Core Insights - Actelis Networks has received its first significant order from a major US telecommunications carrier for its GigaLine solutions, marking a milestone in the company's strategy for the multi-dwelling unit (MDU) market [1][2][3] - The GigaLine 800 and GigaLine 900 solutions provide fiber-grade connectivity to MDUs without the need for new fiber installations, allowing for rapid expansion of high-speed services [2][3] - The partnership with Netceed has facilitated this order, highlighting the collaboration aimed at delivering innovative connectivity solutions across the US [3] Market Opportunity - The MDU market presents a substantial growth opportunity, with approximately 23 million apartment buildings in the United States [4] - Actelis' GigaLine 900 solution is noted for its power efficiency of less than 5 watts, offering a sustainable and cost-effective approach for telecommunications providers [4] Strategic Positioning - The GigaLine solutions are designed to address the 'last 100 meters' challenge in MDU environments, enabling faster broadband deployment while significantly reducing capital expenses [4] - The initial order is expected to pave the way for significant expansion and potential follow-on orders across the carrier's service area [1][4]

Core Insights - Actelis Networks is accelerating its federal and military market expansion by appointing Jason Chasse as Director of Federal Sales, leveraging his 30 years of experience in federal sales [1][3] - The company's solutions are recognized for addressing critical modernization needs in military and federal agencies, with products listed on the Department of Defense Information Network Approved Products List [2][4] Company Strategy - The appointment of Jason Chasse reflects Actelis' commitment to building long-term strategic relationships within the federal and defense community, aiming for growth in this sector [3] - Actelis' hybrid-fiber networking technology allows for immediate fiber-grade connectivity over existing infrastructure, significantly reducing deployment time from months to days [5] Market Position - Actelis has established strong relationships within the defense community, evidenced by recent contracts from U.S. Army installations and Army National Guard bases [4] - The company's GigaLine solution is effective for military base modernization, providing secure, multi-gigabit connectivity for critical operations [4]

Core Insights - Actelis Networks, Inc. has received a follow-on order worth $102,000 from a major Mid-Atlantic US county to enhance its Advanced Transportation Management System (ATMS) operations, building on a previous $260,000 project announced in July 2024 [1][2] Company Overview - Actelis is a market leader in cyber-hardened, rapid deployment networking solutions for IoT and broadband applications, focusing on hybrid fiber-copper technology [5] - The company provides AI-based cyber monitoring and protection for edge devices, enhancing network security and resilience [5] Market Position - The new order reinforces Actelis' position as a trusted provider of critical networking infrastructure for intelligent transportation systems across the nation [2][3] - Recent deployments in cities such as Seattle, Orange County, and Eugene, as well as projects in Northern Ireland and other regions, highlight Actelis' growing recognition in the global market [4] Technology and Solutions - The order aims to support the county's Transportation Systems Technical operations, providing secure, high-performance connectivity for smart transportation applications, including automated traffic signal control and real-time intersection monitoring [3][4] - Actelis' hybrid-fiber technology allows for rapid extension of digital capabilities, enhancing safety, reducing congestion, and improving transportation efficiency [4]

Company Performance - Actelis Networks, Inc. reported a quarterly loss of $0.22 per share, which was better than the Zacks Consensus Estimate of a loss of $0.25, and an improvement from a loss of $0.50 per share a year ago, representing an earnings surprise of 12% [1] - The company posted revenues of $0.72 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 39.92%, and a slight decrease from year-ago revenues of $0.73 million [2] - Actelis Networks has not surpassed consensus revenue estimates over the last four quarters [2] Stock Performance - Actelis Networks shares have declined approximately 42.5% since the beginning of the year, contrasting with the S&P 500's decline of only 0.6% [3] - The current Zacks Rank for Actelis Networks is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $3 million, and for the current fiscal year, it is -$0.42 on revenues of $10 million [7] - The estimate revisions trend for Actelis Networks is currently unfavorable, which may impact future stock movements [6] Industry Context - The Communication - Components industry, to which Actelis Networks belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, suggesting a challenging environment for the stock [8]

