Q2 2024 Ondas Holdings Inc Earnings Call

August 14, 2024

Welcome to the <unk> Holdings, Inc. Second quarter, 'twenty 'twenty four conference call.

Operator: Welcome to the Ondas Holdings Inc. second quarter 2024 conference call. All participants will be in listen-only mode.

Speaker Change: All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone. To withdraw your question, please press star then.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two before we begin the company would like to remind you that this call may contain forward looking statements. While these forward looking statements reflects offices as best current judgment they are subject to risks and uncertainties.

Operator: Before we begin, the company would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Ondas' best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking statements. These risk factors are discussed in Ondas' periodic SEC filings and in the Earnings Press report issued today, which are both available on the company's website. Ondas undertakes no obligation to revise or update any forward-looking statement to reflect future events or circumstances except as required by law.

Speaker Change: That could cause actual results to differ materially from those implied by these forward looking statements. These risk factors are discussed in <unk> periodic SEC filings and in the earnings press release issued today, which are both available on the company's website.

Speaker Change: This is undertakes no obligation to revise or update any forward looking statements to reflect future events or circumstances, except as required by law.

Operator: During this call, Ondas will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with the General Accepted Account. A Reconciliation of the Non-Gap Financial Measures to the Most Directly Comparable Gap is shown in our press release.

Speaker Change: During this call on this one.

<unk> to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with general accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the Investor Relations section of our website there's not.

Operator: Transcripts provided by Transcription Outsourcing, LLC. This non-caption information is provided as a supplement to the, Not as he stops. Or as Superior to Measures of Financial Performance Prepared in accordance with Gap, However, management believes these non-gap measures provide investors with valuable information on the underlying trends of urbanization. Please note this event. I would now like to turn the presentation over to Eric Brock, Chairman and CEO. Please go ahead.

Speaker Change: GAAP information is provided as a supplement to not as a substitute for or as superior to measures of financial performance prepared in accordance with GAAP. However.

Speaker Change: However management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. Please.

Speaker Change: Please note this event is being recorded.

Speaker Change: Now I'd like to turn the presentation over to Eric Brock Chairman and CEO. Please go ahead.

Eric Brock: Well. Thank you operator, and good morning, I want to get started by welcoming you to our quarterly conference call. We appreciate the time, you're spending with us and for your interest in our company.

Eric Brock: Well, thank you, operator. And good morning. I want to get started by welcoming you to our quarterly conference call. We appreciate the time you're spending with us and for your interest in our company. I'm happy to be joined today by key members of our leadership team, including our interim CFO, Neil Laird, Guy Simpson, the President and Chief Operating Officer of Ondas Networks, Meir Kliner, President of Ondas Autonomous Systems, and the Founder and CEO of our Aerobotics Subsidiary, and Tim Tenney, CEO of American Robotics. Now, let's turn to the agenda.

Speaker Change: I'm happy to be joined today by key members of our leadership team, including our interim CFO Neil there guys Vincent the President and Chief operating officer of on Dust networks Mayer Weiner President about August autonomous systems, and the founder and CEO of our aerobatics subsidiary and Tim Kennedy CEO of American Robotics.

Speaker Change: Now, let's turn to the agenda, we will start the call with some brief comments highlighting recent business developments about our audits network in autonomous systems business units.

Eric Brock: We will start the call with some brief comments highlighting recent business developments in both our Ondas Networks and Ondas Autonomous Systems businesses. I will then hand the call to Neil for a financial review of our second quarter 2024 results. We will then provide a business update for Ondas Networks in our OAS Business Units, where I will ask Guy, Meir, and Tim to provide commentary around current business activity. Then we will wrap up the call and open the floor for investor questions.

Speaker Change: I will then hand, the call to Neal for a financial review of our second quarter 2024 results.

Speaker Change: We will then provide a business update broadcast networks and our Oes business unit, where our last guide Marin Tim provide commentary around current business activity.

Speaker Change: Then we will wrap the call and open the floor for investor questions.

Neal: While we continue to progress our critical customer activity during the second quarter positioning us for long term growth I will begin the call by acknowledging the disappointing start to 2024 from a revenue perspective.

Neal: While this is consistent with expectations, we set on our last call. It is nonetheless disappointing to you as well as to me and our team.

Neal: Extended timelines relative to our expectations for railroad deployment claimed in 900 megahertz remains an issue and the impact from the Gaza War, which created inventory production and other bottlenecks served to push out of customer and business development activity at both Arrow Biotics and American robotics.

Eric Brock: Extended timelines relative to our expectations for railroad deployment plans at 900 megahertz remained an issue, and the impact of the Gaza War, which created inventory production and other bottlenecks, served to push out customer and business development activity at both Aerobotics and American Robotics. Nonetheless, we did achieve important technical and operational milestones across the business units, which demonstrates that we are positioned for long-term success, driving adoption of our technology platforms across the large markets we address.

Neal: Nonetheless, we did achieve important technical and operational milestones across the business units, which demonstrates that we are positioned for long term success driving adoption of our technology platforms across the large markets we address.

Neal: Focusing initially on wireless networks I want to highlight that we have completed an important system integration efforts and the 900 megahertz network.

Eric Brock: Focusing initially on Ondas Networks, I want to highlight that we have completed important systems integration efforts on the 900 MHz network. Two customers, which include a Class 1 railroad in Chicago and a commuter railroad in the Southwest, are operating live, air-linked, wireless networks at 900 megahertz.

Neal: Customers, which include a class one railroad in Chicago and a commuter railroad in the southwest are operating live Airlink wireless networks at 900 megahertz and.

Neal: In addition, we have executed a successful field trial with a third customer amaze Your transit authority in the Midwest.

Eric Brock: In addition, we have executed a successful field trial with a third customer, a major transit Authority in the Midwest. Due to this work, our distribution partners secured the first commercial order for APCS in the 900 megahertz band during the second quarter. In addition, we expect both the Class 1 Rail and the Transit Rail operator I mentioned to submit purchase orders for area-wide deployments, both in Chicago, which would take us to three area-wide air-linked deployments in the second half of 2024.

Neal: Given this work our distribution partner secured the first commercial order for Adcs in the 900 megahertz band during the second quarter.

Neal: In addition, we expect both the class one rail and transit rail operator I mentioned.

Neal: Purchase orders for area wide deployments, both in Chicago, which would take us to three area wide early deployment in the second half of 'twenty 'twenty four.

Eric Brock: We are happy to see this commercial acceptance as this further validates our DOT16 technology as a platform for the new 900 MHz network. Guy Simpson will share more details on our field operations and pipeline engagement with both the railroads and our partner Siemens, as well as the progress we are making on advancing the 220 megahertz PTC data radio, which we are developing on behalf of Amtrak and the Northeast Corridor. While the Gaza conflict was disruptive from an operational and financial standpoint, I am proud of how our team at OAS rose to the occasion to support their country and continue to advance the business. While the situation remains difficult, the stakes remain high, and the work we are doing is essential.

Neal: We are happy to see that as commercial acceptance as this further validates our <unk> technology as a platform for a new 900 megahertz network.

Guy Central: Guy Central will share more details on our field operations and pipeline engagement with both the railroads and our partner Siemens as well as the progress we're making on advancing the 220 megahertz P. T C data radio, which we are developing on behalf of Amtrak and the northeast corridor.

Speaker Change: While the Gaza conflict with disruptive from an operational and financial standpoint, I am proud of how our team at OAS rose to the occasion to support their country and continue to advance the business.

Speaker Change: While the situation remains difficult the stakes remain high and the work we are doing is essential.

Eric Brock: That exceptional effort included amazing work in aerobotics to accelerate the productization of our autonomous counter drone platform, the Iron Drone Raider. As we said on our last call, the Raider is a home run product that has benefited from an intense capabilities upgrade program in partnership with our customers to meet the urgent needs to protect the homeland. We have advanced the RADAR product specifications to meet cutting-edge military requirements, which include mobility, autonomy, and precision.

Speaker Change: That exceptional effort included amazing work in a robotics to accelerate the product position of our autonomous counter drone platform. The iron drone rider as we said on our last call. The reader is a homerun products, which has benefited from an intense capabilities upgrade program in partnership with our customers to meet the urgent needs to protect the whole.

Speaker Change: Matt.

Speaker Change: We have advanced the raider product specifications to meet cutting edge military requirements, which include mobility autonomy in precision.

Speaker Change: Those capabilities are enabled by the integration of sophisticated technologies, including onboard sensors and AI driven software algorithms that allow for navigation and high performance level and complex GPS denied environments.

Speaker Change: In addition, we have been able to perform extensive testing in real world conditions to validate these capabilities.

Speaker Change: We are satisfied those requirements, which allowed us to secure two significant customers for our drone with initial orders one of those orders was provided by a large global defense vendor and the other a direct purchase from a major military end customer.

Eric Brock: We have satisfied those requirements, which allowed us to secure two significant customers for Iron Drone with initial orders. One of those orders was provided by a large global defense vendor, and the other was a direct purchase from a major military end customer. The purchase by the military and customer was a particularly significant event for the company, establishing Ondas as a prime vendor with locks on pricing and economics for our high performing counter drone platform.

Speaker Change: The purchased by the military end customer was a particularly significant event for the company, establishing <unk> as a prime vendor with locked in pricing and economics for our high performing counter drone platform.

Speaker Change: This morning, we announced a second order from our initial military customer, which is funding an expansion of our program introducing the iron drove greater it's alive security in combat operations.

Eric Brock: This morning, we announced a second order from our initial military customer, which is funding an expansion of our program, introducing the Iron Drone Raider into live security and combat operations. This order will fund continued system integration and enhancements, as well as certain sustainment activities.

Speaker Change: This order will fund continued systems integration enhancements as well as certain sustainment activities.

Speaker Change: We expect demonstrated combat success in the coming months with vault and volume orders for the iron drone platform.

Eric Brock: We expect demonstrated combat success in the coming months will result in volume orders for the Iron Drone platform. In parallel, we are preparing an increased production capacity, field deployment and sustainment capability, and expanded marketing to other defense and security customers globally. Now, I want to put the Iron Drone success into its proper context, and that is this: we are establishing a leading position in the counter-drone market at Onda. We believe the Iron Drone Raider is a best-in-class autonomous solution from a performance standpoint with its capabilities in complex environments, unique hard kill execution, and price point.

Speaker Change: In parallel we are preparing an increase.

Speaker Change: In production capacity field deployment, sustainment capability and expanded marketing to other defense and security customers globally.

Speaker Change: I want to put the iron drove success into its proper context and that is this we are establishing a leading position in the counter drone market at Argos, We believe the iron drone rater is a best in class autonomous solution from a performance standpoint, with its capabilities and complex environments unique hard kill execution in <unk>.

Speaker Change: Price point.

Eric Brock: We believe there's a significant global market for iron drones to protect from the growing threat of hostile growth. I see substantial expansion opportunities in the global defense market. In fact, we are seeing tangible engagement with additional military customers already, and those government-to-government marketing opportunities are supported by our initial military customers. The emergence of the defense sector as a material growth vector for Ondas cannot be overstated.

Speaker Change: We believe there's a significant global market for art drone to protect from the growing threat of parcel growth.

Speaker Change: See substantial expansion opportunities in the global defense market. In fact, we are seeing tangible engagement with additional military customers already and those government. The government marketing opportunities are supported by our initial military customer.

Speaker Change: Yeah.

Eric Brock: It demonstrates the true dual-use nature of our technology platforms and results in a massive increase in not only the total but dressable market but also drives a much higher serviceable and obtainable market or sob. As we move into the second half of 2024, we are seeing broadening opportunities at OAS. The demand environment for arrow security platforms like Optimus in Iron Drone is strengthening, and we believe we have entered a significant and durable upcycle supporting our long-term business plan and value creation opportunities.

Speaker Change: The emergence of the defense sector as a material growth factor products cannot be overstated. It demonstrates the true dual use nature of our technology platforms and results in a massive increase in not only the total addressable market, but also drives a much higher serviceable and obtainable market or Saab.

Speaker Change: As we moved into the second half of 'twenty 'twenty four we are seeing broadening opportunities that OAS the demand environment for Aero security platforms like I'm, an optimist in iron drone is strengthening and we believe we have entered a significant and durable upcycle supporting our long term business plan and value creation opportunity.

Eric Brock: While Iron Drone has gotten a lot of attention as of late, let's also highlight our business development activity with American Robotics as we open the large U.S. market for our services and technology platform. American Robotics announced a landmark deal with the U.S. Coast Guard, and we won a fixed price contract for a program designed to perform emissions monitoring at the Port of Long Beach.

Speaker Change: While iron dwelling has got a lot of attention as of late that's also highlight our business development activity with American robotics, as we opened a large U S market for our services and technology platforms.

American Robotics: American Robotics announced a landmark deal with the U S Coast Guard, we garnered a fixed price contract for a program designed to perform emissions monitoring at the port of long Beach.

Eric Brock: This is in support of the EPA's Clean Ports Initiative intended to improve air quality. The service we provide is consistent with certified solutions worldwide as maritime regulations around air quality are uniformed globally, and we believe it's the first time the U.S. Coast Guard has contracted for this capability. And it's important to emphasize that while this is an initial pilot, it is not an experiment.

American Robotics: This is in support of the EPA clean ports initiatives intended to improve air quality.

American Robotics: The service we provide is consistent with certified solutions worldwide as maritime regulations around air quality are uniform globally, and we believe it's the first time the U S Coast Guard has contracted to this capability.

Speaker Change: And it's important to emphasize that while this is an initial pilot. It is not an experiment. This is a fully operational program in vessels that violate air quality limitations will be held accountable by the coast Guard.

Eric Brock: This is a fully operational program, and vessels that violate air quality limitations will be held accountable by the Coast Guard. We believe this solution is properly architected and can develop into a big opportunity for American Robotics. Tim will share more details.

Kim: We believe the solution is properly architected and could develop into a big opportunity for American robotics, Kim will share more details.

Eric Brock: With the focus turning to defense, military, and homeland security, remember, both the Optimist and Iron Drone platforms are dual-use, targeting huge commercial and government markets as well. We expect existing customers to grow their Optimist fleets later this year, while the pipeline for new customer engagement is both expanding and maturing. The pipeline now includes military customers. I'm also pleased with the significant fleet opportunities we see in the United States with AmeriCorps Robotics, where we are engaged with public safety departments and operators of critical industrial and technology infrastructure and assets. We expect to have more to share in those markets as we move through the second half.

Speaker Change: With the focus turning to defense military and Homeland security remember, both the optimists and iron drone platforms are dual use targeting huge commercial and government markets as well, we expect existing customers to grow their often the suites later this year, while the pipeline for new customer engagement is both expanding and maturing the pipeline.

Speaker Change: Now include military customers.

Speaker Change: I'm also pleased with significant cleanup to do these we see in the United States with a medical robotics, where we are engaged with public safety department and operators of critical industrial and technology infrastructure and assets, we expect to have more to share in those markets as we move through the second half.

Neil Laird: So to wrap up the introduction, the first half of revenue belies the value we are building with customers across our technology platform. We do have work to do to outline the 900 megahertz deployment plans with customers, and we will work hard to secure those build-out plans. At OAS, we see the commercial adoption cycle for Optus re-engaging and a huge new product opportunity for Iron Drone. This should lead to a material recovery in revenue in the second half of 2024. I will now hand the call to Neil to provide the detailed second quarter financial update.

