Core Viewpoint - Actelis Networks, Inc. has entered into a definitive agreement for the immediate exercise of certain outstanding warrants, allowing the purchase of 4,270,197 shares at a reduced exercise price of $0.37 per share, which is significantly lower than the original prices ranging from $1.18 to $2.00 per share [1][2]. Group 1 - The gross proceeds from the exercise of the existing warrants are expected to be approximately $1.6 million, which will be used for working capital and general corporate purposes [2]. - The company will issue new unregistered warrants to purchase up to 6,405,296 shares at an exercise price of $0.37 per share, with different expiration terms based on the number of shares [3]. - The new warrants have not been registered under the Securities Act of 1933, meaning they cannot be offered or sold in the U.S. without an effective registration statement or applicable exemption [4]. Group 2 - Actelis Networks is recognized as a market leader in hybrid fiber-copper networking solutions, particularly for IoT applications across various sectors including government, military, and telecom [6]. - The company emphasizes its "Cyber Aware Networking" initiative, which provides AI-based cyber monitoring and protection for edge devices, enhancing network security [6].

Core Insights - Actelis Networks has received a $0.5 million order from the FAA for advanced hybrid-fiber networking solutions aimed at modernizing air traffic control infrastructure [1][2][3] - The order is part of a larger $12.5 billion funding initiative approved by Congress for FAA's modernization efforts, with $4.75 billion specifically allocated for telecommunications infrastructure improvements [2][3] - Actelis' technology allows for rapid deployment and enhancement of existing infrastructure, providing fiber-grade performance and high cybersecurity standards without the need for extensive new installations [3][5] Company Role and Technology - Actelis plays a critical role in the FAA's air traffic control system upgrades, leveraging its established relationship with the agency since 2020 [4] - The company's hybrid-fiber technology addresses challenges in aviation infrastructure modernization by enabling immediate deployment capabilities across existing copper, coax, and fiber networks [5] - Actelis' solutions enhance operational reliability and cybersecurity, particularly in light of recent communication disruptions at major airports [6] Market Context - The FAA's modernization initiative is part of a multi-year, multi-billion-dollar transformation that could require investments exceeding $30 billion [2] - Recent incidents, such as communication blackouts at Newark Liberty International Airport, highlight the urgent need for reliable and secure networking solutions in aviation operations [6]

Core Viewpoint - Actelis Networks, Inc. is initiating an operational restructuring aimed at enhancing efficiency, reducing expenses by approximately 20% by the end of 2025, and improving market focus while strengthening sales in profitable growth verticals and regions [1][2][6] Group 1: Operational Restructuring - The restructuring plan includes leveraging AI, offshoring, and outsourcing to enhance agility and flexibility in operations [1][2] - The initiative is expected to result in a 20% reduction in quarterly expenses by the end of 2025 [1] - The company aims to optimize its real estate footprint while maintaining market presence through office consolidation and expanding offshore partnerships [4] Group 2: Technology and Efficiency - Actelis plans to utilize technology-enabled activity optimization to enhance sales, R&D, and operational tasks, adjusting team setups using AI and automation tools [3] - The company is moving towards more software development in network management and cybersecurity, reducing in-house hardware development [5] Group 3: Sales and Market Focus - The company is focusing on strengthening its sales force, particularly in high-growth verticals and geographies, following the hiring of a new Chief Revenue Officer [6] - Actelis is committed to maximizing shareholder and stakeholder value while ensuring no disruption to customer service during the optimization plan [2][6]

Company Performance - Actelis Networks, Inc. reported a quarterly loss of $0.21 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.16, and a decline from earnings of $0.01 per share a year ago, indicating an earnings surprise of -31.25% [1] - The company posted revenues of $0.94 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 5.9%, and a significant drop from year-ago revenues of $3.43 million [2] - Over the last four quarters, Actelis Networks has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [2] Stock Performance - Actelis Networks shares have declined approximately 53.1% since the beginning of the year, contrasting with the S&P 500's gain of 10% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $3 million, and for the current fiscal year, it is -$0.44 on revenues of $7.52 