The Drone Market This Week: Ondas Pays Up to $390 Million for Fuzes, the Pentagon Cannot Rebuild Its Reapers, and Beijing Bans Drones
Ondas buys the Israeli fuze specialist GATE Technologies and the Poland-based manufacturer Bron Technologies for up to $390 million. A Pentagon watchdog says as many as 30 MQ-9 Reapers were lost or damaged in the Iran war, while the MQ-9A production line is closed. Red Cat’s Teal Drones failed to place in the top 5 slots in the recently revealed Gauntlet II competition. NATO fighters shot down a drone over Lithuania, a Russian warship fired flares at a Danish helicopter, Ukraine launched more than 1,000 drones at Russia over the weekend, and Beijing adopted a citywide ban on possessing and storing drones to take effect November 15.
This is what investors must know this week.
Ondas Buys the Fuze Maker for Up to $390 Million
On September 14, Ondas acquired 100% of GATE Technologies and Bron Technologies. GATE is an Israeli specialist in electronic Safe & Arm devices and advanced electronic fuzing. Bron is the affiliated Polish manufacturing and certification company. The SEC filing states that Ondas paid $105 million in cash and issued 10,689,655 Ondas shares, described by the company as approximately $100 million of stock, plus a $25 million working-capital adjustment. Approximately $22.5 million of additional stock is to be issued within nine months subject to post-closing obligations. The sellers can also earn up to $185 million of contingent payments over two years, payable in Ondas stock. Ondas forecasts the acquired business at approximately $65 million of revenue in 2026 and $180 million in 2028, with more than $130 million of aggregate adjusted EBITDA through 2028. The company says approximately 80% of GATE revenue comes from outside the Middle East, and it expects U.S.-made systems in the first half of 2027.
Electronic Safe & Arm devices keep munitions in a safe state until defined arming conditions are met, while electronic fuzes control initiation. Those are safety-critical components that must be qualified on weapon platforms, which can create meaningful switching costs once a supplier is designed in. That is the strategic logic of the deal: Ondas is adding a component layer used across loitering munitions, missiles, rockets and other precision weapons rather than relying only on airframe economics.
This follows Ondas’ August 18 definitive agreement to acquire Aran Defense for approximately $33 million; it was not a second September acquisition. Ondas has also closed DZYNE, Cyberhawk, GATE and Bron in a short period. The pattern is still important: the company is using its balance sheet to assemble a broader defense platform spanning autonomous systems, services, manufacturing and now munitions electronics. Bron’s non-ITAR production in Poland may improve access to European programs and reduce exposure to U.S. export-license constraints. The counterweight is integration risk across a rapidly expanding set of businesses.
Pentagon Watchdog Counts 30 Lost Reapers as Last-Gen Drones Fade
A Lead Inspector General report released September 14 said as many as 30 MQ-9 Reapers were lost or damaged in the Iran war through June 30. The structural issue remains significant: the MQ-9A production line was shut in 2025 after U.S. Air Force procurement ended. General Atomics still produces the newer MQ-9B, and the Air Force has examined near-term ways to restore some MQ-9A capacity, all of which are costly and outdated for the type of contested airspace currently defining conflicts around the world.
At roughly $30 million per MQ-9, 30 aircraft represent about $900 million of platform value, although actual replacement cost depends on configuration and on how many aircraft were destroyed versus damaged. The Air Force’s choice is also broader than a binary restart-versus-replacement decision. It is pursuing cheaper, mass-producible alternatives through the DIU Mass-Produced Medium UAS effort while retaining General Atomics as a potential supplier through existing MQ-9A airframes and newer designs. The direction of travel favors lower-cost attritable systems, but the transition is still a procurement and budget decision rather than a completed choice.
For the market, the important point is the capability gap. The MQ-9A line is closed at the same time combat losses have increased demand for persistent ISR and strike capacity. That creates room for challengers, but not a supplier vacuum: General Atomics remains an incumbent and the Air Force is evaluating multiple paths. Swarm Aero’s Gamera is one entrant; Anduril, Kratos and other autonomous-aircraft developers are competing around adjacent requirements. DIU has described an aggressive schedule for a prototype on roughly a one-year horizon and scaled fielding over roughly three years, subject to testing, funding and program decisions.
The Pentagon Published the Gauntlet Results and Red Cat Missed
The Drone Dominance Program posted its Gauntlet II leaderboards on September 16 after August testing at Fort Carson. Nineteen companies flew 23 platforms across 1,858 sorties. Red Cat subsidiary Teal Drones competed in the “Close Quarters Battle” mission but did not place among the top five. While disappointing, non-top-five participants remain eligible for future Drone Dominance Gauntlets.