Speaker Change: So to wrap up the interruption the weak first half new belies the value we are building with customers across our technology platforms. We do have work to do to outline the 900 megahertz deployment plans with customers and we will work hard to secure those build out plans.

Speaker Change: I don't want yes, we see the commercial adopters adoption cycle for off just re engaging and a huge new product opportunity for iron drown. This should lead to a material recovery in revenue in the second half of 'twenty 'twenty four.

Speaker Change: I will now hand, the call Neil to provide the detail second quarter financial update Neil.

Neil: Thanks, Eric.

Neil Laird: Thanks, Eric. As I get started, I want to remind our investors that our financial statements reflect the early stage of platform adoption for both Ondas Networks and OAS and the Preparation for Larger Commercial Rollout. We expect significant operating leverage as revenues grow, so today's revenue levels do not yet cover our operating expenses.

Neil: Get started I want to remind our investors that our financial statements reflect the early stage of platform adoption, but both on dust networks handle yet on.

Neil: And the preparation for larger commercial rollout.

Neil: We expect significant operating leverage as revenues grow so today's revenue levels do not yet cover our operating expenses.

Neil Laird: For Ondas Networks, revenues will fluctuate from quarter to quarter, given the uncertainty around the timing of customer activity, ahead of the targeted commercial rollouts on the 900 megahertz network and the development of programs underway with Siemens and MXV Rail. Similarly, revenues at OAS are expected to vary from quarter to quarter and to normalize into a more predictable pattern as we grow our customer base and more of those customers enter fleet programs and recurring service agreements in the United States and internationally.

Neil: Roundup networks revenues will fluctuate from quarter to quarter, given the uncertainty around the timing of customer activity.

Neil: The targeted commercial rollouts in the 900 megahertz network.

Neil: The development of programs underway with Siemens.

Ray: Actually ray.

Ray: Similarly revenues at all I guess are expected to vary from quarter to quarter to normalize into a more predictable pattern as we grow our customer base are more of those customers onto fleet programs and recurring service agreements in the United States and internationally.

Neil Laird: In the second quarter of 2024, revenues were approximately $1 million, as compared to approximately $5.5 million for the second quarter of 2023. This was primarily a result of extended timelines at Ondas Networks related to the 900 megahertz activity with the Klaasland Railroads and supply chain disruptions connected to the Gaza War at our OAS business. Gross profit was negative $190,000 for Q2 2024 as opposed to 3.1 million for Gross margin was negative 20% for Q2 2024, as opposed to 56% for Q2 2023. The gross margin performance is primarily due to subscale operations, given the low revenue recorded in the quarter relative to the recurring cost of services provided, as well as revenue being primarily typically low-margin development.

Speaker Change: In the second quarter of 2024, our revenues were approximately $1 million as compared to approximately $5 $5 million for the second quarter of 2023. This.

Speaker Change: This was primarily a result of extended timelines with Amdocs networks related to the 900 megahertz activity with the class one railroads and supply chain disruptions connected to the Gaza War.

Speaker Change: OAS business unit.

Speaker Change: Gross profit was negative 190000, but for Q2 2020 pool as opposed to $3 1 million for Q2 2023.

Speaker Change: Gross margin was negative 20% for Q2 2024 as opposed to 56% for Q2 2023. The gross margin performance was primarily due to subscale operations given the low revenue recorded in the quarter relative to the recurring cost of services provided as well as revenue being primarily.

Speaker Change: Typically low margin development program.

Neil Laird: Gross margins can be volatile on a quarter-to-quarter basis due to low revenue levels and shifts in revenue mix between product development and product development and services. Operating expenses decreased to $8.1 million for the second quarter of 2024, as opposed to $11.6 million in the second quarter of 2023. The sharp drop in operating expenses was primarily due to strict controls on cash expenditures and decreased R&D activity both at networks and OAM.

Speaker Change: Gross margins can be volatile on a quarter to quarter basis, due to lower revenue levels and shift in revenue mix between product development and <unk>.

Speaker Change: Product development and service revenues.

Speaker Change: Operating expenses decreased to $8 $1 million.

Speaker Change: Second quarter of 2020 full as opposed to $11 $6 million in the second quarter of 2023.

Speaker Change: The sharp drop in operating expenses was primarily due to strict controls on cash expenditures and decreased R&D activity, both networks and OIS.

Neil Laird: This decrease in operating expenses emphasizes the ongoing benefits from the restructuring of our Ondas Autonomous Systems business unit in connection with the integration of American robotics and aerobotics after the aerobotics acquisition closed in January 2020. The company narrowed its operating loss to $8.3 million for the second quarter of 2024, as compared to $8.5 million for the second quarter of 2023. Adjusted EBITDA loss... $7 million for Q2 2024 as opposed to $5.6 million for Q2 2023.

Speaker Change: This decrease in operating expenses, emphasizing the ongoing benefits from the restructuring of our own boss autonomous systems business units in connection with the integration of American Robotics, and AI robotics. After the Arab optics acquisition closed in January 2023.

Accompanying narrowed operating loss to $8 3 million for the second quarter of 2024 as compared to $8 5 million for the second quarter of 2023, adjusted EBITDA loss was $6 7 million for Q2 2024 as opposed to $5 6 million for Q2 2023.

Speaker Change: So now, let's turn to the cash flow statement, we held cash and cash equivalents of $5 million as of June 30 of 'twenty 'twenty four as compared to $15 million as of December 31st 2023.

Neil Laird: So now let's turn to the cash flows. We held cash and cash equivalents of $5 million as of June 30, 2024, as compared to $15 million as of December 31, 2023. The first half cash provided by finance includes an additional gross funding totaling $8.5 million. Cash used in operations during the first half of 2024 decreased by $5.6 million due primarily to the lower operating expenses discussed just now, as well as lower investment in working capital, as we collected receivables from the higher revenues in the previous year.

Speaker Change: The first half cash provided by financing includes some additional gross funding totaling $8 $5 million.

Speaker Change: How she used in operations during the first half of 2024 decreased by $5 6 million due to primarily due to the lower operating expenses discussed just now as well as lower investment in working capital as we collected receivables from the higher revenues in the previous year.

Neil Laird: We expect cash utilization to improve significantly as we move into the second half of 2024. Improved cash sufficiency comes from both continued cost control and operating expense leverage at our OAS business unit, given our expectation of a recovery in revenue and gross profit growth in the second half of 2024. As noted, we ended Q2 with $5 million in cash. As of June the 30th, 2024, we had 29.2 million of convertible notes outstanding.

Speaker Change: We expect cash utilization to improve significantly as we moved into the second half of 'twenty 'twenty four improved sufficiency comes from both continued cost controls and operating expense leverage of our OAS business unit, given our expectation of a recovery in revenue and gross profit growth in the second half.

Speaker Change: 2024.

Speaker Change: I've noted we ended Q2 with $5 million in cash as.

Speaker Change: As of June 30 of 'twenty 'twenty, four we had $29 2 million of convertible notes outstanding how can we previously stated it is our objective to <unk>. These notes by using shares to retire the notes either via the amortization or to see these notes converted entirely to equity.

Neil Laird: As we previously stated, it is our objective to equitize these notes by using shares to retire the notes either via monthly amortization or by using shares to retire them, or to see these notes convert entirely to equity prior to maturity. I will now hand the call back to Eric. Thank you, Neil.

Speaker Change: Two maturity.

Speaker Change: I will now hand, the call back to Eric.

Eric Brock: Thank you Neal now we will transition to a review of our business units and as Guy Simpson and their clients to share updates on business development activity in operations. We will also add content to share comments regarding American robotics, and the outlook for OIS in the United States.

Eric Brock: Now we will transition to a review of our business units and ask Guy Simpson and Meir Kliner to share updates on business development activity and operations. We will also ask Tim Tenney to share comments regarding American Robotics and the outlook for OAS in the United States. As I hand the call to Guy, I want to reiterate that I have confidence in our ability to grow an important business at Ondas Networks as we deploy wireless technology that is critically valuable for the rail customers and the large industrial vendors and emerging MCIoT technology ecosystems. While timelines have extended, the opportunity at 900 MHz, as well as with other private networks for Class I rails, in addition to global rail markets, remains substantial. Guy, please proceed.

Speaker Change: As I hand, the call the Guy I want to reiterate that I have confidence in our ability to grow an important business around us networks as we deploy wireless technology that is critically valuable for the rail customers and the large industrial vendors and emerging <unk> technology ecosystem.

While the timelines have extended the opportunity at 900 megahertz as well as with other private networks for the class one rails. In addition to global rail markets remains substantial guy.

Guy Central: Please proceed.

Eric Brock: Thank you Eric.

Guy Simpson: Thank you, Eric. Once again, I'm happy to be here this morning and to share an Ondas Networks update with our investors. Following on from previous calls, I will provide an incremental update on 900 MHz network upgrades and migration. Although progress towards wide-scale deployments has been slower than we would like, there have been some significant milestones recently. Our distribution partner, Siemens Mobility, received the first commercial Air Link order for a system-wide upgrade of a commuter railroad network in the southwest. As a reminder, Siemens AirLink products are powered by our FullMax software-defined networking platform.

Speaker Change: Once again I'm happy to be here this morning to share our non das networks updates for our investors.

Speaker Change: Following on from previous calls I will provide an incremental update on 900 megahertz network upgrades and migrations.

Speaker Change: Although progress towards Widescale deployment has been slower than we would like there have been some significant milestones recently.

Speaker Change: Our distribution partner Siemens mobility received the first commercial air link order for a system wide upgrade of the compute commuter railroad network in the southwest.

Speaker Change: As a reminder, Siemens airlink products are powered by a full Max software defined networking platform.

Guy Simpson: This network is now in full live operation using exclusively Airlink Radio products, and the progressive migration to 802.16 operation in the A-block is underway. Furthermore, this migration supports the introduction of new IP applications using the same 900 MHz network infrastructure. This is a key benefit of 802.16 technology in creating general-purpose networks that are flexible, expandable, and allow for the adoption of new operating and safety technologies. This is unlike legacy application-specific networks that are capable of only a single use.

This network is now in full live operation using exclusively Airlink radio products and the progressive migration to $82 16 operation in the a block is underway.

Speaker Change: Furthermore, this migration supports the introduction of new IP applications using the same 900 megahertz network infrastructure.

Speaker Change: This is a key benefit of $802 16 technology in creating general purpose networks that are flexible and expandable and allow for the adoption of new operating and safety technologies.

This is unlike the legacy application specific networks that are capable of only a single use case.

Speaker Change: Our systems integration activity with club with a class one railroad in Chicago continues with Antelope Airlink products supporting lives network operations.

Guy Simpson: Our systems integration activity with a Class 1 railroad in Chicago continues with AirLink products supporting live network operation. We are currently planning the next phase with this customer, which we expect to complete in the second half of 2020. Also in Chicago, we have completed the establishment of three discrete labs in which a transit customer is evaluating DOT16 technology and planning for field trials. We expect our distribution partner to receive an order for a system-wide upgrade in Q3 2020. Our work with the AAR, and in particular its Wireless Communications Committee, or WCC, continues.

We are currently planning the next phase with this customer, which we expect to complete in the second half of 2024.

Speaker Change: Also in Chicago, we have completed the establishment of three discrete labs in which a transit customer is evaluating Dol 16 technology and planning for field trials.

Speaker Change: We expect our distribution partner to receive an order for a system wide upgrade in Q3 2020 full.

Speaker Change: Okay.

I'll work with the a O and in particular, its wireless Communications Committee or W. C. C continues.

Guy Simpson: As reported in the last earnings call, AAR has repeated its public commitment to the 900 network migration and the deadlines imposed by the FCC. They have also restated the critical role of DOT16 as being key to their future network plan. The successful integration of Airlink products into legacy 900 MHz networks is a key milestone on the path to network migration.

As reported in the last earnings call. The a has repeated its public commitment to the 900 networks migration and the deadlines imposed by the FCC.

Speaker Change: They have also restated the critical role of adult 16, as being key to their future network plans.

Speaker Change: The successful integration of Airlink products into legacy 900 megahertz networks is a key milestone on the path to network migration.

Guy Simpson: In Q2, we continue our support of multiple customers to achieve this critical objective. The introduction of new DOT16 applications helps to reinforce the value of a general-purpose network being created as part of the migration to the 900 MHz band. We are working with multiple customers to integrate a variety of IP-based solutions in parallel with the Legacy Critical Train Control or CTC application. For example, the 900 MHz network can be used as a complementary and or redundant path for positive train control applications.

Speaker Change: In Q2, we continued our support of multiple customers to achieve this critical objective.

Speaker Change: The introduction of new 16 applications helps to reinforce the value of a general purpose networks being created as part of the migration to the 900 megahertz a block.

Speaker Change: We are working with multiple customers to integrate a variety of IP based solutions in parallel with the legacy critical train control well see T C application.

Speaker Change: In one example, the 900 megahertz network can be used as a complementary and all redundant pulse, but positive train control applications.

Speaker Change: Key to securing further commercial orders from the railroads is to work within their standard procedures.

Guy Simpson: Key to securing further commercial orders from the railroads is to work within their standard procedures. For example, railroad budgets for 2025 will typically be determined in the second half of 2024 and finalized in Q4. And we are working with our distribution partner to secure orders. Of course, we are also continuing to pursue opportunities to capture orders within 2024. We are implementing the new PTC data radio program for Amtrak, and the first prototypes have recently been delivered for evaluation.

Speaker Change: Railroad budget for 2025, we will typically be determined in the second half of 'twenty 'twenty four and finalized in Q4.

Speaker Change: And we are working with our distribution partners to secure orders.

Operator: Welcome to the Ondas Holdings Inc. 2nd quarter, 2024 conference call. All participants will be in listen only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

Speaker Change: Of course, we are also continuing to pursue opportunities to capture orders within 2020 full budgets.

Speaker Change: We are executing on the new P. T C data radio program for Amtrak and the first prototypes have recently been delivered before evaluation.

Guy Simpson: We expect the development program to be completed in Q1 2025 and commercial deliveries to start in Q2. Meanwhile, we continue to work with Siemens in the UK on a new locomotive radio for the European market, with important development milestones being achieved in Q2 2025. The delay in commercial orders for the 900 MHz network has created pressure on the network's business. We have taken specific action to manage expenses, including headcount reduction and a sharp focus on direct revenue-generating activities.

Speaker Change: We expect the development program to be completed in Q1, 2025, and commercial deliveries to start in Q2.

Unknown Executive: Before we begin, the company would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Ondas' best current judgment, there is subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking statements. These risk factors are discussing Ondas' periodic SEC filings and in the earnings press release issued today, which are both available on the company's website. Ondas' undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstance except as required by law.

Speaker Change: We continue to work with Siemens in the U K on a new locomotive radio for the European market with important development milestones being achieved in Q2 2024.

Speaker Change: The delay in commercial orders for the 900 megahertz network has created pressure on the networks business.

Speaker Change: We have taken specific actions to manage expenses, including head count reduction and a sharp focus on direct revenue generating activities.

