PART I [Condensed Consolidated Interim Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Interim%20Financial%20Statements%20(Unaudited)) The unaudited interim financial statements for Q1 2025 reveal a net loss of $1.86 million, a decline in total assets, and significant going concern doubts due to recurring losses and negative cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $7.11 million from $8.23 million, while total liabilities and shareholders' equity also saw slight reductions Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $5,847 | $6,903 | | Cash and cash equivalents | $1,122 | $1,967 | | **Total Assets** | **$7,107** | **$8,225** | | **Total Current Liabilities** | $3,740 | $4,583 | | **Total Liabilities** | **$4,301** | **$5,240** | | **Total Shareholders' Equity** | **$2,578** | **$2,757** | [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) For Q1 2025, the company reported a net loss of $1.86 million, a slight improvement from the prior year, with stable revenues and operating expenses Statement of Comprehensive Loss (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $721 | $726 | | Gross Profit | $251 | $220 | | Total Operating Expenses | $2,063 | $2,091 | | Operating Loss | $(1,812) | $(1,871) | | **Net Comprehensive Loss** | **$(1,860)** | **$(1,986)** | | Net loss per share (basic and diluted) | $(0.22) | $(0.50) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to $2.17 million in Q1 2025, partially offset by $1.33 million from financing activities, leading to an $0.84 million decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,174) | $(203) | | Net cash provided by (used in) investing activities | $1 | $(1) | | Net cash provided by (used in) financing activities | $1,331 | $(164) | | **Decrease in Cash and Equivalents** | **$(843)** | **$(370)** | | **Ending Cash and Equivalents** | **$1,424** | **$5,145** | - Financing activities in Q1 2025 included **$1.75 million** in proceeds from the issuance of common stock, net of **$170,000** in offering costs[26](index=26&type=chunk) [Notes to Condensed Consolidated Interim Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements) Notes reveal a going concern warning due to recurring losses and negative cash flows, ongoing Nasdaq listing compliance issues, and significant customer concentration - The company's history of significant losses, negative cash flows, and an accumulated deficit of **$46 million** as of March 31, 2025, raise substantial doubt about its ability to continue as a going concern[32](index=32&type=chunk) - The company has faced delisting notices from Nasdaq for failing to meet the Minimum Shareholders' Equity Requirement and the minimum bid price requirement, although it has regained compliance at various points[35](index=35&type=chunk)[36](index=36&type=chunk) - During Q1 2025, the company sold **1,394,934 shares** of common stock through its At the Market (ATM) offering, raising gross proceeds of approximately **$1.75 million**[71](index=71&type=chunk) - One customer (Customer A) represented **49%** of the company's trade receivables as of March 31, 2025[53](index=53&type=chunk) - As a subsequent event, on May 12, 2025, Nasdaq again notified the company of non-compliance with the minimum bid price requirement of **$1.00 per share**[87](index=87&type=chunk) [Management's Discussion & Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20%26%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, highlighting a slight revenue decrease, improved gross margin, a narrowed net loss, and reiterates significant going concern doubts due to recurring losses and negative operating cash flow [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 2025 revenues slightly decreased to $721,000, driven by an EMEA decline offset by North American growth, while gross profit improved due to a favorable regional sales mix Q1 2025 vs Q1 2024 Results (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $721 | $726 | | Gross Profit | $251 | $220 | | R&D Expenses | $681 | $647 | | S&M Expenses | $666 | $627 | | G&A Expenses | $716 | $817 | | Operating Loss | $(1,812) | $(1,871) | | Net Loss | $(1,860) | $(1,986) | - The slight revenue decrease was due to a **31%** decline in the EMEA region, partially offset by a **23%** increase in North America[96](index=96&type=chunk) - The decrease in cost of revenues and improvement in gross margin was primarily due to a change in the regional mix of revenue, with an increase in more profitable North American sales[97](index=97&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is critical, with $1.4 million in cash and significant going concern doubts, necessitating additional financing beyond current ATM equity program proceeds - Management has determined that the company does not have sufficient resources to meet its operating obligations for at least one year, raising substantial doubt about its ability to continue as a going concern[115](index=115&type=chunk) - The company is utilizing an At-The-Market (ATM) offering program. As of March 31, 2025, it had sold **2,989,784 shares** for approximately **$3.7 million** in net proceeds, with **$0.9 million** remaining available under the program[112](index=112&type=chunk) Cash Flow Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,175) | $(205) | | Net cash provided by (used in) financing activities | $1,331 | $(164) | | Net change in cash | $(843) | $(370) | - The increase in cash used in operating activities in Q1 2025 compared to Q1 2024 was mainly due to a one-time cash inflow of approx. **$1.14 million** from a customer advance in Q1 2024 that did not recur[117](index=117&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) Disclosure is not required for this section as the company qualifies as a smaller reporting company - Disclosure is not required for a smaller reporting company[124](index=124&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2025, with no material changes reported during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[126](index=126&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2025, based on the COSO framework[129](index=129&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[130](index=130&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that would materially affect its business, financial position, or results of operations - To the knowledge of management, there are no material legal proceedings currently pending, contemplated, or threatened against the company[133](index=133&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Key risks include geopolitical instability in Israel, potential Nasdaq delisting due to non-compliance with listing standards, and adverse impacts from changes in international trade policies and tariffs - The company's operations, with most employees and facilities located in Israel, are subject to risks from armed conflicts and political instability in the region, such as the war with Hamas and hostilities with Hezbollah[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - The company faces a significant risk of being delisted from the Nasdaq Capital Market for failing to maintain compliance with listing requirements, including minimum shareholders' equity and a minimum bid price of **$1.00 per share**[143](index=143&type=chunk)[146](index=146&type=chunk) - On May 12, 2025, Nasdaq again notified the company of non-compliance with the minimum bid price rule, giving it until November 10, 2025, to regain compliance[146](index=146&type=chunk)[147](index=147&type=chunk) - Changes in international trade policies and tariffs pose a risk, as they could increase the cost of products manufactured in Israel and Taiwan and imported into the U.S., potentially reducing demand and harming financial results[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[153](index=153&type=chunk) [Other Information](index=35&type=section&id=Item%205%20Other%20information) The company reported no other information for this item - None[157](index=157&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files