Gauntlet is a live fly-off structure for small drones rather than a paper-only source selection. The public leaderboard makes comparative performance unusually visible for a defense procurement. The top five in each mission area are positioned for potential orders, but the program explicitly notes that awards are not guaranteed and quantities are set at contract award. For public companies whose valuations incorporate prospective defense programs, that transparency can create sharp stock reactions in both directions.
Red Cat still has business outside this round, including Black Widow and its expansion into maritime autonomy through Blue Ops. But the Gauntlet result matters because Drone Dominance had become a visible part of the company’s growth narrative.
At June 30, Red Cat reported $325.6 million of cash and a second-quarter operating loss of $38.6 million. That balance sheet gives it runway, while the size of the operating loss increases investor sensitivity to the timing and scale of future program wins.
NATO Shot Down a Drone Over Lithuania and Changes Its Defense Posture
On September 15, Italian fighters operating under NATO command shot down an unidentified drone in Lithuanian airspace. The aircraft entered Lithuania from Belarus, but public reporting did not definitively establish who launched or controlled it. The same day, a Russian warship fired flares at a Danish helicopter. By September 17, NATO officials were describing a shift from traditional air policing toward a broader ‘360-degree’ air and missile defense posture built around threats that include drones and missiles.
The doctrinal shift is the news. Traditional air policing is optimized for crewed aircraft: fighters scramble, identify and escort. That is an expensive answer to cheap unmanned systems that can arrive in volume and do not carry a pilot to deter. Repeated incursions on NATO’s eastern flank are forcing the alliance to think in terms of persistent detection and layered defeat rather than relying only on fighter intercepts.
For investors, a 360-degree posture points toward more demand for ground-based sensors, command-and-control, electronic warfare, kinetic interceptors and directed-energy systems. The investable signal is that counter-UAS is moving from ad hoc purchases toward integrated air-defense architecture across more European countries.
Ukraine Launched More Than 1,000 Drones at Russia in One Night
Over the September 19-20 weekend, Ukraine launched more than 1,000 drones at targets in Russia, according to Associated Press reporting, including what was described as the largest attack on Moscow of the war. The economic effect of the broader refinery campaign is measurable. Reuters reported on September 15 that six major diesel-producing refineries – facilities that together normally account for about half of Russian diesel production – had cut output after drone attacks. On September 21, Reuters reported that the Moscow refinery halted crude processing after the September 20 strike.
More than 1,000 drones over a weekend is an industrial statistic as much as a tactical one. It implies production, logistics, launch infrastructure and mission planning at scale. The refinery disruptions show why saturation matters: air defenses cannot cover every target continuously, and even a modest penetration rate can impose repair costs and disrupt fuel output. The campaign is now affecting energy infrastructure in ways that are visible in refinery operations and export policy.
Russia is scaling its own drone industrial base in response, including expansion plans tied to Geran-family production, while many systems continue to use foreign components. Europe is also institutionalizing lessons from Ukraine. The European Commission convened the first board meeting of the EU-Ukraine Drone Alliance on September 11 with 18 founding members from the EU, EEA-EFTA countries and Ukraine. The direction is clear: battlefield iteration and industrial capacity are increasingly being treated as part of the same defense requirement.
The Air Force Is Standing Up a Career Field Just to Shoot Down Drones
The Air Force is planning a new career field dedicated to point defense of bases against drones, missiles and other threats, according to reporting on September 16. The same week, Joint Chiefs Chairman Gen. Dan Caine said U.S. forces should assume formations will be hunted by autonomous systems, jammed and tracked in real time. Separately, Anduril was added to the hardware-and-software track of DHS’s counter-UAS contract after initially winning only the services track, and DroneShield said it completed installation and acceptance of DroneSentry-X Mk2 systems on U.S. Infantry Squad Vehicles under JIATF-401, establishing initial operational capability.
A dedicated career field would be a deeper institutional commitment than a one-off equipment buy. It implies recruiting, training, doctrine and recurring manpower. The Air Force has worked out all the final details. Even so, the proposal is a strong signal that base defense against small drones is being treated as a persistent mission rather than a temporary contingency.
