Good day, and welcome to the Ondas Holdings' Second Quarter 2022 Earnings and Business Update Conference Call. [Operator Instructions] Please note that today's event is being recorded. At this time I would like to turn the conference over to Eric Brock, Chairman and CEO. Please go ahead.

Good morning. It's a pleasure to welcome you to our conference call. I'm happy to be joined today by our Stewart Kantor, the Founder and President of Ondas Networks; and Reese Mozer, American Robotics Founder and CEO. I want to note that due to scheduling in international travel conflicts, Derek Reisfield, for a President and CFO is unable to participate in today's call. I will handle the financial review in his place. I'm going to start to call by emphasizing that business is on track at Ondas and the technology base leadership positions we are staking out in critical infrastructure in services markets continues to strengthen. Ondas Networks continues to make advances with the Class I rails on the 900 megahertz network. Our launch activity continue to pace and we are seeing expanded opportunities such globally in new networks, new products and new geographic regions. Of course, we believe today is news regarding the Siemens order, which I'll touch on in a moment is a clear signal, our growth trajectory is ahead. At American Robotics, we're continuing with the field work with our initial franchise customers, maturing the pipeline and preparing to onboard additional franchise customers. Importantly, as we do this we are enhancing our capabilities with investments in new payload and data analyst capabilities, all of which we will provide updates on today. Our success in the field with customers and ecosystem partners is demonstrating that our business plan is creating value and highlights our unique position to deliver our valuable technology platforms and data solutions to the large end markets we are targeting. The strength of our technology platforms, market leadership and business plan was demonstrated by the 2 recent significant events we want to highlight at the outset of the call. Obviously, I'm speaking firstly about the…

Great. Thank you, Eric. As Eric mentioned, it was an extremely productive second quarter for Ondas Networks, and we continue to make significant progress in Q3 to date. I'll begin with a strategic update on the process several of the rails are using to transition from the legacy 900 megahertz ATCS network to the new Internet protocol-based multi-application dot 16 network. This network evolution, which has already begun, is transformative in nature. The new wireless architecture based on our FullMAX platform adds the needed data capacity and application flexibility for the Class 1 railroads to transition from the single-purpose ATCS network to an Internet protocol-based multipurpose network capable of carrying data for ATCS and the plethora of additional applications such as interlocking, high rail and yard automation to name just a few. For the customers with legacy ATCS, the transition typically starts with next-generation ATCS equipment, which is backwards compatible with the legacy platform and fully supports the transition to the new 900 megahertz frequencies. And as the software-defined protocols are switched to MC-IoT functionality, the new multipurpose networks become live. It's important to note that many of the applications of interest to the Class Is are currently being tested in the Federated MXV Rail Lab, which ensures a smooth transition and adoption process by the rails. From here, over time, the rails plan to increase the densification of the network with the development of more and more Ondas Siemens Edge radio devices. And as a reminder, the legacy ATCS network frequencies must be retired by 2025. And we believe the transition to the new dot 16 network will occur even earlier with some Class 1s targeting the end of 2023. As most of you know, for some time now, we and Siemens have been intensely focused on pulling through…

Thank you, Stewart. First off, I'd like to welcome the entire Airobotics team to the Ondas and American Robotics family. This is a powerful combination of 2 industry leaders that results in expanded market opportunities, investment and spending efficiencies and accelerated growth. I will share more on that later. Before getting into all of the company progress updates, I think it's important to remind everyone of the market opportunity that we are pursuing. The global commercial drone market is estimated to become roughly $127 billion annually at scale. And of that $127 billion, we estimate that 90% of that opportunity requires government approved, field-proven autonomous drone-in-a-box systems to be practical and scalable. That translates into over 10 million asset sites worldwide that will eventually have the need for the American Robotics Scout system, the Airobotics Optimus system and related products. And so we must view this technology in the same way that we would look at the smartphone market just before the commercial release of the first iPhone in 2007. Yes, people had cell phones before 2007, but they would share only a few similarities to how we view that term today. The same goes from manually operated drones versus autonomous drugs. Now we differ from that analogy is that most of these markets for autonomous drone-in-a-box technology involve mission-critical and safety critical operations with large customers who have the need and intent for fleets of systems. And to bring this up because it is important that we take the proper steps as an organization to ensure product integration and safety are demonstrated thoroughly. To that end, I'd like to share progress updates with our customers. With Chevron and Conoco, we've sent the last month's field testing, environmental testing, defining requirements, integrating new payloads, developing analytics, performing safety analyses and…

Well, thank you, Reese. Now let's turn and summarize some of our key business objectives for 2022. We continue to expect Ondas Networks will generate orders this year from at least 5 railroads, and we are maintaining our goal of at least $20 million in bookings. Importantly, the initial Siemens volume order is equal to more than 25% of our bookings goal. Of course, we are tracking a larger pipeline and expect additional orders and broader rail participation over the second half of 2022. I will remind that this bookings target is a significant component of our compensation plans at Ondas Networks. In addition to platform product sales, we have additional product development opportunities in our pipeline with existing partners and maintain the target for $3.5 million in new programs. We have already announced the European product development with Siemens. So America Robotics, the key targets include securing orders from at least 10 customers and for at least 20 Scout systems by the end of the year. In addition, we are also targeting at least 1 customer reorder for fleet deployment by the end of 2022. And lastly, for AR, our success with customers comes down to partnering, partnering with customers to develop solutions that are valuable yet complex. We are working to secure at least one formal partnership with the customer in 2022. I want to remind our investors that we are working closely with customers and business partners to achieve these goals. Of course, the timing of Ondas Networks product and development program bookings as well as customer activity for American Robotics and the Scout system is subject to uncertainty. Regarding the outlook for Airobotics, we plan to provide additional details of the Airobotics opportunity and business plan at a later date as a conditions for closing become…

[Operator Instructions] Today's first question comes from Mike Latimore with Northland Capital.

This is Adithya on behalf of Mike Latimore. Could you give some color on if the possible recession would that have an effect? Would it along in the sales cycle for drones?

I'll take that initial answer, and then I'll ask Reese to expand. But we don't see that as necessarily being a bottleneck. The work we're doing in the field is with innovation teams who are focused on creating and identifying and creating long-term opportunities for investment in new technologies that make their businesses more productive. Reese, would you add anything?

Yes, that's all correct. The industries that we target are really critical ones that we don't think they haven't flow as much in this regard. And ultimately, our product is about saving them money and bringing back new efficiencies with their labor and with their production. So far, we have not seen any indication of that.

All right. And then regarding the Airobotics acquisition, I think you mentioned you had 40 people over there. Could you tell me or way of those are in the R&D space?

I don't have a precise figure, but I would say at least 2/3 of them.

All right. And have you had any trials or bookings from Ardenna?

We don't have any bookings to announce. However, there is quite a bit of interest in business development activity, and we'll let you know when we do secure business.

[Operator Instructions] At this time, we are showing no further questioners in the queue, and this ends the question-and-answer session. I would now like to turn the conference back over to Eric Brock for any closing remarks.

Okay. Well, I want to thank everyone for joining us this morning. As you know, we've got a lot on our play here at Ondas and AR, and we're going to go back to work. So we will be staying in touch and look forward to chatting again soon.

The conference has now concluded. Thank you for attending today's presentation. And you may now disconnect.