million [7] Industry Outlook - The Communication - Components industry, to which Actelis Networks belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8] - The performance of Actelis Networks may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Executive Summary & Business Update [CEO's Strategic Outlook](index=1&type=section&id=CEO%27s%20Strategic%20Outlook) Actelis' CEO, Tuvia Barlev, highlighted the company's **31%** sequential revenue growth in Q2 2025 and outlined a strategic restructuring plan focused on profitable growth in key markets like Federal/Military and MDU, aiming for an AI-enabled, efficient organization - Actelis grew **31%** in revenues sequentially vs. Q1 2025, driven by multiple comprehensive growth initiatives[2](index=2&type=chunk) - Secured first major US telecommunications carrier customer for MDU solutions, validating long-term strategy[2](index=2&type=chunk) - Adopting a restructuring plan with increased focus on valuable, fast-growing markets and geographies, aiming for profitable growth and a more efficient, AI-enabled, automated organization[3](index=3&type=chunk) [Key Financial Highlights (Q2 & H1 2025)](index=1&type=section&id=Key%20Financial%20Highlights%20(Q2%20%26%20H1%202025)) Actelis reported a **31%** sequential revenue increase in Q2 2025, reaching **$0.94 million**, but experienced significant year-over-year declines in both Q2 and H1 revenues and gross margins. Despite this, the company strengthened its liquidity by raising **$1.35 million** and reduced its net loss per share for the first half of 2025 | Metric | Q2 2025 ($) | Q1 2025 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Revenues | $0.94 million | $0.72 million (implied) | $1.70 million | $4.16 million | | Sequential Change | +31% | - | - | - | | YoY Change (H1) | - | - | -59% | - | | Metric | Q2 2025 (%) | Q2 2024 (%) | H1 2025 (%) | H1 2024 (%) | | :----- | :---------- | :---------- | :---------- | :---------- | | Gross Margin | 32% | 57% | 33% | 52% | | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----- | :------ | :------ | :------ | :------ | | Net Loss Per Share | $(0.21) | $(0.01) | $(0.43) | $(0.51) | | H1 YoY Change | - | - | -16% | - | - Successfully raised approximately **$1.35 million** during Q2 2025, including **$1 million** closed on July 2, strengthening the balance sheet while keeping debt extremely low[6](index=6&type=chunk) [Recent Business and Operational Highlights](index=2&type=section&id=Recent%20Business%20and%20Operational%20Highlights) Actelis achieved notable commercial successes, including a major US telecommunications carrier win and international expansion. The company also bolstered its leadership team with key sales appointments and initiated a comprehensive operational restructuring plan, incorporating AI and a new cryptocurrency treasury strategy, while maintaining cost discipline [Commercial Wins & Expansion](index=2&type=section&id=Commercial%20Wins%20%26%20Expansion) - Secured breakthrough order from a significant US telecommunications carrier for GigaLine MDU solutions, marking the first deployment with a carrier of this scale[6](index=6&type=chunk) - Secured follow-on transportation orders from major Mid-Atlantic county, Orange County California, and City of Eugene Oregon for intelligent transportation infrastructure upgrades[6](index=6&type=chunk) - Continued international expansion with orders from a Nordic municipality and Japanese infrastructure projects, demonstrating global validation of hybrid-fiber technology[6](index=6&type=chunk) [Leadership Appointments](index=2&type=section&id=Leadership%20Appointments) - Hired Mark DeVol as Chief Revenue Officer for the Americas, focusing on Federal/Military, ITS/IoT, and MDU verticals[6](index=6&type=chunk) - Appointed Jason Chasse as Director of Federal Sales in June 2025, bringing **30+ years** of specialized experience to accelerate federal growth[6](index=6&type=chunk) [Strategic Initiatives](index=2&type=section&id=Strategic%20Initiatives) - Adopting a strategic restructuring plan targeting **15-20%** cost reduction compared to Q2 2025 levels, focused on growth enablement, automation, AI integration, offshoring, and outsourcing over **6-9 months**[6](index=6&type=chunk) - Board approved a cryptocurrency treasury management strategy in August 2025, authorizing strategic allocation to established digital assets for long-term shareholder value creation[6](index=6&type=chunk) - Operating expenses of **$2.08 million** in Q2 2025 represent a **2%** decrease when adjusted for **$70,000** in foreign exchange headwinds compared to Q2 2024 (**$2.04 million**), demonstrating continued expense discipline[6](index=6&type=chunk) [CFO's Financial Commentary](index=3&type=section&id=CFO%27s%20Financial%20Commentary) CFO Yoav Efron reiterated the company's commitment to strengthening its financial foundation through disciplined capital management and low debt. He emphasized that the ongoing restructuring plan, targeting **15-20%** cost reduction, is expected to drive