After markets closed on a Friday Ondas Holdings Inc. (ONDS), a provider of private wireless, drone, and automated data solutions, announced the holders of certain convertible promissory notes— including Chairman & Chief Executive Officer Eric Brock— had decided to exercise the notes and convert them into shares of common stock.

The problem is the deadline to convert the notes expired ten weeks ago.

In October and December 2024, Ondas issued a total of $5.2 million in convertible promissory notes to a group of private investors that included its CEO Eric Brock.

Ondas’ SEC filings clearly show the notes matured September 30, 2025— two and a half months prior to the after-hours disclosure announcing the conversion:

“Notwithstanding anything herein to the contrary, unless earlier converted into Conversion Shares (as defined below), Maker shall pay the entire outstanding principal balance hereunder, plus all accrued and unpaid interest thereon, on September 30, 2025 (“Maturity Date”), …”

As a result of the cashless exercise, the company expects to issue an estimated 7.3 million shares with a market value of more than $60 million, or nearly 2% of current shares outstanding.

The dilution occurred with Ondas CEO Eric Brock on both sides of the transaction— approving of the conversion as Chairman & Chief Executive months after the deadline to convert expired and benefitting as one of the investors turning a $5.2 million promissory note into stock worth more than $60 million.

Ondas did not immediately respond when DuDi asked how the notes might be converted in December 2025 given the maturity date of September 30, 2025 means they had expired several months prior.

Separately, six minutes before the above after-hours disclosure, Ondas made another after-hours disclosure announcing Director Ron Stern had quit the same day without notice.

Stern did not give a reason for his sudden departure and was appointed to the Ondas Board of Directors just eleven months ago (January 2025).

With an Enterprise Value (EV) of approximately $3 billion, Ondas is priced as if it will grow annual sales to more than $19.5 billion, up from an estimated $38.1 million in FY25. To justify its current share price of $8.75 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Ondas must:

—Grow sales 100% annually for the next decade
—Increase NOPAT margin to 7%, versus our FY24 estimate of (494.3%) and three-year average estimate of (1,433.7%)
—Increase Invested Capital (IC) Turns to 2.2, up from our FY24 estimate of 1.6

Notably, the current share price also implies Ondas increases Return on Invested Capital (ROIC) to 15.4% from our three-year average estimate of (65.6%):