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Ondas Holdings Inc. [ONDS] Conference call transcript for 2021 q2


2021-08-16 13:39:15

Fiscal: 2021 q2

Operator: Welcome to the Ondas Holdings Inc.'s Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Before we begin, the company would like to remind you that, this call may contain forward looking statements. While these forward looking statements reflect on Ondas's 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 the Ondas’s 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 reference future events or circumstances, except as required by law. Please note this event is being recorded. I would now like to turn the conference over to the Eric Brock, Chairman and CEO. Please go ahead.

Eric Brock: Good morning, and welcome to Ondas’s Second Quarter Investor Call. I'm joined today by Stewart Kantor, our President and CFO; and Reese Moser, CEO of our wholly-owned subsidiary, American Robotics. For those of you who have been following the company, you are well aware that Ondas had a very eventful second quarter. In May, we entered into a definitive agreement to acquire American Robotics, a leading developer of commercial growth systems in the first company Approved by the FAA to operate its drones beyond-visual-line-of-sight without the presence of the human operator. The acquisition was completed on August 5, and we received overwhelming support from our shareholders with approximately 99.7% of the votes cast, supporting the acquisition. Then in June, we completed a $51.5 million public offering their proceeds of which will allow the company to support the planned rapid growth for both Ondas Networks and American Robotics. We also use the opportunity to retire almost all the Company’s debt leaving us with an extremely strong balance sheet. During the quarter, we advanced our plans towards driving FullMAX network adoption with the Class 1 Rails. We expanded our strategic partnership with Siemens is substantially completed our phase-one development work with AURA to support their nationwide command and control network for commercial drones. Our agenda for the call today will include a financial update from our CFO, Stewart Kantor covering the second quarter in first half of 2021. We will then provide an update on the Ondas Network business, before handing the call over to Reese for an update on American Robotics. I'll provide a summary outlook for the company at the end, before turning the call over for Q&A. Stewart, I will now hand the call to you to provide more details on Q2 and the financial outlook.