Revenue Performance - Revenues for Q1 2025 were stable at $0.72 million, flat compared to $0.72 million in Q1 2024, with a seasonal focus on growing the pipeline [3] - Revenues for the three months ended March 31, 2025, were $721 million, a slight decrease of 0.7% compared to $726 million in the same period of 2024 [26] - A 31% decline in revenues from the EMEA region was noted, offset by a 23% increase in revenues from North America [7] Profitability and Loss - Gross margin improved to 35% in Q1 2025, up from 30% in Q1 2024, driven by higher margins in Federal and Military sectors and disciplined cost management [3] - Operating loss decreased to $1.81 million in Q1 2025, a 3% improvement from $1.87 million in Q1 2024, attributed to enhanced gross margins and expense control [3] - Net loss per share improved by 56% to $(0.22) in Q1 2025, compared to $(0.50) in the same period last year [3] - The net comprehensive loss for the period was $1,860 million, an improvement from a loss of $1,986 million in the prior year [26] - The net loss per share attributable to common shareholders improved to $(0.22) from $(0.50) year-over-year [26] - The company reported a GAAP net loss margin of (257.97)% for the period, an improvement from (273.55)% in the prior year [37] Expenses and Investment - Research and development expenses rose to $681,000 in Q1 2025, up from $647,000 in Q1 2024, primarily due to increased utilization of professional services [10] - Research and development expenses increased to $681 million, up from $647 million year-over-year, indicating continued investment in innovation [26] - Total operating expenses decreased to $2,063 million from $2,091 million, reflecting a reduction of 1.3% [26] Cash Flow and Balance Sheet - Cash flows from operating activities showed a significant increase in net cash used, totaling $2,174 million compared to $203 million in the previous year [33] - The balance of cash, cash equivalents, and restricted cash at the end of the period was $1,424 million, down from $5,145 million year-over-year [35] - The balance sheet strengthened with shareholders' equity increasing to $2.61 million, maintaining compliance with Nasdaq listing requirements [3] Business Development - New orders were received from multiple regions including the Nordic region, Hungary, the US, UK, and Japan, validating the company's value proposition [2] - The company engaged with multi-billion dollar partners to expand its presence in Intelligent Transportation Systems markets [6] - The company continues to focus on its three main business areas: Federal and Military, Multi-Dwelling Units, and Intelligent Transportation Systems [6]

Core Insights - Actelis Networks, Inc. reported a gross margin expansion to 35% for Q1 2025, driven by a strategic focus on growing its deal pipeline and high-margin wins while maintaining stable revenues and disciplined cost management [1][7][6] Financial Performance - Revenues for Q1 2025 were $721,000, slightly down from $726,000 in Q1 2024, primarily due to a 31% decline in revenues from the EMEA region, offset by a 23% increase in North America [6][7] - Gross profit for Q1 2025 was $251,000, representing 35% of revenue, an increase from $220,000 or 30% of revenue in Q1 2024, attributed to improved regional revenue mix and efficient cost management [9][7] - Operating loss improved to $1.81 million in Q1 2025 from $1.87 million in the same period last year, reflecting enhanced gross margins and continued expense control measures [11][7] - Net loss per share decreased to $(0.22) for Q1 2025, a 56% improvement compared to $(0.50) in Q1 2024 [7][12] Operational Highlights - The company is focusing on three main business areas: Federal and Military, Multi-Dwelling Units (MDU), and Intelligent Transportation Systems (ITS), with an emphasis on growing the pipeline for the remainder of the year [7][5] - New orders were received from various regions, including the Nordic region, Hungary, the US, UK, and Japan, validating the value proposition of Actelis' solutions [2][7] - The company engaged with multi-billion dollar partners, enhancing opportunities in ITS markets and expanding its sales presence across Europe [7][5] Cost Management - Operating expenses for Q1 2025 were $2.06 million, a 1.5% decrease from $2.09 million in Q1 2024, reflecting consistent efforts to reduce expenses [11][7] - Interest expenses significantly decreased due to the company becoming nearly debt-free, contributing to a stronger financial position [5][12] Market Position - Actelis Networks is recognized as a market leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in various applications, including government and military sectors [14][1] - The company's innovative portfolio offers fiber-grade performance with the flexibility and cost-efficiency of hybrid networks, enhancing its competitive edge in the market [14][1]

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].