faster growth and achieve sustainable operational leverage towards breaking even, despite temporary margin pressures - The restructuring plan is expected to enable faster growth and achieve a **15-20%** cost reduction, creating sustainable operational leverage towards breaking even[7](index=7&type=chunk) - Maintained disciplined expense management, resulting in operating costs essentially flat year-over-year when adjusted for currency impacts[7](index=7&type=chunk) - Significant reduction in interest expenses reflects an improved debt situation, and the new cryptocurrency treasury strategy may open additional financial flexibility[7](index=7&type=chunk) Financial Performance [Condensed Consolidated Statements of Comprehensive Loss](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Actelis experienced substantial year-over-year declines in revenues and gross profit for both the second quarter and first half of 2025, leading to increased operating and net losses. While R&D and S&M expenses rose, G&A costs decreased due to cost reduction measures, and interest expenses were significantly reduced [Revenue and Gross Profit](index=3&type=section&id=Revenue%20and%20Gross%20Profit) | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Revenues | $941 thousand | $3.43 million | $1.66 million | $4.16 million | | YoY Change | -72.5% | - | -60.1% | - | | Cost of Revenues | $636 thousand | $1.49 million | $1.11 million | $1.99 million | | YoY Change | -57.3% | - | -44.2% | - | | Gross Profit | $305 thousand | $1.94 million | $556 thousand | $2.16 million | | YoY Change | -84.3% | - | -74.3% | - | - The decrease in revenues was primarily due to a decline in revenue from North America and the Europe, Middle East, and Africa (EMEA) region[8](index=8&type=chunk) - The decrease in gross profit was primarily due to increased indirect costs[10](index=10&type=chunk) [Operating Expenses](index=3&type=section&id=Operating%20Expenses) | Expense Category | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :--------------- | :---------- | :---------- | :---------- | :---------- | | R&D Expenses | $675 thousand | $603 thousand | $1.36 million | $1.25 million | | S&M Expenses | $700 thousand | $647 thousand | $1.37 million | $1.28 million | | G&A Expenses | $703 thousand | $790 thousand | $1.42 million | $1.61 million | - Research and development expenses increased primarily due to a rise in the utilization of professional services for the GL900 product line and exchange rate differences[11](index=11&type=chunk) - Sales and marketing expenses increased due to payroll expenses and engaging consultants to expand market reach in Europe and Asia[12](index=12&type=chunk) - General and administrative expenses decreased mainly due to cost reduction measures taken[13](index=13&type=chunk) [Net Loss and EPS](index=4&type=section&id=Net%20Loss%20and%20EPS) | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Operating Income (Loss) | $(1.77 million) | $66 thousand | $(3.58 million) | $(1.80 million) | | Net Comprehensive Loss | $(1.90 million) | $(78 thousand) | $(3.76 million) | $(2.06 million) | | Net Loss Per Share (Basic & Diluted) | $(0.21) | $(0.01) | $(0.43) | $(0.51) | - Operating loss increased due to the decline in sales, consistent operating expenditures, effects of exchange rate fluctuations, and increased vacation expenses[14](index=14&type=chunk) - Net loss increased due to lower sales and exchange rate effects[16](index=16&type=chunk) - Financial expenses and interest expenses decreased mainly due to repayment of loans, reducing interest expenses and other bank-related charges[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) Actelis reported a non-GAAP Adjusted EBITDA loss of **$1.7 million** for Q2 2025 and **$3.5 million** for H1 2025, a significant deterioration compared to a slight profit in Q2 2024 and a smaller loss in H1 2024, reflecting the overall decline in operational profitability | Metric | Q2 2025 ($) | Q2 2024 ($) | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | :---------- | :---------- | | Non-GAAP Adjusted EBITDA | $(1.71 million) | $11 thousand | $(3.47 million) | $(1.78 million) | | Adjusted EBITDA Margin | (182.17)% | 0.03% | (208.98)% | (42.70)% | Financial Position [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Actelis' total assets decreased by **27.3%** from December 31, 2024, primarily due to significant reductions in cash and trade receivables. Total liabilities also saw a decrease, while shareholders' equity declined by **62.9%**, largely influenced by an increased accumulated deficit | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change | | :----- | :---------------- | :-------------------- | :----- | | Total Assets | $5,982 thousand | $8,225 thousand | -27.3% | | Current Asset | June 30, 2025 ($) | December 31, 2024 ($) | Change | | :------------ | :---------------- | :-------------------- | :----- | | Cash and cash equivalents | $393 thousand | $1,967 thousand | -80.0% | | Trade receivables, net | $943 thousand | $1,616 