Stewart Kantor: Thank you, Eric. As Eric mentioned, we did have an eventful quarter, which included making a $2 million loan to American Robotics in April in advance of the announced agreement in May, executing on a $51.5 million equity raise in early June and leading the effort to complete the acquisition, all while continuing to advance both the Ondas Network and American Robotics businesses. As I shared our financial results for Q2 in the first half of the year, please note that we have included financial statements in this morning's press release. And we'll be filing our 10-Q by the end of the day. The numbers we're reporting do not include financials for American Robotics for the quarter. We'll be publishing AR second quarter and performer financials in several weeks. I'd also like to mention that we don't intend to provide financial guidance given the maturity of the businesses and the recent acquisition of AR. We will continue to update our shareholders in real time as we achieve milestones. Moving to our results in the second quarter, revenues decreased by 25% to approximately $0.9 million for the three months ended June 30, 2021, as compared to approximately $1.2 million for the three months ended June 30, 2020. The decrease in revenue was primarily due to lower product sales, which were offset by increase -- an increase in development revenue in the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, during which the company fulfilled a large network product order. Gross profit decreased by 50% to $0.3 million for the three months ended June 30, 2021, as compared $0.6 million for the three months ended June 30, 2020. This was as a result of lower revenue and higher cost of goods related to development agreements. Gross profit on a percentage basis was approximately 35% for the three months ended June 30, 2021 compared to 53% for the three months ended June 30, 2020. The lower gross profit percentage was driven by the change in mix between development revenue at a lower margins and product revenues. Operating expenses were relatively flat at $3.4 million for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020. Stock based compensation decreased by approximately $0.8 million in the three months ended June 30, 2021, which is offset by a total increase of approximately $0.8 million for professional fees related to the American robotics acquisition and facilities related expenses to the three months ended June 30, 2021. The company realized an operating loss of approximately $3.1 million for the three months ended June 30, 2021, as compared to $2.8 million for the three months ended June 30, 2020. The difference was driven primarily by lower revenues and lower gross profit during the period. Net loss was approximately $2.8 million for the three months ended June 30, 2021, as compared to a net loss of $3.2 million in the three months ended June 30, 2020. The net loss was lower primarily due to loan forgiveness of approximately $0.7 million and a decrease in interest expense of approximately $0.1 million as compared to the three months ended June 30, 2020. Now transitioning to our first half numbers over the prior year, revenues grew by 50% to approximately $2.1 million for the six months ended June 30, 2021, as compared to approximately $1.4 million for the six months ended June 30, 2020. Revenue growth was due primarily to larger development projects with Siemens and AURA during the first half of 2021. Gross profit increased by 45% to $0.9 million as a result of higher revenue for the six months ended June 30, 2021, as compared $0.6 million for the six months ended June 30, 2020. Gross profit on a percentage basis, was approximately the same at 45% for the six months ended June 30, 2021, as compared to 47% for the six months ended June 30, 2020. Operating expenses increased approximately 21% to $6.9 million for the six months ended June 30, 2021, as compared to $5.7 million for the six months ended June 30, 2020. This increase was driven primarily by professional fees associated with the acquisition of American Robotics. The company realized an operating loss of approximately $6 million for the six months ended June 30, 2021, as compared to a similar loss for the six months ended June 30, 2020. Increased operating expenses from the American Robotics acquisition was the primary driver despite the growth in revenues and gross profits. Net loss was approximately $6 million for the six months ended June 30, 2021, with a similar net loss for the six months ended June 30, 2020. And now turning to our balance sheet. The company held cash and cash equivalents of approximately $58.5 million as of June 30, 2021, as compared to approximately $26.1 million as of December 31, 2020. We'd like now to move to the milestones achieved for -- in our second quarter for Ondas Network, along with the network's outlook and then transition to the same for American Robotics. We continue to work closely with a Class 1 Rails and our strategic rail partner Siemens to advance the adoption of Ondas’ FullMAX platform in the 900 megahertz network, greenfield spectrum. Our multiple test networks with BNSF and CSX continue to be exercised in the field and our real world-learnings are paving the path for implementation. Also, the rail industry continues to rally around the 802.16s and 802.16t standard with active participation in the standards process. We'd like to remind you that the standard is based on our format technology. The federated or shared network capability of our FullMAX platform is an important feature of the 900-megahertz network. The real industry leadership committee notified us in June that the Rail Lab was approved and we can expect to receive the purchase order in the second half of 2021. We'll share that news as soon as we receive it. This order is more validation of the opportunity we have in the rail market. Also, as we move through the year, we'll look to share more information regarding the timing of the 900-megahertz network deployment. Our partnership with Siemens continues to deepen and widen with a major launch of our dual mode ATCS products this September. Siemens is putting their full marketing muscle behind these products, which will continue to become more and more apparent in the near future. And the feedback from the real customers is they understand the value and the capabilities of ATCS with FullMAX inside. And remember these products smooth the transition for the existing legacy ATC network to the new Greenfield 900-megahertz spectrum. Continuing with Siemens, on our last earnings call we made you aware of a new development program that was initiated in Q1. We received the initial purchase orders last quarter and that development project, which is our first onboard locomotive product, is well underway with expected completion by the end of the year. Importantly, Siemens intends to market this product worldwide not just in North America. We’ll provide additional updates on this exciting new product in the near term. We also want to note that we expect to secure additional product integration agreements with Siemens in the second half of 2021. Also in June, both AURA and American Robotics were invited to participate in the FAA unmanned aircraft systems beyond visual line of sight aviation rulemaking committee. We want to tell you that we substantially completed that work in the second quarter with more than 80 hours of real world helicopter flight testing and development work is now transitioning to a test and demonstration network for AURAs customers with additional demand for equipment. I'd also like to highlight that AURA has made some significant announcements recently. On July 28, they announced the closing an approximate $31 million series A financing. And this followed a previous announcement on July 12, in which NASA had selected AURA for their advanced Air Mobility campaign for integrating air taxis, cargo delivery aircraft and other new air vehicle concepts into National Airspace. Also, I'd like to highlight in June, both AURA and American Robotics were invited to participate in the FAA unmanned aircraft systems beyond visual line of sight Aviation Rulemaking Committee. To summarize, we believe the Networks’ business is on the cusp of a widespread adoption for several critical industries. Now, I'd like to transition back to Eric to introduce American Robotics and Reese Moser. Eric?

