statements of Comprehensive Income (Loss)](#a_003) | 3 |
|  | [Condensed Consolidated Statements of Temporary Equity and Stockholders’ Equity](#a_004) | 4 |
|  | [Condensed Consolidated Statements of Cash Flows](#a_005) | 5 |
|  | [Notes to the Condensed Consolidated Financial Statements](#a_006) | 6 |
| **Item  2.** | [**Management’s Discussion and Analysis of Financial Condition and Results of Operations**](#a_007) | 49 |
| **Item 3.** | [**Quantitative and Qualitative Disclosures About Market Risk**](#a_008) | 55 |
| **Item 4.** | [**Controls and Procedures**](#a_009) | 55 |
| [**PART II - OTHER INFORMATION**](#a_010) |  | 56 |
| **Item 1.** | [**Legal Proceedings**](#a_011) | 56 |
| **Item 1A.** | [**Risk Factors**](#a_012) | 56 |
| **Item 2.** | [**Unregistered Sales of Equity Securities and Use of Proceeds**](#a_013) | 56 |
| **Item 3.** | [**Defaults Upon Senior Securities**](#a_014) | 56 |
| **Item 4.** | [**Mine Safety Disclosures**](#a_015) | 56 |
| **Item 5.** | [**Other Information**](#a_016) | 56 |
| **Item 6.** | [**Exhibits**](#a_017) | 57 |

i

## ITEM 1. FINANCIAL STATEMENTS

**ONDAS INC.**

### CONDENSED CONSOLIDATED BALANCE SHEETS

_(dollars in thousands, except par value)_

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
|  | (Unaudited) |  |
| ASSETS |  |  |
| Current Assets: |  |  |
| Cash and cash equivalents | $1,026,003 | $550,744 |
| Restricted cash | 11,081 | 43,615 |
| Short-term investments | 447,842 | 21,750 |
| Accounts receivable, net | 45,295 | 22,356 |
| Inventory, net | 34,286 | 21,963 |
| Other current assets | 64,689 | 25,473 |
| Total current assets | 1,629,196 | 685,901 |
| Property and equipment, net | 11,508 | 10,217 |
| Goodwill | 381,838 | 251,809 |
| Intangible assets, net | 312,514 | 136,890 |
| Long-term equity investments | 42,340 | 35,587 |
| Investment in unconsolidated affiliates, at fair value | 29,289 | - |
| Other assets | 32,685 | 12,437 |
| Total assets | $2,439,370 | $1,132,841 |
| LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY |  |  |
| Current Liabilities: |  |  |
| Accounts payable | $16,697 | $13,873 |
| Accrued expenses and other current liabilities | 70,731 | 33,970 |
| Accrued purchase and contingent consideration | 39,621 | 75,000 |
| Notes payable, related party | - | 1,500 |
| Notes payable | 243 | 704 |
| Convertible note payable, related party | - | 3,500 |
| Convertible note payable | 528 | 2,950 |
| Deferred revenue | 19,627 | 8,029 |
| Government grant liability | 1,870 | 2,295 |
| Total current liabilities | 149,317 | 141,821 |
| Notes payable, net of current portion | 188 | - |
| Accrued purchase and contingent consideration, net of current portion | 88,481 | - |
| Convertible notes payable, net of current portion | 3,410 | 3,834 |
| Government grant liability, net of current portion | 1,586 | 1,362 |
| Warrant liability | 1,058,990 | 489,434 |
| Deferred tax liability | 48,292 | 14,531 |
| Other long-term liabilities | 8,791 | 10,244 |
| Total liabilities | 1,359,055 | 661,226 |
| Commitments and Contingencies (Note 16) |  |  |
| Temporary Equity |  |  |
| Redeemable noncontrolling interests | 2,454 | 29,796 |
| Stockholders’ Equity |  |  |
| Preferred stock – par value $0.0001; 5,000,000 shares authorized at March 31, 2026 and December 31, 2025, and none issued or outstanding at March 31, 2026 and December 31, 2025 | - | - |
| Series A Convertible Preferred stock – par value $0.0001; 5,000,000 shares authorized at March 31, 2026 and December 31, 2025, and none issued or outstanding at March 31, 2026 and December 31, 2025 | - | - |
| Common stock – par value $0.0001; 800,000,000 shares authorized at March 31, 2026 and December 31, 2025; 469,062,109 and 380,763,481 issued and outstanding at March 31, 2026 and December 31, 2025, respectively | 46 | 38 |
| Additional paid in capital | 1,079,757 | 805,828 |
| Accumulated other comprehensive (loss) income | (361) | 329 |
| Accumulated deficit | (5,438) | (368,387) |
| Total Ondas Inc. stockholders’ equity | 1,074,004 | 437,808 |
| Noncontrolling interest | 3,857 | 4,011 |
| Total stockholders’ equity | 1,077,861 | 441,819 |
| Total liabilities, temporary equity, and stockholders’ equity | $2,439,370 | $1,132,841 |

The accompanying footnotes are an integral part
of these Condensed Consolidated Financial Statements.

1

**ONDAS INC.**

### CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

_(in thousands, except per share amounts) · (Unaudited)_

| Line item | Three Months Ended, / March 31, 2026 | Three Months Ended, / March 31, 2025 |
| --- | --- | --- |
| Revenues, net | $50,122 | $4,248 |
| Cost of goods sold | 25,464 | 2,760 |
| Gross profit | 24,658 | 1,488 |
| Operating expenses: |  |  |
| General and administrative | 43,316 | 5,909 |
| Sales and marketing | 10,494 | 2,430 |
| Research and development | 13,519 | 3,459 |
| Total operating expenses | 67,329 | 11,798 |
| Operating loss | (42,671) | (10,310) |
| Other income (expense), net |  |  |
| Other income (expense), net | 136 | (1) |
| Change in fair value of warrant liability | 389,548 | - |
| Gain on deconsolidation of subsidiary | 51,453 | - |
| Loss on acquisition of variable interest entity | (46,150) | - |
| Change in fair value of government grant liability | (104) | (124) |
| Interest and dividend income | 12,136 | 201 |
| Unrealized loss on investments | (2,617) | - |
| Interest expense | (338) | (3,868) |
| Foreign exchange gain (loss), net | 102 | (34) |
| Total other income (expense), net | 404,166 | (3,826) |
| Income (loss) before provision for income taxes | 361,495 | (14,136) |
| Provision for income taxes | 245 | - |
| Net income (loss) | 361,250 | (14,136) |
| Less preferred dividends attributable to noncontrolling interest | - | 390 |
| Less deemed dividends attributable to accretion of redemption value | 1,289 | 817 |
| Net loss attributable to noncontrolling interests | (1,698) | - |
| Net income (loss) attributable to Ondas Inc. stockholders | $361,659 | $(15,343) |
| Net income (loss) per share – basic | $0.58 | $(0.15) |
| Net income (loss) per share – diluted | $0.56 | $(0.15) |
| Weighted average number of common shares outstanding, basic and diluted |  |  |
| Basic | 445,089 | 105,005 |
| Diluted | 461,706 | 105,005 |

The accompanying footnotes are an integral part of these Condensed
Consolidated Financial Statements.

2

**ONDAS INC.**

### CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS**)

_(dollars in thousands) · (Unaudited)_

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Net income (loss) | $361,250 | $(14,136) |
| Other comprehensive income (loss): |  |  |
| Foreign currency translation | (300) | - |
| Available-for-sale investments: |  |  |
| Unrealized gain (loss), net | (383) | - |
| Comprehensive income (loss) | $360,567 | $(14,136) |
| Comprehensive income (loss) attributable to: |  |  |
| Comprehensive loss attributable to noncontrolling interests | (1,698) | - |
| Foreign currency translation adjustments attributable to noncontrolling interests | 8 | - |
| Noncontrolling interests | (1,690) | - |
| Comprehensive income (loss) attributable to Ondas Inc. stockholders | $362,257 | $(14,136) |

The accompanying footnotes are an integral
part of these Condensed Consolidated Financial Statements.

3

**ONDAS INC.**

**CONDENSED CONSOLIDATED
STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’**

**EQUITY**

**FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025**

**(dollars in thousands)**

**(Unaudited)**

| Line item | Redeemable Noncontrolling Interest / Shares | Redeemable Noncontrolling Interest / Amount | Common Stock / Shares | Common Stock / Amount | Ondas Inc. Stockholders’ Equity / Additional Paid in / Capital | Ondas Inc. Stockholders’ Equity / Accumulated other Comprehensive / Income (Loss) | Ondas Inc. Stockholders’ Equity / Accumulated / Deficit | Noncontrolling / Interest | Total Stockholders’ / Equity |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance, January 1, 2025 | 538,048 | $19,361 | 93,173,191 | $9 | $252,942 | - | $(236,368) | - | $16,583 |
| Preferred dividends attributable to redeemable noncontrolling interest | - | 390 | - | - | (390) | - | - | - | (390) |
| Accretion of redeemable preferred stock in Ondas Networks | - | 817 | - | - | (817) | - | - | - | (817) |
| Issuance of warrants in Ondas Networks, in connection with convertible note payable | - | - | - | - | 346 | - | - | - | 346 |
| Issuance of shares for payment on convertible debt | - | - | 33,322,397 | 3 | 21,936 | - | - | - | 21,939 |
| Issuance of shares upon exercise of options and warrants and delivery of restricted stock units | - | - | 1,229,211 | - | 984 | - | - | - | 984 |
| Stock-based compensation | - | - | - | - | 1,573 | - | - | - | 1,573 |
| Net Loss | - | - | - | - | - | - | (14,136) | - | (14,136) |
| Balance, March 31, 2025 | 538,048 | $20,568 | 127,724,799 | $12 | $276,574 | - | $(250,504) | - | $26,082 |
| Balance, January 1, 2026 | 538,048 | $29,796 | 380,763,481 | $38 | $805,828 | $329 | $(368,387) | $4,011 | $441,819 |
| Accretion to redemption amount of redeemable noncontrolling interests | - | 1,289 | - | - | (1,289) | - | - | - | (1,289) |
| Settlement of redeemable noncontrolling interest | - | (2,582) | 352,968 | - | 2,574 | 9 | - | - | 2,583 |
| Deconsolidation of subsidiary | (538,048) | (24,513) | - | - | 8,459 | - | - | - | 8,459 |
| Issuance of shares, warrants, and pre-funded warrants from Offerings, net of offering costs | - | - | 19,000,000 | 2 | (2) | - | - | - | - |
| Issuance of shares upon exercise of options and warrants and delivery of restricted stock units | - | - | 44,737,301 | 4 | 10,035 | - | - | - | 10,039 |
| Issuance of shares in connection with acquisitions | - | - | 21,819,156 | 2 | 232,526 | - | - | - | 232,528 |
| Issuance of shares in exchange for shares of OAS, net of costs | - | - | 2,389,203 | - | 2,051 | - | - | - | 2,051 |
| Stock-based compensation | - | - | - | - | 19,575 | - | - | - | 19,575 |
| Change in net unrealized gain on debt securities, net of tax | - | - | - | - | - | (383) | - | - | (383) |
| Foreign currency translation adjustments, net of tax | - | 9 | - | - | - | (316) | - | (1) | (317) |
| Net income (loss) | - | (1,545) | - | - | - | - | 362,949 | (153) | 362,796 |
| Balance, March 31, 2026 | - | $2,454 | 469,062,109 | $46 | $1,079,757 | $(361) | $(5,438) | $3,857 | $1,077,861 |

The accompanying footnotes are an integral part
of these Condensed Consolidated Financial Statements.

4

**ONDAS INC.**

### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

_(dollars in thousands) · (Unaudited)_

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| Net income (loss) | $361,250 | (14,136) |
| Adjustments to reconcile net income (loss) to net cash flows used in operating activities: |  |  |
| Unrealized losses on investments | 2,617 | - |
| Depreciation | 669 | 181 |
| Amortization of debt discount and issuance cost | - | 3,303 |
| Amortization of intangible assets | 5,622 | 1,062 |
| Amortization of right of use asset | 389 | 222 |
| Noncash interest expense | 383 | - |
| Gain on disposal of equipment | (110) | - |
| Change in fair value of warrant liability | (389,548) | - |
| Gain on deconsolidation of subsidiary | (51,453) | - |
| Loss on acquisition of variable interest entity | 46,150 | - |
| Change in fair value of government grant liability | 104 | (32) |
| Stock-based compensation | 19,658 | 1,573 |
| Changes in operating assets and liabilities, net of acquisitions and deconsolidations: |  |  |
| Accounts receivable | (11,726) | 3,309 |
| Inventory | (4,129) | (727) |
| Other current assets | (32,334) | (3,048) |
| Deposits and other assets | (10,258) | (32) |
| Accounts payable | (288) | (1,161) |
| Accrued expenses and other current liabilities | 15,614 | 806 |
| Deferred revenue | (2,655) | 2,309 |
| Operating lease liability | (593) | (288) |
| Deferred tax liability | (673) | - |
| Other liabilities | 13 | - |
| Net cash flows used in operating activities | (51,298) | (6,659) |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| Purchase of property and equipment | (1,332) | (171) |
| Proceeds from sale of property and equipment | 110 | - |
| Purchase of long-term equity investments | (5,000) | - |
| Purchases of short-term investments | (452,238) | - |
| Maturities of short-term investments | 23,147 | - |
| Cash paid for acquisition, net of cash acquired | (31,770) | - |
| Deconsolidation of subsidiary cash | (7,011) | - |
| All other investing activities | (73) | (24) |
| Net cash flows used in investing activities | (474,167) | (195) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| Proceeds from exercise of options and warrants | 10,039 | 984 |
| Proceeds from sale of common stock and warrants, net of issuance costs | 959,104 | - |
| Proceeds from convertible notes payable, net of issuance costs | - | 923 |
| Proceeds from government grant | - | 365 |
| Payments on notes payable | (305) | - |
| Payments on government grant liability | (373) | (7) |
| Net cash flows provided by financing activities | 968,465 | 2,265 |
| Increase (decrease) in cash, cash equivalents, and restricted cash | 443,000 | (4,589) |
| Effect of exchange rate on cash | (275) | - |
| Cash, cash equivalents, and restricted cash beginning of period | 594,359 | 29,999 |
| Cash, cash equivalents, and restricted cash end of period | $1,037,084 | $25,410 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |  |  |
| Cash paid for interest | $13 | $5 |
| Cash paid for income taxes | - | - |
| SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |  |  |
| Preferred dividends attributable to redeemable noncontrolling interest | - | $390 |
| Accretion of redeemable noncontrolling interest to redemption value | $1,289 | $817 |
| Common stock issued in connection with business acquisitions | $232,528 | - |
| Common stock issued in exchange for debt repayment | - | $21,939 |
| Issuance of shares in exchange for shares of OAS, net of costs | $2,051 | - |
| Warrants issued in connection with convertible notes payable with respect to Ondas Networks | - | $346 |
| Operating leases right-of-use assets obtained in exchange of lease liabilities | $691 | $340 |

The accompanying footnotes are an integral part
of these Condensed Consolidated Financial Statements.

5

**ONDAS INC.  
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

### **NOTE 1 – DESCRIPTION OF BUSINESS**

Ondas, Inc. (together with
its subsidiaries, the “Company,” “Ondas,” “we,” “us,” or “our”) is a defense,
security, and critical infrastructure technology company organized around two business units: Ondas Autonomous Systems Inc. (“OAS”) and Ondas
Capital Inc. (“Ondas Capital”). Through these business units, we develop and commercialize autonomous systems and strategic
investment and partnership initiatives that support the scaling and adoption of mission-critical solutions for governments and industrial
customers.

OAS focuses on autonomous and
unmanned aerial and ground systems and integrated mission solutions for defense, homeland security, public safety, and other critical
infrastructure and industrial end markets. Through its product company subsidiaries, OAS develops, commercializes and delivers
integrated capabilities across Counter-Unmanned Aerial System (“CUAS”), aerial Intelligence, Surveillance,
and Reconnaissance (“ISR”), and Unmanned Ground Vehicle (“UGV”) applications. Ondas
Capital supports our growth strategy through strategic investments, partnerships, and capital formation initiatives intended to accelerate
technology development, expand market access, and enhance long-term value creation across the Ondas platform.

The Company manages these
business units as distinct operating platforms aligned to complementary end markets and customer requirements. The Company’s
approach is designed to combine advanced autonomy, secure communications, and integrated operating capabilities to help customers improve
situational awareness, operational resilience, and safety and security outcomes in complex, regulated, and often contested environments.

*Deconsolidation of subsidiary*

At December 31, 2025, Ondas
Networks was a separate business unit that was consolidated in the December 31, 2025 financial statements. Ondas Networks provides
mission-critical private wireless connectivity solutions for Industrial Internet of Things (IOT) applications, enabling secure,
reliable, wide-area communications and edge data transport in demanding critical infrastructure environments.

On January 16, 2026,
Ondas Networks completed a Series B preferred stock financing (the “2026 Networks Offering”) for aggregate gross proceeds
of approximately $8.4 million, which included approximately $6.0 million from the Company and $2.0 million from other
investors. In connection with the 2026 Networks Offering, Ondas Networks issued shares of Series B-1 and B-2 Preferred Stock. The
Series B Preferred Stock accrues dividends at a rate of 8% per annum of the original issue price. Dividends are payable only when,
as, and if declared by the board of directors of Ondas Networks and may be paid in cash or additional shares of Ondas Networks preferred
stock. Each share of Series B Preferred Stock is convertible at the option of the holder at any time into shares of Ondas Networks
common stock at an initial conversion price equal to the original issue price, subject to standard adjustments. The Series B Preferred
Stock is redeemable upon the occurrence of specified events, including at the option of the holder after a stated period, at amounts intended
to provide a return of capital plus accrued dividends.

During the quarter ended March
31, 2026, the Company determined that it no longer held a controlling financial interest in Ondas Networks as a result of the 2026 Networks
Offering. This determination resulted from the 2026 Networks Offering, pursuant to which minority preferred shareholders exercised warrants
and acquired additional voting interests in Ondas Networks (refer to Note 17 for additional details). As a result of these warrant exercises,
the Company’s ownership and voting interests were diluted such that it no longer possessed the unilateral power to direct the activities
that most significantly impact Ondas Networks’ economic performance. Accordingly, the Company deconsolidated Ondas Networks effective
January 16, 2026 and no longer includes the assets, liabilities, and results of operations of Ondas Networks in its consolidated financial
statements subsequent to that date.

Upon deconsolidation, the Company derecognized all assets and liabilities
of Ondas Networks, including the related noncontrolling interest, and remeasured its retained ownership interest to fair value. The Company
recognized a gain on deconsolidation of $51.5 million, which is included in other income (expense), net in the condensed consolidated
statements of operations for the three months ended March 31, 2026. The most significant carrying amounts of the assets and liabilities
that were deconsolidated were inventory of $3.6 million, deposits and other assets of $2.3 million, convertible notes payable of $5.0
million, accrued expenses and other liabilities, current and long-term, of $2.7 million, and notes payable to the Company of $10.4 million.

Following the deconsolidation,
the Company retains an approximately 47.5% ownership interest in Ondas Networks and has the ability to exercise significant influence
over Ondas Networks’ operating and financial policies. As a result, the retained interest is accounted for as an equity-method investment
and is presented as Investment in unconsolidated affiliate within noncurrent assets on the condensed consolidated balance sheets. The
Company elected the fair value option for its retained equity investment in Ondas Networks in accordance with ASC 825, *Financial Instruments*.
As a result, the investment is carried at fair value, with changes in fair value recognized in earnings each reporting period and included
in other income (expense) in the condensed consolidated statements of operations. There were no changes in the fair value of the retained
interest for the period ended March 31, 2026.

6

### **NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

Basis of presentation

The accompanying condensed
consolidated financial statements include the consolidated accounts of the Company and its wholly-owned and majority-owned subsidiaries,
as well as other entities in which the Company has a controlling financial interest. All intercompany balances and transactions have been
eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements present the Company’s historical
financial position, results of operations, changes in stockholders’ equity and cash flows in accordance with accounting principles
generally accepted in the United States of America (“GAAP”).