Beijing Banned Personal Drone Ownership Across the Entire City
Beijing’s revised unmanned-aircraft rules take effect November 15 and are unusually strict. They prohibit flying, possessing, storing, transporting into the city, selling and renting drones and core components across the municipality, subject to narrow special-security exceptions for uses such as emergency response, research, production and agriculture. The city is already offering registered private owners several disposal channels, including buybacks, recycling and free shipment out of Beijing.
Beijing is treating widely available unmanned aircraft as an infrastructure and public-safety risk inside the political capital, just as Western governments are tightening controls for different legal and national-security reasons. The policy is especially notable because China is home to the world’s dominant consumer-drone manufacturers. It shows that proliferation creates domestic security tradeoffs even for the country with the deepest manufacturing base.
Drone Stocks Making Moves
For the week ended Friday, September 18, the public drone group was mixed rather than broadly lower. Red Cat fell about 15.2% from the prior Friday’s close, while AeroVironment rose about 9.0%, Ondas gained about 2.2% and Unusual Machines gained about 1.0%. The dispersion is the story: investors are differentiating between individual contracts, program outcomes and balance sheets rather than trading the sector as one basket.
Ondas Holdings (ONDS) dominated the week’s deal flow with the GATE and Bron acquisition. The headline economics are $205 million of initial consideration, plus a $25 million working-capital adjustment, approximately $22.5 million of additional stock subject to post-closing obligations, and up to $185 million of contingent earn-outs. Management forecasts about $65 million of 2026 revenue rising to $180 million in 2028 and more than $130 million of aggregate adjusted EBITDA through 2028.
AeroVironment (AVAV) rose about 9% for the week ended September 18. The company has added several contract catalysts, including an August 27 award to provide three autonomous helicopters for NASA JPL’s SkyFall Mars mission and a $464.8 million U.S. Army production award for its high-energy laser program. Even after the week’s rebound, AVAV remained sharply below its January levels. The debate is less about whether contract activity exists than about how quickly the enlarged company can convert backlog into revenue and margins while integrating acquisitions.
Red Cat (RCAT) was the weakest of these four names for the week ended September 18, falling about 15.2%. The Gauntlet II leaderboard added pressure because Teal competed but did not place in the top five. The result should not be described as a disqualification from Drone Dominance, and Red Cat remains eligible for future Gauntlets. Financially, the company reported $325.6 million of cash at June 30 and a second-quarter operating loss of $38.6 million. That combination means liquidity is substantial, but program timing remains important to the path toward operating leverage.
Unusual Machines (UMAC) did not fall for the full week: it finished September 18 about 1.0% above the prior Friday’s close despite sharp day-to-day volatility. The company reported $16.7 million of second-quarter revenue, up 687% year over year, a 34.7% gross margin and $229.6 million of cash. Its September partnership with Altana is aimed at supply-chain visibility and compliance as U.S. sourcing rules and tariffs change. The near-term thesis remains execution on manufacturing scale and conversion of expected fourth-quarter and 2027 demand rather than a simple directional trade on the drone theme.
DroneShield (DRSHF) said it completed installation and acceptance of DroneSentry-X Mk2 systems on U.S. military Infantry Squad Vehicles under JIATF-401, establishing initial operational capability. The significance is the form factor: vehicle-mounted counter-UAS pushes detection and defeat closer to maneuver units rather than limiting protection to fixed-site perimeter defense.
Matternet (MTTN) began trading on the OTCQB Venture Market on September 21. The company describes its platform as the only FAA type-certified drone delivery platform; its SEC filings make the more precise claim that the Matternet M2 is, to its knowledge, the first and only drone delivery system to hold both an FAA Type Certificate and a Production Certificate. That regulatory position is scarce, but certification should not be conflated with commercial scale. The cleaner investment question is whether Matternet can turn those approvals and its operating partnerships into materially larger delivery volumes and revenue. A company to watch.
The Bottom Line
Ondas acquired GATE and Bron for $205 million of initial consideration plus a working-capital adjustment and up to $185 million of earn-outs.
The Pentagon watchdog said as many as 30 MQ-9s were lost or damaged, and the MQ-9A line is closed, a sign of rapidly changing battle zone.
Red Cat’s Teal competed in Gauntlet II and missed the top five; though it was not disqualified from future rounds, and committed to continued innovation in the field.
NATO is moving toward broader 360-degree air defense.
Ukraine launched more than 1,000 drones over the weekend, while six major refineries that normally account for about half of Russian diesel production have cut output.
The Air Force is planning a point-defense career field;
Anduril now holds both tracks of a multi-award DHS vehicle with a $1.5 billion ceiling.
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