Unknown Executive: During this call, Ondas will refer to certain non-gab financial measures. These non-gab measures are not prepared in accordance with general accepted accounting principles. A reconciliation of the non-gab financial measures to the most directly comparable gap measure is shown in our press release issued earlier today, which is available at the Investor Relations section of our website. This non-gab information is provided as a supplement to not as a substitute or as superior to measures of financial performance prepared in accordance with GAP. However, management believes these non-gab measures provide investors with valuable information on the underlying trends of our business. Please note this event is being recorded.

Speaker Change: I remain extremely positive on the outlook for our adult 16 wireless technology with the railroads. There is little doubt that new network investment is required and that we have proven the value of our technology and capabilities.

Guy Simpson: I remain extremely positive about the outlook for our DOT16 wireless technology with the railroad. There is little doubt that new network investment is required and that we have proven the value of our technology and capability. I am hopeful that as the railroads move through their 2025 budgeting process, we will receive more clarity in the coming months in terms of orders and deployment plans for 2025. Now, I will hand the call back to Eric. Eric?

Speaker Change: I'm hopeful that that's the railroads move through the 20th twenty-five budgeting process, we will receive more clarity in the coming months in terms of autos and deployment plans for 'twenty or 'twenty five.

Speaker Change: Now I will hand, the call back to Eric.

Speaker Change: Eric.

Eric Brock: Thank you Guy I will now ask mayor client or to take the floor and update us on progress at Argos autonomy systems.

Eric Brock: Thank you, Guy. I will now ask Meir Kliner to take the floor and update us on progress at Ondas Autonomous Systems. Mayor's comments will include an update on Iron Drone and our intensive engagements with customers. Note that as it relates to the Iron Drone Raider, there are certain technical and operational details that are considered sensitive, which we aren't able to share at this moment. Though Meir will give you a good feel about what makes Iron Drone special and the advancements we have made with customers and in the commercialization of the Raider.

Speaker Change: <unk> comments will include an update on iron drone and our intensive engagements with customers.

Eric Brock: I would now like to turn the presentation over to Eric Brock, Chairman, and CEO. Please go ahead. Thank you, operator and good morning. I want to get started by welcoming you to our quarterly conference call. We appreciate the time you're spending with us and for your interest in our company.

The Omer: Note that as it relates to the iron drone Rader, there are certain technical and operational details that are considered sensitive, which we arent able to share at this moment. The Omer will give you a good feel about what makes I haven't grown special and the advancements we have made with customers and in the commercialization of the rider.

Eric Brock: I am happy to be joined today by key members of our leadership team, including our interim CFO Neil Leard, Guy Simpson, the President and Chief Operating Officer of Ondas Networks, Mayor Cliner, President of Ondas Autonomous Systems, and the Founders CEO of our Aerobotic subsidiary in Tim Kenney, CEO of American Robotics. Let's turn to the agenda. We will start the call with some brief comments highlighting recent business development of both our Ondas Network and Ondas Autonomous Systems business units.

Speaker Change: Sure.

Meir Kliner: Thank you, Eric. During Q2, we continued to witness strong growth in demand for our unmanned systems and solutions in the defense and omni-security markets. The ongoing conflicts and events worldwide are underscoring the significant role of unmanned aerial systems, particularly in low-altitude areas, for both offense and defense missions. Almost every organization worldwide that is involved in national security is gearing up their use of drones for various missions and seeking solutions to protect against hostile drone attacks.

Speaker Change: Thank you Eric during Q2, we continued to witness swung growth in demand for our unmanned systems and solutions in the defense and homeland security markets, the ongoing conflicts and events worldwide underscoring the significant level of unmanned aerial systems, particularly in low altitude.

Speaker Change: Areas for both offense and defense missions.

Eric Brock: I will then hand the call to Neil for a financial review of our second quarter 2024 results. We will then provide a business update around us networks in our OAS business units, where I will ask Guy, Mayor and Tim to provide commentary around current business activity.

Speaker Change: Almost every organization worldwide that is involved in national security is getting off of their use of drones for variance missions and seeking solutions to protect against almost started one attacks.

Meir Kliner: Ondas is well positioned to respond to this growing demand, offering revolutionary technology and unmatched operational readiness. Both the Optimus system and I1-1 radar have essentially no competitive alternatives that offer equivalent capabilities to operate continuously in both civil and military environments, even under harsh weather conditions and limited access to infrastructure such as GPS, the Internet, and cellular networks.

Speaker Change: On this is well positioned to respond to this growing demand offering revolutionary technology and unmatched person on readiness.

Eric Brock: Then, we will wrap the call and open the floor for investor questions.

Speaker Change: Both the optimal system and I want one radar and have essentially no competitive alternatives that offer equivalent capabilities to operate continuously in both civilian and military environments, even on the weather conditions and limited access to infrastructure, such as GPS Internet and cellular networks.

Eric Brock: While we continue to progress critical customer activity during the second quarter, positioning Ondas for long-term growth, I will begin the call by acknowledging the disappointing start to 2024 from our revenue perspective. While this is consistent with expectations we said at our last call, it is nonetheless disappointing to you as well as to me and our team. Expected timelines relative to our expectations for railroad deployment plans and 900 megahertz were made in issue, and the impact from the Gaza War, which created inventory production and other bottlenecks, served to push out customer and business development activity at both aerobotics and AmeriCorps bodies.

Meir Kliner: The primary focus of ARobotics during Q2 was on enhancing the capabilities of ION1 radar to meet the urgent needs of our customers in this military environment. We have succeeded in advancing and showcasing the capabilities of the I-11 radio system and have already secured both a global defense entity and a major military organization as customers. We have also secured the first order for the deployment of the I-1-1 radar in a combat environment, as we recently announced.

Speaker Change: <unk> primary focus during Q2 was an in and seeing the capabilities of island, one radios to meet the urgent needs of our customers in these military environments.

Speaker Change: We have succeeded in advancing and showcasing the capabilities of the I won't run radio system and they are already secured both in global defense entity and the major military organization as customers.

Eric Brock: We did achieve important technical and operational milestones across the business units, which demonstrates that we are positioned for long-term success driving adoption of our technology platforms across the large markets we address. For focusing initially on non-dust networks, I want to highlight that we have completed important systems, integration efforts in the 900 MHz network. Two customers, which include a Class 1 railroad in Chicago, and a commuter railroad in the Southwest, are operating live air-linked wireless networks at 900 MHz.

Speaker Change: We have also secured the first order for the deployment of that.

Speaker Change: One way to in a combat environment as we recently announced.

Speaker Change: We are advancing our optimal system inventory build plan and believe that the optimal system will be required with my existing and many additional close two miles due to the growth in the defense markets.

Meir Kliner: We are advancing our Optimus system inventory build plan and believe that the Optimus system will be required by existing and many additional customers due to the growth in the defense market. Our teams in the U.S. and Israel are working on advancing the Optimus system configuration to address the needs of defense and omni-security customers. We look forward to sharing more news about the new opportunities with the Optimus system soon. In the U.S., American Robotics secured a fixed-price contract with the U.S. Coast Guard for emissions monitoring at the port of Long Beach and further developed our customer pipeline for Optimus systems in U.S. government sectors.

Eric Brock: In addition, we have executed a successful field trial with a third customer, a major transit authority in the Midwest. Due to this work, our distribution partner secured the first commercial order for ATCS in the 900 MHz band during the second quarter. In addition, we expect both the Class 1 Rail and the Transit Rail operator, I mentioned, the submit purchase orders for area-wide deployments, both in Chicago, which would take us to three area-wide air-linked deployments in the second half of 2024. We are happy to see this commercial acceptance as this further validates our .16 technology as the platform for the new 900 MHz network.

Speaker Change: Our teams in the U S and Israel are working on advancing the optimal system configuration to address the needs of the defense and homeland security customers.

Speaker Change: We look forward to sharing more news about the new opportunities with the optimal system soon.

Speaker Change: In the U S American robotics secured at a fixed price contract with the U S Coast Guard for emissions monitoring and the port of long Beach and further developed our customer pipeline for optimal systems in the U S governmental sectors.

Speaker Change: American robotics after several successful demonstration and the new vision and operational center in Baltimore showcasing its unparalleled capabilities in behind visual line of sight, one operations and automation capabilities.

Meir Kliner: American Robotics of the Terror Successful Demonstration at the New Vision and Operational Center in Baltimore, showcasing its unparalleled capabilities in the eyeing visual line of sight, one operation, and automation capabilities. As I previously mentioned, many security organizations worldwide are seeking solutions to protect against hostile drones. I would like to take a few minutes to elaborate on the Iron Drone Raider, its automation features, and advantages. The Raider drone launches from a designated protected storage area. This storage can host one to three drones, keeping the Raider drone hot and ready for a quick launch.

Eric Brock: Guy Simpson will share more details on our field operations and pipeline engagement with both the railroads in our partner Siemens, as well as the progress we are making on advancing the 220 MHz PTC data radio, which we are developing on behalf of Amtrak and the Northeast Quarter. While the guy with conflict was disruptive from an operational and financial standpoint, I am proud of how our team at OAS rose to the occasion to sport their country and continue to advance the business. While the situation remains difficult, the stakes remain high, and the work we are doing is essential.

Speaker Change: As I previously mentioned many security organizations worldwide are seeking solutions to protect against pegged ones I would like to take a few minutes to elaborate on that I haven't gone radio it's automation features and advantages.

Speaker Change: The weighted one lunches from designated protected storage the storage can almost 123 once keeping their wages, one hot and where do you fully creek lunch.

Eric Brock: That exceptional effort included amazing work and aerobotics to accelerate the productization of our autonomous kind of drone platform, the Iron Drone Raider. As we said on our last call, the Raider is a home run product, which is benefited from an intense capabilities upgrade program and partnership with our customers to meet the urgent needs to protect the homeland. We have advanced the Raider product specifications to meet cutting-edge military requirements, which include mobility, autonomy, and precision.

Meir Kliner: It's crucial to have the drones ready for a mission as the interception window of opportunities is typically limited. Deploying I-1-1 systems is a cost-effective solution compared to deploying manual or automated machine guns, missiles, and expensive laser systems, which may not always be applicable as they can cause more collateral damage than the hostile drone itself. Once the Iron Drone Raider receives an estimated location of the target, typically from a radar or another detection system, the Raider automatically launches from its pod and starts flying to this estimated location.

Speaker Change: It's crucial to have this one's ready for mission is named perception window of opportunities typically limited deploying I want one system is a cost effective solution compared to deploying menu on the automated machine guns missiles, and expensive laser systems, which may not always be applicable as they can cause more.

Speaker Change: Collateral damage and Austin grown incentive.

Eric Brock: Those capabilities are enabled by the integration of sophisticated technologies, including onboard sensors and AI-driven software algorithms that allow for navigation and high performance levels in complex, GPS and I arrow environments. In addition, we have been able to perform extensive testing in real-world conditions to validate these capabilities. We have satisfied those requirements, which allow us to secure two significant customers for Iron Drone with initial orders. One of those orders was provided by a large global defense vendor and the other, a direct purchase from a major military end customer.

Speaker Change: Once the Ireland run radio receives an estimated location over the target typically from an either or an auto detection system Dorado automatically lunches from its board and stops flying to these estimated location.

Speaker Change: This flight is entirely autonomous and is based on an advanced system that we have developed that integrates designated outerwear with AI models and optical flows.

Meir Kliner: This flight is entirely autonomous and is based on an advanced system that we have developed that integrates designated hardware with AI modules and optical flows. During the flight, the radar uses its built-in thermal camera to search for and find the hostile drone and recognize it with its advanced AI software.

During the flight Dorado uses its build in thermal camera to search for and find that all started one and recognized <unk> with its advanced AI software, we have invested significant influence in training our algorithms to recognize different types over the ones under various operational conditions.

Eric Brock: The purchase by the military end customer was a particularly significant event for the company, establishing on-dust as a prime vendor with lost in pricing and economics for our high-performing counter drone platform. This morning, we announced a second order from our initial military customer, which is funding an expansion of our program introducing the Iron Drone Raider into live security and combat operations. This order will fund continued system integration and enhancements, as well as certain We expect demonstrated combat success in the coming months, will result in volume orders for the Iron Drone platform. In parallel, we are preparing an increase in production capacity, field deployment, and sustainment capability, and expanded marketing to other descendants and security customers globally.

Meir Kliner: We have invested significant efforts in training our algorithms to recognize different types of drones under various operational conditions. After autonomously detecting the target, the weighted one began to track it and fly forward to meet it. The radar uses its guiding camera, computing power, and onboard microradar to calculate a flight route for interception, maintaining an optimal and close-range position from the target.

Speaker Change: After autonomous fleets detecting the Congress the weighted one will begin to track it and flight routes and meeting point.

Speaker Change: There are other uses it's guiding camera computing power and onboard micro radio to calculate the flight route for interception, maintaining an optimal and closed the range position from the tone of it.

Meir Kliner: This stage requires fast and robust computing and highly responsive motor configuration to be able to maneuver autonomously with the target. The radar then intercepts the target by operator command with a designated ballistic net. The net can be attached to parachutes to reduce collateral damage if operating in overpopulated areas. Earlier in Q2, Aerobotics secured a purchase order from a major defense company for the Iron Drone Raider. In addition, we recently announced Ondas received an initial order from a significant military customer to provide the first systems for operational deployment, adding to the protection of military units' borders and other critical assets from hostile drones.

Speaker Change: This stage requires fast and robust computing and highly responsive multiple configuration to be able to maneuver autonomously with mcdonalds.

Speaker Change: No later than end of substance.

Speaker Change: Operator will command we designated ballistic that then that can be attached to parachute to reduce collateral damage if operating in over populated areas.

Eric Brock: Now, I want to put the Iron Drone success into its proper context, and that is this. We are establishing a leading position in the counter-drone market and on us. We believe the Iron Drone Raider is a best-in-class, economic solution from a performance standpoint, with its capabilities and complex environments, unique hard-kill execution, and price point. We believe there's a significant global market for Iron Drone to protect from the growing threat of hostile growths.

Speaker Change: No in Q2 and would execute a purchase order from a major defense companies for their I wonder on a radio in a day.

Speaker Change: <unk> recently announced August received an initial order from a significant military customers to provide the first systems for operational deployment and then in the protection of military units pull the borders and other critical assets from all segments.

Eric Brock: I see substantial expansion opportunities in the global defense market. In fact, we are seeing tangible engagement with additional military customers already, and those government-to-government marketing opportunities are supported by our initial military customer. The emergence of the defense sector as a material growth vector for our dust cannot be overstated. It demonstrates the true, dual-use nature of our technology platforms, and results in a massive increase in not only the total but dressable market, but also drives a much higher serviceable and obtainable market or SOM.

Speaker Change: And today, we announced that the military customer has expanded the program via a second order.

Meir Kliner: And today we announce that the military customer has expanded the program via a second order. We are concentrating on progressing this order to a multistage structured roadmap, building a supply chain and service infrastructure for sustainment while working on demonstrating the system and capturing new global defense cost. We anticipate additional volume orders in the second half of 2024 based on successful combat operations. Aerobotics will continue to expand operations with a local governmental entity in Dubai, supporting the world's first drone network infrastructure for public safety and other public services.

Speaker Change: We are concentrating on progressing this order to a multi state structured roadmap building a supply chain and service infrastructure for Sustainment, while working on demonstrating the system and capturing new global defense customers.