The condensed consolidated
financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”)
and accounting principles generally accepted in the United States (“U.S. GAAP”) for interim reporting. As such, certain notes
or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate the disclosures contained
in the Company’s annual audited consolidated financial statements. Accordingly, the condensed consolidated financial statements
should be read in conjunction with the Company’s audited financial statements and related notes as of and for the fiscal year ended
December 31, 2025, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed
with the SEC on March 30, 2026 (the “2025 Annual Report”). The condensed consolidated financial statements are unaudited;
however, in the opinion of management, they include all normal and recurring adjustments necessary for a fair presentation of the Company’s
condensed consolidated financial statements for the periods presented. Results of operations reported for interim periods are not necessarily
indicative of results for the entire year. All intercompany accounts and transactions are eliminated upon consolidation.

Acquisitions

The Company accounts for business
combinations in accordance with ASC 805, *Business Combinations (“ASC 805”)*. Assets acquired, liabilities assumed, and
noncontrolling interests are measured at fair value at the acquisition date. Any excess of the consideration transferred over the estimated
fair value of net assets acquired is recorded as goodwill.

The Company accounts for asset acquisitions in accordance with ASC 805-50,
related to transactions that do not meet the definition of a business. In an asset acquisition, the cost of the transaction, including
transaction costs and contingent consideration that is probable and reasonably estimable at the acquisition date, is allocated to the
identifiable assets acquired and liabilities assumed on a relative fair value basis. No goodwill is recognized in an asset acquisition.
Any excess of the transaction cost over the estimated fair value of net assets acquired is recognized in earnings.

7

Goodwill and Intangible Assets

Goodwill and other intangible
assets result from the Company’s acquisition of existing businesses. In accordance with accounting standards related to business
combinations, goodwill is not amortized; however, certain finite-lived identifiable intangible assets, primarily customer relationships
and acquired technology, are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized. The
Company reviews identified intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the
related carrying amounts may not be recoverable. The Company also tests intangible assets with indefinite lives and goodwill for impairment
at least annually.

Use of Estimates

The process of preparing financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those
relating to allocation of consideration for business combinations to identifiable tangible and intangible assets, asset acquisitions,
deconsolidation’s and retained interests, revenue recognition, inventory write-downs to reflect net realizable value, fair values
of financial instruments and goodwill, assumptions used in the valuation of stock-based awards, derivative warrant liabilities, and valuation
allowances against deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents, and Restricted Cash

The Company considers all
highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Restricted cash includes
cash that is not readily available for use in the Company’s operating activities. At December 31, 2025, $37.6 million of our restricted
cash balance relates to funds held in escrow in connection with the acquisition of Sentrycs. The restrictions on the $37.6 million funds
held in escrow were released during the three months ended March 31, 2026. The remaining restricted cash balance at March 31, 2026 and
December 31, 2025 is attributable to (i) minimum cash reserves required to be maintained to cover bank guarantees issued for new customer
orders and operating leases, and (ii) minimum cash reserve requirements for credit cards.

Short-term investments

The Company accounts for its
investments in debt securities, including fixed-income securities and certificates of deposit, as available-for-sale in accordance with
ASC 320, *Investments—Debt Securities*. Available-for-sale debt securities are recorded at fair value on the consolidated balance
sheets, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss).

The amortized cost of available-for-sale
securities includes the purchase price, adjusted for the amortization of premiums and accretion of discounts, which are recognized in
interest income using the effective interest method. Interest income earned on investments, including certificates of deposit, is recorded
in interest and dividend income in the condensed consolidated statements of operations. Certificates of deposit included in available-for-sale
investments are classified based on their contractual maturities and are recorded at fair value, with changes in fair value reflected
in accumulated other comprehensive income (loss).

8

The Company evaluates available-for-sale
debt securities, including certificates of deposit, for expected credit losses at each reporting date and records an allowance for credit
losses when a decline in fair value below amortized cost is attributable to credit factors. Unrealized losses that are not credit related
are recorded in accumulated other comprehensive income (loss). Upon the sale or maturity of an available-for-sale security, realized gains
or losses are recognized in earnings and amounts previously recorded in accumulated other comprehensive income (loss) are reclassified
into earnings.

The Company’s investments
in equity securities are accounted for in accordance with ASC 321, *Investments—Equity Securities*. Equity securities with
readily determinable fair values are measured at fair value, with changes in fair value recognized in earnings. Equity securities without
readily determinable fair values are recorded at cost, less impairment, and adjusted for observable price changes in orderly transactions
for identical or similar equity securities of the same issuer, with such adjustments recognized in earnings. Dividends received from equity
securities are recognized in earnings when declared.

Inventory

Inventories, which consist
solely of raw materials, work in process, and finished goods, are stated at the lower of cost (first-in, first-out) or net realizable
value, net of reserves for obsolete inventory. We continually analyze our slow-moving and excess inventories. Based on historical and
projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected
use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete
are written down to net realizable value. 

| (dollars in thousands) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Raw material | $23,033 | $14,153 |
| Work in process | 6,774 | 1,470 |
| Finished goods | 5,470 | 7,992 |
| Less inventory reserves | (991) | (1,652) |
| Total inventory, net | $34,286 | $21,963 |

Impairment of Long-Lived Assets

Long-lived assets are evaluated
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Such
indicators include significant technological changes, adverse changes in market conditions and/or poor operating results. The carrying
value of a long-lived asset group is considered impaired when the projected undiscounted future cash flows are less than its carrying
value. The amount of impairment loss recognized is the difference between the estimated fair value and the carrying value of the asset
or asset group. Fair market value is determined primarily using the projected future cash flows discounted at a rate commensurate with
the risk involved. There was no impairment of long-lived assets for the three months ended March 31, 2026 and 2025, respectively.

9

Other Assets

Other long-term assets generally
consist of right-of-use assets resulting from leases, long-term portion of prepaid expenses, and refundable deposits that are not expected
to be received in the next twelve months.

On March 28, 2026, the Company
entered into an agreement with World View Enterprises Inc. (World View) in which the Company guaranteed payment of certain vendor invoices
(the World View Guarantee). The Company recorded the fair value of the guaranteed amounts, totaling $20.9 million, pursuant to ASC 460, *Guarantees*, which is presented within accrued expenses and other current liabilities on the condensed consolidated balance sheets.
The guaranteed amounts also represented an advanced payment for the acquisition of World View, and therefore, the Company also recorded
the $20.9 million advanced payment (World View Advanced Payment), which is presented within other assets on the condensed consolidated
balance sheets.

On January 16, 2026,
upon the deconsolidation of Ondas Networks, the Company recorded a note receivable from Ondas Networks (the “Networks Note”),
an unconsolidated affiliate accounted for under the equity method. The face value of the Networks Note is $10 million, and bears interest
at 8% and matures in December 2027. As of January 16, 2026, the fair value of the Networks Note was $8.8 million. During the
period from deconsolidation through March 31, 2026, the Company recognized $0.1 million of interest income, which is included
in interest income in the condensed consolidated statements of operations. The Networks Note is presented within other assets on the condensed
consolidated balance sheets and is separate from the Company’s equity-method investment in Ondas Networks. The Networks Note represents
a contractual debt instrument and is accounted for as a financial asset in accordance with U.S. GAAP. The Company evaluated the Networks
Note for collectability as of the reporting date and determined that no allowance for credit losses was required.

Other Liabilities

Other liabilities generally
consist of operating lease liabilities, accrued interest, contingent consideration, long-term deferred revenue, and refundable sub-lease
deposit that are not expected to be repaid in the next twelve months.

Other liabilities include
the World View Guarantee of $20.9 million as discussed above.

Noncontrolling Interests

Noncontrolling interests represent
the minority shareholders’ proportionate share of the Company’s majority-owned subsidiaries. The portion of net income (loss)
attributable to noncontrolling interests is presented as net loss attributable to noncontrolling interests in the condensed consolidated
statements of operations, and the portion of other comprehensive income (loss) of these noncontrolling interests is presented in the condensed
consolidated statements of stockholders’ equity.

Redeemable Noncontrolling Interests

Redeemable noncontrolling
interests represent equity interests in consolidated subsidiaries that are not attributable to the Company and that are subject to redemption
upon the occurrence of events that are not solely within the Company’s control, including temporary equity classified instruments
and put options embedded in the noncontrolling interests.

Redeemable noncontrolling
interests are initially measured at their fair value. Noncontrolling interests which are currently redeemable are measured at the greater
of the amount that would be paid if settlement occurred as of the balance sheet date or the carrying amount adjusted for net income (loss)
attributable to the noncontrolling interest. For noncontrolling interests which are probable of becoming redeemable, the Company uses
the accretion method for instruments with fixed redemption amounts or the immediate method for instruments redeemable at fair value or
based on a formula, if such amounts are greater than the carrying amount adjusted for net income (loss) attributable to the noncontrolling
interests. Adjustments to the carrying value of the redeemable noncontrolling interests are recorded through additional paid-in capital.

10

Derivative Warrant Liabilities

The Company classifies as
equity any warrants that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash
settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities
any warrants that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that
event is outside the Company’s control), (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical
settlement or net-share settlement) or (iii) that contain reset provisions that do not qualify for the scope exception. The Company assesses
classification of its common stock warrants and other freestanding warrant instruments at each reporting date to determine whether a change
in classification between assets and liabilities is required.

Warrants that are determined
to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required
to be reclassified. Warrants that are determined to require asset or liability classification are measured at fair value upon issuance
and are subsequently remeasured to fair value at each balance sheet date with any change in fair value recognized in the condensed consolidated
statements of operations.

Embedded Derivatives

Features embedded into contracts
are assessed to determine if they represent embedded derivatives which require bifurcation and separate recognition. Embedded derivatives
requiring bifurcation are accounted for at fair value, with subsequent changes in fair value recognized in the condensed consolidated
statements of operations.

Fair Value of Financial Instruments

Our financial assets measured
at fair value on a recurring basis consist primarily of cash equivalents, such as money market funds, short-term investments, including
publicly traded equity securities, warrants (including warrants exercisable for publicly traded stock), and available-for-sale debt securities.
Our financial liabilities measured at fair value on a recurring basis consist primarily of government grant liabilities and warrant liabilities.

Government grant liabilities
represent obligations under government-funded arrangements and are measured at fair value using valuation techniques that incorporate
significant unobservable inputs. Warrant liabilities arise from warrants issued by the Company that do not meet the criteria for equity
classification and are therefore accounted for as liabilities and measured at fair value on a recurring basis, with changes in fair value
recognized in earnings.

The carrying amounts of receivables,
accounts payable, and accrued expenses approximate fair value due to the short-term maturity of such instruments.

Income Taxes

Income taxes are accounted
for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount
that will more likely than not be realized. In accordance with U.S. GAAP, we recognize the effect of uncertain income tax positions only
if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain
income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement
are reflected in the period in which those changes in judgment occur. We recognize both interest and penalties related to uncertain tax
positions as part of the income tax provision.

Stock-based Compensation

The Company calculates stock-based
compensation expense for option awards (“Stock-based Awards”) based on the estimated grant/issue date fair value using the
Black-Scholes-Merton option pricing model (“Black-Scholes Model”) and recognize the expense on a straight-line basis over
the vesting period. The Company accounts for forfeitures as they occur.

The Black-Scholes Model requires
the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting
period in determining the fair value of Stock-based Awards. The expected term is based on the “simplified method”, due to
the Company’s limited option exercise history. Under this method, the term is estimated using the weighted average of the service
vesting period and contractual term of the option award. As the Company does not yet have sufficient history of its own volatility, the
Company has identified several public entities of similar size, complexities and industry and calculates historical volatility based on
the volatilities of these companies. These assumptions can involve complex judgments about future events, which are open to interpretation
and inherent uncertainty. In addition, significant changes in assumptions could significantly impact the amount of expense recorded in
a given period.

The Company recognizes restricted
stock unit expense over the period of vesting or the period that services will be provided. Compensation associated with shares of the
Company’s common stock, par value $0.0001 (the “Common Stock”), issued or to be issued to consultants and other non-employees
is recognized over the expected service period beginning on the measurement date, which is generally the time the Company and the service
provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided.

11

Net Income (Loss) Per Common Share

Basic net income (loss) per
share is computed by dividing net income (loss) available to common stockholders (the numerator) by the weighted average number of shares
of Common Stock outstanding for each period (the denominator).

Basic net income (loss) per
share is computed using the two-class method, which is an earnings allocation method that determines income (loss) per share for common
stock and participating securities. The participating securities consist of warrants to purchase common stock issued in the October 2025
Offering and the January 2026 Offering. Undistributed earnings are allocated between common stock and participating securities as if all
earnings had been distributed during the period. In periods of loss, no allocation is made to the participating securities.

Diluted net income (loss)
per share is calculated using the more dilutive of the two-class method or the treasury stock and if-converted methods, as applicable.
Potential dilutive shares include stock options, warrants, restricted stock units, contingently issuable shares, and convertible preferred
stock. Because the Company reported a net loss for the three months ended March 31, 2025, the effect of potentially dilutive securities
would have been anti-dilutive; therefore, diluted net loss per share equals basic net loss per share for that period.

The reconciliation of basic
to diluted shares is as follows (in thousands except share data):

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Calculation of basic income (loss) per share attributable to stockholders |  |  |
| Net income (loss) attributable to stockholders | $361,659 | $(15,343) |
| Net income attributable to participating securities | (103,924) | - |
| Net income (loss) attributable to common stockholders - basic | $257,735 | $(15,343) |
| Weighted-average common shares outstanding – basic | 445,088,835 | 105,004,818 |
| Earnings per share - basic | $0.58 | $(0.15) |
| Calculation of diluted income (loss) per share attributable to stockholders |  |  |
| Net income (loss) attributable to stockholders | $361,959 | $(15,343) |
| Net income attributable to participating securities | (103,924) | - |
| Net income (loss) attributable to common stockholders - diluted | $257,735 | $(15,343) |
| Weighted-average common shares outstanding – basic | 445,088,835 | 105,004,818 |
| Common stock warrants | 278,260 | - |
| Common stock options | 10,012,986 | - |
| Restricted stock units | 6,308,924 | - |
| Other | 16,951 | - |
| Weighted-average common shares outstanding – diluted | 461,705,956 | 105,004,818 |
| Net income (loss) per share - diluted | $0.56 | $(0.15) |

The following potentially
dilutive securities for the three months ended March 31, 2026 and 2025, have been excluded from the computation of diluted net income
(loss) per share because the effect of their inclusion would have been anti-dilutive.

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Warrants to purchase common stock | 195,527,101 | 25,384,610 |
| Options to purchase common stock | 654,350 | 9,349,311 |
| Contingently issuable shares | 109,456,221 | - |
| Potential shares issuable under 2022 Convertible Promissory Notes | - | 19,502,416 |
| Potential shares issuable under 2023 Additional Notes | - | 30,237,267 |
| Potential shares issuable under 2024 Additional Notes | - | 42,348,142 |
| Restricted stock units | - | 1,458,600 |
| Total potentially dilutive securities | 305,637,672 | 128,280,346 |

Concentration of Customers

A small number of customers
have accounted for a substantial amount of our revenue. Revenue from significant customers, those representing 10% or more of total revenue,
was composed of three customers accounting for 32%, 20% and 17% of the Company’s revenue for the three months ended March 31, 2026,
respectively. Three customers accounted for 43%, 36% and 14% of the Company’s revenue for the three months ended March 31, 2025,
respectively.

Accounts receivable from significant
customers, those representing 10% or more of the total accounts receivable, were composed of two customers accounting for 42% and 11%
of the Company’s accounts receivable balance as of March 31, 2026, respectively. One customer accounted for 73% of the Company’s
accounts receivable balance as of December 31, 2025.

12

Recently Adopted Accounting Pronouncements

In September 2025, the Financial
Accounting Standards Board (FASB) issued ASU 2025-06, *Intangibles—Goodwill and Other—Internal-Use Software (Subtopic
350-40): Targeted Improvements to the Accounting for Internal-Use Software*. ASU 2025-06 updates the accounting for internal-use software
by replacing the previous project-stage model with a principles-based recognition threshold, under which an entity capitalizes qualifying
internal-use software costs when management authorizes and commits to fund a project and it is probable the project will be completed
and the software will be used for its intended purpose. The amendments also bring website development costs into Subtopic 350-40 and require
enhanced disclosures, including presentation of capitalized internal-use software within the scope of ASC 360-10.

The amendments are effective
for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption
permitted as of the beginning of an annual reporting period. Ondas elected to early adopt ASU 2025-06 on a prospective basis effective
January 1, 2026. Under the prospective method, the Company applies the new capitalization model only to costs incurred on or after January
1, 2026, for new or significantly modified internal-use software projects, while amounts capitalized prior to adoption continue to be
amortized under the Company’s historical accounting policies. Prior-period financial statements and opening retained earnings were
not adjusted for the adoption of this standard.

The early, prospective adoption
of ASU 2025-06 did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows
as of and for the period ended March 31, 2026. However, the guidance is expected to affect the timing and amount of internal-use software
costs capitalized and amortized in future periods, as well as related disclosures.

Reclassification

Certain amounts reported in
the prior year financial statements have been reclassified to conform to the current year’s presentation.

### **NOTE 3 – REVENUE**

The following table presents our disaggregated
revenues by type, timing and geographical region.

| (dollars in thousands) | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Type of Revenue |  |  |
| Product revenue | $38,368 | $3,224 |
| Service revenue | 9,323 | 809 |
| Development revenue | 2,431 | 215 |
| Total revenues | $50,122 | $4,248 |
| Timing of Revenue |  |  |
| Revenue recognized point in time | $40,562 | $3,984 |
| Revenue recognized over time | 9,560 | 264 |
| Total revenue | $50,122 | $4,248 |
| Geographical region |  |  |
| Israel | $21,598 | $2,488 |
| Europe | 12,071 | - |
| Asia - Other | 12,000 | - |
| North America | 3,313 | 216 |
| United Arab Emirates | 305 | 1,533 |
| Other Countries | 835 | 11 |
| Total revenues | $50,122 | $4,248 |

13

*Contract Assets and Liabilities*

The Company recognizes a receivable
or contract asset when we perform a service or transfer a good in advance of receiving consideration. A receivable is recorded when our
right to consideration is unconditional and only the passage of time is required before payment of that consideration is due. A contract
asset is recorded when we have recognized revenue over time in accordance with meeting our performance obligation but are unable to invoice
the customer yet based on the contractual invoicing terms. The contract asset is reclassified to a receivable when the right to consideration
becomes unconditional. Contract assets are included in other current assets on the condensed consolidated balance sheets. The table below
details the activity in our contract assets during the three months ended March 31, 2026 and the year ended December 31, 2025.

| (dollars in thousands) | Three Months Ended March 31, 2026 | Year Ended December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of period | $3,171 | $206 |
| Contract assets recognized | 15,488 | 8,476 |
| Reclassification to accounts receivable, net | (2,676) | (5,511) |
| Balance, end of period | $15,983 | $3,171 |

The Company recognizes a contract
liability (deferred revenue) when we receive consideration from a customer, or if we have the unconditional right to consideration (i.e.,
a receivable), prior to satisfying the performance obligation. A contract liability is our obligation to transfer goods or services to
a customer for which we have received consideration, or an amount of consideration is due from the customer. The table below details the
activity in our contract liabilities during the three months ended March 31, 2026, and the year ended December 31, 2025.

| (dollars in thousands) | Three Months Ended March 31, 2026 | Year Ended December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of period | $8,501 | $329 |
| Contract liabilities acquired in business combinations | 14,253 | 7,374 |
| Effect of deconsolidation of subsidiary | (337) | - |
| Additions | 4,892 | 9,542 |
| Recognized as revenue | (7,477) | (8,744) |
| Balance, end of period | $19,832 | $8,501 |

Revenue recognized during
the three months ended March 31, 2026 and 2025 that was included in the contract liability opening balance, was $2.2 million and $12 thousand,
respectively. As of March 31, 2026 and December 31, 2025, $205 thousand and $472 thousand of the contract liability balance
represents long-term deferred revenue and is included in other liabilities on the consolidated balance sheets, respectively.