Eric Brock: Thank you, Stewart. We continue to make substantial progress on the Ondas networks' front. Now let's turn to American Robotics. As you have heard, American Robotics is leading the charge in the commercial drone sector. They bring both a first-in-class and a best-in-class complete drone-in-a-box platform called the Scout System. In addition, AR has secured unique and critical regulatory approvals to be the FAA that allow for widespread commercial deployment of Scout Systems. The Scout is a type of solution that is coveted by our critical infrastructure customers in the addressable market for the Scout drone platform can be extended with the integration of Ondas' mission critical FullMAX wireless technology. Scout can benefit from Ondas' networks robust wireless connectivity and Ondas' networks customers can benefit from a new, hugely valuable means of data collection. The AR acquisition was a bold move for Ondas and the reception has been extremely positive, opening the eyes of our customers, ecosystem partners, and many industry participants are looking for complete end-to-end next generation data solutions. REEF, VJ and the American robotics team have already been hard at work scaling the AAR business plan. I will now ask Reese to give an update on where we're at and ramping that growth plan. After Reese, we'll wrap the call and turn to Q&A. Reese?

Reese Moser: Thank you, Eric. It's a pleasure to attend our first quarterly investor call officially under the Ondas umbrella. We've had quite a year since we announced our historic FAA approval, which culminated in merging American Robotics in Ondas Holdings. I know I speak for our entire team that we are thrilled to be here and are ready to scale and deliver for both our customers and investors. We've already begun to put together the key building blocks for growth at American Robotics. As previously discussed, we launched our growth plan after receiving initial funding from Ondas in April, 2021, prior to reaching the definitive agreement in May. We started building inventory of Scout Systems and have launched a hiring plan to put a world-class team in place to support our rapid growth potential. Previously, we indicated plans to produce 10s of units so Scout Systems and we have made our initial orders to do so. We've identified customers for initial installations as we move through Q3 and Q4 of this year. Our customer pipeline has historically been focused on Ag markets. Our business receiving our critical FAA approvals and with the funding an acquisition by Ondas, we have seen a significant demand ramp in high valued industrial markets such as oil and gas, mining and rail. The applicability for this technology is huge and at the outset, we will concentrate our energies on the largest sophisticated customers who have existing drone programs that they're looking to scale with automated solutions. We also plan to leverage Ondas' networks customer base and worldwide distribution partners. This business plan calls for significant investment in people across all aspects of the organization. We're adding software, hardware, manufacturing, and customer support engineers and we'll be continuously advancing our Scout platform and its capabilities. Importantly, we're now investing in and building out our field service operational capabilities, as our customers are large, sophisticated, and demand quality execution from their vendors. Combining that requirement with a significant market demand for our products, we're investing to ensure an industry leading experience from day one. To that end, I want to highlight a few critical hires that relate to this plan. In May of this year, we hired Kevin Willis as American Robotics VP of Sales. Kevin has hit the ground running as he brings with him decades of experience, including serving as the Vice President of Sales for Kiva Systems, which was sold to Amazon and now operates as Amazon Robotics. Michael Gatewood has been hired as American Robotics Director of Flight Ops, Mike will oversee, formalize, and grow the company's flight operations program. Prior to American Robotics, Michael was Flight Operations Manager at Aero Biomed and brings with him two decades of engineering and aviation management experience. Additionally, last week, we announced the hiring of Michael Clatworthy as our VP of Operations. Michael is an exceptional hire that will help accelerate our corporate and customer ops. Prior to American Robotics, Michael was the Head of Operations for Avitas Systems, which is Baker Hughes' internal drone company. Michael helped found Avitas when it was part of GE, and has grown their operations from concepts to 1,500 customer sites per quarter. As mentioned, we see significant pent-up customer demand and have received purchase orders post deal announcement. I would like to highlight two. First, we announced the purchase order from Stockpile reports in July. Stockpile provides best-in-class supply chain data solutions for both products that are mined and processed such as rock, gravel, cement, and aggregates. This is a huge industry with more than 10,000 sand and gravel mines and more than 3,000 ready-mix and asphalt plants in the US alone. And Stockpile has an impressive customer base of leading players serving over 300 companies in 48 countries. The data generated and analyzed by Stockpile is used not just for inventory management, but also has tremendous value for supply chain optimization. When you can have near real time information on inventory levels, the opportunity to create -- that impact the bottom-line profitability for stockpile customers is massive. Again, there are 1,000s of these types of locations in the US alone, and just one of stockpiles customers generates nearly 5 billion per year in revenue. The market is eager for better supply chain data, and the Scout System is the best position technology to deliver. Similarly, we also announced in July a purchase order from a Fortune 100 oil and gas producer. The oil and gas industry represents a major new market for American Robotics with more than 90,000 oil and gas wells and over 500,000 miles of pipeline in the US that require constant monitoring and inspection. This customer has a variety of use cases ranging from well pad inspection to demanding of remote facilities and emissions monitoring. This customer like many industrials has an active drone program that currently relies on pilots. The Scout System will take over many of these jobs generate data more frequently, more reliably and at a lower cost. Eric, I'll turn it back over to you now.