Speaker Change: Anticipate additional volume orders in the second half of 'twenty 'twenty four based on successful combat operations.

Eric Brock: As we moved into the second half of 2024, we are seeing broadening opportunities at OAS. The demand environment for era security platforms like on Optimus in Iron Drone is strengthening, and we believe we have entered a significant and durable upcycle supporting our long-term business plan and value creation opportunities.

Speaker Change: <unk> continued to expand operations with a local governmental entity and Dubai supporting the world's first one network infrastructure for public safety and other public services, we have secured a renewed and expanded service agreement for the support and maintenance of the optimal systems fleet deployed in Dubai.

Meir Kliner: We have secured a renewed and expanded service agreement for the support and maintenance of the Optimus systems fully deployed in Dubai. The deployed fleet of Optimus systems has been extensively utilized by the local government entity. This initiative is expected to continue. With the aim of achieving a fleet of more than 20 systems by the end of 2025, we are expanding our business in the UAE with additional deployments and locations. During Q2, we continued our market-rich activities to expand into Europe, addressing this through reseller partnerships with Allosky and Sea Astral Aerospace in Germany, Slovenia, and other European countries. I will now hand over the call to Tim Tenney, CEO of American Robotics, to provide an update on the business achievements we are making at American Robotics. Thank you, Mayor.

Eric Brock: While Iron Drone has gotten a lot of attention as of late, let's also highlight our business development activity with American Robotics as we open the large US market for our services and technology platforms. American Robotics announced a landmark deal with the US Coast Guard. We guarded a fixed price contract for a program designed to perform admissions monitoring at the port of Long Beach. This is in support of the EPA CleanPorts Initiative's Intended to Improve Air Quality.

Speaker Change: The deployed fleet of optimal system has been extensively utilize idled.

Speaker Change: Local government entity.

Speaker Change: This initiative is expected to continue with the aim of achieving a fleet of more than 20 systems by the end of 2025, we are expanding our business in the UAE with additional deployment and locations.

Speaker Change: During Q2, we continued our market reach activities to expand into Europe addressing this through sale of partnerships with Alice Cai and see US one aerospace in Germany, Slovenia in other European countries.

Eric Brock: The service we provide is consistent with certified solutions worldwide as maritime regulations around air quality are uniform globally, and we believe it is the first time the US Coast Guard has contracted to this capability. And it's important to emphasize that while this is an initial pilot, it is not an experiment. This is a fully operational program. Investors that violate air quality limitations will be held accountable by the Coast Guard. We believe this solution is properly architected and can develop into a big opportunity for American Robotics.

Speaker Change: I'll now hand over the call to team <unk> C O for medical robotics to provide an update on the business achievements, we are making at the American robotics.

Speaker Change: Thank you mayor we have just completed the build out of our new demonstration training in an operation Center, which was launched the Grand opening event in June at our Baltimore County, Maryland headquarters.

Tim Tenney: We have just completed the buildout of our new demonstration training and operations center, which was launched via a grand opening event in June at our Baltimore County, Maryland, headquarters. We were very excited to see the positive reception of local, state, and federal leadership, including the Deputy Regional Administrator for the Federal Aviation Administration, as well as many other dignitaries. The launch has already paved the way for increased opportunities as we have seen large municipal, state, and other potential customers come and provide actionable and positive feedback on the products, location, and operations.

Tim Tenney: This has led to increased demand for the deployment of the Optimus system with potential customers in both government and commercial segments. We are also pleased to share that American Robotics landed an important strategic win with the U.S. Coast Guard by securing a fixed price contract for a program designed to perform emissions monitoring at the ports of Los Angeles and Long Beach. The aerial collection of data via a specialized and certified payload will allow the EPA and U.S. Coast Guard increased capability that increases the compliance of vessels entering U.S. ports in alignment with the EPA Clean Ports Initiative. Compliance with global standards around maritime emissions is intended to improve air quality.

Eric Brock: Kim will share more details. With the focus turning to defense, military, and homeland security, remember, both the Optimus and Iron Drone platforms are dual use targeting huge commercial and government markets as well. We expect existing customers to grow their Optimus Suites later this year, while the pipeline for new customer engagement is both expanding and maturing.

Speaker Change: We were very excited to see the positive reception of local state and federal leadership to include the Deputy regional administrator for the Federal Aviation administration as well as many other dignitaries. The launch has already paved the way for increased opportunities as we have seen large municipal state and other potential customers come and provide actionable.

Eric Brock: The pipeline now includes military customers. I'm also pleased with significant plead opportunities we see in the United States with American Robotics, where we are engaged with public safety departments and operators of critical industrial and technology infrastructure and assets. We expect to have more to share in those markets as we move through the second half.

Speaker Change: Positive feedback on the products location and operations.

Eric Brock: So to wrap up the introduction, the week first half revenue belies the value we are building with customers across our technology platforms. We do have work to do to outline the 900 megahertz deployment plans with customers, and we will work hard to secure those buildout plans.

Speaker Change: This has led to increased demand for the deployment of the optimists system with potential customers in both government and commercial segments. We are also pleased to share that American robotics landed an important strategic win with the U S Coast guard by securing a fixed price contract for a program designed to perform emissions monitoring at the port.

Speaker Change: Of Los Angeles, and long Beach.

Speaker Change: Aerial collection of data via a specialized and certified payload will allow the EPA and U S Coast Guard increased capability that increases the compliance of vessels entering U S ports and alignment with the EPA clean ports initiatives.

Eric Brock: At OAS, we see the commercial adoption cycle for Optus re-engaging in a huge new product opportunity for Iron Drone, officially to a material recovery and revenue in the second half of 2024.

Speaker Change: Compliance with the global standards around Maritime I mentioned is intended to improve air quality.

Tim Tenney: Being selected by the US Coast Guard for this critical and complex operation continues to prove that both commercial and government customers trust American Robotics to provide the right capabilities and solutions. It's important to emphasize that this is being treated by the U.S. Coast Guard as an initial operation. Given the importance of this mandate, we are confident this will only grow as a requirement for the EPA and US Coast Guard.

Speaker Change: Being selected by the U S Coast Guard for this critical and complex operation continues to prove that both commercial and government customers Trust American robotics to provide the right capabilities and solutions.

Neil Laird: I will now hand the call to Neil to provide the detailed second quarter financial update. Neil, thanks, Eric. As I get started, I want to remind our investors that our financial statements reflect the early stage of platform adoption for both on-dust networks and OAS, and the preparations for larger commercial roll-ups. We expect significant operating leverages on revenues growth, so today's revenue levels do not yet cover our operating expenses. For on-dust networks, revenues will fluctuate from quarter to quarter, given the uncertainty around the timing of customer activity in front of the targeted commercial roll-ups in the 900 megahertz network and the development of programs underway with Siemens and MXV rail.

Speaker Change: It's important to emphasize that this is being treated by the U S Coast Guard as an initial operation.

Tim Tenney: We believe that this has the potential to develop into a much larger opportunity for American robotics with the possibility of a program of record for persistent inspection across all major US ports. We are executing the program over the next couple of weeks, and we look forward to sharing more details in the future. American Robotics is also advancing its go-to-market plans and US defense and security markets with both Optimus and Iron Drone.

Speaker Change: Given the importance of this mandate we are confident this will only grow as a requirement for the EPA and U S Coast Guard.

Speaker Change: We believe that this has the potential to develop into a much larger opportunity for American robotics with the possibility of a program of record for persistent inspection across all major U S. Ports. We are executing the program over the next couple of weeks and we look forward to sharing more details in the future.

Speaker Change: American Robotics is also advancing its go to market plans and U S defense and security markets with both Optimists and iron drone, we demonstrated our optimists system to key customers, which included public safety as well as a major technology infrastructure provider in Texas. This demonstration showcased its.

Neil Laird: Similarly, revenues at OAS are expected to vary from quarter to quarter, and are normalizing to a more predictable pattern as we grow our customer base and more of those customers enter fleet programs and recurring service agreements in the United States and internationally. In the second quarter of 2024, revenues were approximately $1 million, as compared to approximately $5.5 million for the second quarter of 2023. This was primarily a result of extended timelines at OAS networks related to the 900 megahertz activity with the classroom railroads and supply chain disruptions connected to the Gaza war at OAS business unit.

Tim Tenney: We demonstrated our Optimus system to key customers, which included public safety, as well as a major technology infrastructure provider in Texas. This demonstration showcased its capability to remotely operate drone fleets beyond visual line-of-sight via the leveraging of Optimus FAA type certification and the Kestrel. We also successfully hosted demonstrations for key potential customers with the Kestrel system, an airspace monitoring system comprised of active and passive technology that is fused with air traffic situational awareness software. This system satisfies regulatory detect and avoid requirements, enabling full autonomous and remote operations beyond visual line of sight.

Neil Laird: Gross profit was negative $190,000 for Q2 2024, as opposed to $3.1 million for Q2 2023. Gross margin was negative 20% for Q2 2024, as opposed to 56% for Q2 2023. The gross margin performance is primarily due to sub-scale operations given the low revenue recorded in the quarter relative to the recurring cost of services provided, as well as revenue being primarily typically low margin development programs. Gross margins can be volatile on the quarter to quarter basis due to low revenue levels and shifts in revenue makes between product development and product development and service revenues.

Speaker Change: Capability to remotely operate drone fleets beyond visual line of sight via the leveraging of Optimists FAA type certification and the Kestrel system. We also successfully hosted demonstrations for key potential customers with the Kestrel system and aerospace monitoring system comprised of active and passive technology that.

Speaker Change: It is fused with air traffic situational awareness software.

Speaker Change: This system satisfies regulatory detect and avoid requirements, enabling full autonomous and remote beyond visual line of sight operations, we anticipate new opportunities that will come into effect. During the second half of 2024, and I look forward to keeping our investors informed on these activities are and that will now hand the call back.

Tim Tenney: We anticipate new opportunities that will come into effect during the second half of 2024, and I look forward to keeping our investors informed on these activities. I will now hand the call back to Eric. Let's wrap up the call now, summarize the outlook, and provide context for where we are and where we are going. We're going to continue to hold off on providing a formal outlook for 2024.

Speaker Change: Eric.

Speaker Change: Let's wrap the call now summarize the outlook and provide context for where we are and where we're going we're going to continue to hold off on providing a formal outlook for 2024.

Eric Brock: While we expect modest revenues for Ondas Networks in the second half, mostly driven by development programs, we continue to see a major financial opportunity in 900 MHz and beyond. Recall from our last call that public comments made by the AAR in May and June suggest the railroads are intending to build out the 900 megahertz network. And it also suggests they will have some urgency. We are working hard to drive visibility on timelines around 900 megahertz, and we and our partner are asking for orders. In addition, the railroads typically complete budgets in the October and November time period, as Guy stated.

Speaker Change: While we expect modest revenues from <unk> networks in the second half, mostly driven by development programs. We continue to see a major financial opportunity in 900 megahertz and beyond.

Speaker Change: Recall from our last call public comments made by the E. R. In May and June suggest the railroads are intending to build out the 900 megahertz network and it also suggests that we will have some urgency.

Neil Laird: Operating expenses decreased to $8.1 million for the second quarter of 2024, as opposed to $11.6 million in the second quarter of 2023. The sharp drop in operating expenses was primarily due to strict controls on cash expenditures and decreased R&D activity, both at networks and OAS. This decrease in operating expenses emphasizes the ongoing benefits from the rescructuring of our on-dass autonomous systems business unit in connection with the integration of American robotics and aerobotics up to the aerobotics sector, was issued closed in January 2023.

Speaker Change: We're working hard to drive visibility on timelines around 900 megahertz, and we and our partner are asking for orders. In addition, the railroad typically complete budgets in the October and November time period as guys stated, we believe that will help support clarity for the outlook in 2025.

Eric Brock: We believe that will help support clarity for the outlook in 2025. We have made it clear to customers that we need ordering plans well in advance to fulfill deployments, which we expect to occur in 2025. For OAS, we see a significant recovery in revenue beginning in the second half, and I believe the recovery will be strong and durable in the coming years, supported by demand from optimists, from both existing customers in the Middle East and rest of the world, and a growing opportunity set in the United States with American Robotics.

Speaker Change: We have made it clear to customers that we need ordering plans well in advance and fill deployments, which we expected to occur in 2025.

Speaker Change: Oh, yes, we see a significant recovery in revenue beginning in the second half and I believe the recovery will be strong and durable in the coming years supported by demand from optimist from both existing customers and the middle East and rest of world and a growing opportunity set in the United States with American Robotics. We also believe the Optimus platform has significant.

Neil Laird: The company narrowed operating last to $8.3 million for the second quarter of 2024 as compared to $8.5 million for the second quarter of 2023. Adjusted, EBITR loss was $6.7 million for Q2 2024 as opposed to $5.6 million for Q2 2023.

Eric Brock: We also believe the Optimist platform has significant potential with military customers, and this is now part of our customer pipeline. The need to protect and secure military locations, critical civil and industrial infrastructure and technology assets, and public safety and emergency response capabilities continues to grow in importance. We have the product platforms and services portfolio to meet the needs of the highest end of these markets from a performance and reliability standpoint.

Speaker Change: <unk> potential with military customers and this is now part of our customer pipeline.

Speaker Change: The need to protect and secure military locations critical civil and industrial infrastructure and technology assets and for public safety and emergency response capabilities continues to grow in importance, we have the product platforms and services portfolio to meet the needs at the highest end of these markets from a performance and reliability.

Neil Laird: For now, let's turn to the cash flow statement. We held cash and cash equivalent to $5 million as of June the 30th, 2024 as compared to $15 million as of December the 31st, 2023. The first half cash provided by financing includes an additional gross funding totaling $8.5 million. Cash used in operations during the first half of 2024 decreased by $5.6 million due to primarily due to the lower operating expenses discussed just now as well as lower investment in working capital as we collected receivables from the higher revenues in the previous year.

Speaker Change: Standpoint.

Eric Brock: To that end, our new Customer Training and Demonstration Center with American Robotics in Maryland is allowing us to efficiently engage customers and is likely to accelerate the sales cycle. A brief word about the US market for American robotics. In recent quarters, we have noticed some notable maturation of the US market from an end customer standpoint. Commercial customers realize the value of the drone for aero security and intelligence, are improving their expertise in integrating drones into their operating environments, and are securing budgets for expanded operations. Public safety may be the best example, where demand is booming, and many public safety departments are looking to scale drones as first responders or DFR programs.

Speaker Change: To that end, our new customer training and demonstration center with American Robotics in Maryland is allowing us to efficiently engage customers and is likely to accelerate sales cycles.

Speaker Change: A brief word about the U S market and American robotics in recent quarters, we have noticed a notable maturation of the U S market from an end customer standpoint.

Speaker Change: Customers realize the value of the drones for Aero security and intelligence are improving their expertise in integrating drone into their operating environments in our securities budgets for expanded operations.

Neil Laird: We expect cash utilization to improve significantly as we moved into the second half of 2024. Improve cash efficiency comes from both continued cost controls and operating expense leverage at our OAS business unit given our expectation of a recovery and revenue and gross profit growth in the second half of 2024. I've noticed we ended Q2 with $5 million in cash. As of June the 30th, 2024, we had 29.2 million of convertible notes outstanding. As we previously stated, it is our objective to advertise these notes by using shared to retire the notes either via monthly amortization or to see these notes convert entirely to equity prior to maturity.