Core Insights - Actelis Networks, Inc. has received a new order to support railway modernization and digitization initiatives in Northern Ireland, deploying advanced networking technology trackside to enhance communications along railway lines [1][2] Group 1: Company Overview - Actelis is a market leader in cyber-hardened, rapid deployment networking solutions for IoT and broadband applications, focusing on sectors such as government, military, and transportation [5] - The company offers hybrid fiber-copper networking solutions that provide fiber-grade performance with cost-efficiency, enhancing network security through its "Cyber Aware Networking" initiative [5] Group 2: Order Details - The order was placed through the Kenton Group, a long-time partner of Actelis, and aims to enable next-generation digital rail operations by delivering secure, high-performance connectivity for critical IoT applications [2][3] - The deployment will leverage existing infrastructure to minimize costs and time, supporting automated signaling systems, real-time asset monitoring, advanced security surveillance, and intelligent train control [2] Group 3: Industry Impact - This order signifies Actelis' expanding presence in the rail transportation sector in the UK and Ireland, addressing the need for robust digital infrastructure to support complex automated control systems and enhanced security applications [3][4] - Actelis' solutions are designed to operate reliably in extreme conditions, facilitating real-time data transmission for operational technology networks and security systems [3][4]

Company Overview - Actelis Networks, Inc. is a market leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in wide-area IoT applications, serving sectors such as government, military, utilities, and telecom [2] - The company offers fiber-grade performance combined with the flexibility and cost-efficiency of hybrid fiber-copper networks [2] - Actelis' "Cyber Aware Networking" initiative provides AI-based cyber monitoring and protection for all edge devices, enhancing network security and resilience [2] Financial Reporting - Actelis Networks will report its first quarter 2025 financial results and operational highlights after the close of the U.S. financial markets on May 13, 2025 [1]

Core Viewpoint - Actelis Networks, Inc. has received a new order to supply advanced networking technology for critical infrastructure modernization in Japan, emphasizing its strategic presence in the region [1][3]. Company Overview - Actelis Networks, Inc. is a market leader in hybrid fiber-copper, cyber-hardened networking solutions, focusing on rapid deployment in wide-area IoT applications across various sectors including government, military, and utilities [4]. - The company's innovative portfolio offers fiber-grade performance while maintaining the flexibility and cost-efficiency of hybrid fiber-copper networks [4]. Recent Developments - The new order, placed through a leading Japanese distributor, aims to enable secure connectivity for infrastructure applications, particularly in transportation systems, utilities, and defense networks [2]. - This order builds on Actelis' established presence in Japan, where it has previously supplied solutions for major highway and rail systems [3]. - Actelis' hybrid-fiber networking solutions allow organizations to achieve fiber-grade performance while leveraging existing wiring infrastructure, significantly reducing deployment time and costs [3]. Strategic Importance - Japan is identified as a strategic region for Actelis, with the company providing secure connectivity solutions that can be rapidly deployed over existing infrastructure, thus saving time and costs for network operators [3].

Core Insights - Actelis Networks, Inc. has secured a new order to modernize the communications infrastructure for a major Nordic city, enhancing its European presence [1][4] - The company is collaborating with a leading European traffic technology provider to supply advanced hybrid-fiber networking solutions, aimed at improving connectivity in a city with over 300,000 residents [2][3] - Actelis' technology is designed to provide fiber-grade performance while utilizing existing infrastructure, which reduces deployment time and costs compared to traditional methods [3][4] Company Overview - Actelis Networks specializes in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in various applications, including IoT, government, and transportation systems [5] - The company's innovative portfolio offers flexibility and cost-efficiency, while its "Cyber Aware Networking" initiative enhances network security through AI-based monitoring [5]