14

### **NOTE 4 – OTHER CURRENT ASSETS**

Other current assets consist
of the following:

| (dollars in thousands) | Three Months Ended March 31, 2026 | Year Ended December 31, 2025 |
| --- | --- | --- |
| Prepaid insurance | $1,311 | $1,417 |
| Prepaid income and other taxes | 5,809 | 9,551 |
| Advance to vendors | 16,802 | 6,831 |
| World View advanced payment | 20,888 | - |
| Contract assets | 15,983 | 3,171 |
| Receivable for stock option exercises | - | 2,965 |
| Other prepaid expenses and current assets | 3,896 | 1,538 |
| Total other current assets | $64,689 | $25,473 |

### **NOTE 5 – GOODWILL AND ACQUISITIONS**

We account for acquisitions
in accordance with ASC 805 and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”).
The purchase price, plus the estimated fair value of noncontrolling interest retained by the selling shareholders, less the estimated
fair value of net assets acquired in a business combination, is recorded as goodwill.

The following table summarizes
the change in the Company’s goodwill:

| (amounts in thousands) | Total |
| --- | --- |
| Balance as of January 1, 2026 | $251,809 |
| Measurement period adjustments | (7,882) |
| Goodwill acquired during the period | 137,911 |
| Balance as of March 31, 2026 | $381,838 |

The Company completed the
acquisitions detailed below to expand product offerings, add critical technology and enter new markets. Control was obtained through the
purchase of the issued and outstanding share capital pursuant to the respective share purchase agreement. Equity consideration issued
in connection with the acquisitions was measured at fair value based on the quoted market price on the respective acquisition dates. All
identifiable intangible assets acquired other than goodwill are finite lived.

Acquisition-related costs
incurred in connection with the 2026 acquisitions were $5.8 million for the three months ended March 31, 2026, and were expensed as incurred.
These costs are included in general and administrative expense in the condensed consolidated statements of operations. The accounts receivable
acquired across the Company’s 2026 acquisitions were not material, either individually or in the aggregate. Accordingly, the Company
has not separately disclosed the gross contractual amounts receivable or the best estimate of contractual cash flows not expected to be
collected. The unaudited pro forma financial information reflected below includes adjustments that are directly attributable to the acquisitions
and factually supportable, including incremental amortization of acquired intangible assets, incremental depreciation related to fair
value adjustments of property and equipment.

The Company valued identifiable
intangible assets acquired in its business combinations, and assets acquired that are consolidated as variable interest entities (i.e.,
Indo Earth Ltd.), using valuation approaches consistent with ASC 805, applied consistently across all acquisitions completed during the
period. For material acquisitions, the Company primarily used income-based valuation techniques to estimate fair value based on the present
value of expected future economic benefits, including the multi-period excess earnings method for developed technology and the relief-from-royalty
method for trade names. These valuations incorporate managements financial forecasts, estimated useful lives, contributory asset charges,
royalty rates, tax rates, and discount rates. For acquisitions determined to be immaterial, the Company may use market-based benchmarking
approaches, including observable transaction multiples, comparable royalty rate benchmarks, and other market-corroborated data, to estimate
the fair value of acquired intangible assets. The Company engaged third-party valuation specialists, as appropriate, to assist in the
identification and valuation of intangible assets acquired.

15

**2026 Acquisitions**

*Rotron Aerospace Ltd.*

On February 12, 2026, the
Company completed the acquisition of Rotron Aerospace Ltd. (“Rotron”), pursuant to the Share Purchase Agreement (the “Rotron
Acquisition Agreement”), by and among the Company, Gilo Holdings Ltd., a private limited company existing under the laws of England
and Wales (“Gilo”) and indirect owner of Rotron, and the shareholders of Gilo. Pursuant to the Rotron Acquisition Agreement,
the Company acquired 100% of the issued and outstanding share capital of Rotron. The purchase consideration includes cash consideration
of $6.7 million and the issuance of 3,334,753 shares of the Company’s common stock with a fair value of $35.1 million.

Pursuant to the Rotron Acquisition
Agreement, the Company agreed to contingent consideration in the form of an earn-out payable over four post-acquisition periods, generally
corresponding to calendar years 2026 through 2029. The earn-out is based on the achievement of specified program win milestones and revenue
targets during each earn-out period. For each period, the earn-out consists of (i) a program win component calculated as a percentage
of the total contract value of qualifying customer program wins awarded during the period, subject to defined eligibility criteria and
an aggregate cap of £25.0 million, and (ii) a revenue component based on revenues earned in excess of defined target thresholds,
which is uncapped. The revenue-based earn-out is payable only to the extent it exceeds the program win earn-out for the same period, and
failure to achieve an earn-out in any period does not preclude payments in subsequent periods. The earn-out arrangement is accounted for
as contingent consideration and measured at fair value, with changes in fair value recognized in earnings until settlement.

The following table summarizes the consideration paid for Rotron and
the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at
the acquisition date.

| (dollars in thousands) / Purchase price consideration |  |
| --- | --- |
| Cash | $6,662 |
| Equity | 35,115 |
| Fair value of the earn-out consideration | 41,731 |
| Total purchase price consideration | $83,508 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents and restricted cash | $154 |
| Inventory | 972 |
| Other current assets | 1,732 |
| Property and equipment | 390 |
| Right-of-use assets | 768 |
| Intangible assets | 28,748 |
| Total estimated fair value of assets acquired | 32,764 |
| Estimated fair value of liabilities assumed: |  |
| Accounts payable | 852 |
| Accrued expenses and other current liabilities | 771 |
| Lease liabilities | 768 |
| Other long-term liabilities | 86 |
| Deferred tax liability | 7,187 |
| Total estimated fair value of liabilities assumed | 9,664 |
| Net assets acquired | $23,100 |
| Goodwill | $60,408 |

The intangible assets acquired
include $25.0 million allocated to developed technology, with a useful life of ten years, and $3.7 million allocated to trademarks, with
a useful life of seven years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting
from the acquisition. No portion of the goodwill is deductible for tax purposes. The final purchase price allocation will be determined
when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the
preliminary allocation. The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in
valuation of intangible assets such as developed technology, tradename, as well as goodwill, and (3) other changes to assets and liabilities.

Rotron generated revenue of
$331 thousand, and a net loss of $12 thousand, since the acquisition date that is recognized in the condensed consolidated statements
of operations for the three months ended March 31, 2026. The following unaudited pro forma information presents the Company’s results
of operations as if the acquisition of Rotron had occurred on January 1, 2025. The unaudited pro forma results do not purport to represent
what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2025 or what the
Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable
to the business combinations included in the unaudited reported pro forma revenue and earnings.

16

| (dollars in thousands) | Three months ended March 31, 2026 | Three months ended March 31, 2025 |
| --- | --- | --- |
| Revenue | $50,914 | $6,617 |
| Net income (loss) | $360,255 | $(15,378) |

*4M Defense Ltd.,*

On October 29, 2025, the Company
completed the acquisition of a controlling interest in 4M Defense Ltd. (“4M”), a company registered in the State of Israel,
pursuant to the Share Purchase Agreement, dated October 24, 2025 (the “4M Acquisition Agreement”), by and among the Company,
4M, Chirokka Holding Ltd., a company registered in the State of Israel (“HoldCo”), and the 4M shareholders. HoldCo held 100%
of the share capital of 4M. In accordance with the terms of the 4M Acquisition Agreement, the Company acquired 70% of the issued and outstanding
share capital of HoldCo (“HoldCo Shares”).

On March 16, 2026, pursuant
to the Supplement to Share Purchase Agreement, dated March 16, 2026 (the “4M Supplement”), the Company acquired the remaining
30% of the issued and outstanding share capital of HoldCo for a purchase price of (i) 352,968 shares of Common Stock, and (ii) an additional
amount of up to $1,400,000 shares of Common Stock in contingent earn-out payments, subject to certain milestones as set forth in the 4M
Supplement.

*Bird Aerosystems Ltd.*

On March 11, 2026, the Company
completed the acquisition of Bird Aerosystems Ltd., a company organized under the laws of the State of Israel (“Bird”) pursuant
to the Share Purchase Agreement (the “Bird Purchase Agreement”), entered into by and among the Company, Bird, Bird’s
shareholders, and a general partnership organized under the laws of the State of Israel, solely in its capacity as the representative,
agent and attorney-in-fact of the indemnifying parties. The Company acquired 100% of the issued and outstanding share capital of Bird
for an aggregate purchase price of $127.9 million consisting of $23.5 million in cash consideration and 10,291,207 shares of the Company’s
common stock with a fair value of $104.5 million.

The following table summarizes
the consideration paid for Bird and the preliminary allocation of the purchase consideration to the estimated fair value of the assets
acquired and liabilities assumed at the acquisition date.

| (dollars in thousands) / Purchase price consideration |  |
| --- | --- |
| Cash | $23,456 |
| Equity | 104,521 |
| Total purchase price consideration | $127,977 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents | $3,493 |
| Accounts receivable | 9,285 |
| Inventory | 10,862 |
| Other current assets | 5,614 |
| Property and equipment | 1,042 |
| Right of use asset | 1,674 |
| Other long-term assets | 2,812 |
| Intangible assets | 58,400 |
| Total estimated fair value of assets acquired | $93,182 |
| Estimated fair value of liabilities assumed: |  |
| Accounts payable | $2,746 |
| Accrued expenses and other current liabilities | 6,821 |
| Deferred revenues | 14,253 |
| Lease liabilities | 1,581 |
| Deferred tax liability | 13,432 |
| Total estimated fair value of liabilities assumed | 38,833 |
| Net assets acquired | $54,349 |
| Goodwill | $73,628 |

17

The intangible assets acquired
include $34.6 million allocated to customer relationships with a useful life of five years, $21.1 million allocated to developed technology
with a useful life of ten years, and $2.7 million allocated to trademarks with a useful life of seven years. Goodwill represents the assembled
workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible
for tax purposes. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary
calculations. The final allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes
in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as customer relationships, developed
technology, and trademarks, as well as goodwill, and (3) other changes to assets and liabilities.

Bird generated revenue of
$10.6 million, and net income of $2.0 million, since the acquisition date that is recognized in the condensed consolidated statements
of operations for the three months ended March 31, 2026. The following unaudited pro forma information presents the Company’s results
of operations as if the acquisition of Bird had occurred on January 1, 2025. The unaudited pro forma results do not purport to represent
what the Company’s results of operations actually would have been if the transactions had occurred on January 1, 2025 or what the
Company’s operating results will be in future periods. There were no material nonrecurring pro forma adjustments directly attributable
to the business combinations included in the reported unaudited pro forma revenue and earnings.

| (dollars in thousands) | Three months ended March 31, 2026 | Three months ended March 31, 2025 |
| --- | --- | --- |
| Revenue | $57,869 | $11,814 |
| Net income (loss) | $362,459 | $(15,291) |

*Indo-Earth Moving Ltd.*

On March 17, 2026, the Company
completed the acquisition of certain assets associated with Indo Earth Moving Ltd. (“Indo”) pursuant to a Share Purchase Agreement
with Indo’s shareholders and their representative (the “Indo Agreement”). Pursuant to the Indo Agreement, at closing
the Company transferred cash consideration of $5.7 million and 2,441,506 shares of Common Stock with a fair value of $27.5 million, for
total consideration of $33.5 million (together, the “Indo Base Consideration”), in exchange for all outstanding equity interests
in Indo. The Company also agreed to issue 3,051,882 shares of Common Stock upon the achievement of a specified technical and regulatory
milestones (the “Indo Milestone Payment”) and agreed to make additional earn-out payments of up to $140 million in cash based
on the achievement of defined post-closing revenue, bookings and profitability targets (the “Indo Earn-Out Payments”).

Although the transaction was
structured as a legal acquisition, (i) Indo did not meet the definition of a business under ASC 805, (ii) Indo qualified as a variable
interest entity (“VIE”) under ASC 810, *Consolidation (“ASC 810”)* as its pre-Acquisition equity capitalization
was not sufficient to finance its activities without additional subordinated financial support, and (iii) the Company was the primary
beneficiary of Indo. As such, in accordance with ASC 810, Indo was consolidated in the Company’s condensed consolidated financial
statements beginning on the date the Company obtained a controlling financial interest and recognized a loss on the acquisition measured
as the difference between the fair value of the consideration paid and the net amount of Indo’s identifiable assets measured in
accordance with ASC 805.

The Indo Milestone Payment and Indo Earn-Out Payments represent contingent
consideration and were measured at fair value at the date the Company obtained a controlling financial interest. The fair value of the
Indo Milestone Payment and Indo Earn-Out Payments at the date the Company obtained a controlling financial interest totaled $25.4 million
and $58.8 million, respectively. The fair value of the Indo customer relationship acquired totaled $92.5 million and has an estimated
useful life of ten years. Amortization of the Indo Customer Relationship is presented in sales and marketing expense on a straight-line
basis.

Under the terms of the Indo
Agreement, the Company may be entitled to recover all or a portion of the Indo Base Consideration transferred if certain conditions are
not satisfied within a defined period following the acquisition date. As of March 31, 2026, the Company has concluded that the refundability
provisions represent a contingent feature of the purchase consideration. Accordingly, the refundable amounts continue to be evaluated
at each reporting date based on the facts and circumstances then existing, including the likelihood that the relevant conditions will
be met. The Company has not recorded any refund receivable as of March 31, 2026, as management has determined that realization of any
refund is not probable.

18

The excess purchase consideration
over the estimated fair value of the net assets acquired resulted in a loss on the acquisition of the variable interest of $46.2 million,
which is presented in other income (expense) in the condensed consolidated statements of operations.

| (dollars in thousands) / Purchase price consideration |  |
| --- | --- |
| Cash | $5,664 |
| Equity portion of purchase price | 27,540 |
| Fair value of contingent consideration | 84,171 |
| Total purchase price consideration | $117,375 |
| Estimated fair value of assets acquired: |  |
| Customer relationships | $92,500 |
| Estimated fair value of liabilities assumed: |  |
| Deferred tax liability | $21,275 |
| Net assets acquired | $71,225 |
| Loss on acquisition of variable interest entity | $46,150 |

*Other 2026 acquisitions*

During the three months ended
March 31, 2026, the Company completed other acquisitions that were individually immaterial, with an aggregate purchase price of approximately
$4.8 million in equity consideration. The acquisitions were accounted for as business combinations, and the consideration transferred
has been allocated on a preliminary basis to the assets acquired and liabilities assumed. The identifiable intangible assets recognized
include approximately $1.3 million of developed technology with a useful life of ten years and $0.5 million of customer relationships
with a useful life of five years. The Company also recognized goodwill of approximately $3.9 million, which represents the assembled workforce,
acquired capabilities, and future economic benefits expected to arise from the acquisitions. No portion of the goodwill is deductible
for tax purposes. The preliminary purchase price allocations are subject to change during the measurement period as additional information
becomes available regarding the fair value of the assets acquired and liabilities assumed. Detailed disclosures required for individually
material business combinations have not been presented, as the acquisitions were not material individually or in the aggregate.

**2025 Acquisitions**

As of March 31, 2026, the
accounting for the Company’s 2025 acquisitions remains preliminary, as certain fair value measurements associated with the assets
acquired and liabilities assumed have not yet been finalized. During the three months ending March 31, 2026, measurement period adjustments
totaled $7.9 million and related to decreases in deferred tax liabilities recorded. These adjustments were applied retrospectively to
the acquisition-date amounts and resulted in a corresponding decrease in goodwill. The Company is continuing to evaluate information obtained
about facts and circumstances that existed as of the respective acquisition dates, including, but not limited to, the valuation of identifiable
intangible assets, tangible assets, assumed liabilities, deferred taxes, and other acquisition-related items.

19

*Apeiro Motion Ltd.*

On August 31, 2025, the Company
completed the acquisition of Apeiro Motion Ltd. (Apeiro), pursuant to the Share Purchase Agreement (the “Apeiro Acquisition Agreement”),
by and among the Company, Apeiro, and the Apeiro shareholders. Pursuant to the Apeiro Acquisition Agreement, the Company acquired 100%
of the issued and outstanding share capital of Apeiro. The following table summarizes the consideration paid for Apeiro and the preliminary
allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition
date.

| (dollars in thousands) Purchase price consideration |  |
| --- | --- |
| Cash consideration | $11,950 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents and restricted cash | $5,536 |
| Certificates of deposit | 907 |
| Other current assets | 646 |
| Property and equipment | 84 |
| Intangible assets | 3,982 |
| Total estimated fair value of assets acquired | $11,155 |
| Estimated fair value of liabilities assumed: |  |
| Accounts payable | $1,317 |
| Customer prepayments | 3,108 |
| Accrued expenses and other current liabilities | 651 |
| Deferred tax liability | 43 |
| Total estimated fair value of liabilities assumed | $5,119 |
| Net Assets Acquired | $6,036 |
| Goodwill | $5,914 |

The intangible assets acquired
include $4.0 million allocated to developed technology with an estimated useful life of eight years. Goodwill represents the assembled
workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible
for tax purposes. All of the goodwill was assigned to the OAS reporting unit. During the three months ended March 31, 2026, the Company
recorded measurement period adjustments related to deferred tax liabilities, which resulted in a decrease to goodwill of $836 thousand.
These adjustments reflect additional information obtained about facts and circumstances that existed as of the acquisition date. The final
purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final
allocation could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property,
plant, and equipment, (2) changes in valuation of intangible assets, including goodwill, and (3) other changes to assets and liabilities.

The following unaudited pro
forma information presents the Company’s results of operations as if the acquisition of Apeiro had occurred on January 1, 2025. The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if
the transactions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods. There were no
material nonrecurring pro forma adjustments directly attributable to the business combinations included in the unaudited reported pro
forma revenue and earnings.

| (dollars in thousands) | Three months ended March 31, 2025 |
| --- | --- |
| Revenue | $6,682 |
| Net loss | $(15,453) |

*Smart Precision Optics S.P.O Ltd.*

On October 3, 2025, the Company
completed the acquisition of Smart Precision Optics S.P.O ltd. (“SPO”)., a company organized under the laws of the State of
Israel, pursuant to (i) the SPO Share Purchase Agreement, dated August 20, 2025, by and among the Company, SPO, Shamir Investment Entrepreneurship
ACS LTD., an agricultural cooperative society organized under the laws of the State of Israel (“Shamir”) and (ii) the Side
Letter, dated August 20, 2025, by and among the Company, SPO and Shamir (the “Side Letter”) (collectively the “SPO Acquisition
Agreement”). In accordance with the terms of the SPO Acquisition Agreement, the Company acquired (i) 51% of the issued and outstanding
share capital of SPO for an aggregate purchase amount of approximately $6.0 million and (ii) 51% of the outstanding capital notes of SPO
for an aggregate purchase amount of approximately $0.30 plus the Contingent Consideration, as defined below. The Company allocated the
aggregate purchase amount to the purchase consideration and capital notes based on their relative fair value, resulting in $2.8 million
in purchase consideration and $3.2 million in capital notes acquired by the Company, which have been eliminated in consolidation.

20

Additionally, if SPO obtains
or receives Qualified Grants (as defined in the SPO Acquisition Agreement) between October 3, 2025 and December 31, 2026, the Company
shall be required to make payment to Shamir in an amount equal to 10% of the amount of any such Qualified Grants received by SPO, up to
an aggregate amount of approximately $11.9 million of Qualified Grants received (“Contingent Consideration”) (i.e. the maximum
Contingent Consideration paid by the Company to Shamir shall be approximately $1.2 million). The Contingent Consideration shall be paid
in cash, provided however, that the Company may choose, in its sole discretion, to pay the Contingent Consideration in shares of the Company’s
Common Stock.

Subject to the terms of the
SPO Acquisition Agreement, Shamir has the right (the “First Put Option”) to cause the Company to purchase all (but not less
than all) of the remaining issued and outstanding share capital of SPO held by Shamir, which acquisition shall be accompanied with sale
for no additional consideration of any and all capital notes of SPO then held by Shamir (such shares and capital notes, jointly, the “Put
Shares”), at a purchase price of approximately $220.69 per share. Shamir may exercise the First Put Option during the period commencing
on October 15, 2025 and ending June 30, 2026.