thousand | -41.6% | | Total Current Assets | $4,828 thousand | $6,903 thousand | -30.0% | | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change | | :----- | :---------------- | :-------------------- | :----- | | Total Liabilities | $4,730 thousand | $5,240 thousand | -9.7% | | Total Shareholders' Equity | $1,024 thousand | $2,757 thousand | -62.9% | - Accumulated deficit increased from **$(44,062 thousand)** as of December 31, 2024, to **$(47,823 thousand)** as of June 30, 2025[26](index=26&type=chunk) Cash Flow Analysis [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2025, Actelis utilized **$3.2 million** in cash from operating activities, a **37.3%** increase in cash burn compared to the prior year. This was partially offset by **$1.6 million** in cash provided by financing activities, including proceeds from common stock issuance, resulting in an overall decrease in cash and cash equivalents | Metric | H1 2025 ($) | H1 2024 ($) | Change | | :----- | :---------- | :---------- | :----- | | Net cash used in operating activities | $(3,218 thousand) | $(2,343 thousand) | +37.3% | | Metric | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | | Net cash provided by financing activities | $1,643 thousand | $3 thousand | - Proceeds from issuance of common stock amounted to **$2,100 thousand** in H1 2025[31](index=31&type=chunk) | Metric | H1 2025 ($) | H1 2024 ($) | | :----- | :---------- | :---------- | | Decrease in cash, cash equivalents and restricted cash | $(1,572 thousand) | $(2,153 thousand) | | Metric | June 30, 2025 ($) | June 30, 2024 ($) | | :----- | :---------------- | :---------------- | | Balance of cash, cash equivalents and restricted cash at end of period | $695 thousand | $3,362 thousand | Company Information & Disclosures [About Actelis Networks, Inc.](index=4&type=section&id=About%20Actelis%20Networks%2C%20Inc.) Actelis Networks, Inc. is a leading provider of cyber-hardened, hybrid fiber-copper networking solutions for rapid deployment in wide-area IoT applications across various sectors, including government and military, and integrates AI-based cyber monitoring for enhanced network security - Actelis Networks is a market leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in wide-area IoT applications[18](index=18&type=chunk) - Serves government, ITS, military, utility, rail, telecom, and campus networks[18](index=18&type=chunk) - Provides AI-based cyber monitoring and protection for all edge devices through its 'Cyber Aware Networking' initiative[18](index=18&type=chunk) [Use of Non-GAAP Financial Information](index=5&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) Actelis utilizes non-GAAP financial measures, specifically Adjusted EBITDA, to offer a clearer view of its core operating performance by excluding certain non-recurring or non-cash items such as interest, stock-based compensation, and depreciation, which are reconciled to GAAP net loss - Non-GAAP Adjusted EBITDA is used to report financial results adjusted for items including financial expenses, stock-based compensation expenses, depreciation and amortization expense, tax expense, and impact of development expenses[19](index=19&type=chunk) [Cautionary Statement Concerning Forward-Looking Statements](index=5&type=section&id=Cautionary%20Statement%20Concerning%20Forward-Looking%20Statements) This section advises that the press release contains forward-looking statements based on management's current beliefs, which are inherently uncertain and subject to risks detailed in SEC filings. Actelis explicitly states it has no obligation to update these statements unless legally required - Forward-looking statements are based on management's current expectations, beliefs, and projections, which are inherently uncertain and subject to risks and uncertainties that could cause actual performance or results to differ materially[20](index=20&type=chunk) - Investors and security holders are urged to read the Company's filings with the SEC, including the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for more detailed information about risk factors[20](index=20&type=chunk) - The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws[21](index=21&type=chunk) [Contact Information](index=5&type=section&id=Contact%20Information) This section provides the contact details for investor relations, directing inquiries to Arx | Capital Markets & IR via their North American Equities Desk email address - Contact for investor relations is Arx | Capital Markets & IR, North American Equities Desk, via email at actelis@arxadvisory.com[22](index=22&type=chunk)