Speaker Change: Public safety may be the Best example, where demand is booming and many public safety departments are looking to scale drone as first responder or D F. Our programs.

Eric Brock: We are seeing significant interest in optimists for high-end use cases, where markets are most mature and require safety and advanced autonomy, have high system utilization demands, and most of all, require proven reliability. We believe Optimist is in its own class as an industrial and even military grade platform to meet these requirements. Optimus is still new to the US, and with our new Baltimore location, we are seeing the most sophisticated users of drones indicate significant interest in our platform, as well as our ability to integrate safety and regulatory solutions to support field deployments and flight operations.

Speaker Change: We are seeing significant interest in optimists for high end use cases, where markets are most mature and require safety and advanced autonomy have high system utilization demands and most of all require a proven reliability.

Speaker Change: We believe optimists in its own class is in industrial and even military grade platform to meet these requirements.

Speaker Change: Optimists is still new to the U S and with our new Baltimore location. We are seeing the most sophisticated users of drone indicate significant interest in our platform as well as our ability to integrate safety and regulatory solutions to support field deployments in flight operations.

Eric Brock: I will now hand the call back to Eric. Thank you, Neil.

Eric Brock: Now we will transition to a review of our business unit and ask Guy Simpson and Mayor Clienton to share updates on business development activity and operations. We will also ask Contendi to share comments regarding American robotics and the outlook for OAS in the United States.

Eric Brock: We will look to leverage that with comprehensive programs designed around scalable fleet operations with American robotics. I am optimistic that we will be able to share updated proof points as we move through the second half with Optimus and AR. I want to also note that we continue to work on funding plans to address our liquidity position. We may seek additional funds through equity or debt offerings and or borrowings under additional notes payable, line of credit, or other sources. We noted in the earnings release that Charles and Potomac invested $1.5 million via senior notes and on the networks.

Speaker Change: We will look to leverage that with comprehensive programs designed around scalable fleet operations with American robotics, I am optimistic we will be able to share updated proof point as we move through the second half with the Optimists N E R.

Eric Brock: As I hand the call to Guy, I want to reiterate that I have confidence in our ability to grow an important business that on this networks as we deploy wireless technology that is critically valuable for the rail customers and the large industrial vendors and emerging MCOT technology ecosystem. While timelines have extended the opportunity at 900 MHz as well as with other private networks for the Class 1 rails, in addition to global rail markets remains substantial. Guy, please proceed.

Speaker Change: I want to also note that we continue to work on funding plans to address our liquidity position.

Speaker Change: We may seek additional funds through equity or debt offerings, and our borrowings under additional notes payable lines of credit or other sources.

Speaker Change: Noted in the earnings release that Charles and Potomac has invested $1 $5 million via senior notes in August that works of course, we are grateful for the continued support of Charles and Potomac.

Eric Brock: Of course, we are grateful for the continued support of Charles and Potomac. I believe we have tremendously valuable technology platforms and have both demonstrated product market fit with customers and proven we can deploy these technologies with attractive unit economics. I believe there are experienced defense, industrial, and technology partners who see that value. Our objective is to properly capitalize the businesses and support the focused business and financial plan we have created to operationalize and enable the scalable expansion we are working hard at driving. We also plan to hold an Investor Day in the first half of September, where we will focus on Ondas Autonomous Systems.

Guy Simpson: Thank you, Eric.

Speaker Change: I believe we have tremendously valuable technology platforms and have both demonstrated product market fit with customers improving we can deploy these technologies with attractive unit economics.

Guy Simpson: Once again, I'm happy to be here this morning and to share an on-dust networks updates for our investors. Following on from previous calls, I will provide an incremental update on 900 MHz network upgrades and migrations. Although progress towards wide-scale deployments has been slower than we would like, there have been some significant milestones recently. Our distribution partner, Siemens Mobility, received the first commercial air link order for a system-wide upgrade of a commuter railroad network in the southwest.

Speaker Change: I believe there are experienced the Spanish industrial and technology partners, who see that value. Our objective is to properly capitalize the businesses and support focused business and financial plan. We have created to operationalize enable this and enable scalable expansion we are working hard at driving.

Speaker Change: We also plan to hold an investor day in the first half of September where we will focus on Argos autonomy system. The event will take place at our Baltimore location, where we will provide systems demonstrations as well as a detailed overview of our business plan with an in depth look at the financial model and outlook for OAS.

Guy Simpson: As a reminder, Siemens AirLink products are powered by our full-max software-defined networking platform. This network is now in full live operation using exclusively air-link radio products and the progressive migration to Aditya 2.16 operation in the A-block is underway. Furthermore, this migration supports the introduction of new IP applications using the same 900 MHz network infrastructure. This is a key benefit of Aditya 2.16 technology in creating general-purpose networks that are flexible, expandable, and allow for the adoption of new operating and safety technologies.

Eric Brock: The event will take place at our Baltimore location, where we will provide systems demonstrations, as well as a detailed overview of our business plan with an in-depth look at the financial model and outlook for OAS. We will share details and logistics next week. I encourage our investors to make the trip to Baltimore for this.

Speaker Change: We will share details on logistics next week I encourage our investors to make the trip Baltimore for this so we will we will also offer a live broadcast of the event.

Eric Brock: We will also offer a live broadcast of the event. So I will close by saying the outlook remains very positive for Ondas. Ondas Networks is taking longer than we want, but we have the DOT 16 platform solution and are committed to delivering for customers. We will get there.

Speaker Change: So I will close by saying the outlook remains very positive for us.

Speaker Change: Networks is taking longer than we want but we have the dock 16 platform solution and are committed to delivering for customers, we will get there.

Eric Brock: Our drone businesses are poised for an inflection point as we recover from war disruptions. We expect to deliver on demand for optimists and, of course, capitalize on the exceptional opportunity with Iron Drone as we introduce this platform and capture a new revenue stream. I believe we will have a strong second half and have an extremely bright future.

Speaker Change: Our drilling businesses are poised for an inflection point as we recover from war disruptions, we expect to deliver on demand for optimists and of course capitalize on the exceptional opportunity with iron throne, as we introduce this platform and capture a new revenue stream.

Guy Simpson: This is unlike the legacy application-specific networks that are capable of only a single use case. Our systems integration activity with a Class 1 Railroad in Chicago continues, with AirLink products supporting live network operations. We are currently planning the next phase with this customer which we expect to complete in the second half of 2024. Also in Chicago we have completed the establishment of three discrete labs in which a transit customer is evaluating dot-16 technology and planning for field trials.

Speaker Change: I believe we will have a strong second half and have an extremely bright future with that let's see if there are any questions operator.

Operator: With that, let's see if there are any questions. Operator. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Operator: You're using a speaker phone; please pick up your handset before pressing a number. To withdraw your question, please press star 1. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Glenn Mattson from Lattinburg; please go ahead. Uh, yeah, thanks for taking the questions. First on, um..., on the networks business.

Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we'll pause momentarily to assemble our roster.

Guy Simpson: We expect our distribution partner to receive an order for a system-wide upgrade in Q3 2024. Our work with the AAR and in particular its wireless communications committee or WCC continues. As reported in the last earnings call, the AAR has repeated its public commitment to the 900 networks migration and the deadlines imposed by the FCC. They have also restated the critical role of dot-16 as being key to their future network plans. The successful integration of AARLink products into legacy 900 megahertz networks is a key milestone on the path to network migration.

Our first question comes from Glenn Mattson from Ladenburg. Please go ahead.

Eric Brock: Can you kind of just give us a better sense of the scope of some of these things? You talked about the transit Authority in the Northeast evaluating DOT 16 and expecting a system-wide upgrade order potentially in the third quarter. You know, there's the first commercial order for Air Link leading to full live operations of 802.16 migration leading to new IP applications being deployed. Can you just kind of help us understand some of the size and scope of the best you can as far as from what you know right now in terms of the magnitude, and then maybe you can frame it along the lines of like, and is there, the scope of work that you expected, say, six months ago versus where you are Sure. Thanks for the question, Glenn.

Glenn Mattson: Hi, Yeah, thanks for taking the questions first on.

Glenn Mattson: On the networks business could you kind of just give us a better sense of the scope.

Glenn Mattson: Of some of these things you talked about are the.

Speaker Change: Transit authority in the northeast evaluated 16, and expect that system wide upgrade order potentially in the third quarter.

Speaker Change: You know, there's the first commercial order of air link.

Speaker Change: A whole lot of operators. The later 2016 migration leave it to do.

Speaker Change: T applications being deployed can you just kind of help us understand some of the some of the size and scope of the best you can as far as what you know right now in terms of.

Guy Simpson: In Q2 we continued our support of multiple customers to achieve this critical objective. The introduction of new dot-16 applications helps the reinforce the value of a general-purpose network being created as part of the migration to the 900 megahertz network. We are working with multiple customers to integrate a variety of IP-based solutions in parallel with the legacy critical train control or CTC application. In one example the 900 megahertz network can be used as a complementary and all redundant path of positive train control applications.

Speaker Change: The magnitude and then maybe you could frame it along the lines of like.

Speaker Change: Is there.

Speaker Change: The scope of work and you expected say six months ago versus where you are today.

Speaker Change: In relation to the <unk>.

Speaker Change: The migration plan for for Q3, 15, or whatever where we are in terms of how far along on track, we aren't all that kind of stuff.

Eric Brock: So, what we're talking about with these three customers that we're active in the field with are what we're describing as area-wide networks. So, these are smaller deployments, and they're going to be largely fulfilled out of Siemens inventory. And as we're doing that, we're working with customers on broader deployment plans across wider systems. So, a little more context, as we said, two of those three customers are transit operators, and, of course, their footprints are going to be much smaller individually.

Speaker Change: Sure. Thanks for the question Glenn.

Speaker Change: So what we're talking about with these three customers that were active in the field with our what we're describing as area wide.

Guy Simpson: Key to securing further commercial orders from the railroads is to work within their standard procedures. Railroad budgets for 2025 will typically be determined in the second half of 2024 and finalized in Q4 and we are working with our distribution partner to secure orders. Of course we are also continuing to pursue opportunities to capture orders within 2024 budgets. We are executing on the new PTC data radio program for Amtrak and the first prototypes have recently been delivered for evaluation.

Speaker Change: Networks.

Speaker Change: So these are smaller.

Smaller deployments.

Speaker Change: And they're going to be largely fulfilled out of Siemens inventory.

And as we're doing that we're working with customers on the broader deployment plans across wider system. So a little more context is as we said two of those three customers our transit operators and of course their footprints are going to be a much smaller individually now transit as a whole there's a lot of territory.

Eric Brock: Now, transit as a whole, there's a lot of territory to cover, but specific transit customers are typically based in city environments, right, as opposed to Class 1 freight, which collectively, amongst the six freight operators, covers the entire country.

Speaker Change: To cover but specific transit customers are typically based in city environments right.

Guy Simpson: We expect the development program to be completed in Q1 2025 and commercial deliveries to start in Q2. We continue to work with Siemens in the UK on a new locomotive radio for the European market with important development milestones being achieved in Q2 2024. The delay in commercial orders for the 900 megahertz network has created pressure on the network's business. We have taken specific action to manage expenses, including headcount reduction and a sharp focus on direct revenue generating activities. I remain extremely positive on the outlook for our .16 wireless technology with the railroads. There is little doubt that new network investment is required and that we have proven the value of our technology and capabilities.

Speaker Change: Opposed to the class, one freight which collectively amongst the sixth great operators cover the entire country.

Eric Brock: So, what we're trying to do is use these proof points, show the deployment activity, demonstrate how we deploy the network, how it's installed, operated, and maintained. And as we're doing that, working with the customers on these broader wide-area deployments. Crosshairs. And Glenn, maybe I'll just say, yeah, on the scale. I'm sorry to interrupt, but you did ask about scale.

Speaker Change: So what we're trying to do is use these proof points show that deployment activity.

Speaker Change: Demonstrate how we deploy the network.

Speaker Change: Installed and operated and maintained.

Speaker Change: And as we're doing that I'm working with the customers on these broader wide area deployments across their system.

Speaker Change: Systems.

Speaker Change: And then maybe I'll just say here.

Speaker Change: Yeah on the scale I'm, sorry to interrupt, but you did ask about scale.

Eric Brock: And of course, we think this is a big opportunity. We've given market size information at least a couple of times around the TAM for 900, which we think is over $400 million, and a good chunk of that, the obtainable market out of the gate here is the initial build out of the new 900 megahertz network, which we think is half that. So obviously, we continue to have a big opportunity, and what we need to do with these customers is just drive them further down the path.

Speaker Change: And of course, we think this is a big opportunity, we've we've given our market size.

Speaker Change: Information.

Speaker Change: At least a couple of times around the Tam for 900, which we think is over $400 million and a good chunk of that be attainable market out of the gate here is the initial build out of the new 900 megahertz network, which we think is half that so.

Guy Simpson: I am hopeful that as the railroads move through their 2025 budgeting process, we will receive more clarity in the coming months in terms of orders and deployment plans for 2025.

Speaker Change: Obviously, we continue to have a big opportunity and what we need to do with these customers just drive them further down the path and we do believe that the the budgeting process.

Eric Brock: Now I will hand the call back to Eric.

Eric Brock: Eric? Thank you, Eric.

Eric Brock: And we do believe that the budgeting process that they're going through now will be providing for the beginning of... Let's have a couple of things on the... On the OAS side. The UAE was a big part of the kind of back half, I think, projections and everything.

Meir Kliner: I will now ask Mayor Kleiner to take the floor and update us on progress at Ondas' economic systems. Mayor's comments will include an update on iron drone in our intensive engagements with customers. Note that as it relates to the iron drone radar, there are certain technical and operational details that are considered sensitive, which we aren't able to share at this moment. Though Mayor will give you a good feel about what makes iron drone special and the advancements we have made with customers and in the commercialization of the radar.

Speaker Change: They're going through now.

Speaker Change: We'll be providing for the beginning beginning of deployments.

Speaker Change: That's helpful. Thanks on the on.

Speaker Change: On the OE side.

Speaker Change: In the UAE.

Speaker Change: UAE was a big part of the kind of back half I think projections and everything and it sounds like you guys continue to make.

Eric Brock: And it sounds like you guys continue to make progress with them. You talked about this service arrangement that you said you've added and stuff. Can you just talk about the potential for further deployment in the second half? Do you still expect that, and is it at the same pace as you previously had expected?

Meir Kliner: Mayor? Thank you, Eric. Doing Q2, we continue to witness strong growth in demand for our unmanned systems and solutions in the defense and online security markets. Ondas is well positioned to respond to this growing demand, offering revolutionary technology and unmatched operational readiness. Both the optimal system and iron drone radar have essentially no competitive alternatives that offer equivalent capabilities to operate continuously in both civil and military environments, even under our weather conditions and limited access to infrastructure such as GPS, Internet and cellular networks.

Speaker Change: Employment in the second half do you still expect that in under the same paces you previously had expected.

Speaker Change: Yes, certainly so we have talked about our government customer, which is the public safety group.

Eric Brock: Yes, certainly. So we have talked about our government customer, which is a public safety group in the UAE, deploying fleets across the city of Dubai. They have publicly said that they intend to deploy 22 systems by the end of 2025. And that is a plan that they've reiterated multiple times, including in the first half of this year.

