v3.26.1
Notes Payable and Convertible Notes Payable
 6 Months Ended
Jun. 30, 2026
Notes Payable And Convertible Notes Payable [Abstract]  
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

NOTE 10 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

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

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

For the three months ended June 30, 2025, we recognized interest expense of $0.2 million and amortization expense of $0.9 million related to the debt discount and issuance costs for convertible notes. For the six months ended June 30, 2025, we recognized interest expense of $0.5 million and amortization expense of $3.6 million related to the debt discount and issuance costs for convertible notes. Interest expense and amortization expense related to debt discount and issuance costs are included in interest expense in the condensed consolidated statements of operations.

SPO Convertible Capital Notes

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

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

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

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

As of June 30, 2026 and December 31, 2025, the total outstanding balance of the SPO Convertible Capital Notes subject to repayment or conversion by noncontrolling interest holders was $4.7 million and $3.5 million, respectively. For the three and six months ended June 30, 2026, the Company recognized $0.5 million and $0.8 million, respectively, of accretion which is included in interest expense in the condensed consolidated statements of operations.

OAS Convertible Notes

In October and December 2024, multiple investors (collectively, the “Holders”) elected to purchase convertible notes in the aggregate original principal amount of $5.2 million, (the “OAS Convertible Notes”), of which $2.0 million was purchased by C&P and $1.0 million was purchased by Privet Ventures LLC, an entity affiliated with Eric Brock, Chairman and Chief Executive Officer of the Company and OAS. The OAS Convertible Notes are convertible into shares of OAS common stock, par value per share $0.0001 (the “OAS Common Stock”), or preferred stock under certain conditions. The Company used the net proceeds for general corporate purposes, which includes funding capital expenditures and working capital. The OAS Convertible Notes bear interest at the rate of 5% per annum. On September 29, 2025, the Company amended the OAS Convertible Notes to extend the maturity date from September 30, 2025, to January 1, 2026. The amendment was accounted for as a debt modification under ASC 470-50.

On December 17, 2025, the Company and OAS entered into agreements with the Holders of the OAS Convertible Notes to convert the principal and accrued interest outstanding as of November 30, 2025 into OAS Common Stock under the original conversion terms of the OAS Convertible Notes, at a conversion price of $0.7189, which was equal to the quotient resulting from dividing (x) the Valuation Cap of $65.0 million by (y) the fully diluted shares outstanding as of November 30, 2025 (the “OAS Exchange”).

At each Holder’s election, the Holder could elect to defer the conversion to January 5, 2026 as the Company and the Holder may agree. Seven of the eleven Holders that elected to participate in the Exchange elected to defer their closing to January 5, 2026 (the “January Converters”). For the year ended December 31, 2025, OAS converted $3.3 million and $0.2 million of principal and accrued interest, respectively, into OAS Common Stock for four of the eleven Holders including C&P (the “December Converters”). Immediately following the conversion, the OAS Common Stock was exchanged for Common Stock. OAS made cash payments of $33 thousand to the December Converters representing accrued interest on the OAS Convertible Notes from December 1 to December 16, 2025.

As of December 31, 2025, the total outstanding principal on the OAS Convertible Notes was $1.9 million. As of December 31, 2025, accrued interest was $0.1 million, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

On January 5, 2026, OAS converted the remaining $1.9 million and $0.1 million of principal and accrued interest, respectively, into common shares of OAS for the January Converters, which were immediately exchanged for Ondas Inc. Common Stock.

For the three months ended June 30, 2025, we recognized interest expense of $64 thousand and amortization expense of $12 thousand related to the issuance costs, which are included in interest expense in the condensed consolidated statements of operations. For the six months ended June 30, 2025, we recognized interest expense of $0.1 million and amortization expense of $25 thousand related to the issuance costs.