PART I - FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period [Item 1. Condensed Consolidated Interim Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Interim%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Actelis Networks, Inc., including balance sheets, statements of comprehensive loss, statements of mezzanine and shareholders' equity, and cash flows, along with their accompanying notes, for the periods ended June 30, 2025, and December 31, 2024 (balance sheet) or June 30, 2024 (income/cash flow) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, at specific points in time | Metric (U.S. dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | **Assets** | | | | Total Current Assets | 4,828 | 6,903 | | Total Non-Current Assets | 1,154 | 1,322 | | **Total Assets** | **5,982** | **8,225** | | **Liabilities** | | | | Total Current Liabilities | 4,239 | 4,583 | | Total Non-Current Liabilities | 491 | 657 | | **Total Liabilities** | **4,730** | **5,240** | | **Shareholders' Equity** | | | | Total Shareholders' Equity | 1,024 | 2,757 | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Details the company's revenues, expenses, and net comprehensive loss over specified interim periods | Metric (U.S. dollars in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Revenues | 1,662 | 4,157 | 941 | 3,431 | | Cost of Revenues | 1,106 | 1,994 | 636 | 1,488 | | Gross Profit | 556 | 2,163 | 305 | 1,943 | | Operating Expenses | 4,141 | 3,968 | 2,078 | 1,877 | | Operating Income (Loss) | (3,585) | (1,805) | (1,773) | 66 | | Net Comprehensive Loss | (3,761) | (2,064) | (1,901) | (78) | | Net loss per share (basic & diluted) | (0.43) | (0.51) | (0.21) | (0.01) | [Unaudited Condensed Consolidated Statements of Mezzanine Equity and Shareholders' Equity](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock,%20Warrants%20to%20Placement%20Agent%20and%20Shareholders'%20Equity) Outlines the changes in the company's equity components, including additional paid-in capital and accumulated deficit, over interim periods | Metric (U.S. dollars in thousands) | As of January 1, 2025 | As of June 30, 2025 | | :--------------------------------- | :-------------------- | :------------------ | | Additional paid-in capital | 46,818 | 48,846 | | Accumulated deficit | (44,062) | (47,823) | | Total Shareholders' Equity | 2,757 | 1,024 | - The company **issued 1,901,299 shares of common stock, net of offering costs, contributing $1,877 thousand to additional paid-in capital** during the six months ended June 30, 2025[28](index=28&type=chunk) - **Net comprehensive loss for the six months ended June 30, 2025, was $3,761 thousand**, increasing the accumulated deficit[28](index=28&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Reports the cash inflows and outflows from operating, investing, and financing activities for interim periods | Cash Flow Activity (U.S. dollars in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | (3,218) | (2,343) | | Net cash (used in)/provided by investing activities | (4) | 197 | | Net cash provided by financing activities | 1,643 | 3 | | Decrease in cash, cash equivalents and restricted cash | (1,572) | (2,153) | | Balance at end of period | 695 | 3,362 | [Notes to Condensed Consolidated Interim Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements) Provides essential additional information and detailed explanations supporting the condensed consolidated interim financial statements - The company incurred **significant losses ($3,761 thousand for six months ended June 30, 2025)** and **negative cash flows from operations ($3,218 thousand for six months ended June 30, 2025)**, raising **substantial doubt** about its ability to continue as a going concern[42](index=42&type=chunk) - Operations have **not been significantly impacted** by ongoing conflicts in Israel and the broader region as of August 14, 2025, though two employees were called to reserve duty[44](index=44&type=chunk) - The company is **not in compliance with Nasdaq's Minimum Shareholders' Equity Requirement** and **received a notification for not meeting the minimum bid price of $1.00 per share**, with **deadlines of August 27, 2025, and November 10, 2025, respectively, to regain compliance**[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) | Inventory Category (U.S. dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------------- | :------------ | :---------------- | | Raw materials | 1,580 | 1,521 | | Finished goods | 939 | 915 | | **Total Inventories** | **2,519** | **2,436** | | Inventory write-downs (six months) | 92 | 25 | - The company has an **outstanding Economic Injury Disaster Loan (EIDL Loan) of $150 thousand as of June 30, 2025, maturing in June 2050 with a 3.75% interest rate**[69](index=69&type=chunk) - As of June 30, 2025, the company had a **liability of approximately $731 thousand for royalties related to government R&D grants, having received $14,300 thousand and repaid $10,857 thousand in grants**[75](index=75&type=chunk) | Warrant Type | Number of Warrants | Exercise Price | Period Left (years) | | :----------------------- | :----------------- | :------------- | :------------------ | | Warrants May 2023 | 66,127 | $4.625 | 3.6 | | Warrants December 2023 | 1,360,170 | $1.18 - $1.47 | 4.2 | | Warrants June 2024 | 1,069,647 | $2 - $3.43 | 4.7 | | Warrants July 2024 | 2,069,317 | $2.5 - $1.75 | 1.45 | | Other | 36,942 | $10.27 - $50 | 1.20 - 2.1 | | **Outstanding as of