Core Viewpoint - Actelis Networks, Inc. has received a follow-on order from the City of Eugene, Oregon to expand its traffic management system, indicating the growing adoption of its hybrid fiber-copper networking solutions for smart city applications [1][2][5] Company Overview - Actelis Networks is a market leader in cyber-hardened, rapid deployment networking solutions, specializing in hybrid fiber-copper technologies for IoT and broadband applications [1][5] - The company offers fiber-grade performance with the flexibility and cost-efficiency of hybrid fiber-copper networks, enhancing connectivity for various sectors including government and transportation [5] Recent Developments - The new order builds on a previous deployment announced in February 2023, as part of Eugene's Transportation Management Plan aimed at tripling the current rate of transit by foot, bicycles, and public transport by 2035 [2] - Actelis' technology integrates with traffic controllers and IoT devices, providing live data to the city's operations center, thereby modernizing traffic management capabilities [3][4] Partnerships - The equipment is being delivered through Western Systems, a long-standing partner of Actelis, which collaborates with various agencies to implement advanced traffic solutions across the western United States [4]

Core Insights - Actelis Networks, Inc. has secured a new order to modernize the intelligent transportation system infrastructure in Orange County, California, enhancing its presence in the transportation sector [1][2] - The order, placed through Western Systems, will provide advanced networking technology for secure, high-speed connectivity in traffic management systems, benefiting a region with over 3 million residents [2][4] - Actelis' hybrid-fiber networking solutions offer fiber-grade performance while utilizing existing infrastructure, reducing deployment time and costs significantly [3][4] Company Overview - Actelis Networks is a leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in various applications, including government and intelligent transportation systems [5] - The company's technology is designed to withstand harsh environments and provides military-grade security against threats to essential transportation networks [3][5] - Actelis has seen growing adoption of its technology across the United States, indicating its unique value proposition in smart city initiatives and infrastructure modernization [4]

Core Viewpoint - Actelis Networks, Inc. has received new orders for its GigaLine 800 (GL800) networking solution aimed at modernizing and enhancing the cybersecurity of military base operations [1][2]. Company Overview - Actelis Networks, Inc. is a leader in cyber-hardened, rapid deployment networking solutions for IoT and broadband applications, focusing on hybrid fiber-copper technologies [6]. - The company offers a portfolio that combines fiber-grade performance with the cost-efficiency of hybrid networks, targeting various sectors including military, government, and utilities [6]. Product Details - The GL800 solution provides secure, multi-gigabit connectivity over existing wiring, allowing for rapid deployment without extensive construction [3][8]. - It supports high-speed internet access and improved communications, essential for modern military operations, including barracks and information centers [2][5]. - The solution is designed to meet the growing bandwidth demands of military applications, facilitating the integration of smart IoT devices [2][5]. Recent Developments - The recent orders, valued at $140,000, are part of military base modernization initiatives, enhancing connectivity across various facilities [2]. - Actelis has established a strong presence in the defense sector, with its products being used for barracks connectivity, surveillance systems, and VoIP upgrades [5]. Competitive Advantages - Key advantages of the GL800 include rapid deployment capabilities, immediate gigabit-grade connectivity, and Department of Defense-certified security [8]. - The solution is recognized for its reliability and performance in challenging environments, further supported by advanced remote monitoring and management features [8].

Core Insights - Actelis Networks has received an order from a major North American railway group to support the implementation of its Positive Train Control (PTC) system across challenging track sections [1][3] - PTC systems are designed to enhance rail safety by preventing train-to-train collisions, derailments from excessive speed, and movement through incorrectly positioned switches [2] - Actelis' hybrid-fiber networking technology maximizes bandwidth over existing copper infrastructure while ensuring network diversity through wireless and fiber connections [4] Company Overview - Actelis Networks is a leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in various applications, including rail, military, and utility sectors [6] - The company's technology is engineered to perform in extreme conditions, providing fast deployment options that avoid significant costs and delays associated with new infrastructure installation [5][8] - Actelis' solutions are designed to maintain network integrity in remote locations and provide uninterrupted connectivity during extreme weather events [8]

Core Insights - Actelis Networks, Inc. has received an order from a major North American railway group to support the implementation of its Positive Train Control (PTC) system across challenging track sections [1][3] - PTC is a significant advancement in rail safety, aimed at preventing train-to-train collisions, derailments from excessive speed, and incorrect switch movements [2] - The railway's selection of Actelis' technology highlights its capability to operate in extreme environmental conditions, ensuring network continuity amidst challenges like avalanches and severe weather [3][5] Company Technology - Actelis' hybrid-fiber networking technology allows railway operators to maximize bandwidth over existing copper infrastructure while integrating wireless and fiber connections for network diversity [4] - The technology is designed to provide essential redundancy for safety-critical systems, ensuring no downtime [4] - Actelis' solutions are engineered for rapid deployment, avoiding the high costs and delays associated with new infrastructure installation [5][8] Industry Context - The implementation of PTC systems is part of a broader industry initiative to enhance safety across North America's rail networks, particularly in areas with unique environmental challenges [3] - The company's technology supports mission-critical safety systems with military-grade security, maintaining network integrity in remote locations [8]