Speaker Change: In the UAE deployed fleets across the city of Dubai.

Speaker Change: We have publicly said that they intend to deploy 22 systems by the end of 2025 and that is a plan that they reiterated multiple times include.

Speaker Change: Including in the first half of this year.

Eric Brock: Today, we've deployed about eight systems with them. And we do have, you know, we've been expanding the services capabilities around that to support the broader network build out. So we expect them to come back with a significant order in the second half, which is consistent with what we've seen in the last couple of years. In addition, I want to highlight that we are really building three revenue streams now. Optimus has really started to get traction in the Middle East and rest of the world.

Speaker Change: Today, we've we've deployed about eight systems with them.

Speaker Change: And we do have and.

Speaker Change: We've been expanding the services capabilities around that.

Speaker Change: To support the broader.

Speaker Change: Network build out so we expect them to come back with a significant order in the second half, which is consistent with what we've seen in the last couple of years and.

Speaker Change: In addition.

Speaker Change: I'll highlight that we are really building three revenue streams now optimists has really started to get traction in the middle East.

Meir Kliner: A robotics primary focus during Q2 was on enhancing the capabilities of iron drone radar to meet the urgent needs of our customers in these military environments. We have succeeded in advancing and showcasing the capabilities of the iron drone radar system and have already secured both a global defense entity and a major military organization as customers. We have also secured the first order for the deployment of the iron drone radar in a combat environment as we recently announced.

Eric Brock: Of course, we've described some of the activity we've had on the commercial side with AmeriCorps Robotics. And I do think we're going to get at least a winner or two here in the US in the second half.

Speaker Change: And rest of World of course, we've described some of the activity we've had on the commercial side, where the medical robotics and I do think we're going to get at least a winter too.

Eric Brock: And the customers that we're working with in the US are substantial and do have the capability, and I would say the intent, if we begin deploying with them, to build fleets. So I do think we've got some activity here with AR. And then we have a third revenue line that is starting to mature clearly, which is Iron Drone and the military sector. So I do think we're setting up for a really strong recovery after some disruptions that I referred to in our comments that held us back a bit in the first half.

Speaker Change: Here in the U S in the second half and the customers are working with.

Speaker Change: In the U S are substantial.

Speaker Change: You do have the capability and I would say the intent if we begin deploying with them to build fleets. So so.

Speaker Change: So I do think we've got some activity here with <unk> and then we have a third revenue line, which is.

Speaker Change: It's starting to mature clearly which is iron drone.

Meir Kliner: We are advancing our Optimal System inventory build plan and the deal that the Optimal System will be required by existing and many additional customers due to the growth in the defense markets. Our teams in the US and Israel are working on advancing the Optimal System configuration to address the needs of defense and ominous security customers. We look forward to sharing more news about the new opportunities with the Optimal System soon. In the US, American Robotics secured a fixed price contract with the US Coast Guard for emissions monitoring at the port of Long Beach and further developed our customer pipeline for Optimal Systems in US governmental sectors.

Speaker Change: In the military sector. So so I do think we're setting up for a really a strong recovery after some disruptions that I referred to.

Speaker Change: And in our comments or that we that held us back a bit in the first half.

Speaker Change: Oh, that's great and then.

Eric Brock: That's great. And then... I guess last, the, uh.., government has kind of been on this initiative a little bit to kind of help build a industrial drone. Unknown Program, Founder & Co-Founder, Doug Financial, Universal Income League, Mark Leach Unknown Program, Founder & Co-Founder, Doug Financial, Universal Income League, Mark Leach, As you see it.

Speaker Change: I guess last one.

Speaker Change: Uh huh.

Speaker Change: U S government has kind of been on this initiative, a little bit to kind of help build the industrial drone.

Speaker Change: You know manufacturing and production base, given the realities of what's going on in the world and so can you just talk about generally speaking the level of support you see in terms of.

Speaker Change: They're they're interested in the kind of supporting you amongst many of the players that are out there.

Meir Kliner: American Robotics hosted several successful demonstration at the new vision and operational center in Baltimore showcasing its unparalleled capabilities in the eyeing visual line of side one operations and automation capabilities. As I previously mentioned, many security organizations worldwide are seeking solutions to protect against aspect ones.

Speaker Change: You talked about some new military orders and things like that so maybe just a little more commentary on the general backdrop versus you know.

Speaker Change: Thanks.

Speaker Change: Yeah, Let me, let me kind of keep a high level at least as I start to discuss this so there.

Eric Brock: Yeah, let me kind of keep a high level, at least as I start to discuss this. So there is major support coming really from all levels of government, both federal and specifically for DOD and DHS, but it's not limited to that. You see what we're doing here with the Coast Guard and the EPA, for example, the understanding that the government is clearly understanding the value of drones as tools for security inspections and, of course, defense and security as well. So, that's both on the offense and the defense.

Speaker Change: There is major support coming really from all levels of government, both federal and specifically for D. O D. M D. H S, but not limited to that you see what we're doing here with the coast Guard and the EPS for example, the understanding that the government's clearly understanding the.

Meir Kliner: I would like to take a few minutes to elaborate on the divided one lunches from a designated protected storage. This storage can host one to three ones keeping the rated one hot and ready for a quick lunch. It's crucial to have the ones ready for a mission as the interception window of opportunities is typically limited. Deploying iron one system is a cause effective solution compared to deploying manual or automated machine guns, missiles and expensive laser systems, which may not always be applicable as they can cause more collateral damage than the hostile drone itself.

Speaker Change: The value of drones as tools.

Speaker Change: For security inspection and of course defense and security as well so that's.

Eric Brock: And then, of course, where typically on the security side, and as they do that, they're putting a lot of dollars to work and building programs and ecosystems to support not just OEMs who are developing and deploying these technologies for government applications, but they're also taking some great pains to help support an ecosystem. And what I mean by the ecosystem is the supply chain, the production capacity, the services capabilities, and even the regulations.

Speaker Change: And that's both on the offense and defense and then of course, we're typically on that.

Speaker Change: On the security side.

Speaker Change: And as they do that they're putting a lot of dollars to work and building programs and ecosystems to support not just Oems who are developing and deploying these technologies for government applications, but they're also taking some great print not pains.

Meir Kliner: Once the iron one radar receives an estimated location of the target, typically from a radar or another detection system, the radar automatically launches from its pod and starts flying to this estimated location. This flight is entirely autonomous and is based on an advanced system that we have developed that integrates designated hardware with AI models and optical flows. During the flight, the radar uses it built in thermal camera to search for and find the ostrich drone and recognize it with its advanced AI software.

Speaker Change: To help support and ecosystem and what I mean about the ecosystem is the supply chain that production.

Speaker Change: Capacity.

Speaker Change: The services capabilities and even the regulations and all of these are interrelated.

Eric Brock: And all of these are interrelated, and we can see support on all levels. And as that support comes, and you see the intentions of the federal government, and it does come down to some state and local activities, some very specific to what we're doing. You know, what I am seeing is that it's encouraging in a big way the private sector to amplify that investment. The demand signal that's coming from the government.

Speaker Change: And we can see support on all levels and as that support comes in you see the intentions of the federal government and it does come down to some state and local activity and some some very specific to what we're doing you know what I am seeing is encouraging in a big way the private sector to amplify that that investment.

Meir Kliner: We have invested significant efforts in training our algorithms to recognize different types of drones under various operational conditions. After autonomously detecting the target, the rated one begins to track it and fly towards a meeting point. The radar uses its guiding camera, computing power and onboard micro-rader to calculate a flight route for interception, maintaining an optimal and close range position from the target. This stage requires fast and robust computing and highly responsive auto-configuation to be able to maneuver autonomously with the target.

Speaker Change: And Oh demand signal, that's coming from the government.

Eric Brock: So I think broadly that there is a big tailwind here for what we do, and I do believe that we're benefiting in a big way because what we're bringing is a very special, unique technology that's valuable. Great. That's helpful, Eric. Thanks for the color.

So I think broadly there's a big tailwind here for what we do and I do believe that we're benefiting in a big way because of what we're bringing is very special and unique technology that's valuable.

Speaker Change: Great. That's helpful. Eric Thanks for the color I'll get back in the queue.

Eric Brock: I'll get back to you. Thanks. Again, if you have a question, please press star, then 1. Star 1.

Speaker Change: Sure.

Speaker Change: Excellent.

Speaker Change: Again, if you have a question. Please press Star then one.

Speaker Change: That's star one if you have a question.

Speaker Change: Yeah.

Meir Kliner: The weather then interrupts the target by operator command with a designated ballistic net. The net can be attached to parachute to reduce collateral damage if operating in over-populated areas. Law and Q2, a robotics secured a purchase order from a major defense company for the I-1 Donor Radio. In addition, we recently announced Ondas received an initial order from a significant military customers to provide the first systems for operational deployment, adding in the protection of military units for the borders and other critical assets from off-type drones.

Speaker Change: Our next question comes from.

Eric Brock: Our next question comes from Jim Powers, a private investor. Yes, I'd like some color on how we are cutting off our blockchain infrastructure's bandwidth allocation for the European Union to address that TAM. Is there a block, a single block of frequency available, or will it be fragments? for The Real.

Speaker Change: She empowers a private investor. Please go ahead.

She empowers: Here's how I'd like some color on.

She empowers: Bandwidth allocation for the European Union.

Tam: To address that Tam is there a a block a single block of frequency available or will it be fragmented.

For the rail.

Speaker Change: So the the opportunity in your European Union and just by the way, we do have some activity that specific to gypsum development programs with our partner Siemens.

Eric Brock: So the opportunity in the European Union, and, just by the way, we do have some activity that's specific to some development programs with our partner Siemens, but I think the question is more broadly about what the opportunity is. And I'd say in a lot of ways, it's very similar to the US, where railroads and other critical infrastructure industries who are operating critical infrastructure and assets over extremely wide fields need to use low-frequency band networks that are private because it's mission critical.

Meir Kliner: And today we announced that the military customer has expanded the program via a second order. We are concentrating on progressing this order to a multistage structured roadmap, building a supply chain and service infrastructure for sustainment while working on demonstrating the system and capturing new global defense customers. We anticipate additional volume orders in the second half of 2024 based on successful combat operations. A robotics continued to expand operations with a local governmental entity in Dubai, supporting the world's first one network infrastructure for public safety and other public services.

Speaker Change: But I think the question is more broadly about what the opportunity is.

Speaker Change: And I say in a lot of ways, it's very similar to the U S. A.

Speaker Change: There railroads and other critical infrastructure industries.

Speaker Change: Who are operating are critical infrastructure assets over extremely wide field areas need to use low frequency band networks that are private because it's mission critical so there's a huge installed base in Europe that Oh that looks a lot like what we see in the U S and.

Eric Brock: So there's a huge installed base in Europe that looks a lot like what we see in the US, and we do see opportunities to bring our technology there. I will say where it differs a little bit is that the public infrastructure as it relates to wireless networks is a little bit more densely deployed. So that's folks like Vodafone, Orange, and other cellular carriers across Europe. And that's because the population density is a bit different or quite a bit different than we see here in the United States.

Speaker Change: And we do see opportunities to bring our technology. There I will say we're differs a little bit is that the public infrastructure as it relates to our community wireless networks is a little bit more densely.

Meir Kliner: We have secured a renewed and expanded service agreement for the support and maintenance of the optimal systems fleet deployed in Dubai. The deployed fleet of optimal systems has been extensively utilized by the local government entity. This initiative is expected to continue with the aim of achieving a fleet of more than 20 systems by the end of 2025. We are expanding our business in the UAE with additional deployments and locations. Doing Q2, we continued our market's reach activities to expand into Europe, addressing these three sailor partnerships with Alaskai and sea asphalt airspace in Germany, Slovenia and other European countries.

Speaker Change: Deployed so that's the folks like vote, Vodafone Orange other cellular carriers across Europe.

Speaker Change: And that's because of the population intensity is a bit different when we or quite a bit different but let me see here in the United States. So.

Speaker Change: So but at the same time, it's not unlike what you see here is a mixture of private wireless networks for mission critical activity, there's fiber of course in certain certain areas and then some in some places for some use cases, you'll see a public publicly cellular networks and satellite systems being deployed.

Eric Brock: But at the same time, it's not unlike what you see here. There's a mixture of private wireless networks for mission critical activities. There's fiber, of course, in certain areas, and then in some places, for some use cases, you'll see both public cellular networks and satellite systems. Does it, does it have to be done on an individual country basis, or does Brussels handle it centrally? It's going to be done by each rail operator, really. The private networks and connectivity are unique to each railroad.

Timothy Tenne: I will now end over the core to Tim Tene. CEO of American Robotics to provide an update on the business achievements we are making at American Robotics. Thank you, Mayor.

Speaker Change: Is it does it have to be done on an individual country basis or does Brussels handle that centrally.

Timothy Tenne: We have just completed the build out of our new demonstration training and operation center which was launched the grand opening event in June at our Baltimore County Maryland headquarters. We were very excited to see the positive reception of local, state and federal leadership to include the deputy regional administrator for the federal aviation administration as well as many other dignitaries. The launch has already paved the way for increased opportunities as we have seen large municipal, state and other potential customers come and provide actionable and positive feedback on the products, location and operations. This has led to increased demand for the deployment of the Optimus system with potential customers in both government and commercial segments.

Speaker Change: It's going to be done by a by rail operator really the private networks and connectivity as you unique to each railroad. So you don't necessarily see a coordinated.

Eric Brock: So, you know, you don't necessarily see a coordinated network deployment. But, with that said, similar to what we see in the U.S., there's obviously standards and coordination amongst the railroad operators and the vendors who are providing technology into these networks that connect to the wireless networks. So the standards are things to watch. And, you know, obviously, the IEEE standard is going to be an option for those railroad operators and regulators. I was referring to the issue of licenses for the bandwidth itself from government entities, not the railroad.

Speaker Change: Network deployment with that said you know similar to what we've seen in the U S. There's obviously standards and coordination amongst the railroad operators in the vendors who are providing technology into these entities networks that connect to the wireless networks are.

Speaker Change: So the standards are things I guess to watch.

Speaker Change: You know obviously the eye Tripoli standard is going to be an option for for those railroad operators and regulators.

Timothy Tenne: We are also pleased to share that American Robotics landed an important strategic win with the U.S. Coast Guard by securing a fixed price contract for a program designed to perform emissions monitoring at the ports of Los Angeles and Long Beach. The aerial collection of data via specialized and certified payload will allow the EPA and U.S. Coast Guard increased capability that increases the compliance of vessels entering U.S, ports and alignment with the EPA clean ports initiative.

Speaker Change: I was referring to the the issuance of licenses for the cause of bandwidth itself from the government entities not the railroads.

Speaker Change: Okay, So I'm not familiar with what you're talking about specifically, but the you know my my understanding is that Oh, whether they're owned outright right or or provided vital highly oh.

Eric Brock: Okay, so I'm not familiar with what you're talking about specifically, but my understanding is that whether they're owned outright, or right, or or provided by frequency coordinators at the federal level, that the existing wireless networks that are low-band would be upgradable with our technology. And our next question comes from Matthew Galinko from Maxson Group. Please go ahead.

Speaker Change: Frequency.