June 30, 2025** | **4,602,203** | | | - During the first six months of 2025, the company **issued and sold 1,901,299 shares of common stock through an At-the-Market (ATM) offering for gross proceeds of approximately $2,100 thousand, incurring $223 thousand in offering costs**[81](index=81&type=chunk)[82](index=82&type=chunk)[36](index=36&type=chunk) | Geographic Area | Six months ended June 30, 2025 (U.S. dollars in thousands) | Six months ended June 30, 2024 (U.S. dollars in thousands) | Three months ended June 30, 2025 (U.S. dollars in thousands) | Three months ended June 30, 2024 (U.S. dollars in thousands) | | :------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | | North America | 1,100 | 3,463 | 623 | 3,075 | | Europe, the Middle East and Africa | 434 | 667 | 204 | 332 | | Asia Pacific | 128 | 27 | 114 | 25 | | **Total Revenues** | **1,662** | **4,157** | **941** | **3,431** | - On July 2, 2025, the company **completed a private placement offering for gross proceeds of approximately $1.0 million, issuing 1,626,019 shares of common stock and accompanying warrants**[98](index=98&type=chunk) [Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20%26%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing key trends, operational results, liquidity, and capital resources for the three and six months ended June 30, 2025, compared to the same periods in 2024. It also includes non-GAAP financial measures and critical accounting policies [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance by comparing revenues, costs, and operating expenses across different reporting periods | Metric (U.S. dollars in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | 1,662 | 4,157 | 941 | 3,431 | | Cost of Revenues | 1,106 | 1,994 | 636 | 1,488 | | Gross Profit | 556 | 2,163 | 305 | 1,943 | | R&D Expenses | 1,356 | 1,250 | 675 | 603 | | Sales & Marketing Expenses | 1,366 | 1,274 | 700 | 647 | | G&A Expenses | 1,419 | 1,607 | 703 | 790 | | Operating (Loss) Income | (3,585) | (1,805) | (1,773) | 66 | | Net Comprehensive Loss | (3,761) | (2,064) | (1,901) | (78) | - **Revenues decreased significantly** for both the three-month period (from **$3.4 million to $0.9 million**) and six-month period (from **$4.16 million to $1.7 million**) ended June 30, 2025, primarily due to a software and services renewal in 2024 and a large deal to Washington D.C. last year, with 2025 revenues being more backend loaded[103](index=103&type=chunk)[104](index=104&type=chunk) - **Operating loss increased** for both periods, reaching **$1.8 million** for the three months and **$3.6 million** for the six months ended June 30, 2025, mainly due to declining sales while operating expenditures remained consistent, coupled with exchange rate fluctuations and increased vacation expenses[112](index=112&type=chunk)[113](index=113&type=chunk) [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) Presents and reconciles non-GAAP financial metrics, such as Adjusted EBITDA, to provide additional insights into operational performance | Metric (U.S. dollars in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | 1,662 | 4,157 | 941 | 3,431 | | GAAP net loss | (3,761) | (2,064) | (1,901) | (78) | | Non-GAAP Adjusted EBITDA | (3,473) | (1,775) | (1,714) | 11 | | Adjusted EBITDA margin | (208.98)% | (42.70)% | (182.17)% | 0.03% | - **Non-GAAP Adjusted EBITDA is used to evaluate ongoing operations by adjusting for financial expenses, stock-based compensation, depreciation, tax expense, and other one-time costs**[119](index=119&type=chunk)[120](index=120&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash position, funding sources, and ability to meet its short-term and long-term financial obligations - The company has **historically funded operations through equity sales, debt financing, convertible loans, and royalty-bearing grants from the Israel Innovation Authority**[122](index=122&type=chunk) - As of June 30, 2025, the company had an **accumulated deficit of $48 million and cash on hand (including restricted cash equivalents) of $0.7 million**, indicating **insufficient resources to meet operating obligations for at least one year and raising substantial doubt about its ability to continue as a going concern**[125](index=125&type=chunk)[126](index=126&type=chunk) - On July 2, 2025, the company **closed a private placement offering, raising approximately $1 million in gross proceeds by issuing 1,626,019 shares of common stock and accompanying Series A-3 and Series A-4 warrants**[127](index=127&type=chunk) [Cash Flows](index=31&type=section&id=Cash%20Flows) Provides a detailed analysis of the company's cash generation and utilization across operating, investing, and financing activities | Cash Flow Activity (U.S. dollars in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | (3,211) | (2,343) | | Net cash (used in)/provided by investing activities | (4) | 197 | | Net cash provided by financing activities | 1,643 | 3 | | Net change in cash | (1,572) | (2,149) | - **Net cash used in operating