Actelis(ASNS) - 2024 Q4 - Annual Report

Revenue and Market Position - Actelis Networks generated approximately 72% and 73% of its revenues from IoT customers for the years ended December 31, 2024 and 2023, respectively[27]. - The top ten customers accounted for approximately 74% and 66% of total revenues for the years ended December 31, 2024 and 2023, respectively[28]. - The global IoT market is expected to grow to $1.8 trillion by 2028, with a CAGR of 24.5$6,965.02 billion by 2030, with a CAGR of 25.8%[51]. - The company has deployed products and solutions with over 100 telecommunication service providers globally, focusing on both enterprise and residential customers[83]. - The company has projects in over 100 cities, primarily in North America and Europe, focusing on smart city applications[102]. Financial Performance - As of December 31, 2024, Actelis had an accumulated deficit of $44.0 million and cash on hand of$2.3 million[30]. - The company reported net losses of $4.4 million and$6.3 million for the years ended December 31, 2024 and 2023, respectively, resulting in an accumulated deficit of $44 million as of December 31, 2024[166]. - Negative cash flows from operations were$6.5 million and $6.6 million for the years ended December 31, 2024 and 2023, respectively[168]. - The company has cash on hand of$2.3 million and long-term restricted cash of $0.2 million as of December 31, 2024[168]. - The company has received a notification from Nasdaq regarding non-compliance with the Minimum Shareholders' Equity Requirement of$2.5 million, but has since regained compliance[171]. - The company’s financial condition raises substantial doubt about its ability to continue as a going concern[170]. Product Development and Innovation - Actelis introduced the MetaShield cyber-aware networking product family in 2024, enhancing its cybersecurity offerings[40]. - The company signed a strategic partnership in August 2024 to develop an AI-Powered SaaS offering under its 'Cyber Aware Networking' initiative[26]. - The company has invested nearly $100 million in developing its patented "Triple Shield" technology, which enhances connectivity performance and security across various markets[68]. - In 2023, the company introduced the "Gigaline" product family for hybrid-fiber-copper connectivity, addressing challenges faced by IoT and telecom customers[69]. - The MetaShield product, introduced in 2024, is an AI-powered cybersecurity solution that continuously monitors IoT devices for cyber risks and operational anomalies[74]. - The GL5000 and GL6000 product lines include over 40 variants of hardened, 10Gbps fiber switches to expand offerings into the IoT market[72]. Strategic Partnerships and Compliance - Actelis has been selected for deployment in sensitive applications with U.S. DoD and other government organizations, highlighting its market credibility[43]. - The company has been selected by Norseman Defense Technologies to provide solutions to all branches of the US Military and Government[99]. - The company regained compliance with Nasdaq Listing Rule 5550(b)(1) regarding minimum shareholders' equity, confirming compliance as of August 27, 2024[65]. - The company has entered into several large multi-year contracts with ITS, military, and airports, which will generate more predictable sales for the next several years[126]. Operational Challenges and Risks - The company may face challenges in generating sufficient revenue to support its cost structure and may need to execute a cost reduction plan if cash flow does not improve[169]. - The company is susceptible to unfavorable global economic conditions, which could weaken demand for its products and affect its ability to raise capital[176]. - The company may face challenges in raising additional capital, which could dilute stockholders' ownership interests and impact market value[178]. - The company is dependent on key manufacturers and suppliers, which poses risks related to procurement and product quality[161]. - The company relies on outsourced manufacturing, which may lead to quality and reliability risks, affecting production rates[188]. - Cybersecurity measures are critical, as breaches could lead to significant data loss and operational disruptions[197]. Workforce and Intellectual Property - As of December 31, 2024, the company had approximately 49 employees and contractors, with a focus on retaining and developing its workforce[142]. - The company has registered 16 patents in the United States and is actively maintaining its intellectual property through various legal protections[150]. Future Growth and Strategic Focus - The company is evaluating growth through mergers and acquisitions to fill business gaps and enhance its offerings[138]. - The company is expanding its network of partners and representatives in over 30 countries, including Italy, France, and the United States, to enhance global coverage[123]. - The company is investing in cybersecurity capabilities to position its products as the most cyber-safe IoT building blocks in the secure IoT communication market[127]. - The company plans to leverage its presence in the field to offer customers the option to host and integrate various applications into its IoT connectivity building blocks, aiming for recurring revenue models[131]. - The Bipartisan Infrastructure Law mandates approximately$1.2 trillion in investments, with specific allocations that could positively impact the company's communication infrastructure solutions[134]. Economic and Market Conditions - Prolonged inflation rates may negatively impact revenues and profitability, with potential decreases in customer spending leading to lower sales[177]. - Economic conditions, including the impact of pandemics and political uncertainty, may affect overall business performance[213]. - Fluctuations in foreign currency exchange rates can influence financial outcomes[214].