Ondas(US:ONDS)2019-03-19 21:19Revenue and Profitability - Revenue decreased to approximately $190,000 for the year ended December 31, 2018, from approximately $274,000 for the year ended December 31, 2017, primarily due to a decrease in pilot programs and small customer deployments[214]. - Gross profit decreased to approximately $151,000 for the year ended December 31, 2018, with a gross margin of 79% compared to 71% for the year ended December 31, 2017[216]. - Operating loss increased approximately $6,042,000, or 252%, to approximately $8,436,000 for the year ended December 31, 2018, compared to approximately $2,394,000 for the year ended December 31, 2017[221]. - Net loss increased approximately $9,075,000, or 300%, to approximately $12,097,000 for the year ended December 31, 2018, compared to approximately $3,022,000 for the year ended December 31, 2017[224]. - Net loss per share of common stock was ($0.42) for the year ended December 31, 2018, compared with ($0.19) per share for the year ended December 31, 2017[224]. Expenses and Costs - Cost of sales decreased to approximately $39,000 for the year ended December 31, 2018, from approximately $79,000 for the year ended December 31, 2017, reflecting the reduction in revenue[215]. - Operating expenses increased by approximately $5,998,000, or 232%, to $8,587,000 for the year ended December 31, 2018, primarily due to increased human resource costs and professional fees[220]. - Other non-operating expense increased by approximately $3,033,000, or 483%, to approximately $3,661,000 for the year ended December 31, 2018, primarily due to increased interest expense and changes in fair value of derivative liability[222]. Cash Flow and Financial Position - For the year ended December 31, 2018, net cash used in operating activities was $(8,517,000), an increase of approximately $5,887,000 compared to $(2,630,000) in 2017[225]. - Cash and cash equivalents at the end of the period were approximately $1,130,000, up from $456,000 at the beginning of the period[227]. - The company had an accumulated deficit of approximately $32,382,000 and net borrowings outstanding of approximately $14,246,000 as of December 31, 2018[227]. - The increase in cash provided by financing activities was primarily due to a loan and security agreement totaling $9,875,000, net of closing fees[225]. - The company anticipates that existing cash and cash equivalents, along with $3.3 million in borrowings drawn in 2019, will only be sufficient to meet operating needs through March 2019[228]. - The company does not currently have sufficient funds to repay approximately $3,883,000 due on March 30, 2019, and must secure additional capital[228]. - As of December 31, 2018, the company had a working capital deficit of approximately $15,205,000[227]. - The company has incurred losses since inception and has funded operations primarily through debt and capital stock sales[227]. Future Outlook and Development - The company expects to continue incurring substantial losses for the next several years as it develops, manufactures, and markets its technologies[196]. - Future capital requirements will depend on various factors, including progress in technology development and market conditions[197]. - The company is focused on completing second-generation products and commencing their manufacture, marketing, and sales, which will require significant working capital[228]. - The company plans to further develop its FullMAX system of wireless base stations[245]. - The company intends to further develop remote radios[245]. Accounting and Reporting Changes - The adoption of ASU 2016-02 will require the company to recognize future minimum rentals due under noncancelable leases on a discounted basis on its consolidated balance sheet[242]. - ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, requiring adoption in the first quarter of 2019[242]. - The company is evaluating its lease portfolio to assess the impact of ASU 2016-02 on its consolidated financial statements[242]. Risk Factors - Forward-looking statements in the annual report are subject to known and unknown risks and uncertainties that may cause actual results to differ materially[243]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[247].