Subject to the terms of the
SPO Acquisition Agreement, to the extent that the First Put Option was not exercised, Shamir has the right to appoint a third-party evaluator
to determine SPO’s valuation and after receiving such valuation, Shamir may offer to the Company to purchase the Put Shares at such
evaluated price (the “Second Put Option” together with the First Put Option, the “SPO Options”). If the Company
declines, the Company may make a counter-offer to purchase the Put Shares. If Shamir rejects the Company’s counter-offer, Shamir
can initiate a “Forced Sale” process to sell 100% of SPO to a third party during a limited period of nine months. Alternatively,
if no Forced Sale occurs, Shamir can request an updated evaluation for SPO and either sell to the Company pursuant to Company’s
offer, or buy all of the Company’s securities in SPO at the updated valuation. Shamir may exercise the foregoing during the period
commencing on the second anniversary of the closing of the SPO Acquisition and ending June 30, 2029. The consideration payable by the
Company to Shamir upon the consummation of either the First Put Option or the Second Put Option shall be paid in cash, provided however,
that the Company may choose, in its sole discretion, to pay Shamir in Common Stock.

Additionally, subject to the
terms of the SPO Acquisition Agreement, in the event that the Second Put Option is exhausted without being exercised, the Company shall
have the right (the “Call Option”) to require Shamir to sell all (and not less than all) of the remaining issued and outstanding
share capital of SPO held by Shamir in consideration for the amount reflecting SPO’s valuation on a cash free-debt free basis of
approximately $59.5 million, which acquisition shall be accompanied with sale for no additional consideration of any and all capital notes
of SPO then held by Shamir, payable in cash. The Company may exercise the Call Option during the period commencing on the end of the Second
Put Option Period and ending 18 months later.

The following table summarizes
the consideration paid for SPO and the preliminary allocation of the purchase consideration to the estimated fair value of the assets
acquired, liabilities assumed and noncontrolling interest retained by SPO shareholders at the acquisition date.

| (dollars in thousands) Purchase price consideration |  |
| --- | --- |
| Cash | $2,829 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents and restricted cash | $6,087 |
| Accounts receivable | 439 |
| Inventory | 482 |
| Other current assets | 104 |
| Property and equipment | 3,731 |
| Right of use asset | 2,511 |
| Other long-term assets | 22 |
| Intangible assets | 3,258 |
| Total estimated fair value of assets acquired | $16,634 |
| Estimated fair value of liabilities assumed: |  |
| Accounts payable | $314 |
| Accrued expenses and other current liabilities | 691 |
| Government grant liability | 958 |
| Convertible preferred notes | 6,300 |
| Lease liabilities | 2,511 |
| Deferred tax liability | 740 |
| Total estimated fair value of liabilities assumed | $11,514 |
| Net assets acquired | $5,120 |
| Reconciliation of goodwill: |  |
| Total consideration transferred | $2,829 |
| Add: Fair value of redeemable noncontrolling interest | 2,718 |
| Less: Net assets acquired | (5,120) |
| Goodwill | $427 |

21

The noncontrolling interest
was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of SPO, using the purchase
consideration paid for the Company’s 51% ownership as an observable input. The implied equity value was extrapolated to a 100% basis,
and the 49% noncontrolling interest ownership percentage was applied to determine the fair value of the noncontrolling interest. The noncontrolling
interest, inclusive of the embedded First Put Option, is reflected within redeemable noncontrolling interest in the consolidated balance
sheets.

The intangible assets acquired
include $3.2 million allocated to customer relationships with an estimated useful life of five years. Goodwill represents the assembled
workforce, acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible
for tax purposes. All of the goodwill was assigned to the OAS reporting unit. There were no measurement period adjustments with respect
to the three months ended March 31, 2026. The final purchase price allocation will be determined when the Company has completed the detailed
valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation
may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as customer
relationships, as well as goodwill, and (3) other changes to assets and liabilities.

The following unaudited pro
forma information presents the Company’s results of operations as if the acquisition of SPO had occurred on January 1, 2025. The
unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the
transactions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods. There were no material
nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro forma revenue
and earnings.

| (dollars in thousands) | Three months ended March 31, 2025 |
| --- | --- |
| Revenue | $4,636 |
| Net loss | $(16,028) |

*Insight Intelligent Sensors Ltd.*

On October 27, 2025, the Company
completed the acquisition of Insight Intelligent Sensors Ltd. (“Insight”), pursuant to the Share Purchase Agreement (the “Insight
Acquisition Agreement”), by and among the Company, Insight, and the Insight shareholders. Pursuant to the Insight Acquisition Agreement,
the Company acquired 51% of the issued and outstanding share capital of Insight, representing a controlling interest. The following table
summarizes the consideration paid for Insight and the preliminary allocation of the purchase consideration to the estimated fair value
of the assets acquired, liabilities assumed and noncontrolling interest retained by Insight shareholders at the acquisition date.

| (dollars in thousands) Purchase price consideration |  |
| --- | --- |
| Cash | $3,500 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents and restricted cash | $2,534 |
| Other current assets | 56 |
| Property and equipment | 21 |
| Intangible assets | 2,379 |
| Total estimated fair value of assets acquired | $4,990 |
| Estimated fair value of liabilities assumed: |  |
| Accrued expenses and other current liabilities | $78 |
| Deferred tax liability | 432 |
| Total estimated fair value of liabilities assumed | $510 |
| Net assets acquired | $4,480 |
| Reconciliation of goodwill: |  |
| Total consideration transferred | $3,500 |
| Add: Fair value of noncontrolling interest | 3,891 |
| Less: Net assets acquired | (4,480) |
| Goodwill | $2,911 |

22

The noncontrolling interest
was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of Insight, using the
purchase consideration paid for the Company’s 51% ownership interest as an observable input. The implied equity value was extrapolated
to a 100% basis, and the 49% noncontrolling interest ownership percentage was applied to determine the fair value of the noncontrolling
interest.

The intangible assets acquired
include $2.4 million allocated to developed technology with an estimated useful life of ten years. Goodwill represents the assembled workforce,
acquired capabilities, and future economic benefits resulting from the acquisition. No portion of the goodwill is deductible for tax purposes.
All of the goodwill was assigned to the OAS reporting unit. During the three months ended March 31, 2026, the Company recorded measurement
period adjustments related to deferred tax liabilities, which resulted in an decrease to goodwill of $115 thousand. The final purchase
price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation
could differ materially from the preliminary allocation. The final allocation may include (1) changes in fair values of property, plant,
and equipment, (2) changes in valuation of intangible assets such as developed technology, as well as goodwill, and (3) other changes
to assets and liabilities.

The following unaudited pro
forma information presents the Company’s results of operations as if the acquisition of Insight had occurred on January 1, 2025.
The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if
the transactions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods. There were no
material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported pro forma revenue
and earnings.

| (dollars in thousands) | Three months ended March 31, 2025 |
| --- | --- |
| Revenue | $4,264 |
| Net loss | $(15,439) |

*4M Defense Ltd.,*

On October 29, 2025, the Company
completed the acquisition of a controlling interest in 4M, a company registered in the State of Israel, pursuant to the Share Purchase
Agreement, dated October 24, 2025 (the “4M Acquisition Agreement”), by and among the Company, 4M, Chirokka Holding Ltd., a
company registered in the State of Israel (“HoldCo”), and the 4M shareholders. HoldCo held 100% of the share capital of 4M.
In accordance with the terms of the 4M Acquisition Agreement, the Company acquired 70% of the issued and outstanding share capital of
HoldCo (“HoldCo Shares”) for the purchase price of (i) $2.4 million in cash and (ii) 801,068 shares of Common Stock, in exchange
for the HoldCo Shares (the “4M Acquisition”). Pursuant to the 4M Acquisition Agreement, the 4M shareholders have agreed, subject
to certain customary exceptions, not to sell, transfer or dispose of 480,641 shares of Common Stock for a period of twelve (12) months
after the closing of the 4M Acquisition, at which time they shall be permitted to sell, transfer or otherwise dispose of, on a calendar
quarterly basis, up to twelve and one-half percent (12.5%) of such shares of Common Stock, until all such shares have been released from
the lock-up restrictions.

Pursuant to the 4M Acquisition
Agreement, between January 1, 2026 and December 31, 2027, (i) the Company shall have an irrevocable right, exercisable in whole (and not
in part), at the Company’s sole discretion to acquire 100% of the remaining share capital in HoldCo following the closing of the
4M Acquisition (the “Call Option”) and (ii) the 4M shareholders shall have an irrevocable right, exercisable in whole (and
not in part), at the 4M shareholders sole discretion, to request the Company to acquire from the 4M shareholders 100% of the remaining
share capital in HoldCo following the closing of the Acquisition (the “Put Option”). The applicable consideration payable
by the Company to the 4M shareholders upon the consummation of either the Call Option or the Put Option shall be paid in cash, provided
however, that the Company may choose, in its sole discretion, to pay Nir in Common Stock. The noncontrolling interest, inclusive of the
embedded Call Option and Put Option, is reflected within redeemable noncontrolling interest in the consolidated balance sheets.

23

The following table summarizes
the consideration paid for 4M and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired,
liabilities assumed and noncontrolling interest retained by 4M shareholders at the acquisition date.

| (dollars in thousands) Purchase price consideration |  |
| --- | --- |
| Cash | $2,400 |
| Common Stock – 801,068 Shares | 5,407 |
| Total purchase price consideration | $7,807 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents and restricted cash | $1,712 |
| Accounts receivable | 253 |
| Other current assets | 351 |
| Property and equipment and other long-term assets | 722 |
| Intangible assets | 2,435 |
| Total estimated fair value of assets acquired | 5,473 |
| Estimated fair value of liabilities assumed: |  |
| Accrued expenses and other current liabilities | 836 |
| Notes payable | 494 |
| Deferred tax liability | 462 |
| Total estimated fair value of liabilities assumed | 1,792 |
| Net assets acquired | $3,681 |
| Reconciliation of goodwill: |  |
| Total consideration transferred | $7,807 |
| Add: Fair value of redeemable noncontrolling interest | 2,925 |
| Less: Net assets acquired | (3,681) |
| Goodwill | $7,051 |

The noncontrolling interest
was measured at fair value at the acquisition date. The fair value was estimated based on the implied equity value of 4M, using the purchase
consideration paid for the Company’s 70% ownership interest as an observable input. The implied equity value was derived by extrapolating
the purchase consideration to a 100% basis and applying the 30% noncontrolling interest ownership percentage.

The intangible assets acquired
include $0.9 million allocated to developed technology with an estimated useful life of ten years, $1.4 million allocated to customer
relationships with an estimated useful life of five years, and $137 thousand allocated to backlog with an estimated useful life of three
years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition.
No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. During the three
months ended March 31, 2026, the Company recorded measurement period adjustments related to deferred tax liabilities, which resulted in
an decrease to goodwill of $98 thousand. The final purchase price allocation will be determined when the Company has completed the detailed
valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The final allocation
may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets such as developed
technology, as well as goodwill, and (3) other changes to assets and liabilities.

The following unaudited pro
forma information presents the Company’s results of operations as if the acquisition of 4M had occurred on January 1, 2025. The
unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if the
transactions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods. There were no material
nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro forma revenue
and earnings.

| (dollars in thousands) | Three months ended March 31, 2025 |
| --- | --- |
| Revenue | $5,884 |
| Net loss | $(15,339) |

24

*Sentry CS Ltd.*

On November 17, 2025, the
Company completed the acquisition of Sentry CS Ltd., (“Sentrycs”) pursuant to the Share Purchase Agreement (the “Sentrycs
Acquisition Agreement”), entered into by and among the Company, Sentrycs, a company organized under the laws of the State of Israel,
Sentrycs’s shareholders, (the “Sentrycs Major Shareholders”), and Sagitta Holdco SARL, a private limited liability company
organized under the laws of the Grand Duchy of Luxembourg. The Company acquired 100% of the issued and outstanding share capital of Sentrycs
for an aggregate purchase price of $224.6 million consisting of $134.1 million in cash and shares of the Company’s
common stock valued at $90.6 million. This aggregate purchase price reflects the working capital adjustments made at closing pursuant
to the Sentrycs Acquisition Agreement.

The Sentrycs Acquisition Agreement
detailed that the purchase price consideration of $224.6 million would be paid over four payment dates, with the first payment made upon
closing at November 17, 2025. The Company paid $149.6 million on November 17, 2025, consisting of $120.2 million in cash and 4,096,700
shares of Common Stock valued at $29.4 million. The remaining three payments would be made 30-days, 45-days and 120-days after
closing. These three payments would total $25 million each and consist of $4.6 million in cash and shares of Common Stock valued at $20.4
million. At December 31, 2025, the Company recorded a liability for these payments in the amount of $75 million classified as Accrued
Purchase Consideration on the Company’s Consolidated Balance Sheets. The Company issued 1,671,899 and 1,622,607 shares of Common
Stock on January 8, 2026 and January 22, 2026, respectively, related to the second and third payments.

The Company also paid $37.5
million into an escrow account which we own (the “Ondas Escrow Amount”). On second, third and fourth payment dates, $10 million
will be returned to the Company, and $2.5 million will be transferred from the Ondas Escrow Amount to the Indemnity Escrow Account. Under
the Indemnity Escrow terms and agreement, the funds will be held until the one-year anniversary of the Sentrycs Acquisition Agreement,
during which time the Company may make indemnification claims. Any balance remaining after 1 year will be released to the sellers.

Amounts transferred to the
Indemnity Escrow Account serve as security for the sellers’ indemnification obligations. Under the Indemnity Escrow Agreement, these
funds will be held until the one-year anniversary of the Sentrycs Acquisition Agreement. During this period, the Company may assert indemnification
claims in accordance with the agreement. Any balance remaining in the Indemnity Escrow Account after the one-year period, net of any amounts
reserved for outstanding claims, will be released to the sellers. The Ondas Escrow Amount is included in Restricted cash on the Company’s
Consolidated Balance Sheets, as the scheduled releases to the Company are considered short-term in nature. Amounts transferred to the
Indemnity Escrow Account are recognized as part of the purchase consideration.

The following table summarizes
the consideration paid for Sentrycs and the preliminary allocation of the purchase consideration to the estimated fair value of the assets
acquired and liabilities assumed at the acquisition date.

| (dollars in thousands) Purchase price consideration |  |
| --- | --- |
| Cash | $134,053 |
| Equity portion of purchase price | 90,556 |
| Total purchase price consideration | $224,609 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents | $1,735 |
| Accounts receivable | 2,403 |
| Inventory | 2,005 |
| Other current assets | 463 |
| Property and equipment | 1,780 |
| Right of use asset | 1,980 |
| Other long-term assets | 312 |
| Intangible assets | 72,454 |
| Total estimated fair value of assets acquired | $83,132 |
| Estimated fair value of liabilities assumed: |  |
| Accounts payable | 282 |
| Accrued expenses and other current liabilities | 2,961 |
| Deferred revenues | 3,681 |
| Lease liabilities | 2,257 |
| Deferred tax liability | 4,644 |
| Total estimated fair value of liabilities assumed | 13,825 |
| Net Assets Acquired | $69,307 |
| Goodwill | $155,302 |

25

The intangible assets acquired
include $66 million allocated to developed technology with an estimated useful life of ten years, $3.7 million allocated to trademarks
with an estimated useful life of seven years, and $2.7 million allocated to customer relationships with an estimated useful life of five
years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition.
No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. There were no measurement
period adjustments during the three months ended March 31, 2026. The final purchase price allocation will be determined when the Company
has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation.
The final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible
assets such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

The following unaudited pro
forma information presents the Company’s results of operations as if the acquisition of Sentrycs had occurred on January 1, 2025.
The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if
the transactions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods. There were no
material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro
forma revenue and earnings.

| (dollars in thousands) | Three months ended March 31, 2025 |
| --- | --- |
| Revenue | $9,853 |
| Net loss | $(19,302) |

*Robo-Team Holdings Ltd.*

On December 17, 2025, the
Company completed the acquisition of Robo-Team Holdings Ltd. (“Robo-Team”), pursuant to the Share Purchase Agreement, dated
November 23, 2025 (the “Robo-Team Acquisition Agreement”), by and among the Company, Robo-Team, and the Robo-Team shareholders.
Pursuant to the Robo-Team Acquisition Agreement, the Company acquired 100% of the issued and outstanding share capital of Robo-Team. The
following table summarizes the consideration paid for Robo-Team and the preliminary allocation of the purchase consideration to the estimated
fair value of the assets acquired and liabilities assumed at the acquisition date.

*(dollars in thousands)*

| Purchase price consideration |  |
| --- | --- |
| Cash | $81,653 |
| Estimated fair value of assets acquired: |  |
| Cash and cash equivalents and restricted cash | $2,327 |
| Accounts receivable | 424 |
| Inventory | 5,682 |
| Other current assets | 1,393 |
| Property and equipment | 151 |
| Right of use asset | 1,276 |
| Intangible assets | 30,803 |
| Other long-term assets | 344 |
| Total estimated fair value of assets acquired | 42,400 |
| Estimated fair value of liabilities assumed: |  |
| Accounts payable | 1,835 |
| Accrued expenses and other current liabilities | 967 |
| Deferred revenues | 735 |
| Lease liabilities | 1,434 |
| Deferred tax liability | 345 |
| Total estimated fair value of liabilities assumed | 5,316 |
| Net Assets Acquired | $37,084 |
| Goodwill | $44,569 |

26

The intangible assets acquired
include $12.7 million allocated to developed technology with an estimated useful life of ten years, $14.6 million allocated to customer
relationships with an estimated useful life of five years, and $3.5 million allocated to non-compete agreements with an estimated useful
life of four years. Goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the
acquisition. No portion of the goodwill is deductible for tax purposes. All of the goodwill was assigned to the OAS reporting unit. During
the three months ended March 31, 2026, the Company recorded measurement period adjustments related to deferred tax liabilities, which
resulted in an decrease to goodwill of $6.8 million. The final purchase price allocation will be determined when the Company has completed
the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation. The
final allocation may include (1) changes in fair values of property, plant, and equipment, (2) changes in valuation of intangible assets
such as developed technology, as well as goodwill, and (3) other changes to assets and liabilities.

The following unaudited pro
forma information presents the Company’s results of operations as if the acquisition of Robo-Team had occurred on January 1, 2025.
The unaudited pro forma results do not purport to represent what the Company’s results of operations actually would have been if
the transactions had occurred on January 1, 2025 or what the Company’s operating results will be in future periods. There were no
material nonrecurring pro forma adjustments directly attributable to the business combinations included in the reported unaudited pro
forma revenue and earnings.

| (dollars in thousands) | Three months ended March 31, 2025 |
| --- | --- |
| Revenue | $7,753 |
| Net loss | $(16,406) |

Goodwill Impairment

The Company reviews goodwill
for impairment annually as of December 31 and on an interim basis whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. For the quarter ended March 31, 2026, the Company performed an assessment of whether any such indicators
were present and concluded that there were no triggering events or changes in circumstances that would indicate a potential impairment
of goodwill. Accordingly, no interim impairment test was performed as of March 31, 2026.

As previously disclosed, the
Company performed a qualitative assessment as of December 31, 2025 and concluded there were no indications of impairment with respect
to the goodwill recorded at that date.