Eric Brock: Thank you, Reese. Quite clearly, we are full steam ahead at America Robotics. We got an early start in May on launching their plan and we will accelerate customer activity as quickly and imprudently as we can. Our goal is to position America Robotics to eventually deploy 1,000s of autonomous Scout Systems in the field. We intend to build a dominant commercial drone platform in our all-in and doing so. We do want to carve out time to do a deeper dive with our investors on the American Robotics market opportunity, growth strategy and many additional details around the AR business plan. To do this, we intend to schedule an AR focus business update targeted for September. We will be in touch with more details about that event soon. Let's wrap it up before we move to Q&A. Ondas has made tremendous progress this year positioning the company for huge growth in large open ended markets. Importantly, we are getting closer to turning the investments we've made into revenue. We announced and closed the transformative acquisition of American Robotics in just a few short months, and then significantly strengthened our balance sheet by raising $51.5 million in the public offering. The equity offering allowed us to eliminate virtually all our debt in secured growth capital to allow us to fully execute our plan. We have momentum. In addition to the huge opportunity with American robotics, Ondas is executing on our critical initiatives in driving platform adoption. Starting with the rails, Siemens and Aura, we are establishing our MC-IoT platform as the default next generation wide area mission critical industrial network. Operator, we can now open the call to Q&A.

Operator: Thank you. We will now begin the question-and answer-session. Today's first question comes from Tim Horan at Oppenheimer. Please go ahead.

Tim Horan: Hey, guys. Thanks a lot. Can you elaborate on – I think you said in June, the lab approved the FullMAX equipment, maybe what lab just a little bit more color around, what does that mean? Yeah.