activities increased to $3.2 million for the six months ended June 30, 2025, from $2.3 million in the prior year**, primarily due to lower sales[133](index=133&type=chunk) - **Net cash provided by financing activities significantly increased to $1.6 million for the six months ended June 30, 2025, compared to $3 thousand in the prior year**, mainly driven by **proceeds from the sale of common stock through an at-the-market (ATM) offering**[135](index=135&type=chunk) [Off-Balance Sheet Arrangements](index=31&type=section&id=Off-Balance%20Sheet%20Arrangements) Discloses any significant contractual obligations or financial arrangements not recognized on the consolidated balance sheets - The company **does not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships**[136](index=136&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Highlights the significant accounting policies and management judgments that are crucial to the preparation of the financial statements - The preparation of financial statements requires management to make **estimates, assumptions, and judgments**, particularly for areas like revenue from contracts with customers, which are **critical to financial results**[137](index=137&type=chunk)[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This item is not required for a smaller reporting company - **This disclosure is not required for a smaller reporting company**[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of June 30, 2025, with no material changes during the quarter - The **CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025**[142](index=142&type=chunk) - Management concluded that the **internal control over financial reporting was effective as of June 30, 2025**, based on the COSO framework[145](index=145&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[146](index=146&type=chunk) PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other disclosures relevant to the company's operations [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that are expected to have a material effect on its business, financial position, or results of operations - There are **no legal proceedings currently pending against the company that are believed to have a material effect on its business, financial position, or results of operations**[149](index=149&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section updates previously disclosed risk factors, highlighting new or changed risks related to the ongoing conflicts in the Middle East affecting Israeli operations, potential delisting from Nasdaq due to non-compliance with listing standards (shareholders' equity and minimum bid price), and the high risks associated with the company's new cryptocurrency treasury management strategy - **Ongoing armed conflicts and political instability in the Middle East, particularly in Israel where the company's R&D and operations are located, may harm operations, though no material impact has been experienced to date**[151](index=151&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - The company is **not in compliance with Nasdaq's Minimum Shareholders' Equity Requirement and faces a delisting risk if it fails to regain compliance by August 27, 2025**. Additionally, it **received a notification for not meeting the minimum bid price of $1.00 per share, with a deadline of November 10, 2025, to regain compliance**[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - A **new treasury management strategy involving cryptocurrency investments poses high risks due to market volatility, an evolving and uncertain regulatory environment, and unique audit, accounting, and internal control challenges**[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company completed a private placement offering on July 2, 2025, issuing 1,626,019 shares of common stock and accompanying warrants for gross proceeds of approximately $1.0 million, relying on Section 4(a)(2) of the Securities Act for exemption from registration - On July 2, 2025, the company **completed a private placement offering for gross proceeds of approximately $1.0 million**[169](index=169&type=chunk) - The offering involved the **issuance of 1,626,019 shares of Common Stock, Series A-3 warrants to purchase up to 1,626,019 shares, and Series A-4 Warrants to purchase up to 3,252,038 shares of Common Stock**[169](index=169&type=chunk) - The securities were issued in reliance on the **exemption from registration provided by Section 4(a)(2) of the Securities Act**[170](index=170&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - **None**[172](index=172&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[173](index=173&type=chunk) [Item 5. Other information](index=36&type=section&id=Item%205.%20Other%20information) No other information is reported under this item - **None**[174](index=174&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, warrant forms, agreements, and certifications - The **exhibits include the Twenty-Fourth Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, various forms of Series A-3, A-4, and Placement Agent Warrants, Securities Purchase Agreement, Registration Rights Agreement, and certifications by the Principal Executive and Financial Officers**[175](index=175&type=chunk) SIGNATURES The report is duly signed on behalf of Actelis Networks, Inc. by its Chief Executive Officer and Chief Financial Officer on August 14, 2025 - The report was **signed by Tuvia Barlev, Chief Executive Officer, and Yoav Efron, Chief Financial Officer and Deputy Chief Executive Officer, on August 14, 2025**[179](index=179&type=chunk)