27

### **NOTE 6 – INTANGIBLE ASSETS**

The components of intangible
assets, all of which are finite-lived, were as follows:

| Line item | March 31, 2026 / Gross Carrying | March 31, 2026 / Accumulated Amortization | March 31, 2026 / Net Carrying Amount | December 31, 2025 / Gross Carrying Amount | December 31, 2025 / Accumulated Amortization | December 31, 2025 / Net Carrying Amount | Weighted Average Useful Life (years) | Useful Life (years) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (dollars in thousands) |  |  |  |  |  |  |  |  |
| Trademarks | $13,339 | $(1,734) | $11,605 | $6,930 | $(1,488) | $5,442 | 7.7 | 7 - 10 |
| FAA waiver | 5,930 | (2,759) | 3,171 | 5,930 | (2,611) | 3,319 | 10.0 | 10 |
| Developed technology | 161,061 | (15,331) | 145,730 | 113,604 | (12,276) | 101,328 | 9.9 | 3 - 10 |
| Non-compete agreements | 3,521 | (257) | 3,264 | 3,521 | (37) | 3,484 | 4.0 | 1 - 4 |
| Customer relationships | 150,635 | (2,836) | 147,799 | 23,008 | (982) | 22,026 | 8.1 | 5-10 |
| Other intangible assets | 1,454 | (509) | 945 | 2,040 | (749) | 1,291 | 8.5 | 3 - 10 |
| Total | $335,940 | $(23,426) | $312,514 | $155,033 | $(18,143) | $136,890 |  |  |

Amortization expense for the
three months ended March 31, 2026 and 2025 was $5.6 million and $1.1 million, respectively. Other intangible assets represent patents,
licenses, software, backlog and other marketing-related assets.

### **NOTE 7 – LONG-TERM EQUITY INVESTMENTS**

These long-term equity investments
consist of equity investments in private companies through common and preferred stock. The Company accounts for these equity securities
under the measurement alternative because they do not have a readily determinable fair value and do not qualify for the equity method
of accounting. Accordingly, the investments are carried at cost, less impairment, adjusted for observable price changes in orderly transactions
for identical or similar investments of the same issuer. The Company does not have significant influence over any of the long-term equity
investees. Amounts are classified as a long-term equity investment on our condensed consolidated balance sheets. Dividends or other distributions,
if and when declared by the investee, are recognized by the Company as investment income upon receipt with adjustments recognized in other
(expense) income, net in the condensed consolidated statements of operations.

On August 12, 2025, the Company
purchased a non-controlling interest in Rift Dynamics AS (“Rift”), a Norway-based defense technology company specializing
in affordable, mass-producible combat drone systems, for the aggregate price of $587 thousand.

On November 20, 2025, the
Company purchased Series B-3 Preferred Stock in Performance Drone Works (“PDW”), a veteran-led defense-technology engineer
and manufacturer of advanced robotics for mission-critical national security missions, for the aggregate price of $35.0 million. The Series
B-3 Preferred Stock is convertible into PDW common stock at the option of the holder and ranks senior to PDW’s common stock with
respect to liquidation and dividend rights. The investment is subject to customary transfer restrictions and provides the Company with
certain investor rights, including information rights and the right to appoint a non-voting observer to PDW’s board of directors,
subject to specified conditions.

On February 27, 2026, the
Company purchased Series B-1 Preferred Stock in Firestorm Labs, Inc (“Firestorm”), a defense technology company that develops
expeditionary manufacturing platforms enabling the on-demand, point-of-need production of mission-critical systems and components for
military and defense applications, for the aggregate price of $5.0 million.

Each reporting period, the
Company performs a qualitative assessment to evaluate whether the investment is impaired. The assessment includes a review of recent operating
results and trends, recent transactions involving the investee securities, and other publicly available data. If the investment is impaired,
the Company writes it down to its estimated fair value. No impairment charges were recognized for the three months ended March 31, 2026
or 2025.

28

### **NOTE 8 – LEASES**

The Company has operating
leases for office space, warehouses, and certain equipment, primarily automobiles. Many leases include one or more options to
renew, some of which include options to extend the leases for up to 10 years. In certain of the Company’s lease agreements,
the rental payments are adjusted periodically to reflect inflation and/or changes in other indexes.

Right-of-use assets are recorded
in other assets; the current portion of lease liabilities for our operating leases are recorded in accrued expenses and other current
liabilities, and the long-term portion of our operating lease liabilities is recorded in other long-term liabilities on the condensed
consolidated balance sheets as follows:

| (dollars in thousands) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Right-of-use assets: |  |  |
| Operating lease assets | $10,734 | $10,365 |
| Total right-of-use assets | $10,734 | $10,365 |
| Liabilities: |  |  |
| Operating lease liabilities, current | $3,496 | $3,076 |
| Operating lease liabilities, net of current | 8,487 | 9,645 |
| Total lease liabilities | $11,983 | $12,721 |

### **NOTE 9 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

Accrued expenses and other
current liabilities consist of the following:

| (dollars in thousands) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Compensation and other benefits | $23,910 | $21,003 |
| World View Guarantee | 20,888 | - |
| Accrued income and other tax | 3,238 | 4,299 |
| Operating lease liabilities | 3,496 | 3,076 |
| Accrued purchases | 2,009 | 1,903 |
| Accrued interest | 8 | 721 |
| Other accrued expenses and payables | 17,182 | 2,968 |
| Total accrued expenses and other current liabilities | $70,731 | $33,970 |

29

### **NOTE 10 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE**

Ondas Inc. 2022 Convertible Exchange Notes,
2023 Additional Notes, and 2024 Additional Notes

In
2022, 2023 and 2024, the Company entered into securities purchase agreements with certain investors, pursuant to which we issued convertible
notes. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026
for a full description. As of December 31, 2025, the convertible notes were repaid in full.

For
the three months ended March 31, 2025, we recognized interest expense of $332 thousand and amortization expense of $2.7 million related
to the debt discount and issuance costs for convertible notes. Interest expense and amortization expense related to debt discount and
issuance costs are included in interest expense in the condensed consolidated statements of operations.

SPO Convertible Capital Notes

In connection with the acquisition
of SPO in October 2025, the Company assumed outstanding convertible capital notes issued by SPO (the “SPO Convertible Capital Notes”).
Immediately prior to the acquisition, the SPO Convertible Capital Notes were held entirely by the existing shareholders of SPO. Upon acquisition,
51% of the outstanding SPO Convertible Capital Notes, corresponding to the Company’s ownership interest, were considered intercompany
balances and therefore eliminated in consolidation. The remaining 49% of the SPO Convertible Capital Notes, held by noncontrolling interest
holders, remain outstanding and are reflected in the Company’s condensed consolidated balance sheets.

Concurrent with the acquisition,
the SPO Convertible Capital Notes were amended to include the following terms: (i) any repayment of the SPO Convertible Capital Notes
is subject to prior written consent of the Company, as the majority shareholder of SPO, (ii) the Company, as the majority shareholder
of SPO, has the right, at its sole discretion, to require conversion of any or all SPO Convertible Capital Notes into common shares of
SPO after a minimum holding period of five years from the original issuance date of the SPO Convertible Capital Notes, but no earlier
than January 1, 2027, at a conversion price reflecting the fair market value of SPO’s common shares as determined by SPO’s
board of directors at the relevant time and (iii) each holder of the SPO Convertible Capital Notes may assign all or a portion of its
SPO Convertible Capital Notes solely to a transferee of SPO common shares on a pro rata basis, in proportion to the number of shares transferred.

The SPO Convertible Capital
Notes do not bear interest and do not have a stated maturity date. The SPO Convertible Capital Notes were accounted for as part of the
business combination in accordance with ASC 805 and were initially measured at fair value as of the acquisition date. Because the SPO
Convertible Capital Notes are non-interest-bearing and their settlement is contingent upon the timing of future conversion or repayment,
the Company recorded the noncontrolling interest portion of the SPO Convertible Capital Notes at a discount to face value.

Subsequent to initial recognition,
the outstanding portion of the SPO Convertible Capital Notes is accounted for as a liability and measured at amortized cost. The Company
accretes the discount to the SPO Convertible Capital Notes’ face value using the effective interest method, with the resulting accretion
recognized as interest expense in the condensed consolidated statements of operations.

As of March 31, 2026 and December
31, 2025, the total outstanding balance of the SPO Convertible Capital Notes subject to repayment or conversion by noncontrolling interest
holders was $3.9 million and $3.5 million, respectively. For the three months ended March 31, 2026, the Company recognized $381 thousand
of accretion, which is included in interest expense in the condensed consolidated statements of operations.

30

Ondas Networks Convertible Notes

On
July 8, 2024 and July 23, 2024, Charles & Potomac Capital, LLC, (“C&P”), an entity affiliated with Joseph Popolo,
a former director of the Company, elected to purchase Convertible Notes in the aggregate original principal amount of $700 thousand and
$800 thousand, respectively, (the “July Networks Convertible Notes”). The July Networks Convertible Notes are convertible
into common stock of Ondas Networks at $0.00001 par value per share (“Networks Common Stock”) or Preferred Stock under certain
conditions. The Company used the net proceeds for general corporate purposes, which includes funding capital expenditures and working
capital. The July Networks Convertible Notes bear interest at the rate of 6% per annum.

On
November 13, 2024, pursuant to the Securities Purchase Agreement, dated November 13, 2024, by and between Ondas Networks and a private
investor group (the “November Networks SPA”), multiple investors elected to purchase Convertible Notes in the aggregate original
principal amount of $2.1 million (the “November Networks Convertible Notes”), of which $1 million was purchased by C&P.
The November Networks Convertible Notes are convertible into shares of Networks Common Stock or preferred stock of Ondas Networks at $0.00001 par value per share (“Networks Preferred Stock”) under certain conditions. The Company used the net proceeds for general corporate
purposes, which includes funding capital expenditures and working capital.

On January 15, 2025, pursuant to the Securities Purchase Agreement,
dated January 15, 2025, by and between Ondas Networks, the Company, and a private investor group(the “January Networks SPA,”
together with the November Networks SPA, the “Networks SPA”), multiple investors elected to purchase Convertible Notes in
the aggregate original principal amount of $2.9 million (the “January 2025 Networks Convertible Notes,” together with the
July Networks Convertible Notes and November Networks Convertible Notes, the “Ondas Networks Convertible Notes”), of which
$2 million was from the Company. The November Networks Convertible Notes and January 2025 Networks Convertible Notes will (i) bear an
interest rate of 10% per annum, (ii) have an amended maturity date of December 31, 2025, (iii) be secured by all assets of Ondas Networks,
provided however such secured obligation shall be subordinate to that certain secured note, dated September 3, 2024, by and between Ondas
Networks and C&P, and (iv) at the option of C&P be convertible into equity securities of Ondas Networks upon the closing (a) a
Corporate Transaction (as defined in the November Networks Convertible Notes and January 2025 Networks Convertible Notes) or (b) a subsequent
offering of securities of Ondas Networks. The $2.0 million in Convertible Notes held by the Company has been eliminated in the consolidated
financials.

On November 13, 2024 and January 15, 2025, in connection with the November
Networks Convertible Notes and January 2025 Networks Convertible Notes, respectively, Ondas Networks issued the investors warrants (“Networks
Warrants”) to purchase $2.1 million and $2.9 million, respectively, in shares of Networks Preferred Stock at an exercise price of
$20.65 per share, of which $2 million is to the Company and has been eliminated in the condensed consolidated financial statements. The
number of warrants exercisable under the Networks SPA is calculated by $5 million divided by the Conversion Price, which is the amount
equal to the price per share of the most senior series of Networks Preferred Stock issued to investors in Ondas Networks’ next equity
financing date, or if none, then $41.3104. The warrants are exercisable commencing November 13, 2024 through November 13, 2029 and January
15, 2025 through January 15, 2030, respectively. The Company engaged a third-party service provider to carry out an appraisal of the warrants,
who ran a Black-Scholes Model to determine the fair value of the warrants as of November 13, 2024 and January 15, 2025, which were $1.2
million and $549 thousand, respectively. The initial valuation was assigned to the November Networks Convertible Notes and January 2025
Networks Convertible Notes and the warrants based on their relative fair values, resulting in a total relative fair value of $1.1 million
for the warrants, which was recorded as a debt discount.

In
the event Ondas Networks consummates an additional equity financing prior to the maturity date, the principal balance and unpaid accrued
interest on the Ondas Networks Convertible Notes will be convertible at the option of the Investor into conversion shares upon closing
of the next round of equity financing.

On
July 3, 2025, the Company amended the Ondas Networks Convertible Notes to extend the maturity date to December 31, 2025. The amendment
was accounted for as a debt modification under ASC 470-50.

31

As of December 31, 2025, the
total outstanding principal and accrued interest on the Ondas Networks Convertible Notes was $4.5 million and $456 thousand, respectively.
Accrued interest is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For the three
months ended March 31, 2025, we recognized interest expense of $121 thousand and amortization expense of $334 thousand related to debt
discount and issuance costs.

On January 16, 2026, Ondas
Networks consummated an additional equity financing round. Pursuant to the Securities Purchase Agreement, the Networks Warrants and the
principal balance and accrued interest on the Ondas Networks Convertible Notes were converted into shares of Networks Preferred Stock.

As a result of the additional
equity financing round, during the quarter ended March 31, 2026, the Company determined that it no longer held a controlling financial
interest in Ondas Networks. Accordingly, the Company deconsolidated Ondas Networks effective January 16, 2026 and no longer includes the
assets, liabilities, and results of operations of Ondas Networks in its consolidated financial statements subsequent to that date. Refer
to Note 1 - *Deconsolidation of subsidiary* for additional information.

OAS Convertible Notes

In
October and December 2024, multiple investors (collectively, the “Holders”) elected to purchase convertible notes in the aggregate
original principal amount of $5.2 million, (the “OAS Convertible Notes”), of which $2 million was purchased by C&P and
$1 million was purchased by Privet Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company
and OAS. The OAS Convertible Notes are convertible into shares of OAS common stock, par value per share $0.0001 (the “OAS Common
Stock”), or preferred stock under certain conditions. The Company used the net proceeds for general corporate purposes, which includes
funding capital expenditures and working capital. The OAS Convertible Notes bear interest at the rate of 5% per annum. On September 29,
2025, the Company amended the OAS Convertible Notes to extend the maturity date from September 30, 2025, to January 1, 2026. The amendment
was accounted for as a debt modification under ASC 470-50.

On
December 17, 2025, the Company and OAS entered into agreements with the Holders of the OAS Convertible Notes to convert the principal
and accrued interest outstanding as of November 30, 2025 into OAS Common Stock under the original conversion terms of the OAS Convertible
Notes, at a conversion price of $0.7189, which was equal to the quotient resulting from dividing (x) the Valuation Cap of $65 million
by (y) the fully diluted shares outstanding as of November 30, 2025 (the “OAS Exchange”).

32

At
each Holder’s election, the Holder could elect to defer the conversion to January 5, 2026, as the Company and the Holder may agree.
Seven of the eleven Holders that elected to participate in the Exchange, elected to defer their closing to January 5, 2026, (the “January
Converters”). For the year ended December 31, 2025, OAS converted $3.3 million and $173 thousand of principal and accrued interest,
respectively, into OAS Common Stock for four of the eleven Holders, including C&P, (the “December Converters”). Immediately
following the conversion, the OAS Common Stock was exchanged for Common Stock. OAS made cash payments of $33 thousand to the December
Converters, representing accrued interest on the OAS Convertible Notes from December 1 to December 16, 2025.

As
of December 31, 2025, the total outstanding principal on the OAS Convertible Notes was $1.9 million. As of December 31, 2025, accrued
interest was $110 thousand, which is included in accrued expenses and other current liabilities on the condensed consolidated balance
sheets.

On
January 5, 2026, OAS converted the remaining $1.9 million and $110 thousand of principal and accrued interest, respectively, into common
shares of OAS for the January Converters, which were immediately exchanged for Ondas Inc. Common Stock.

For
the three months ended March 31, 2025, we recognized interest expense of $64 thousand and amortization expense of $12 thousand related
to the issuance costs, which are included in interest expense in the condensed consolidated statements of operations.

Ondas Networks Secured Note

On September 3, 2024, Ondas
Networks entered into a Security Note Agreement (the “Security Agreement”) with C&P, in which, Ondas Networks may draw,
and C&P shall loan Ondas Networks, up to $1.5 million (the “Networks Secured Loan”). Pursuant to the Security Agreement,
Networks issued C&P a secured note in the amount of $1.5 million, which amount may be increased or decreased by the mutual written
agreement of the parties thereto (the “Ondas Networks Secured Note”). The Ondas Networks Secured Note (i) bears interest at
a rate of 8% per annum, (ii) has an amended maturity date of December 31, 2027, and (iii) is secured by all assets of Ondas Networks.

On September 3, 2024 and October
7, 2024, pursuant to the C&P Security Agreement, Ondas Networks issued C&P warrants to purchase $1 million and $500 thousand,
respectively, in shares of Ondas Networks Preferred Stock, at an exercise price of $20.65 per share. The number of warrants exercisable
under the C&P Security Agreement is calculated by $1.5 million divided by the Conversion Price, which is the amount equal to the price
per share of the most senior series of Ondas Networks Preferred Stock issued to investors in Ondas Networks’ next equity financing
date, or if none, then $41.3104. The warrants are exercisable commencing September 3, 2024 through September 3, 2029 and October 7, 2024
through October 7, 2029, respectively. The Company engaged a third-party service provider to carry out an appraisal of the warrants, who
ran a Black-Scholes Model to determine the fair value of the warrants as of September 3, 2024 and October 7, 2024, which were $590 thousand
and $295 thousand, respectively. The initial valuation was allocated to the Ondas Networks Secured Note and the warrants based on their
relative fair values, resulting in a total relative fair value of $557 thousand for the warrants, which was recorded as a debt discount.

As
of December 31, 2025, the total outstanding principal on the Ondas Networks Secured Note was $1.5 million. Accrued interest as of December
31, 2025 was $155 thousand, which is included in accrued expenses and other current liabilities on the condensed consolidated balance
sheets. For the three months ended March 31, 2025, we recognized interest expense of $30 thousand and amortization expense of $227 thousand
related to the debt discount and issuance costs. Interest expense and amortization expense related to issuance costs are included in interest
expense in the condensed consolidated statements of operations.

Effective
January 16, 2026, the Company determined that it no longer held a controlling financial interest in Ondas Networks and no longer includes
the assets, liabilities, and results of operations of Ondas Networks in the condensed consolidated financial statements subsequent to
that date. Refer to Note 1 - *Deconsolidation of subsidiary* for additional information.

33

### **NOTE 11 – STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION**

**Stockholders’ Equity**

As of March 31, 2026 and December
31, 2025, the Company had 800,000,000 shares of Common Stock authorized for issuance, of which 469,062,109 and 380,763,481 shares of our
Common Stock were issued and outstanding, respectively.

As of March 31, 2026 and December
31, 2025, the Company had 10,000,000 shares of preferred stock, par value $0.0001, authorized, of which 5,000,000 shares are designated
as Series A Convertible Preferred Stock (“Series A Preferred”) and 5,000,000 shares are non-designated (“blank check,”
together with the Series A Preferred, the “Preferred Shares”) shares. As of March 31, 2026 and December 31, 2025, the Company
had no preferred stock outstanding.

Stock Issued for Convertible Debt

The Company issued 33,322,397
shares of its Common Stock during the three months ended March 31, 2025 to the lenders in lieu of cash payments for $42 thousand of interest
and $22.6 million of outstanding principal on the 2024 Additional Notes.

Sale of Common Stock and Capital Raises

*January 2026 Offering*

On January 12, 2026, the Company
closed on an offering (the “January 2026 Offering”) for the sale of (i) 19,000,000 shares of Common Stock (the “2026
Shares”), (ii) pre-funded warrants to purchase up to 41,790,274 shares of Common Stock (the “2026 Pre-Funded Warrants”),
and (iii) common warrants to purchase up to 121,580,548 shares of Common Stock (the “2026 Common Warrants”).

The January 2026 Offering
price for (i) each 2026 Share and accompanying 2026 Common Warrant was $16.45 and (ii) each 2026 Pre-Funded Warrant and accompanying 2026
Common Warrant was $16.45 (with all but a nominal exercise price of $0.0001 per share prepaid as of the issuance date). The 2026 Pre-Funded
Warrants were immediately exercisable and will expire seven years from the date of issuance. As of March 31, 2026, the 2026 Pre-Funded
Warrants have been fully exercised. The 2026 Common Warrants have an exercise price of $28.00 per share, were immediately exercisable
and will expire seven years from the date of issuance.