Eric Brock: Sure. Absolutely, thank you, Tim. So let me talk about what we mean by the Federated Rail Lab, the Mission Critical-IoT lab, and remind you that this is connected to the work on the 900 megahertz network. So recall that our FullMAX software defined wireless platform is a new paradigm. We're bringing the bandwidth, but we're also bringing flexibility that the railroads and these industrial markets have never had before. As it relates to the railroads, in certain high traffic areas, there's multiple rails operating, we like to point to Chicago as sort of the poster child for that, right, all the rails come in, they terminate their traffic there. And of course, that creates logistical and operational issues because there's – on the network in particular, because there's a lot of demand for data capacity. In the Legacy Network, which is going to be retired, the legacy 900 band, the rails have historically had to carve out that spectrum into a small, tiny, inefficient networks that each individual rail would operate. Obviously, compromising the capacity for the system. We can bring a shared network, provide more capacity, and then our software can allocate or manage that traffic to maximize throughput, and guarantee a much higher level of quality of service. So that's what the rail labs for. You can think of it as planning, additional planning activity related to the network adoption. I also highlight that the Rail Lab is going to be evergreen, right? This is going to be a lab that we establish and in given the flexibility of network, the railroads are always going to be testing sort of looking to see how to optimize traffic, but also how to add new applications because we have – we're giving them the capacity to do just that. So that's the real lab. As we discussed in our last call, we've been working with the rails and the 900 in the field for a long time. The shared element, the lab was taken up by the wireless comms committee under the AURA, to the senior most operating group for the rails. And that's where we see the support for the lab. So as Stewart mentioned in his comments, we expect the purchase order for the formal work on the lab in the fourth quarter.

Tim Horan: And as the Association of American Railroads have – they endorsed your FullMAX network? Have they seen or said anything publicly or formally?

Eric Brock: They haven't formally done that. And they won't until they're ready to give us the initial purchase order.

Stewart Kantor: So I'd say that -- let me just build on that, Tim. The work, on the 900 megahertz with the Class 1 rails, continues to be very good in collaborative and of course, seen an arm with us as we navigate the process. And as I mentioned, we have sort of -- we have gone through this process. We’re the wireless cons can be essentially taken us up the hill. And I think the fact that the senior most operating committee of the Rail Association has endorsed the lab. It's a very good sign, quite a bit of validation for what we're doing. I'd also add that if you think about what we're doing at 900, it really shows the complexity of the process, right? We're adopting a new mission critical network, which is of significant size is 900 megahertz system. So getting these rails all organized under that centralized coordinated operating groups, is sort of what we're getting advantages through now.

Tim Horan: And on the purchase order, will that be from multiple driver companies, or do you expect individual ones for each rail? And secondly, if you get the purchase order in the fourth quarter, when do you start recognizing revenue?

Stewart Kantor: Okay, so I'll take that -- second part of the question last. So, we would recognize revenue in the fourth quarter. We can set that lab up pretty quickly. In fact people who already have the basic structures outlined and equipment ready. In terms of the order, it's unclear exactly sort of what budgets coming from. We do believe it's going to be supported at the at the industry level. And in fact, we take the participation amongst the Class 1 rails will be much wider than we thought initially. I'll remind you that most of the work in the field has been led by BNSF and TSX. They continue to be very active with the labs also an opportunity to bring the others into the fold.

Tim Horan: But ultimately, it'll be purchase orders with each individual rail company, correct?

Stewart Kantor: Ultimately, on the deployment, it will be. We're -- in terms of where the order comes, what budget for it remains to be seen.

Tim Horan: So just to be clear, this purchase order is coming from the lab, or is it coming from the individual rail companies here?

Stewart Kantor: Well, this is -- the purchase order we're talking about is for the Federated Network Lab.

Tim Horan: Do we have a sense how large it could be or how large purchase orders in fourth quarter could be broadly speaking?

Stewart Kantor: We're not able to share that information today.

Tim Horan: Okay, great. And do you have a sense of how large -- how much the rails have to spend now to vacate and upgrade the 900 megahertz spectrum. Is this just a higher level sense of timing, when they have to spend that.

Eric Brock: So all indications are strongly positioned to deliver on this 900 megahertz network. But, of course, the question is timing Tim. We can't give you a precise date for the commercial PO and when that starts. We're working closely with rails, and we're earning the business, but the purchase orders are going to come when they're ready. So we'll be sure to notify our investors as soon as we can.

Tim Horan: Okay, great. And any sense on how large -- now you've been studying this, and it sounds like more rails, any sense how much they have to spend with you guys to upgrade the network ultimately?