Speaker Change: Our coordinators at the at the federal level.

Timothy Tenne: Compliance with the global standards around maritime emissions is intended to improve air quality. Being selected by the U.S. Coast Guard for this critical and complex operation continues to prove that both commercial and government customers trust American robotics to provide the right capabilities and solutions. It's important to emphasize that this is being treated by the U.S. Coast Guard as an initial operation. Given the importance of this mandate, we are confident this will only grow as a requirement for the EPA and U.S. Coast Guard.

Speaker Change: That the you know the existing wireless networks that are low band you know would be upgradable with our technology.

Speaker Change: And our next question comes from Matthew Galynker from Maxim Group. Please go ahead.

Matthew Galynker: Hey, Thanks for taking my questions.

Eric Brock: Hey, thanks for taking my questions. Eric, I guess I should expect more of the Iron Drone pipeline to go directly, you know, through defense customers as opposed to, you know, sort of an intermediary, you know, and I guess that's surprising, the way it's developed so far. And I guess just how do you expect that to progress? It's a great question, Matt, and I don't think I want to put a stake in the ground on that because it depends.

Eric I guess to expect more of the higher current pipeline to go directly.

Timothy Tenne: We believe that this has the potential to develop into a much larger opportunity for American robotics with the possibility of a program of record for persistent inspection across all major U.S, ports. We are executing the program over the next couple of weeks and we look forward to sharing more details in the future.

Matthew Galynker: Through defense customers as opposed to you know sort of an intermediary I guess, that's surprising the way it's developed so far.

Speaker Change: I guess, just how do you expect that to progress.

Speaker Change: It's a great question, Matt and I don't think I want to make.

Timothy Tenne: American robotics is also advancing its go-to-market plans and U.S, defense and security markets with both Optimus and Iron Drone. We demonstrated our Optimus system to key customers which included public safety as well as a major technology infrastructure provider in Texas. This demonstration showcased its capability to remotely operate drone fleets beyond visual line of sight via the leveraging of Optimus FAA type certification and the Kestrel system. We also successfully hosted demonstrations for key potential customers with the Kestrel system.

Speaker Change: Uh huh.

Put a stake in the ground on that because it depends but the reason we are going direct to the customer is really because our technology platform.

Eric Brock: But the reason we are going direct to the customer is really because our technology platform needs to be integrated, and it is. Unknown Attendee, Yishay Curelaru, Timothy Tenney, Yishay Curelaru, Tim Tenney, Neil, So if you're a military customer and you need a counter-UAS system like ours for securing and protecting against hostile drones, you want us to be able I'll also add that, although we didn't really emphasize this on the call, that the system, the Iron Drone system, has also been enhanced for mobility. That also means that, and what that means is it's all able to be installed on a vehicle, a ground vehicle, and it's mobile.

Speaker Change: At least to be integrated in and it is as is capable of being integrated into a variety of technologies in particular.

Speaker Change: That'd be the detect technologies, which are often going to be radar systems.

Speaker Change: So if you're a military customer and you need a counter UAS system like ours for securing and protecting against a hostile drones you want us to be able that'd be integrated into any detect technology as an example.

Timothy Tenne: An airspace monitoring system comprised of active and passive technology that is fused with air traffic situational awareness software. This system satisfied regulatory detect and avoid requirements enabling full autonomous and remote beyond visual line of sight operations. We anticipate new opportunities that will come into effect during the second half of 2024 and I look forward to keeping our investors informed on these activities.

Speaker Change: I'll also add that and we didn't really emphasize this on the call.

Speaker Change: But the system. The iron drone system has also been enhanced for mobility that also means that and what that means is it's or able to be installed on a vehicle for ground vehicle and and and its mobile. So similarly, we will need to integrate this system with <unk>.

Eric Brock: I now will now hand the call back Derek.

Eric Brock: Let's wrap the call now, summarize the outlook and provide context for where we are and where we are going. We're going to continue to hold off on providing a formal outlook for 2024. While we expect modest reviews for on-desk networks in the second half mostly driven by development programs, we continue to see a major financial opportunity in 900 megahertz and beyond. We call from our last call public comments made by the AAR in May and June suggest the railroads are intending to build out the 900 megahertz network and it also suggests they will have some urgency.

Eric Brock: So similarly, we will need to integrate the system with customers who have ground equipment that the militaries want to deploy. So that's, you know, that's the answer. I will say going direct, and we did highlight this, but I'll just reemphasize it provides many, many, many advantages to us, including the ability to really set the economics for the system, which is good as opposed to trying to be bundled into various systems, you know, on each sale.

Speaker Change: Customers, who have ground equipment that the military is wanted to deploy so.

Speaker Change: That's a you know that's the answer I will say going direct and we did highlight this but I'll. Just reemphasize provides you know many many many advantages to us.

Speaker Change: Queen and the ability to you know really set in the economics for the system.

Which is good as opposed to trying to be bundled into our various oh systems.

Eric Brock: We are working hard to drive visibility on timelines around 900 megahertz and we in our partner are asking for orders. In addition, the railroads typically complete budgets in October and November time period as guys stated. We believe that will help support clarity for the outlook in 2025. We have made it clear to customers that we need ordering plans well in advance to fulfill deployments which we expect to occur in 2025. For all, yes, we see a significant recovery in revenue beginning in the second half and I believe the recovery will be strong and durable in the coming years supported by demand from Optimus from both existing customers in the Middle East and rest of world and a growing opportunity set in the United States with American robotics.

Speaker Change: On each sale.

Eric Brock: And then I'd also add that some customers, including this one, when you are qualified as a vendor, you become eligible for what we refer to as government-to-government sales. What that means is your customer is actually marketing you to allied countries. And I think that's going to be a very significant source of new customer activity for us. And it's already started, and we made that point on the call.

Speaker Change: And then I'd also add that you know some customers, including this one when you are qualified as a vendor you become eligible for what we refer to as government to government sales.

Speaker Change: That means as your customer actually is marketing you to allied countries and I think that's going to be a very significant source.

Speaker Change: New customer activity for us and it's already started I mean, we made that appointment call.

Speaker Change: Okay.

Eric Brock: All right, thanks. And maybe just as a follow-up, just, you know, I guess presuming you get more of the direct sales as opposed to, you know, the alternative with Iron Throne, did that create any conversations to expand the visibility of optimist systems and their role they could play in DoD and different defense systems, or is that, you know, the conversation fairly limited?

Speaker Change: Alright, Thanks, and maybe just as a follow up just I guess presuming you get.

Speaker Change: More of the direct.

Speaker Change: Now as opposed to you know the alternative with I heard Trump does that create any conversation to expand.

Eric Brock: We also believe the Optimus platform has significant potential with military customers and this is now part of our customer pipeline. The need to protect and secure military locations, critical civil and industrial infrastructure and technology assets, and for public safety and emergency response capabilities continues to grow in importance. We have the product platforms and services portfolio to meet the needs of the highest end of these markets from a performance and reliability standpoint. To that end, our new customer training and demonstration center with American Robotics in Maryland is allowing us to efficiently engage customers and is likely to accelerate sales cycles.

Speaker Change: The visibility.

Visibility of Optimists systems in their role they could play in.

Speaker Change: N D O D and then different defense systems or is that.

Speaker Change: You know is the conversation fairly limited.

Speaker Change: Oh, I'd say Ah you're spot on and we did make the point on the call that this these conversations and activities around securing critical locations nationally and lead themselves to to what we're capable of doing with Optimus for homeland security and defense.

Eric Brock: I'd say you're spot on, and we did make the point of the call that these conversations and activities around securing critical locations naturally lead themselves to what we're capable of doing with optimists for homeless security and defense. So now this is specifically a market that is emerging. It's always been available to us, but it hasn't been a focus for us to the extent that it is going to be going for.

Eric Brock: A brief word about the US market in American Robotics. In recent quarters, we have noticed notable maturation of the US market from an end customer standpoint. Commercial customers realize the value of the drones for aerospace security and intelligence are improving their expertise in integrating drones into their operating environments in our securing budgets for expanded operations. Public safety may be the best example where demand is booming and many public safety departments are looking to scale drone as first responder or DFR programs.

Speaker Change: So now this is specifically a market that is emerging now it's always been available to us, but it hasn't been a focus for us to the extent it is going to be going forward.

Speaker Change: Great maybe one last question I think you qualified.

Eric Brock: Great. Maybe one last question. I think you qualify.

Speaker Change: The iron German opportunity a couple of times with the defense customers.

Eric Brock: We are seeing significant interest in optimists for high end use cases, where markets are most mature and require safety and advanced autonomy, have high system utilization demands, and most of all require proven reliability. We believe optimists is in its own class as an industrial and even military grade platform to meet these requirements. Optimists is still new to the US and with our new Baltimore location, we are seeing the most sophisticated users of drones indicate significant interest in our platform as well as our ability to integrate safety and regulatory solutions to support fuel deployments and flight operations.

Eric Brock: The Iron Drone opportunity a couple of times with the defense customer is, you know, I don't know if you meant it as pending success in its current use or if it's been tested and it's actively moving towards that commercial order. But can you just clarify if you're sort of waiting for more performance data of actual use for further go-ahead for the order, or are you already there? Yeah, I'd say so.

Speaker Change: You know I don't know if you meant that a pending success.

Speaker Change #100: And its current use or if it's been tested in an actively moving towards that that commercial order, but can you just clarify if you're sort of waiting for more performance data of actual use for for further go ahead for order or are you already there.

Speaker Change #101: Yeah, I'd say, so so given the unique circumstances, where we've really had a shock to military globally around how the battlefields evolved so so quickly.

Eric Brock: So given the unique circumstances where, you know, we really had a shock to militaries globally around how the battlefields evolved so quickly and where drones have become, you know, such a threat, we've been working, as we've described, on urgent activities around upgrading the system for, you know, even new military requirements. And that's particularly around the capabilities to deploy the Iron Drone in complex aerial environments where you don't have GPS and reliable communication.

Speaker Change #101: And we're drones have become such a threat.

Speaker Change #102: So we've been working as we've described on urgent activities around upgrading the system for them, even new military requirements and that's particularly around what your capabilities with a to deploy the iron drone and in complex aerial environments, where you don't have G. P S and reliable.

Eric Brock: We will look to leverage that with comprehensive programs designed around scalable fleet operations with American Robotics. I am optimistic we will be able to share updated proof points as we move through the second half with Optimist and AR.

Eric Brock: I want to also note that we continue to work on funding plans to address our liquidity position. We may seek additional funds through equity or debt offerings and or borrowings under additional notes payable, lines of credit or other sources. We noted the earnings release that Charles and Potomac has invested $1.5 million via senior notes and on the networks. Of course, we are grateful for the continued support of Charles and Potomac. I believe we have tremendously valuable technology platforms and have both demonstrated product market fit with customers, improving we can deploy these technologies with attractive unit economics.

Speaker Change #102: Cases links.

Eric Brock: So, as we've done that, we've been in parallel doing extensive testing. We've had the really incredible good fortune to do that hand-in-hand with our customer and military partners, you know, and really, it's a sort of real world environment for this sort of stuff. Okay. So now that we've gone to the next level, we've done extensive real-world testing and validation. And you know, these initial orders that we've discussed are intended to put us into live combat and security operations. We do see that happening over the next couple of months; we have all the confidence in the world that we can capture the hostile drones as intended.

Speaker Change #102: So as we've done that we've we've been in parallel doing extensive testing and we've had them to the really incredible good fortune to do that hand in hand, with our customer and military partners.

Speaker Change #102:

Speaker Change #103: And really a it's a sort of a.

Speaker Change #103: Real world environments for this sort of stuff okay.

Speaker Change #103: So now as we've gone to the next level, we've done extensive real world testing and validation and you know this initial these initial orders that we've discussed.

Eric Brock: I believe there are experienced and industrial and technology partners who see that value. Our objective is to properly capitalize the businesses and support focused business and financial plan we have created to operationalize and enable the scalable expansion we have are working hard at driving.

Speaker Change #103: Our are intended to put us into now live combat and security operations.

Speaker Change #103: And we do see that happening over the next couple of months.

We have all the confidence in the world that we can capture the hostile drones says as intended.

Eric Brock: And that's going to be very valuable. And as we do that, we do believe the customers will come back for expanded volume orders. And, of course, we need to be putting in parallel here the capacity to do so to address and fulfill those orders. Did that answer the question, Matt?

Speaker Change #103: It's gonna be very valuable and as we do that we do believe the customers will come back or expanded volume orders and of course, we need to keep putting in parallel here.

Eric Brock: We also plan to hold an investor day in the first half of September where we will focus on on our autonomous system. The event will take place at our Baltimore location where we will provide systems demonstrations as well as a detailed overview of our business plan with an in-depth look at the financial model and outlook for OAS. We will share details and logistics next week. I encourage our investors to make the trips of Baltimore for this so we will also offer a live broadcast of the event.

Speaker Change #103: Capacity to do to do to address and and fulfill those orders.

Speaker Change #103: So.

Speaker Change #103: Does that answer the question Matt.

Eric Brock: It does. I appreciate it. Okay, great. Thank you. As a reminder, if you have a question, please press star. Now, we have a follow-up from Glenn Mattson from Lydenburg. Please go ahead. Hi Eric, just as a follow-up to that last point, can you talk about the capacity plans for Iron Drone and what kind of cost you need to build something out and where you intend to do it, and what kind of production levels you expect to build to? Yes, sure. So, on a relative basis, building the Iron Drone is much simpler, right? It's a less complex system than the Optimist system.

Matt: It does I appreciate it.

Matt: Okay, great. Thank you.

Speaker Change #105: As a reminder, if you have a question. Please press Star then one.

Eric Brock: So I will close by saying the outlook remains very positive for Ondas. Ondas Networks is taking longer than we want, but we have the dot 16 platform solution in our committed to delivering for customers. We will get there. Our drone businesses are poised for an inflection point as we recover from war disruptions. We expected deliver on demand for openness and of course capitalizing the exceptional opportunity with iron drone as we introduce this platform and capture a new revenue stream.

Speaker Change #105: And we have a follow up from Glenn Mattson from Ladenburg. Please go ahead.

Glenn Mattson: Hi, Eric just as a follow up to that last point can you talk about the capacity plans for Brian drone and where are you you know how it was.

Speaker Change #106: Like what kind of cost you need to build something out and where you tend to do it and what kind of production levels do you expect that they will do but that's it for me. Thanks.

Operator: I believe we will have a strong second half and have an extremely bright future. With that, let's see if there are any questions operator. Thank you. We will now begin the question and answer session. To ask a question, you may press star than one on your touchstone phone. If you're using the speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble a roster.

Speaker Change #107: Yes, sure. So you know on a relative basis building. The iron drone is is much simpler less complex system, then the Optimus system.

Speaker Change #107: So what we're having here is really at the low volumes, which you'll see over the next I'll say quarter or two we will be doing that in house and that's you know it will be you know tens of systems. A month will go up to hundreds of systems with contract manufacturers and we and identifying them.

Eric Brock: So what we're having here is really low volumes, which we'll see over the next, I'll say, quarter or two; we'll be doing that in house. And that's, you know, tens of systems a month. We'll go up to hundreds of systems with contract manufacturers, and we've been identifying them already. And then, of course, we'll move to thousands of systems, a larger and more diverse group of contract manufacturers as we, Fight, will be able to create that keep them.