The 2026 Common Warrants may
be cash settled, at the option of the holders, upon a change of control event. Because share settlement of the 2026 Common Warrants is
not within the Company’s control, the 2026 Common Warrants were initially classified as a liability with a fair value of $1,194
million, and the Company recognized a loss of $234.9 million. Refer to Note 13 for further discussion of the warrant liability.

The net proceeds to the Company
from the January 2026 Offering was $959.1 million, after deducting underwriting discounts and commissions and estimated offering expenses
payable by the Company and excluding any proceeds that may be received from the exercise of the 2026 Common Warrants.

The table below details the
net proceeds of the January 2026 Offering.

*(dollars in thousands)*

| Gross proceeds | 999,996 |
| --- | --- |
| Offering costs: |  |
| Underwriting discounts and commissions | (40,000) |
| Other offering costs | (892) |
| Net proceeds | $959,104 |

*Noncontrolling Interest in OAS*

On September 11, 2025, certain
OAS warrant holders exercised their warrants for 669,643 shares of OAS Common Stock for exercise proceeds of $1.2 million, of which $334
thousand was attributed to noncontrolling interest in OAS, representing an ownership interest of approximately 0.77% in OAS. The Company
retained a controlling interest of approximately 99.23% in OAS. The transaction was accounted for as an equity transaction in accordance
with ASC 810-10-45-23, with no gain or loss recognized in the consolidated statements of operations for year ended December 31, 2025.

On December 17, 2025, in conjunction
with the OAS Exchange, 44,643 shares of OAS Common Stock were exchanged for Common Stock, reducing the noncontrolling interest in OAS
to 0.71%. For the three months ended March 31, 2026, the Company attributed $42 thousand of OAS’ net loss to the remaining noncontrolling
interest in OAS. As of March 31, 2026 and December 31, 2025, the carrying value of the noncontrolling interest in OAS was $154 thousand
and $196 thousand, respectively.

34

*Noncontrolling Interest in Insight*

On October 27, 2025, the Company
completed the acquisition of a controlling interest of 51% in Insight and recognized a noncontrolling interest for the remaining 49%.
For the three months ended March 31, 2026, the Company attributed $111 thousand of Insight’s net loss and $1 thousand of foreign
currency translation losses to the noncontrolling interest in Insight. As of March 31, 2026 and December 31, 2025, the carrying value
of the noncontrolling interest in Insight was $3.7 million and $3.8 million, respectively.

**Stock-Based Compensation**

*Warrants to Purchase Common Stock of the Company*

We use the Black-Scholes-Merton
option model (the “Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company.
The Black-Scholes Model is an acceptable model in accordance with U.S GAAP. The Black-Scholes Model requires the use of a number of assumptions
including volatility of the stock price, the risk-free interest rate, and the term of the warrant.

The risk-free interest rate
assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term
of the warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the
expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were
publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the
lack of sufficient historical data of our stock price.

A summary of our Warrants
activity and related information is as follows:

| Line item | Number of Shares Under Warrant | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life |
| --- | --- | --- | --- |
| Balance as of January 1, 2026 | 75,476,378 | $19.74 | 6.74 |
| Granted | 163,370,822 | $20.84 |  |
| Exercised | (42,527,395) | $0.14 |  |
| Canceled | - | - |  |
| Balance as of March 31, 2026 | 196,319,805 | $24.90 | 6.68 |
| Vested and Exercisable as of March 31, 2026 | 196,293,252 | $24.90 | 6.68 |

Total stock-based compensation
expense for warrants for the three months ended March 31, 2026 and 2025 was $0 thousand and $40 thousand, respectively, and is recorded
in general and administrative expense on the condensed consolidated statements of operations.

*Equity Incentive Plans*

In 2018, the Company’s
stockholders adopted the 2018 Equity Incentive Plan, which has been subsequently amended (the “2018 Plan”), pursuant to which
3,333,334 shares of our Common Stock has been reserved for issuance to employees, including officers, directors and consultants. The 2018
Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the compensation committee
of the Board of the Company (the “Compensation Committee”). Subject to the provisions of the 2018 Plan, the Board and/or the
Compensation Committee shall have authority to grant, in its discretion, incentive stock options, or non-statutory options, stock awards
or restricted stock purchase offers (“Equity Awards”). As of March 31, 2026, the balance available to be issued under the
2018 Plan was 95,050 shares.

35

In 2021, the Company’s
stockholders adopted the Ondas Inc. 2021 Stock Incentive Plan, which has been subsequently amended (the “2021 Plan”), pursuant
to which 61,000,000 shares of our Common Stock has been reserved for issuance to employees, including officers, directors and consultants.
The purpose of the 2021 Plan is to enable the Company to attract, retain, reward, and motivate eligible individuals by providing them
with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum efforts for
the growth and success of the Company, so as to strengthen the mutuality of the interests between the eligible individuals and the stockholders
of the Company. The 2021 Plan provides for the issuance of awards including stock options, stock appreciation rights, restricted stock,
restricted stock units, and performance awards. As of March 31, 2026, the balance available to be issued under the 2021 Plan was 1,986,679
shares.

*Stock Options to Purchase Common Stock*

The Company awards stock options
to certain employees, directors, and consultants, which represent the right to purchase common shares on the date of exercise at a stated
exercise price. Stock options granted to employees generally vest over a two to four-year period and are contingent on ongoing employment.
Compensation expenses related to these awards is recognized straight-line over the applicable vesting period. Stock options granted to
consultants are subject to the attainment of pre-established performance conditions. The actual number of shares subject to the award
is determined at the end of the performance period and may range from zero to 100% of the target shares granted depending upon the terms
of the award. Compensation expenses related to these awards is recognized when the performance conditions are satisfied.

The assumptions used in the
Black-Scholes Model are set forth in the table below.

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Stock price | $$9.44-12.27 | 2.11-2.69 |
| Risk-free interest rate | 3.69-4.17% | 4.42-4.65% |
| Volatility | 65.98-77.49% | 59.05-88.69% |
| Expected life in years | 5.17-5.88 | 5.00-5.77 |
| Dividend yield | - | - |

A summary of our Option activity
and related information is as follows:

| Line item | Number of Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life |
| --- | --- | --- | --- |
| Balance as of January 1, 2026 | 20,014,381 | $3.72 | 8.16 |
| Granted | 7,412,700 | $10.29 |  |
| Exercised | (1,620,088) | $2.60 |  |
| Forfeited | (458,338) | $5.42 |  |
| Canceled | (983) | $0.86 |  |
| Balance as of March 31, 2026 | 25,347,672 | $5.68 | 8.06 |
| Vested and Exercisable as of March 31, 2026 | 4,496,344 | $3.51 | 6.78 |

36

As of March 31, 2026, total
unrecognized compensation expense related to non-vested options was $82.9 million which is expected to be recognized over a weighted-average
period of 2.67 years. The weighted-average grant date fair value per option was $7.02 for options granted during the three months ended
March 31, 2026.

Total stock-based compensation
expense for stock options for the three months ended March 31, 2026 and 2025 is as follows:

| (dollars in thousands) | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| General and administrative | $3,945 | $788 |
| Sales and marketing | 836 | (1) |
| Research and development | 1,740 | 69 |
| Cost of goods sold | 575 | 69 |
| Total stock-based compensation related to options | $7,096 | $925 |

*Restricted Stock Units*  

The Company awards Restricted
Stock Units (“RSUs”) to certain employees and directors, which represent a right to receive common stock for each RSU that
vests. RSUs generally vest over a one to four-year period and are contingent on ongoing employment or service as directors. Compensation
expenses related to these awards is recognized straight-line over the applicable vesting period.

A summary of our RSUs activity
and related information is as follows:

| Line item | RSUs | Weighted Average Grant Date Fair Value | Weighted Average Vesting Period (Years) |
| --- | --- | --- | --- |
| Unvested balance at January 1, 2026 | 9,110,776 | $5.64 | 2.35 |
| Granted | 18,374,254 | $9.47 |  |
| Vested | (763,569) | $2.80 |  |
| Canceled | (108,334) | $6.32 |  |
| Unvested balance at March 31, 2026 | 26,613,127 | $8.42 | 2.69 |

As of March 31, 2026, there
were 186,251 restricted stock units that were vested but not yet released due to administrative timing. As of March 31, 2026, the unrecognized
compensation expense for RSUs was $210.6 million, which is expected to be recognized over a weighted-average period of 2.83 years.

Total stock-based compensation
expense for RSUs for the three months ended March 31, 2026 and 2025 is as follows:

| (dollars in thousands) | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| General and administrative | $10,577 | $286 |
| Sales and marketing | 727 | 155 |
| Research and development | 795 | 51 |
| Cost of goods sold | 463 | 65 |
| Total stock-based compensation related to restricted stock units | $12,562 | $557 |

37

### **NOTE 12 – REDEEMABLE NONCONTROLLING INTERESTS**

**Ondas Networks Preferred Stock**

Prior to deconsolidation during
the three Months ended March 31, 2026, Ondas Networks had issued multiple series of convertible preferred stock to third-party investors
in connection with equity financings used to fund its operations. These preferred stock instruments generally accrued dividends and were
convertible into shares of Ondas Networks common stock at the option of the holder. Because the preferred stock is redeemable upon the
occurrence of specified events, the Company accounted for these instruments as temporary equity in accordance with ASC 480 prior
to deconsolidation.

**Redeemable Noncontrolling Interest in SPO**

In connection with the acquisition
of SPO, Shamir retained a noncontrolling equity interest. Shamir has the right (the “First Put Option”) to cause the Company
to purchase all (but not less than all) of the remaining issued and outstanding share capital of SPO held by Shamir at a purchase price
of approximately $220.69 per share, including all capital notes of SPO then held by Shamir for no additional consideration. Shamir may
exercise the First Put Option during the period commencing on October 15, 2025, and ending June 30, 2026.

As of December 31, 2025, the
carrying value and redemption value of Shamir’s noncontrolling equity interest was $2.3 million. During the three months ended March
31, 2026, the Company attributed $1.1 million of SPO’s net loss and $0 thousand of foreign currency translation losses to the carrying
value of Shamir’s noncontrolling interest. Since the noncontrolling interest is currently redeemable, the Company recorded accretion
of $1.3 million during the three months ended March 31, 2026, to increase the carrying amount of the noncontrolling interest to its redemption
value of $2.5 million as of March 31, 2026.

**Redeemable Noncontrolling Interest in 4M**

In connection with the acquisition
of 4M in October 2025, the 4M shareholders retained a noncontrolling equity interest. The 4M shareholders have the right to cause the
Company to purchase all (but not less than all) of the remaining issued and outstanding share capital of 4M at an aggregate purchase price
equal to 30% of 90% of 4M’s EBITDA during the 12-month period ending on the first day of the calendar quarter during which such
calculation is made. The 4M shareholders may exercise the redemption right during the period from January 1, 2026 through December 31,
2027. As of December 31, 2025, the carrying value of redeemable noncontrolling interest was $3.0 million.

38

For the period of January
1 through March 15, 2026, the Company attributed $427 thousand of 4M’s net loss and $8 thousand of foreign currency translation
gains to the redeemable noncontrolling interest, resulting in a carrying value of $2.6 million immediately prior to the transaction described
below.

On March 16, 2026, the Company
and 4M shareholders entered into the 4M Supplement, whereby the Company acquired the remaining 30% of the issued and outstanding share
capital of 4M, for a purchase price of (i) $3.7 million, paid with 352,968 shares of Common Stock, and (ii) an additional amount of up
to $1.4 million in shares of common stock in contingent earn-out payments, subject to certain milestones as set forth in the 4M Supplement.
During the three months ended March 31, 2026, the Company recognized $30 thousand of stock-based compensation in relation to the contingent
earn-out payments.

Upon closing, the redemption
feature associated with the noncontrolling interest was eliminated and the redeemable noncontrolling interest balance of $2.6 million
was reclassified to additional paid-in capital.

### **NOTE 13 – FAIR VALUE MEASUREMENTS**

Accounting standards define
fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried
at fair value and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established
within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows.

**Level 1** -- Unadjusted quoted prices in active markets for identical assets or liabilities.

**Level 2** -- Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

**Level 3** -- Unobservable inputs for the asset or liability.

A summary of financial assets
and liabilities that are measured at fair value on a recurring basis were as follows:

_March 31, 2026 Fair Value Measurements_

| (dollars in thousands) | Level 1 | Level 2 | Level 3 | Total |
| --- | --- | --- | --- | --- |
| Assets |  |  |  |  |
| Cash equivalents (money market funds) | $960,188 | - | - | $960,188 |
| Short-term investments |  |  | - |  |
| Publicly traded stock | 20,295 | - | - | 20,295 |
| U.S. Treasury securities | 64,960 | - | - | 64,960 |
| Fixed income (corporate fixed income and bonds, agency securities) | - | 111,660 | - | 111,660 |
| Certificates of deposit | - | 249,937 | - | 249,937 |
| Warrants in publicly traded companies | - | - | 990 | 990 |
| Total short-term investments | 85,255 | 361,597 | 990 | 447,842 |
| Convertible promissory note | - | - | 10,000 | 10,000 |
| Equity investment in affiliate | - | - | 29,289 | 29,289 |
| Note receivable from affiliate | - | - | 8,835 | 8,835 |
| Total assets | $1,045,443 | $361,597 | $49,114 | $1,456,154 |
| Liabilities |  |  |  |  |
| Government grants | - | - | $3,456 | $3,456 |
| Warrant liabilities | - | - | 1,058,990 | 1,058,990 |
| Contingent consideration | - | - | 128,102 | 128,102 |
| Total liabilities | - | - | $1,190,548 | $1,190,548 |

39

_December 31, 2025 Fair Value Measurements_

| (dollars in thousands) | Level 1 | Level 2 | Level 3 | Total |
| --- | --- | --- | --- | --- |
| Liabilities |  |  |  |  |
| Government grants | - | - | $3,657 | $3,657 |
| Total liabilities | - | - | $3,657 | $3,657 |

*Short-term investments*

The Company classifies its
investments in fixed-income securities and certificates of deposit as available-for-sale. Available-for-sale securities are carried at
fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss). The amortized cost
of available-for-sale securities includes the purchase price adjusted for the amortization of premiums and accretion of discounts, which
are recognized in interest income using the effective interest method. Certificates of deposit are classified as available-for-sale investments
and are recorded at amortized cost, adjusted for unrealized gains and losses to reflect fair value at each reporting date.

_As of March 31, 2026_

| (dollars in thousands) | Amortized cost basis | Gross unrealized gains | Gross unrealized losses | Fair Value |
| --- | --- | --- | --- | --- |
| U.S. Treasury securities | $64,970 | - | $(10) | $64,960 |
| Fixed income (corporate fixed income and bonds, agency securities) | 111,970 | 25 | (335) | 111,660 |
| Certificates of deposit | 250,000 | - | (63) | 249,937 |
| Total | $426,940 | $25 | $(408) | $426,557 |

The Company holds marketable
equity securities consisting of publicly traded common stock measured at fair value of $20.3 million as of March 31, 2026. For the three
months ended March 31, 2026, we recognized net unrealized losses of $2.5 million on these marketable equity securities, which are included
in other income (expense) in the condensed consolidated statements of operations.

The Company’s investments
are measured at fair value on a recurring basis. There were no transfers between Levels 1 and 2 during the period. Fair value measurements
classified as Level 2 primarily include U.S. government agency securities, corporate fixed income securities, and certificates of deposit.
These instruments are valued using pricing models and matrix pricing techniques that rely on observable market inputs, including quoted
prices for similar instruments, benchmark yield curves, interest rate spreads, and dealer quotations. The valuation models do not rely
on significant unobservable inputs.

The Company classifies its
warrants within Level 3 in the fair value hierarchy because it uses unobservable inputs related to volatility to determine fair value.
There were no transfers between Level 1 and Level 3 during the period ended March 31, 2026.

The following table summarizes
the Company’s Level 3 investments in marketable equity securities:

_As of March 31, 2026_

| (dollars in thousands) | Fair Value Hierarchy | Cost Basis | Accumulated Net Unrealized Gains | Fair Value |
| --- | --- | --- | --- | --- |
| Warrants exercisable for publicly traded stock | Level 3 | $706 | $284 | $990 |
| Total |  | $706 | $284 | $990 |

40

The Company’s investment
in warrants exercisable for publicly traded stock allow us to purchase up to 500,000 shares of publicly traded common stock at an exercise
price of $6.00 per share. The warrants are exercisable in whole or in part until August 20, 2028 and are required to be measured at fair
value as long as the warrants remain outstanding. The fair value of the Company’s investment in warrants in a publicly traded company
was determined using a Black-Scholes Model. During the three months ended March 31, 2026, net unrealized losses totaled $133 thousand
and is included in other income (expense), net. For the three months ended March 31, 2026, the key assumptions used in the Black-Scholes
Model are as follows:

_As of March 31, 2026_

|  |  |
| --- | --- |
| Stock price | $3.81 |
| Risk-free interest rate | 3.8% |
| Expected volatility | 107.7% |
| Remaining contractual life in years | 2.39 |
| Dividend yield | 0% |

The following table provides
a reconciliation of the beginning and ending balances for the Level 3 warrant assets measured at fair value using significant unobservable
inputs.

| (dollars in thousands) | Warrants |
| --- | --- |
| Balance as of January 1, 2026 | $1,123 |
| Warrants purchased, adjusted to fair value | - |
| Net unrealized gain (loss) on change in fair value | (133) |
| Balance as of March 31, 2026 | $990 |

*Convertible promissory note*

On February 27, 2026, the
Company purchased a $10 million convertible promissory note issued by World View. The convertible promissory note is measured under the
fair value option and classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs, including projected
cash flows and market-based credit assumptions. The Company elected the fair value option for this instrument upon acquisition. Changes
in fair value are recognized in other income (expense), net.

*Equity investment in affiliate*

The Company’s equity
investment in Ondas Networks is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable
inputs. The fair value of the investment was estimated using a combination of income-based and market-based valuation approaches, requiring
significant judgment by management.

The income-based approach
primarily applied a discounted cash flow (“DCF”) method using management-prepared financial projections, a terminal value
based on a long-term growth rate, and a discount rate that reflects the risks associated with Ondas Networks’ expected future cash
flows and early-stage operating profile. A probability-weighted expected return method (“PWERM”) was also used to allocate
value across potential future liquidity scenarios, including assumed sale or liquidation outcomes and continued operations, based on management’s
assessment of the probability and timing of each scenario and the contractual rights of the equity holders. A market approach utilizing
guideline public company data was used to corroborate the income-based valuation conclusions.

41

Significant unobservable inputs
include projected revenue growth, operating margins, discount rates, long-term growth rates, assumed probabilities and timing of liquidity
events, and market-based valuation multiples. Changes in these assumptions, particularly revenue forecasts, discount rates, or liquidity
assumptions, could materially impact the estimated fair value of the investment.

There were no changes in the
fair value of the equity investment in affiliate for the three months ended March 31, 2026.

*Note receivable from affiliate*

The Company holds a note receivable
from Ondas Networks, which is measured at fair value and classified as Level 3 within the fair value hierarchy. The fair value of
the note receivable was estimated using a discounted cash flow approach, applying a discount rate that reflects the credit risk of Ondas
Networks and the illiquid nature of the instrument. Changes in the discount rate could materially affect the estimated fair value of the
note receivable.

*Government Grants*

The Company had Level 3 liabilities
that are required to be valued at fair value as of March 31, 2026 and December 31, 2025. The fair value of the government grant liability
is determined as the sum of 3% royalty payments on forecasted future sales of the products developed using the grant funds, discounted
using a discounted cash flow model. As of March 31, 2026 and December 31, 2025, the Company made the following assumptions: (i) royalty
payments will be made on certain forecasted future sales through 2031, and (ii) using a discount rate of 19%.