Eric Brock: Well, we think the network is in the hundreds of millions of dollars of potential market, and I don't have anything yet to add beyond what we've talked previously, which was the market size.

Tim Horan: Great, great. And then hen just lastly, just curious on the drones, what can the concrete industry do with the drones essentially to improve our operations, just out of curiosity, at a high level what they're using it for?

Eric Brock: Sure. Reese, would you like to take that?

Reese Moser: Yeah, sure. Can you just repeat, which industry you're asking the question about?

Tim Horan: Sorry, I think you said you want a very large contract in the mining industry that was more focused on aggregates and concrete. Just curious, with just some examples, what do we do to improve productivity?

Reese Moser: Yeah. Sure, absolutely. So the initial use cases around stockpile analysis and management. So it's about having a daily representation of exactly what you have in your stockpile yard, your facility to optimize things like supply chain management and logistics, where materials are being moved to and from. So it's really just about having up to date accurate information about how much of any of these materials you actually have.

Tim Horan: I see. Thank you. Thanks, guys. Good luck.

Eric Brock: Thanks Tim.

Operator: And our next question today comes from Mike Latimore with NCM. Please go ahead.

Mike Latimore: Hi, good morning. Thanks for taking the question. I guess, on the American Robotics initial winter stockpile in the Fortune 100 company. Can you talk about the rollout with these two customers? Just the process there, do they start with trials and get commercial over time? Just how would that work with these two?

Eric Brock: Hey, Stewart please take that.

Stewart Kantor: Yeah, sure. The short answer is yes. So typically with industrial customers and sales process that we see is starting out with trials and the single digit units and then after reaching some success criteria, after call it three to six months that transitions into larger commercial deployments. And so with any of these customers, including stockpile in the in the Fortune 100 oil and gas company, part of our initial discussion with them is what does field look like? Since we received that FAA approval in January, we received a lot of inbound interest, frankly, more than we can handle. So we want our tasks right now is qualifying, who's worthy of being in this first wave of customers? And who has the biggest potential to convert to hundreds of units? And so one of the reasons we selected those two companies that we've referenced publicly, is because they have the ability to scale to eventually hundreds of units, in the fairly near-term.

Mike Latimore: That makes sense. Okay. And then, are you finding that customers are willing to pay you under a kind of a SaaS model, or do some of these guys want to just kind of buy the system outright?

Reese Moser: Yeah. That's a great question. On the whole, most are interested in except the SaaS base model, there's a couple industries that based on their kind of historical accounting practices may prefer to shift it more to a CapEx model. And we're working with them again, in the lens of making sure that fits with our scaling up business plan. And we don't want to change too many things for everybody. But you know if we represent a large potential order of hundreds of units. And we're willing to work with that customer.

Mike Latimore: Got it. And then any -- you are doing a lot of investing in American Robotics kind of across the board. You mentioned software/hardware as well. What would be the next big kind of technology update you'd like to see, for your platform?

Reese Moser: Yeah. I mean, I'd say, it's a little bit more on the operations side of things, but technology related. Our big focus right now is scaling up field operations, things like installation, maintenance, design for manufacturer, we want to make sure that the process of building and installing and servicing hundreds of units is efficient and goes well for our customers. So there's some technology elements around that, that we're investing in. And again to make sure that our customers have the best possible experience.

Mike Latimore: Okay. Got it. And then, as you shifting to the real opportunity for a second, assuming the lab order comes in, in the fourth quarter. What would be the next step after that? You know, do they kind of deploy and testings for a couple quarters? And then, we get commercial orders after that?

Reese Moser: Mike, I'll ask Stewart to fill-in, but the lab work is around the element of the shared system, right. As I described earlier, if you think about the 900 megahertz, or the rail footprint, I'll say, there's most of the territory is solely operated in own track. And we think that's where the initial build out is going to take place, with the shared element coming in parallel, sort of, somewhere in the process. So we still target with Siemens, the ATCS deployment of 900 and the initial commercial deployments with the Rails. And like I said, it's likely going to be in the sole -- solely operated territories to start. Stewart, would you talk a little bit about the lab and how long that will be in place?

