The Ministry of Defense added backlog for MER, a small proof point for VELORYX, and a yellow flag for AERODROME

On April 23, MER, VELORYX, and AERODROME GROUP published three filings that all touch the Ministry of Defense or defense procurement. That similarity is misleading. For MER, the filing is a binding NIS 43 million order with a defined execution period. For VELORYX, it is a NIS 2 million order that supports a drone activity it is acquiring and still needs to integrate. For AERODROME GROUP, there is no new order. There is a response to allegations raised by the Ministry of Defense in connection with a prior tender.

That distinction matters because the words “Ministry of Defense” are not enough. A binding order, a notice of award that still depends on future purchase orders, and a dispute with a government customer are different economic assets. They create different revenue visibility, different execution risk, and a very different quality of backlog.

What is working now is demand for local solutions in intelligence, communications, drones and military systems. What is still missing is consistent proof that this demand turns into profitable revenue, collections, and customer exposure that does not become harder after the headline. The April 23 filings therefore separate a company that already received work to execute, a company trying to prove that an acquisition carries real orders, and a company that first needs to neutralize customer risk.

The Same Customer Does Not Create The Same Order Quality

MER is the clearest case. A wholly owned subsidiary received binding orders from the Ministry of Defense for planning and executing intelligence-gathering and communications sites, with an aggregate scope of about NIS 43 million, excluding VAT. The expected execution period is 12 to 18 months, and expected profitability is in line with similar agreements in the relevant activity area. The company also signed an extension of the agreement with the customer through April 2027.

The strong point is not only the amount. On April 9, MER had already reported engagements of about NIS 53 million with the Ministry of Defense in optics, AI-based video processing and communications systems, but that filing included notices of award whose execution mainly depended on receiving purchase orders. On April 23, the quality improved: binding orders, a clear scope and a relatively short execution period.

For VELORYX, the amount is much smaller, but the reference point is different. Aerosol received a Ministry of Defense order of about NIS 2 million for advanced drones to be delivered in 2026 and 2027. In the updated transaction filing, Aerosol presented 2025 revenue of NIS 15.5 million and EBITDA (earnings before interest, taxes, depreciation and amortization) of NIS 3.5 million. On that base, a NIS 2 million order is about 13% of Aerosol’s 2025 revenue, even if it is spread over two years.

In its April 23 filing, AERODROME GROUP presented the opposite picture. The company did not receive an order. It responded to a media publication about a March 5 Ministry of Defense email concerning a tender won by its subsidiary. The Ministry of Defense raised allegations of breach, a compensation demand and a summons to a supplier-suspension committee. AERODROME GROUP argues that the allegations are unfounded, that the Ministry of Defense was not a customer at the filing date, that no additional approach or official letter had been received, and that no legal proceeding had been opened.

MER Adds To A Backlog That Already Has Real Defense Weight

MER reached this filing after a relatively strong 2025. Revenue totaled about NIS 666.4 million, net profit increased to about NIS 41.2 million, and backlog including framework agreements stood at about NIS 843.5 million at year-end. The capital-markets presentation also showed defense backlog of about NIS 420 million, around 63% of total backlog including framework agreements.

The NIS 43 million order does not change MER’s scale on its own, but it improves the quality of the Israeli defense part of the story. It sits inside areas that had already become more important in 2025: military technologies generated NIS 107.2 million of revenue, and homeland-security solutions generated NIS 259.3 million. The new order connects the company again to the Ministry of Defense, not as a strategic statement but as work to execute.

Still, this is not proof that all of MER’s backlog has become easier to convert. The 2025 reports still carried two layers that require monitoring: major customers accounted for 45.3% of sales, and one global customer in the Global segment accounted for 28.9% of sales. A local Ministry of Defense order helps with diversification and visibility, but it does not erase concentration and collection questions in other projects.

VELORYX’s Order Tests Aerosol Before The Transaction Is Fully Proven

VELORYX is not a mature defense company that simply added another contract to its backlog. It is a company that changed direction at the end of 2025, moving from internal-combustion engines to defense and security activity. At the annual-report date, it still had no revenue, customers or backlog in the new field. The Aerosol acquisition is supposed to give it an existing business rather than a strategic promise.

On March 31, VELORYX reported a binding agreement to acquire at least 70% of Aerosol for about NIS 25.1 million, plus a commitment to invest NIS 9 million in Aerosol. Funding is expected to come from company equity, including a NIS 19.5 million private placement, and a planned bank loan of about NIS 15 million at prime plus 1%, with a minimum coverage ratio and a reserve fund for principal and interest payments.

On an all-in cash-flexibility view, the NIS 2 million order does not fund the transaction and does not solve VELORYX’s capital needs. It does something else: it gives a first reality check on whether Aerosol continues to receive orders from a central defense customer after the acquisition agreement was signed. That matters because on April 3, significant damage was caused to Aerosol’s only plant after an impact near the facility, and on April 6 VELORYX presented an immediate move to a new plant and a business-continuity plan under which no damage to delivery of already approved orders was expected.

The Ministry of Defense order strengthens the business rationale for the acquisition, but it still does not turn VELORYX into a proven HLS (border and homeland-security solutions) platform. For that to happen, the company needs to complete the transaction, meet the financing conditions, preserve Aerosol’s production continuity, and show that orders like this recur rather than remain a one-off.

At AERODROME, Customer Quality Is Measured Through Risk Rather Than New Backlog

AERODROME GROUP is in a very different place. In 2025, revenue fell to NIS 9.7 million from NIS 14.5 million, gross profit almost disappeared at NIS 28 thousand, the operating loss remained heavy at NIS 22.9 million, and operating cash flow was negative NIS 14.6 million. Backlog at the end of 2025 was NIS 3.37 million and included an initial NIS 2.5 million order from a defense customer.

That context makes AERODROME GROUP’s response more meaningful than its reassuring tone. The original Ministry of Defense tender had an estimated financial scope of NIS 137 million, and in November 2024 the company received a binding order of NIS 73.6 million, plus additional orders of about NIS 11 million. The Ministry of Defense later reduced the first order, and in the March 5 approach alleged that the subsidiary failed to meet the terms of the engagement and delivery schedules, and that the ministry cancelled the engagement in August 2025.

The disputed amounts are large relative to AERODROME GROUP’s current scale. The approach referred to an alleged right to compensation of about NIS 30 million, while the actual demand was about NIS 6.4 million if the allegations were accepted without reservation. The company estimates that the probability of the allegations being accepted is low, and in its April 23 response emphasized that there is currently no legal proceeding and that the Ministry of Defense is not an active customer. That reduces the immediate risk, but it does not remove the quality issue: a company refocusing on UAVs needs to prove that it can pass government procurement processes without this kind of friction.

Execution Will Matter More Than The Filing Itself

All three companies benefit from the same business tailwind, but their next test is different. For MER, the company needs to execute the new orders within 12 to 18 months and maintain profitability similar to prior agreements. For VELORYX, the next filing that changes the picture will be completion of the Aerosol transaction, closed financing, and proof that the new plant does not impair delivery. For AERODROME GROUP, the test is not backlog. It is clearing the Ministry of Defense uncertainty and proving that its UAV focus can produce new or existing defense customers that do not depend on the disputed tender.

The April 23 filings do not create one unified defense story. They do the opposite. MER received an order that strengthens existing backlog, VELORYX received an early commercial proof point for an acquired activity, and AERODROME GROUP received a reminder that defense-customer quality is measured after winning the tender too. In this field, the headline can look similar, but the quality of the engagement determines the value.