The following table provides
a reconciliation of the beginning and ending balances for the Level 3 government grant liabilities measured at fair value using significant
unobservable inputs.

| (dollars in thousands) | Government Grant Liability |
| --- | --- |
| Balance as of January 1, 2026 | $3,657 |
| Government grant liability acquired in Bird Aerosystems Ltd. acquisition | 58 |
| Payments made | (373) |
| Effect of foreign currency translation | 10 |
| Net loss on change in fair value of liability | 104 |
| Balance as of March 31, 2026 | $3,456 |

42

*Warrant Liability*

The fair value of the warrants
was determined using Level 3 inputs in a Black-Scholes Model. Inherent in the valuation were assumptions related to the expected stock-price
volatility, expected term, risk-free interest rate, and dividend yield. Estimated volatility is a measure of the amount by which our stock
price is expected to fluctuate each year during the expected life of the warrant term. Our estimated volatility is an average of the historical
volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used
the historical volatility of peer entities due to the lack of sufficient historical data of our stock price. The expected term was assumed
to be equivalent to the warrants’ remaining contractual term. The risk-free interest rate was estimated using the yield on actively
traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term. The dividend yield was based
on the historical rate, which the Company anticipates remaining at zero.

The assumptions used to estimate
the fair value of warrants during the period were as follows:

| Line item | Range | Weighted average |
| --- | --- | --- |
| Risk-free interest rate | 4% | 4% |
| Expected volatility | 79-84% | 82% |
| Expected life (in years) | 6.5-6.8 | 6.7 |
| Dividend yield | 0% | 0-% |

The following table provides
a reconciliation of the beginning and ending balances for the Level 3 warrant liabilities measured at fair value using significant unobservable
inputs. There was no warrant liability activity during the three months ended March 31, 2025.

| (dollars in thousands) | Warrant liability |
| --- | --- |
| Balance as of January 1, 2026 | $489,434 |
| Fair value of warrant liability issued during the period | 1,194,019 |
| Change in fair value of warrant liability | (624,463) |
| Balance as of March 31, 2026 | $1,058,990 |

In connection with the January
2026 Offering, the Company issued liability classified warrants that were measured at fair value on the issuance date. The initial fair
value of the warrant liabilities of $1.2 billion exceeded the net proceeds received from the issuance of $959.1 million. As a result,
the Company recognized a loss upon issuance equal to the excess of the initial fair value of the warrant liabilities over the net proceeds
of $234.9 million. The warrant liabilities are subsequently remeasured to fair value at each reporting date, with changes in fair value
recognized in earnings in the period of change. The $389.5 million net gain, consisting of the $234.9 million loss recognized upon issuance
and the $624.5 million gain on change in fair value subsequent issuance, are recorded in other income (expense), net in the condensed
consolidated statements of operations.

Significant increases or decreases
in expected volatility or expected term would result in a higher or lower fair value measurement, respectively.

*Contingent Consideration*

The Company’s
contingent consideration liabilities consist of earn-out and milestone payment arrangements related to business combinations. Earn-out
payments are contingent upon the achievement of specified revenue, program win, and financial performance targets over defined post-acquisition
periods. Milestone payments are contingent upon the achievement of specified operational, technical, regulatory, or program-related events
within defined timeframes. These liabilities are classified as Level 3 within the fair value hierarchy due to the use of significant
unobservable inputs in their valuation. Contingent consideration liabilities are presented as accrued purchase and contingent consideration
on the condensed consolidated balance sheets.

43

The fair value of the contingent
consideration liabilities is estimated using an income-based approach, primarily a scenario-based methods and discounted cash flow techniques.
The valuation incorporates multiple future performance and milestone achievement scenarios, each probability-weighted based on management’s
assessment of potential outcomes and discounted to present value using risk-adjusted discount rates.

The significant unobservable
inputs used in the valuation of the contingent consideration liabilities include projected revenue, probability of achieving performance
and milestone targets, discount rates, and the expected timing of payments. These assumptions reflect management’s judgment regarding
expected future operating performance, program execution, achievement of specified milestones, market conditions, and the time value of
money. Significant increases or decreases in the probability of achieving the underlying earn-out targets or milestone events, or in projected
revenue levels, would result in a corresponding increase or decrease in the fair value of the contingent consideration liabilities. Increases
in the discount rate would result in a decrease in the estimated fair value of the contingent consideration liabilities.

The following table reconciles
the beginning and ending balances of the Company’s Level 3 contingent consideration liabilities:

| (dollars in thousands) / Balance as of January 1, 2026 | Contingent Consideration / - |
| --- | --- |
| Earn-out liabilities acquired at fair value | 102,682 |
| Milestone liabilities acquired at fair value | 25,420 |
| Changes in fair value recognized in earnings | - |
| Payments | - |
| Balance as of March 31, 2026 | $128,102 |

*Non-recurring fair value measurements*

In connection with the business
combinations completed during the three months ended March 31, 2026 and the year ended December 31, 2025, the Company recognized identifiable
intangible assets, including developed technology, customer relationships, trade names, and non-compete agreements. These intangible assets
were measured at fair value on a non-recurring basis as of their respective acquisition dates in accordance with ASC 805*.* These
measurements are not subsequently remeasured and the assets are amortized over their estimated useful lives.

The fair value of the acquired
intangible assets was determined using valuation techniques consistent with the income approach, including discounted cash flow models
such as the multi-period excess earnings method for developed technology and customer relationships, the relief-from-royalty method for
trade names, and the with-and-without method for non-compete agreements.

These fair value measurements
are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including projected future
revenues, operating margins, customer attrition rates, royalty rates, and discount rates, which reflect management’s assumptions
regarding the expected economic benefits derived from the acquired assets. The fair value measurements were determined as of the respective
acquisition dates and represent non-recurring measurements.

44

### **NOTE 14 – SEGMENT INFORMATION**

During the three months ended March 31, 2026, the Company deconsolidated
Ondas Networks, which was previously included in the Company’s consolidated financial statements. As a result of the deconsolidation,
Ondas Networks is no longer a reportable segment, and the Company evaluated its segment reporting structure for the current period in
accordance with ASC 280, *Segment Reporting*. Following the deconsolidation, the Company operates in one operating and reportable
segment, which is focused on developing and providing advanced defense, security, and communications technologies for critical infrastructure
and government customers. The prior period has been recast to confirm to the current period presentation.

The Company’s Chief
Executive Officer serves as the chief operating decision maker (“CODM”) and is responsible for assessing operating performance
and allocating resources. The Company’s organizational structure is based primarily on functional lines, with department heads and
shared service functions reporting either directly to the CODM or to direct reports of the CODM. The CODM reviews financial information
on a consolidated basis and uses net income (loss) as the primary measure of operating performance and for purposes of making operating
decisions. Accordingly, the Company has determined that it has a single operating segment.

In assessing performance,
the CODM reviews significant operating expense categories reflected in net income (loss), including research and development, sales and
marketing, and general and administrative expenses, each of which is separately disclosed in the condensed consolidated statements of
operations. In addition, the CODM reviews certain significant expense items that impact operating results, including stock-based compensation,
as well as other significant charges or credits that may occur during the period and are discussed elsewhere in the notes to the condensed
consolidated financial statements.

The measure of segment assets
is reported on the condensed consolidated balance sheets as total consolidated assets. The accounting policies of the Company’s
operating segment are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The following table presents segment information for three months ended
March 31, 2026 and 2025:

| (dollars in thousands) | Three months ended March 31, 2026 / Total | Three months ended March 31, 2025 / Total |
| --- | --- | --- |
| Product revenue | $38,368 | $3,224 |
| Service and subscription revenue | 9,323 | 809 |
| Development revenue | 2,431 | 215 |
| Revenue, net | 50,122 | 4,248 |
| Cost of goods sold | 25,464 | 2,760 |
| Gross profit (loss) | 24,658 | 1,488 |
| Operating expenses: |  |  |
| General and administration | 43,316 | 5,909 |
| Sales and marketing | 10,494 | 2,430 |
| Research and development | 13,519 | 3,459 |
| Total other income | 404,166 | (3,826) |
| Segment operating profit (loss) | 361,495 | (14,136) |
| Reconciliation of profit or loss adjustments and reconciling items | - | - |
| Income (loss) before provision for income taxes | $361,495 | $(14,136) |

The above table includes depreciation
expense of $669 thousand and $181 thousand for the three months ended March 31, 2026 and 2025, respectively, and amortization expense
of intangible and right-of-use assets of $6.0 million and $1.3 million for the three month periods ended March 31, 2026 and 2025, respectively.

45

### **NOTE 15 – INCOME TAXES**

In general, the Company uses
an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions
in which the Company operates, to determine its quarterly provision for income taxes. However, to the extent that application of the estimated
annual effective tax rate is not representative of the quarterly portion of actual tax expense expected to be recorded for the year in
a jurisdiction, the Company determines the provision for income taxes based on actual year-to-date income (loss) which it has done for
the quarter ended March 31, 2026. Certain significant or unusual items, if applicable, are separately recognized in the quarter in which
they occur and can be a source of variability on the effective tax rates from quarter to quarter. The Company’s effective tax rate
may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax
legislation, and state and local income taxes.

The effective income tax rate
was expense of 0.1% and 0.0% for the three months ended March 31, 2026 and 2025, respectively. The effective income tax rate for the three
months ended March 31, 2026 was impacted by the geographical mix of earnings, as well as movement in the federal, state and foreign valuation
allowances.

### **NOTE 16 – COMMITMENTS AND CONTINGENCIES**

The Company may be involved
in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties,
and outcomes are not predictable with assurance. There are no such loss contingencies that are included in the financial statements as
of March 31, 2026.

### **NOTE 17 – RELATED PARTY TRANSACTIONS**

As of March 31, 2026 and December
31, 2025, the Company owed $81 thousand to independent directors related to accrued compensation and $701 thousand to independent directors
related to taxes collected on RSU shares delivered, respectively, which is included in accrued expenses and other current liabilities
on the condensed consolidated balance sheets.

Ondas Networks Convertible Notes

On
July 8, 2024, July 23, 2024, and November 13, 2024 C&P elected to purchase Convertible Notes in Ondas Networks in the aggregate original
principal amount of $700 thousand, $800 thousand, and $1 million, respectively, (the “C&P Networks Convertible Notes”).
Joseph Popolo, a former director of the Company, was the sole control person of C&P.

46

Along with the November 13,
2024 Networks Convertible Notes, Ondas Networks issued warrants to purchase $1 million in shares of Ondas Networks Preferred Stock at
an exercise price of $20.65 per share (the “Networks Warrants”). The number of Networks Warrants exercisable under the Security
Agreement is calculated by $1 million divided by the Conversion Price, which is the amount equal to the price per share of Ondas Networks’
most senior series of Preferred Stock issued to investors in Ondas Networks’ next equity financing date, or if none, then $41.3104.
The Networks Warrants are exercisable commencing November 13, 2024 through November 13, 2029 and have a relative fair value of $371 thousand,
which was recorded as debt discount.

As
of December 31, 2025, the total outstanding principal on the C&P Networks Convertible Notes was $2.5 million. Accrued interest as
of December 31, 2025, was $245 thousand and is included in accrued expenses and other current liabilities on the condensed consolidated
balance sheets. For the three months ended March 31, 2025, we recognized interest expense of $48 thousand and amortization expense of
$104 thousand related to debt discount and issuance costs. Interest expense and amortization expense related to debt discount and issuance
costs are included in interest expense in the condensed consolidated statements of operations.

On January 16, 2026, Ondas
Networks consummated an additional equity financing round. Pursuant to the Securities Purchase Agreement, the C&P Warrants and the
principal balance and accrued interest on the C&P Networks Convertible Notes were converted into shares of Ondas Networks Preferred
Stock.

OAS Convertible Notes

On October 10, 2024, Privet
Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company and OAS, elected to purchase a
convertible note in OAS in the original principal amount of $1 million (the “Privet OAS Convertible Note”). As of December
31, 2025, the total outstanding principal on the Privet OAS Convertible Note was $1 million, net of unamortized issuance costs of $7 thousand.
Accrued interest as of December 31, 2025 was $61 thousand, which is included in accrued expenses and other current liabilities on the
condensed consolidated balance sheets. For the three months ended March 31, 2025, we recognized interest expense of $12 thousand and amortization
expense of $2 thousand related to the issuance costs. Interest expense and amortization expense related to issuance costs are included
in interest expense in the condensed consolidated statements of operations.

On January 5, 2026, in connection
with the OAS Exchange, Privet Ventures LLC converted $1 million in principal and $61 thousand of accrued interest on the Privet OAS Convertible
Note into OAS Common Stock under the original conversion terms of the OAS Convertible Notes, which was immediately exchanged for 1,153,625
shares of Common Stock, repaying the Privet OAS Convertible Note in full.

Ondas Networks Secured Note

On September 3, 2024, Ondas
Networks entered into the C&P Security Agreement, in which Ondas Networks may draw, and C&P shall loan Ondas Networks, up to $1.5
million. Pursuant to the C&P Security Agreement, Ondas Networks issued C&P the Ondas Networks Secured Note.

On September 3, 2024 and October 7, 2024, pursuant to the C&P Security
Agreement, Ondas Networks issued C&P warrants to purchase $1 million and $500 thousand, respectively, in shares of Ondas Networks
Preferred Stock at an exercise price of $20.65 per share (the “C&P Warrants”). The number of warrants exercisable under
the C&P Security Agreement is calculated by $1.5 million divided by the Conversion Price, which is the amount equal to the price per
share of the most senior series of Ondas Networks Preferred Stock issued to investors in Ondas Networks’ next equity financing date,
or if none, then $41.3104. The C&P Warrants are exercisable commencing September 3, 2024 through September 3, 2029 and October 7,
2024 through October 7, 2029, respectively. The C&P Warrants have a total relative fair value of $557 thousand, which was recorded
as debt discount. Joseph Popolo, a former director of the Company, was the sole control person of C&P.

As of December 31, 2025, the
total outstanding principal on the Ondas Networks Secured Note was $1.5 million. Accrued interest as of December 31, 2025 was $155 thousand,
which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. For the three months
ended March 31, 2025, we recognized interest expense of $30 thousand and amortization expense of $227 thousand related to the debt discount
and issuance costs. No principal or interest has been paid since the Ondas Networks Secured Note was issued.

Effective
January 16, 2026, the Company determined that it no longer held a controlling financial interest in Ondas Networks and no longer includes
the assets, liabilities, and results of operations of Ondas Networks in the condensed consolidated financial statements subsequent to
that date. Refer to Note 1 - *Deconsolidation of subsidiary* for additional information.

Networks Note

On January 16, 2026,
upon the deconsolidation of Ondas Networks, the Company recorded the Networks Note, a note receivable from Ondas Networks. The face value
of the Networks Note is $10 million, and bears interest at 8% and matures in December 2027. As of January 16, 2026, the fair
value of the Networks Note was $8.8 million. During the period from deconsolidation through March 31, 2026, the Company recognized
$0.1 million of interest income, which is included in interest income in the condensed consolidated statements of operations. No principal
or interest has been paid since the Networks Note was issued. Refer to Note 1 – Other Assets for additional information.

47

### **NOTE 18 – SUBSEQUENT EVENTS**

*World View Enterprises, Inc.*

On April 1, 2026,
the Company completed the acquisition of World View pursuant to the Agreement and Plan of Merger (the “World View Agreement”)
by and among the Company, Wassaic Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Wassaic
Merger Sub”), World View, and Fortis Advisors LLC, a Delaware limited liability company, in its capacity as the representative thereunder.

Pursuant to the World View
Agreement, Wassaic Merger Sub merged with and into World View, with World View continuing as the surviving entity and a wholly owned subsidiary
of the Company (the “World View Merger”). At the closing of the World View Merger, the Company paid aggregate consideration
of $150 million, subject to customary purchase price adjustments set forth in the World View Agreement. The consideration consisted
of up to approximately $129.5 million in shares of the Company’s common stock, with the remainder payable in cash, subject
to the terms and conditions of the World View Agreement.

The initial accounting for
the World View acquisition is incomplete as of the issuance of the condensed consolidated financial statements. Therefore, the Company
is unable to provide other disclosures required by ASC 805 regarding this acquisition.

*Mistral, Inc.*

On April 24, 2026, the Company
completed the acquisition of Mistral, Inc. (“Mistral”) pursuant to the Agreement and Plan of Merger (the “Mistral Agreement”),
by and among the Company, Project Cyclone Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger
Sub”), Mistral, Inc., a Delaware corporation (“Mistral”), and Shoshana Banai (the “Mistral Stockholder”).

The Mistral Agreement provides
that, upon the terms and subject to the conditions set forth in the Mistral Agreement, the Company will acquire 100% of the issued and
outstanding shares of Mistral (the “Mistral Merger”). At the closing of the Mistral Merger, upon the terms and subject to
the conditions set forth in the Mistral Agreement, the Company shall pay an aggregate amount of $175 million, comprised of (i) $122.5
million of shares of the Company’s common stock, subject to certain adjustments set forth in the Mistral Agreement, of which (a)
$17.5 million of shares shall be deposited into an escrow account for the purpose of securing the obligations of the Mistral Stockholder
as set forth in the Mistral Agreement and (b) the remaining $105 million of shares shall be paid in seven equal installments within twenty
days following the closing of the Mistral Merger, and (ii) $52.5 million of shares shall be deposited into an escrow account and released
as follows: (x) $26.25 million of shares on the first anniversary of the closing of the Mistral Merger, (y) $13.13 million of shares on
the second anniversary of the closing of the Mistral Merger, and (z) $13.13 million of shares on the third anniversary of the closing
of the Mistral Merger.

The initial accounting for
the Mistral acquisition is incomplete as of the issuance of the condensed consolidated financial statements. Therefore, the Company is
unable to provide other disclosures required by ASC 805 regarding this acquisition.

48

## Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations**

*You should read the following
discussion and analysis in conjunction with our condensed consolidated financial statements and the notes to those financial statements
included elsewhere 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, 2025, filed with the Securities and Exchange
Commission (the “SEC”) on March 30, 2026, including the audited consolidated financial statements and notes included therein
as of and for the year ended December 31, 2025 (“2025 Form 10-K”). This discussion contains forward-looking statements based
upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”
Our actual results may differ materially from those contained in or implied by any forward-looking statements.*

Management’s Discussion
and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide material information relevant
to an assessment of the Company’s financial condition and results of operations, including an evaluation of the amounts and certainty
of cash flows from operations and from outside sources. This MD&A is designed to focus specifically on material events and uncertainties
known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating
results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported
operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations.

**Overview**

Ondas, Inc. (together with its subsidiaries, the “Company,”
“Ondas,” “we,” “us,” or “our”) is a defense, security, and critical infrastructure technology
company organized around two business units: Ondas Autonomous Systems Inc. (“OAS”), and Ondas Capital Inc. (“Ondas Capital”).
Through business units, we develop and commercialize autonomous systems, and strategic investment and partnership initiatives that support
the scaling and adoption of mission-critical solutions for governments and industrial customers.

- **OAS** focuses on autonomous and unmanned aerial and ground systems and integrated mission solutions for defense, homeland security, public safety, and other critical infrastructure and industrial end markets. Through its product company subsidiaries, OAS develops, commercializes, and delivers integrated capabilities across Counter-Unmanned Aerial System (“CUAS”), aerial Intelligence, Surveillance, and Reconnaissance (“ISR”), and Unmanned Ground Vehicle (“UGV”) applications.
- **Ondas Capital** supports our growth strategy through strategic investments, partnerships, and capital formation initiatives intended to accelerate technology development, expand market access, and enhance long-term value creation across the Ondas platform.

We manage these business units
as distinct operating platforms aligned to complementary end markets and customer requirements. Our approach is designed to combine advanced
autonomy, secure communications, and integrated operating capabilities to help customers improve situational awareness, operational resilience,
and safety and security outcomes in complex, regulated, and often contested environments.

The Company deconsolidated
Ondas Networks effective January 16, 2026 and no longer includes the assets, liabilities, and results of operations of Ondas Networks
in its consolidated financial statements subsequent to that date. Additionally, our results of operations for the three months ended March
31, 2026 have been affected by recent acquisitions. For additional information see Note 5- GOODWILL AND ACQUISITIONS.