Stewart Kantor: Yes. I think, that's right. So the -- as Eric mentioned, the federated concept is where they are intermodal, where they are up and where they connect. But as we mentioned, both BNSF and CSX have their existing test networks out and deployed. And those continue to progress. And so I would say that, right, the orders will be coming from the individual railroads, and they're not necessarily linked to the lab timing. So the lab timing is really the intermodal focus. So I think we need to just have you stay tuned for -- as we make progress with the individual Rails too, with the Siemens’ support. And we mentioned that the ATCS is being formally launched in September with Siemens, and the Rails are understanding the value of that product, where it both supports the legacy platform and allows for the transition to the greenfield at the same time. So all those things are coming together, where the individual Rails are understanding the value, and then also the intermodal or where they connect component. So I would say, they're not completely linked on gating items. They're independent.

Mike Latimore: And that would go for the ATCS product there it sounds like?

Stewart Kantor: Correct.

Mike Latimore: Yes. Okay. Thanks a lot.

Eric Brock: Thanks, Mike.

Operator: Today's next question comes from Carter Mansbach with Forte Capital Group. Please go ahead.

Carter Mansbach: Good morning, gentlemen. Congratulations on all your developments. So I have two questions. One is, in the way of projections, at what point will we begin to have clarity on future growth? And the second question is regarding contracts. So I'm sure there's competitive natures that play in here, but at any point, will we -- are we going to know the names of these Fortune 100 companies that, both companies are getting contracts on?

Eric Brock: Hi. Thank you, Carter. The answer to the last question is, yes. And at the appropriate time, we'll be able to share more details on customers and their names, as certain -- for competitive reasons and business reasons, we chose not to on the recent oil and gas customer. But I would also add that we have equivalent sized customers in the pipeline and oil and gas. And then as we released the guidance that we were investing to scale into really huge markets. It's a mission-critical IoT private industrial networks, market via Ondas networks. And of course, commercial drones via American Robotics. At Ondas networks, we're working with large customers on really large networks. And given we don't have clarity on the timing of purchase orders we're working towards it's prudent not to put that stake in the ground. However, we're extremely confident the opportunity in the 900. In other Rail Networks we've talked about in the past including 160 and 450. So as we see the inflections and get the purchase orders we’ll be building backlog and the business Ondas networks will be much more predictable American Robotics has best in class technology platform, they have these FAA rules that allow for faster deployment than anyone else in the industry. And we're putting the team in place to scale these initial purchase orders or for a handful of scout systems. And we're working to position those customers for fleet deployments. And as we sort of go through that process, that business is going to get a lot more predictable as well. So that's the answer. I think, at the moment not providing the guidance for that for Q3 is a prudent step.

Carter Mansbach: Okay, great. Thank you so much.

Operator: And ladies and gentlemen this concludes the question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Eric Brock: All right, well, thank you, operator. And appreciate everyone joining us on the call this morning. I'd like to close by reminding our investors that we're bringing tremendous value to the commercial and markets we're targeting. We're leveraging not one, but two best in class disruptive technology platforms, of course, that's Ondas network software base FullMAX mission-critical wireless network. And that's with American Robotic Scout Systems, the only fully autonomous drone approved to operate beyond visual line of sight with no human on site. The markets we're targeting are well into the billions of dollars in size in Ondas has made and continues to make the investments needed to pull them through to orders or revenue that we're tracking towards in the substantial customer pipeline opportunities we are focused upon. We expect a very active second half of 2021 and a strong finish to what is clearly a transformational year for Ondas and Robotics. We will keep you informed on the critical business development milestones as we achieve them. Thanks again for joining us this morning and have a great day.

Operato: Ladies and gentlemen this concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines. And have a wonderful day