Core Insights - Actelis Networks, Inc. reported a sequential revenue growth of 31% in Q2 2025, reaching $0.94 million, while the first half of 2025 revenue totaled $1.7 million, down from $4.16 million in the prior year period [6][9] - The company is restructuring to focus on high-growth markets and aims for a 15-20% cost reduction over the next 6-9 months [3][16] - Actelis secured significant contracts, including its first major US telecommunications carrier customer for MDU solutions, indicating strong market validation [6][9] Financial Performance - Q2 2025 revenues were $941,000, a decrease from $3.4 million in Q2 2024, while the first half of 2025 revenues were $1.7 million compared to $4.2 million in the same period in 2024 [9][31] - Gross margin for Q2 2025 was 32%, down from 57% in Q2 2024, with a first half gross margin of 33% compared to 52% in the prior year [6][11] - Operating loss for Q2 2025 was $1.77 million, compared to an operating profit of $66,000 in Q2 2024, reflecting a decline in sales [15][31] Operational Highlights - The company has appointed new leadership in sales and marketing, including Mark DeVol as Chief Revenue Officer for the Americas, to enhance focus on Federal/Military and Local Government markets [6][7] - Actelis is expanding its international presence with orders from various global markets, including Nordic municipalities and Japanese infrastructure projects [6][9] - The company is implementing an AI-enabled restructuring plan aimed at improving operational efficiency and market capture [3][16] Liquidity and Capital Management - Actelis raised approximately $1.35 million in Q2 2025, maintaining a low debt level and strengthening its balance sheet [6][8] - Financial expenses for Q2 2025 were $128,000, a decrease from $144,000 in Q2 2024, primarily due to loan repayments [17][18] - The company is adopting a cryptocurrency treasury management strategy to enhance financial flexibility [16]

"Mark's appointment as CRO Americas represents a pivotal step in our commercialization acceleration strategy," said Tuvia Barlev, Chairman and CEO of Actelis. "His deep relationships across Federal, Military, and Local Government markets, combined with his proven ability to build teams and scale revenue growth, directly aligns with our strategic priorities. Mark's expertise in deploying secure, mission-critical networking solutions will be instrumental as we capitalize on the significant opportunities in ou ...

Board authorizes strategic allocation to established digital assets as part of enhanced treasury management approach FREMONT, Calif, Aug. 06, 2025 (GLOBE NEWSWIRE) -- Actelis Networks, Inc. (NASDAQ: ASNS) ("Actelis" or the "Company"), a market leader in cyber-hardened, rapid deployment networking solutions for IoT and broadband applications, today announced that its Board of Directors has approved a new treasury management strategy that includes the strategic allocation of corporate funds to cryptocurrencie ...

Core Insights - Actelis Networks has secured a new order from a leading tier 2 telecommunications carrier in the UK to deploy its hybrid-fiber networking solutions for enterprise connectivity applications, highlighting the importance of its technology in the UK telecommunications market [1][2][3] Company Overview - Actelis Networks is a market leader in cyber-hardened, rapid deployment networking solutions for IoT and broadband applications, offering fiber-grade performance with the flexibility and cost-efficiency of hybrid fiber-copper networks [5] Market Expansion - The new order signifies Actelis' continued expansion in the UK telecommunications market, where its technology allows carriers to deliver fiber-grade connectivity over existing infrastructure, significantly reducing deployment costs and timelines compared to traditional methods [2][3] - The UK enterprise connectivity market is one of the largest in Europe and the world, providing a significant growth opportunity for Actelis as telecommunications providers seek innovative solutions [4][5] Strategic Value - The order reflects the strategic value of Actelis' hybrid-fiber technology, enabling UK telecommunications providers to rapidly expand high-quality enterprise services without substantial capital expenditure and lengthy deployment timelines [3][4] - Actelis' established presence in the UK market, including deployments for critical infrastructure applications, positions the company well for continued growth [4]