49

**Results of Operations**

**Comparison of Results for the Three Months
Ended March 31, 2026 and 2025**

Revenue, net for the three
months ended March 31, 2026 and 2025 are as follows:

| (dollars in thousands) | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | Three Months Ended March 31, / $ Change | Three Months Ended March 31, / % Change |
| --- | --- | --- | --- | --- |
| OAS |  |  |  |  |
| Product revenue | $38,368 | $3,224 | $35,144 | 1,090% |
| Service revenue | 9,323 | 797 | 8,526 | 1,070% |
| Development revenue | 2,431 | - | 2,431 | 100% |
| Total OAS revenues, net | 50,122 | 4,021 | 46,101 | 1,147% |
| Ondas Networks |  |  |  |  |
| Product revenue | - | - |  | -100% |
| Service revenue | - | 12 | (12) | -100% |
| Development revenue | - | 215 | (215) | -100% |
| Total Ondas Networks revenues, net | - | 227 | (227) | -100% |
| Total revenues, net | $50,122 | $4,248 | $45,874 | 1,080% |
| Total product revenue | 38,368 | 3,224 | 35,144 | 1,090% |
| Total service revenue | 9,323 | 809 | 8,514 | 1,052% |
| Total development revenue | 2,431 | 215 | 2,216 | 1,031% |
| Total revenue, net | $50,122 | $4,248 | $45,874 | 1,080% |

Revenue, net increased $45.9
million to $50.1 million for the three months ended March 31, 2026 from $4.2 million for the three months ended March 31, 2025. The increase
in revenue is primarily attributed to our OAS segment, of which $34.7 million of revenue growth was generated by companies acquired since
March 31, 2025 including $15.8 million from Sentry CS Ltd. OAS revenue also increased by $11.4 million at Airobotics, of which approximately
$7.9 million relates to product sales and approximately $3.5 million relates to service revenue from sales of our Optimus System™
and Iron Drone Raider™.

Cost of goods sold increased
to $25.5 million for the three months ended March 31, 2026, from $2.8 million for the three months ended March 31, 2025. The $22.7 million
increase was primarily due to activity from companies acquired since March 31, 2025 and the increase in Airobotics revenues discussed
above, in addition to increased labor and material costs**.** 

Gross margin percentage increased
to 51% for the three months ended March 31, 2026, compared to 35% for the three months ended March 31, 2025. The 16% increase in gross
margin percentage is primarily due the significant increases in revenue generated by product sales offsetting fixed service delivery costs
at OAS.

General and administrative
expenses (“G&A”) increased $37.4 million, or 633%, to $43.3 million for the three months ended March 31, 2026, from $5.9
million for the three months ended March 31, 2025. This increase is primarily due to (i) an increase of $11.5 million in stock-based
compensation for awards granted since March 31, 2025; (ii) an increase of $8.4 million in software costs; (iii) an increase of $7.7 million
in professional fees and consulting costs, of which $5.8 million related to legal, accounting and due diligence fees associated with
the acquisitions completed during the year; (iv) an increase of $7.1 million related to general and administrative expense attributable
to companies acquired since March 31, 2025, of which $2.8 million relates to amortization and depreciation of acquired assets; and (v)
an increase of $2.7 million in human resource costs, including benefits, from increased headcount as we build out our management team
at both Ondas Inc. and OAS.

50

Sales and marketing expenses (“S&M”)
increased $8.1 million, or 332%, to $10.5 million for the three months ended March 31, 2026, from $2.4 million for the three months ended
March 31, 2025. This increase is primarily due to (i) an increase of $5.4 million related to S&M attributable to companies acquired
since March 31, 2025, of which $1.8 million relates to amortization and depreciation of acquired assets; (ii) an increase of $861 thousand
in human resource costs, including benefits, from increased headcount; (iii) an increase of $893 thousand in other S&M costs primarily
related to increased marketing and advertising costs, use of third-party contractors and consultants, and increased attendance at trade
shows and other marketing events; and (iv) an increase of $836 thousand related to increased stock-based compensation for awards granted
since March 31, 2025.

Research and development expenses (“R&D”)
increased $10.0 million, or 291%, to $13.5 million for the three months ended March 31, 2026, from $3.5 million for the three months ended
March 31, 2025, of which $7.8 million related to companies acquired since March 31, 2025. Other increases in R&D include, (i) an increase
of $911 thousand in human resource costs, including benefits, from increased headcount, (ii) an increase of $779 thousand is related to
increased stock-based compensation for awards granted since March 31, 2025, and (iii) an increase of $534 thousand in other R&D costs
primarily related to increased use of third-party consultants and allocation of general expenses to research and development.

Total other income, net increased
$408 million to $404.2 million for the three months ended March 31, 2026, from total other expense, net of $3.8 million for the three
months ended March 31, 2025. Total other income, net increased primarily as a result of the net gain of $389.5 million related to the
change in fair value of our warrant liability, an increase of approximately $51.5 million related to the gain on the deconsolidation of
Ondas Networks, an increase of approximately $11.9 million in interest and dividend income, and a decrease of approximately $3.5 million
in interest expense. This was partially offset by a loss on acquisition of Indo Earth of approximately $46.2 million and the net unrealized
losses of approximately $2.6 million on our equity security investments.

The Company recorded an income
tax provision of $245 thousand for the three months ended March 31, 2026, and an income tax provision of $0 for the three months ended
March 31, 2025. The 2026 income tax provision is attributable to earnings in foreign jurisdictions.

Net income increased $375.4
million to $361.3 million for the three months ended March 31, 2026, from a net loss of $14.1 million for the three months ended March
31, 2025. For the three months ended March 31, 2026, the Company attributed $1.7 million of net loss to noncontrolling interests (“NCI”),
related to the subsidiaries in which we acquired less than 100% ownership during the fourth quarter of 2025. These subsidiaries incurred
operating losses due to early-stage operating performance.

**Non-GAAP Measures**

As required by the rules of
the Securities and Exchange Commission (“SEC”), we provide a reconciliation of our non-GAAP financial measures to the most
directly comparable GAAP measures. These reconciliations are set forth in the tables below.

We believe that adjusted earnings
before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) is a useful supplemental measure for evaluating
our operating performance and period to period trends because it eliminates the impact of items that primarily reflect our capital structure,
tax position, non-cash accounting charges, acquisition-related transaction costs, and other items that management does not consider indicative
of ongoing operating performance. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income (loss)
and other measures prepared in accordance with GAAP. Adjusted EBITDA removes the effects of interest and financing-related items, depreciation
and amortization, income taxes, stock-based compensation, acquisition-related expenses, and other non-operating gains and losses. Management
believes that excluding these items enhances comparability across periods and facilitates analysis of underlying operating trends. Other
companies may calculate similarly titled non-GAAP measures differently, and therefore our Adjusted EBITDA may not be comparable to measures
used by other companies.

51

Cash Operating Expense is
a non-GAAP financial measure that represents total operating expenses excluding depreciation, amortization of intangible assets, acquisition-related
expenses, and stock-based compensation. The most directly comparable GAAP measure to Cash Operating Expense is total operating expenses.
Management believes Cash Operating Expense provides useful supplemental information by isolating recurring, cash-based operating costs
and facilitating meaningful period-to-period comparisons. Management uses this measure for internal cost management, budgeting, and liquidity
planning, and to evaluate operating trends exclusive of non-cash accounting charges. Cash Operating Expense should be considered in addition
to, and not as a substitute for, total operating expenses prepared in accordance with GAAP.

Management uses Adjusted EBITDA
and Cash Operating Expense, together with GAAP results, in making operating and planning decisions and in evaluating the Company’s
ongoing performance.

| (dollars in thousands) | Three months ended March 31, 2026 | Three months ended March 31, 2025 |
| --- | --- | --- |
| Reconciliation of Adjusted EBITDA |  |  |
| Net income (loss) | $361,250 | $(14,136) |
| Depreciation | 669 | 181 |
| Amortization of intangible assets | 5,622 | 1,062 |
| Acquisition-related expenses (1) | 5,844 | - |
| Stock-based compensation | 19,658 | 1,573 |
| Provision for income taxes | 245 | - |
| Other (income) expense, net (2) | (404,166) | 3,826 |
| Adjusted EBITDA | $(10,878) | $(7,494) |

(1) Acquisition-related expenses include legal, accounting, and other due diligence costs incurred in connection with completed or pending acquisitions.

(2) Other (income) expense, net includes interest and dividend income, unrealized gain and losses on investments, interest expense, foreign exchange gain and loss, the change in the fair value of government grant liabilities and warrant liability, and other income (expense), net included on the Company’s unaudited Condensed Consolidated Statements of Operations.

| (dollars in thousands) | Three months ended March 31, 2026 | Three months ended March 31, 2025 |
| --- | --- | --- |
| Reconciliation of Cash Operating Expenses |  |  |
| Total operating expenses | $67,329 | $11,798 |
| Depreciation (1) | (473) | (180) |
| Amortization of intangible assets | (5,622) | (1,062) |
| Acquisition-related expenses (2) | (5,844) | - |
| Stock-based compensation (1) | (18,497) | (1,572) |
| Cash Operating Expenses | $36,893 | $8,984 |

(1) Excludes depreciation and stock-based compensation amounts included in Costs of goods sold on the Company’s unaudited Condensed Consolidated Statements of Operations.

(2) Acquisition-related expenses include legal, accounting, and other due diligence costs incurred in connection with completed or pending acquisitions.

52

**Summary of (Uses) and Sources of Cash**

| (dollars in thousands) | Three months ended March 31, 2026 | Three months ended March 31, 2025 |
| --- | --- | --- |
| Net cash used in operating activities | $(51,298) | $(6,659) |
| Net cash used in investing activities | (474,167) | (195) |
| Net cash provided by financing activities | 968,465 | 2,265 |
| Increase (decrease) in cash, cash equivalents, and restricted cash | 443,000 | (4,589) |
| Effect of exchange rate on cash | (275) | - |
| Cash, cash equivalents, and restricted cash, beginning of period | 594,359 | 29,999 |
| Cash, cash equivalents, and restricted cash, end of period | $1,037,084 | $25,410 |

The principal use of cash
in operating activities for the three months ended March 31, 2026, was to fund the Company’s current expenses primarily related
to operating activities necessary to allow us to service and support customers for the three months ended March 31, 2026.

The increase in cash flows
used in operating activities of $44.6 million primarily relates to an increase in net income of $375.4 million, of which approximately
$371.8 million related to non-cash charges and credits, which primarily includes gains and losses on investments, acquisitions, and deconsolidation
of subsidiary; change in fair value of warrant liability; amortization of debt discount and issuance costs; depreciation and amortization;
and stock-based compensation; combined with changes in operating assets and liabilities resulting in a cash outflow of approximately $48.2
million for the three months ended March 31, 2026.

The increase in cash flows
used in investing activities of $474 million primarily relates to an increase of $429.1 million in purchases of short-term investments,
net of maturities of $23.1 million; $31.8 million in cash paid, net of cash acquired, for acquisitions; $5 million in purchases of long-term
equity investments; $7 million relating to deconsolidation of subsidiary cash; and $1.1 million increase in cash paid for other tangible
and intangible assets.

The increase in cash provided
by financing activities of $966.2 million primarily relates to the net proceeds of approximately $959.1 million received from the sale
of common stock and warrants, net of issuance costs during the three months ended March 31, 2026, combined with an increase in proceeds
of approximately $9 million from the exercise of stock options and warrants during the three months ended March 31, 2026, offset by an
increase of approximately $1.9 million in net cash outflow related to debt transactions.

**Liquidity and Capital Resources**

As of March 31, 2026, the
Company had a strong liquidity position, including $1.0 billion of cash, cash equivalents, and restricted cash, $448 million of short-term
investments, and 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. While the Company has incurred
losses since inception and historically funded operations through equity and debt financings, management does not believe additional financing
is required to support near-term operating needs based on current plans.

53

As of March 31, 2026, the Company had an accumulated deficit of $5.4
million. At that date, the Company had net long-term borrowings outstanding of approximately $3.6 million and short-term borrowings of
approximately $779 thousand, including accrued interest.

In 2025, the Company raised
net proceeds of approximately $829.5 million from the sale of common stock and warrants, $30.8 million from the exercise of stock options
and warrants, $1.2 million from the exercise of warrants in OAS, and $923 thousand from the issuance of convertible notes in Ondas Networks
(collectively, the “2025 Offerings”). In January 2026, the Company raised approximately $1 billion in gross proceeds from
the sale of common stock and warrants.

While the Company currently
has significant liquidity, it may seek additional capital to support strategic initiatives, accelerate growth opportunities, or enhance
financial flexibility. Although the Company does not currently anticipate the need for additional financing to support near-term operations,
future capital requirements could increase depending on the timing and scale of growth initiatives, market conditions, or other strategic
factors. In addition, the Company may be required to make cash payments in future periods related to contingent earn-out and milestone
arrangements; however, the timing and amount of any such payments are contingent on the achievement of specified operational or financial
targets and are not currently expected to impact near-term liquidity.

**Off-Balance Sheet Arrangements**

As of March 31, 2026, 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 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 2025 Form 10-K. There have been no significant changes in our
critical accounting policies since the filing of the 2025 Form 10-K.

**Recent Accounting Pronouncements and SEC
Rules**

There have been no material
changes to our significant accounting policies as summarized in Note 2 of our 2025 Form 10-K. We do not expect that the adoption of any
recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements.

54

**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 2025 Form
10-K, which was filed with the SEC on March 30, 2026. 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.

## Item 3. Quantitative and Qualitative Disclosures
About Market Risk.**

We are a smaller reporting
company as defined by Rule 229.10(f)(1) and are not required to provide information under this item. Although we are not required to provide
the quantitative and qualitative disclosures about market risk required by this Item, there have been no material changes to our exposure
to market risk for the three months ended March 31, 2026, from those previously disclosed in “Quantitative and Qualitative Disclosures
About Market Risk” contained in Part II, Item 7A of our 2025 Form 10-K.

## Item 4. Controls and Procedures.

**Disclosure Controls and Procedures**

The Company’s management,
with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated 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, as amended (the “Exchange Act”) as of March 31, 2026. Based on that evaluation, the Company’s Chief Executive
Officer and the Company’s Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of March 31, 2026.

**Changes in Internal Control Over Financial
Reporting**

There were no changes in our
internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the
Exchange Act during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

**Limitations on Effectiveness of Controls and
Procedures**

In designing and evaluating
the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource
constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative
to their costs.

55

**PART II - OTHER INFORMATION**

## Item 1. Legal Proceedings.

For information related to
our legal proceedings, refer to Note 16 —Commitments and Contingencies of Item 1, “Financial Statements” of this Quarterly
Report on Form 10-Q.

## Item 1A. Risk Factors.

Our business, financial condition,
operating results, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth
in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 30,
2026 (the “2025 Form 10-K”), the occurrence of any one of which could have a material adverse effect on our actual results.

There have been no material
changes to the Risk Factors previously disclosed in the 2025 Form 10-K.

## Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

**Unregistered Sales of Securities**

During the quarter ended March
31, 2026, the Company issued shares of its common stock and other equity linked-securities in transactions that were not registered under
the Securities Act of 1933, as amended. These issuances occurred primarily in connection with business combination transactions and private
financing arrangements. All sales of unregistered securities during the quarter ended March 31, 2026 were previously disclosed in a Current
Report on Form 8-K except the following.

The 2,389,203 shares of common
stock that were issued and exchanged for shares of OAS common stock, pursuant to those certain exchange agreements, by and between the
Company, OAS and certain holders of OAS securities (the “OAS Exchange”), were exempt from the registration requirements of
the Securities Act in accordance with Regulation D thereunder. Refer to Note 10 – Notes Payable and Convertible Notes Payable –
of Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

The Company did not sell any unregistered equity securities to the
public during the fiscal quarter. All unregistered issuances were made in reliance on available exemptions from the registration requirements
of the Securities Act, and no underwriters were involved in such transactions.

## Item 3. Defaults Upon Senior Securities.

None.

## Item 4. Mine Safety Disclosures.

Not applicable.

## Item 5. Other Information.

None.

56

## Item 6. Exhibits

| Exhibit No. | Name of Document |
| --- | --- |
| 2.1+ | Supplement to Share Purchase Agreement, by and among by and among the Company, 4M Defense Ltd., Chirokka Holding Ltd., and Mr. Nir Cohen (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 16, 2026). |
| 2.2+ | Agreement and Plan of Merger, dated March 8, 2026, by and among the Company, Project Cyclone Merger Sub Inc., Mistral, Inc., and Shoshana Banai (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2026). |
| 2.3+ | Share Purchase Agreement, dated March 17, 2026, by and among the Company, Indo Earth Moving Ltd., Indo’s shareholders as set forth on Exhibit B thereto, and Eli Hefets (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2026). |
| 2.4+ | Agreement and Plan of Merger, dated March 23, 2026, by and among the Company, Wassaic Merger Sub Inc., World View Enterprises Inc., and Fortis Advisors LLC (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 23, 2026). |
| 3.1 | Certificate of Amendment, filed on January 15, 2026 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed by the Company with the SEC on January 16, 2026). |
| 3.2 | Amended and Restated Bylaws of the registrant, dated January 16, 2026 (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed by the Company with the SEC on January 16, 2026). |
| 4.1 | Form of Common Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 12, 2026). |
| 4.2 | Form of Inducement Award Grant Restricted Stock Unit Agreement (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on April 1, 2026). |
| 4.3 | Form of Inducement Award Grant Option Agreement (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on April 1, 2026). |
| 10.1# | Amendment to the 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026). |
| 10.2# | Form of Stock Option Agreement (US Employee) (incorporated herein by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026).* |
| 10.3# | Form of Restricted Stock Unit Agreement (US Employee) (incorporated herein by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026).* |
| 10.4# | Form of Stock Option Agreement (Foreign Employee) (incorporated herein by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026). |
| 10.5# | Form of Restricted Stock Unit Agreement (Foreign Employee) (incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026). |
| 10.6 | Second Amended and Restated Director Compensation Policy (incorporated herein by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026). |
| 10.7 | Amendment to the Ondas Inc. 2021 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K, filed by the Company with the SEC on March 30, 2026). |
| 10.8 | Registration Rights Agreement, dated April 24, 2026, by and among the Company and the Stockholder (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2026). |
| 10.9 | Registration Rights Agreement, dated April 1, 2026, by and among the Company and the signatories thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2026). |

57

| 10.10 | Registration Rights Agreement, dated March 17, 2026, by and among the Company and the Sellers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2026). |
| --- | --- |
| 10.11 | Letter Agreement, dated January 16, 2026, by and among Ondas Networks Inc. and the signatories thereto (incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2026). |
| 10.12 | Form of Securities Purchase Agreement, dated January 9, 2026 by and between Ondas Holdings Inc. and each investor listed on the Schedule of Buyers attached thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 12, 2026). |
| 10.13 | Placement Agent Agreement, dated January 9, 2026, between Ondas Holdings Inc. and Oppenheimer & Co. Inc., as representative of the placement agents named in Schedule I thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 12, 2026). |
| 10.14 | Form of Series B Preferred Stock Purchase Agreement, dated January 16, 2026, between Ondas Networks Inc. and the Purchasers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2026). |
| 10.15 | Form of Investors’ Rights Agreement, dated January 16, 2026, between Ondas Networks Inc. and the Purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2026). |
| 10.16 | Form of Right of First Refusal Agreement, dated January 16, 2026, between Ondas Networks Inc. and the Purchasers (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2026). |
| 10.17 | Form of Voting Agreement, dated January 16, 2026, between Ondas Networks Inc. and the Purchasers (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2026). |
| 31.1 | Certification of Chief Executive Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a) dated March 31, 2026*. |
| 31.2 | Certification of Chief Financial Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a) dated March 31, 2026*. |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 dated March 31, 2026** |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 dated March 31, 2026** |
| 101.INS | Inline XBRL Instance Document.* |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).* |

\* Filed herewith.

\*\* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

+ Schedules and Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon request.

58

**SIGNATURES**

Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

DATE: May 15, 2026 **ONDAS INC.**

By: /s/ Eric A. Brock

Eric A. Brock

Chief Executive Officer

(Principal Executive Officer)

By: /s/ Neil J. Laird

Neil J. Laird

Chief Financial Officer

(Principal Financial Officer

Principal Accounting Officer)

59