Glenn Mattson: Our first question comes from Glenn Matson from Latinburg. Please go ahead. Hi, yeah, thanks for taking the questions. First on the network's business, can you kind of just give us a better sense of the scope of some of these things. You talked about the trans authority in the northeast value and dot 16 and expect the system wide upgrade order potentially in the third quarter. You know, there's the first commercial order of air link.

Speaker Change #107: Already.

Speaker Change #107: And then of course, we'll move to thousands of systems.

Speaker Change #107: With larger and more diverse group of our contract manufacturers as we move through 2025 will be able to create that capability.

Speaker Change #107: There are no more questions in the queue. This concludes our question and answer session I would like to turn the conference back over to Eric Brock for any closing remarks.

Eric Brock: No more questions in the clue to this concludes our question and answer session. I would like to turn the conference back over to Eric Brock for any closing remarks. Okay, thank you, operator. So I'll just close the call by thanking you again for attending. We do hope that you can join us in Baltimore for our OAS Investor Day. It's going to be a great opportunity to touch and feel the technology platforms and see them in action.

Okay. Thank you operator, so I'll just close the call Bye bye. Thank you again for attending our we do hope that you can join us in Baltimore for our OAS Investor day, it's going to be a great opportunity to touch and feel the technology platforms, you can see them in action.

Glenn Mattson: We did a whole lot of operations of eight or two dot 16 migration, believe it to do IP applications being deployed. Can you just kind of help us understand some of the some of the size and scope of the best you can as far as what from what you know right now in terms of the magnitude. And then maybe you could frame it along the lines of like. Is there the scope of work that you expect in say six months and over versus where you are today, you know, in relation to the migration plan for, you know, Q three, 15 or whatever, where we are in terms of how far along on track we are and all that kind of stuff.

Eric Brock: And I think you're going to be impressed by the opportunities we have created in the business plan we have developed to capitalize on the investments we have made in these technology platforms, as well as the global distribution and services capabilities that we're going to demonstrate. So we have a lot of work ahead. So we're going to get right back at it, and we do look forward to keeping you informed on our progress. So I hope you have a great day and we'll talk soon.

Speaker Change #107: And I think you're gonna be impressed by the opportunities. We have created in the business plan. We have developed to capitalize on the investments. We have made in these technology platforms as well as the global distribution and services capabilities that we're going to demonstrate so we have a lot of work ahead. So we're going to get right back at it and we do look forward to keeping you informed of our progress.

Speaker Change #107: So I hope you have a great day, and we'll talk soon.

Speaker Change #108: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Glenn Mattson: Thanks. Sure. Thanks for the question, Glenn. So what we're talking about with these three customers that we're active in the field with are what we're describing as area wide networks. So these are smaller, smaller deployments and they're going to be largely fulfilled out of Siemens inventory. And as we're doing that, we're working with customers on the broader deployment plans across wider systems. So a little more context as as we said, two of those three customers are transit operators.

Operator: All right. Thank you. Thank you. Thank you for attending today's presentation.

Speaker Change #108: [music].

unknown: Matthew Galinko, Matthew Galinko, Tim Tenney, Neil Laird, [inaudible] Stewart Kantor, Meir Kliner, Aditya Dagaonkar, Tim Tenney, Neil Laird, Ondas Holdings, [music] Thank you very much for watching. [inaudible] Thank you very much. [inaudible] In the next episode, we'll see you in the next episode [inaudible] In the next episode, we'll see you in the next episode. The Ultimate Parody Site!

Glenn Mattson: Of course, their footprints are going to be much smaller individually now transit as a whole. There's a lot of territory to cover, but specific transit customers are typically based in city environments, right. As opposed to the class one freight, which collectively amongst the six freight operators cover the entire country. So what we're trying to do is use these proof points show the deployment activity, demonstrate how we deploy the network, how it's installed and operated and maintained.

Speaker Change #108: Okay.

Speaker Change #108: [music].

unknown: [inaudible] http://www.youtube.com.uk, The Ultimate Parody Site! John, John, John, John, [inaudible]. .. Alan Shephard, 31 Beryl Next Graduate Award for Science Literature, Arthur C.zeskiewicz professors, [inaudible] transcript Emily Beynon, In the next episode, we'll see you in the next episode. The Ultimate Parody Site! In the next episode, we'll see you in the next episode, [inaudible]

Glenn Mattson: And as we're doing that, working with the customers on these broader wide area to point, across their systems. Glenn, maybe I'll just say, on the scale, I'm sorry, interrupt, but you did ask about scale. And of course, we think this is a big opportunity. We've given market size information, at least a couple of times, around the TAMS for 900, which we think is over $400 million. And a good chunk of that, the obtainable market out of the gate here is the initial build out of the new 900 megahertz network, which we think is half that.

Glenn Mattson: So, obviously, we continue to have a big opportunity, and what we need to do with these customers is just drive them further down the path. And we do believe that the budgeting process that they're going through now will be providing for the beginning of deployment. That's helpful. Thanks. On the OAS side, the UAE was a big part of the kind of back half, I think, projections and everything. And it sounds like you guys continue to make progress with them.

Glenn Mattson: You talked about this service arrangement that you've added and stuff. Can you get that? And is it the same case as you previously had expected? Yes, certainly. So, we have talked about our government customer, which is a public safety group in the UAE deploying fleets across the city of Dubai. They have publicly said that they intend to deploy 22 systems by the end of 2025, and that is a plan that they've reiterated multiple times, including in the first half of this year.

Glenn Mattson: Today, we've deployed about eight systems with them, and we do have, you know, we've been expanding the services capabilities around that to support the broader network build out. So, we expect them to come back with a security order in the second half, which is consistent with what we've seen in the last couple of years. In addition, you know, I want to highlight that we are really building three review streams now. Optimus has really started to get traction in the Middle East and rest of the world.

Glenn Mattson: Of course, we've described some of the activity we've had on the commercial side with AmeriCorps robotics. And I do think we're going to get at least a winter to here in the US in the second half, and the customer to work with in the US are substantial and do have the capability. And I would say the intent, if we begin deploying with them, to build fleets. So, I do think we've got some activity here with AR.

Glenn Mattson: And then we have a third revenue line, which is starting to mature clearly, which is Iron Drone, and the military sector. So, so I do think we're setting up for for really a strong recovery after some disruptions that I refer to in our comments that we've to help us back a bit in the first half. That's great. And then, I guess last, the The US government has kind of been on this initiative a little bit to kind of help build a industrial drone manufacturing and production base given the realities of what's going on in the world.

Glenn Mattson: And so, can you just talk about generally speaking the level of support you see in terms of their interest in kind of supporting you amongst many of the players that are out there. You know, you've talked about some new military orders and things like that. So maybe just a little more commentary on the general backdrop versus, you know, as you see it. Thanks. Yeah, let me kind of keep a high level, at least as I start to discuss this.

Glenn Mattson: So there is major support coming really from all levels of government, both federal and specifically for DOD and DHS, but not limited to that. You see what we're doing here with the Coast Guard in the EPIET, for example, the, you know, understanding the governance clearly understanding the value of drones as tools for security inspection, and of course, defense and security as well. So, and that's both on the offense and defense, and then of course, we're typically on the security side.

Glenn Mattson: And as they do that, they're putting a lot of dollars to work and building programs and ecosystems to support not just OEMs who are developing and deploying these technologies for government applications, but they're also taking some great, not pains to help support an ecosystem. And what I mean about the ecosystem is the supply chain, the production capacity, the services capabilities, even the regulations, and all these are interrelated and we can see support on all levels.

Glenn Mattson: And as that support comes, and you see the intentions of the federal government, and it does come down to some state and local activities, some very specific tool. We're doing, you know, what I am seeing is that encouraging in a big way the private sector to amplify that investment and demand signal that's coming from the government. So, this thing broadly, there's a big tail in here, so what we do, and I do believe that we're benefiting in a big way because what we're bringing is very special, unique technology that's valuable.

Glenn Mattson: Great, that's all for the air case for the color. I'll get back in the queue. Sure, thanks, thanks one. Again, if you have a question, please press star then one. That's star one, if you have a question.

Unknown Executive: Our next question comes from Jim Powers, a private investor, please go ahead. Yes, I'd like some color on bandwidth allocation for the European Union to address that 10. Is there a single block of frequency available, or will it be fragment? for the rail.

Unknown Executive: So the opportunity in the European Union, and just by the way, we do have some activity that's specific to different development programs with our partner Siemens, but I think the question is more broadly about what the opportunity is. And I say in a lot of ways it's very similar to the US where railroads and other critical infrastructure industries who are operating critical infrastructure and assets over extremely wide field areas need to use low frequency band networks that are private because it's mission critical.

Unknown Executive: So there's a huge install base in Europe that looks a lot like what we see in the US, and we do see opportunities to bring our technology there. I will say where differs a little bit is that the public infrastructure as it relates to a community wireless networks is a little bit more densely deployed. So that's the folks like Vodafone or in other cellular carriers across Europe. And that's because the population intensity is a bit different or quite a bit different than we see here in the United States.

Unknown Executive: So but at the same time it's not unlike what you see here is a mixture of private wireless networks from mission critical activity. There's fiber of course in certain areas and then some places for some use cases. You'll see both public cellular networks and satellite systems being deployed.

Unknown Executive: Is it does it have to be done on an individual country basis or does Brussels handle it centrally? It's going to be done by by rail operator really the private networks and connectivity is unique to each railroad. So you don't necessarily see a coordinated network deployment with that said similar to what we see in the US. There's obviously standards and coordination amongst the railroad operators in the vendors who are providing technology into these networks that connect to the wireless networks. So the standards are things I guess to watch and obviously the IEEE standard is going to be an option for those railroad operators and regulators.

Unknown Executive: I was referring to the the issue of licenses for the for the bandwidth itself from the government entities, not the real roads. OK, so I'm not familiar with what you're talking about specifically, but the you know my understanding is that whether they're owned outright right or or provided by the highly. The frequency coordinators at the federal level that the existing wireless networks that are low band, you know, would be upgradable with our technology.

Matthew Galinko: And our next question comes from Matthew Galinco from Maxon Group, please go ahead. Hey, thanks for taking my questions. Eric, I get to expect more of the Iron Drone Pipeline to go directly, you know, through defense customers as opposed to, you know, sort of an intermediary. You know, and I guess that that's surprising the way it's developed so far. And I guess just how do you expect that to progress? It's a great question, Matt, and I don't think I want to make put a stake in the ground on that because it depends.

Matthew Galinko: But the reason we are going direct to the customer is really because our technology platform needs to be integrated and is capable of being integrated into a variety of technologies in particular, that being the detect technologies, which are often going to be radar systems. So if you're a military customer and you need a counter UAS system like ours for securing and protecting against hostile drones, you want us to be able to be integrated into any detect technology as an example.

Matthew Galinko: I'll also add that we didn't really emphasize this on the call that the system, the Iron Drone system has also been enhanced for mobility. That also means that what that means is it's all able to be installed on a vehicle, a ground vehicle, and it's mobile. So similarly, we will need to integrate the system with customers who have ground equipment that the military is one of the employees.

Eric Brock: So that's the answer. I will say going direct, and we did highlight this, but I just re-emphasized, provides many advantages to us including the ability to really set the economics for the system, which is good as opposed to trying to be bundled into various systems on each sale. Then I'd also add that some customers, including this one, when you qualify to the vendor, you become eligible for what we refer to as government-to-government sales.

Eric Brock: What that means is your customer actually is marketing you to allied countries, and I think that's going to be a very significant source of new customer activity for us, and it's already started, and we made that point with call. All right, thanks, and maybe just to the follow-up, I guess presuming you get more of the direct sales of the post to the alternative, what with Iron Drone, did that create any conversations to expand the visibility of optimist systems in their role they could play in DoD and different defense systems, or is the conversation fairly limited?

Eric Brock: I'd say your spot on, and we did make the point of a call, that these conversations and activities around securing critical locations naturally lead themselves to what we're capable of doing with optimist for home security and defense. Now, this is specifically a market that is emerging.

Eric Brock: Now, it's always been available to us, but it hasn't been a focus for us to extend it is going to be going forward. Great. Maybe one last question. I think you qualified the Iron Drone opportunity a couple of times with the defense customer is, you know, I don't know if you meant that it's pending success in its current use or if it's been tested and it's actively moving towards that commercial order.

Eric Brock: But can you just clarify if you're sort of waiting for more performance data of actual use for further go ahead for order or are you already there? Yeah, I'd say so given the unique circumstances where, you know, we've really had a shock to military globally around how the battlefields evolved so quickly and where drones have become, you know, such a threat. So we've been working as we've described on urgent activities around upgrading the system for, you know, even new military requirements.

Eric Brock: And that's particularly around the capabilities with to deploy the Iron Drone in complex aerial environments where you don't have GPS and reliable communications links. So as we've done that, we've been in parallel doing extensive testing. We've had the really incredible good fortune to do that hand in hand with our customer and military partners. You know, in really, I'd say sort of a real world environment for this sort of stuff. Okay. So now as we've gone to the next level, we've done extensive real world testing and validation.

Eric Brock: And, you know, this initial, these initial orders that we've discussed are intended to put us into now live combat and security operations. And we do see that happening over the next couple of months. We have all the confidence in the world that we can capture the hostile drones as as intended. And that's going to be very valuable. And as we do that, we do believe the customers will come back for expanded volume orders.

Eric Brock: And of course, we need to be putting in parallel here, the capacity to do to address and fulfill those orders. So did that answer the question, Matt? It does. I appreciate it. Okay. Great. Thank you. As a reminder, if you have a question, please press star then one. We have a follow-up from Glenn Madison from Latinburg. Please go ahead. Prior to the follow-up to that last point, can you talk about the capacity plans for Iron Drone and where you, you know, how to, like, what kind of cost you need to build something out and where you tend to do it, and what kind of production levels you expect to build to.

Eric Brock: That's up to me, thanks. Yes, sure. So, you know, on a relative basis building the Iron Drone is as much simpler, it's a less complex system than the Optimus system. So what we're having here is really at the low volumes, which we'll see over the next, I'll say, quarter or two. We'll be doing that in-house, and that's, you know, will be, you know, tens of systems a month. We'll go up to hundreds of systems with contract manufacturers, and we've been identifying them already.

Eric Brock: And then, of course, we'll move to thousands of systems. and with larger and more diverse group of contract manufacturers as we move through 2025, we'll be able to create that capability. There are no more questions in the queue.

Eric Brock: This concludes our question answer session. I would like to turn the conference back over to Eric Brock for any closing remarks. Okay, thank you, operator. So I'll just close the call by thanking you again for attending. We do hope that you can join us in Baltimore for our OAS investor day. It's going to be a great opportunity to touch and seal the technology platforms and see them in action. And I think you're going to be impressed by the opportunities we have created in the business plan we have developed to capitalize on the investments we have made in these technology platforms, as well as the global distribution and services capabilities that we're going to demonstrate.

Eric Brock: So we have a lot of work ahead. So we're going to get right back at it and we do look forward to keeping you informed on our progress. So hope you have a great day. We'll talk soon. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. In the next episode, we'll see you in the next episode, and we'll see you in the next episode.

Q2 2024 Ondas Holdings Inc Earnings Call

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