Actelis(ASNS) - 2025 Q1 - Quarterly Report

PART I Condensed Consolidated Interim Financial Statements (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 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 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 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] Notes to Condensed Consolidated Interim Financial Statements 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] - 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][36] - 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] - One customer (Customer A) represented 49% of the company's trade receivables as of March 31, 2025[53] - 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] Management's Discussion & Analysis of Financial Condition and Results of Operations 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 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] - 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] Liquidity and Capital Resources 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] - 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] 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] Quantitative and Qualitative Disclosure About Market Risk 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] Controls and Procedures 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] - Management concluded that the company's internal control over financial reporting was effective as of March 31, 2025, based on the COSO framework[129] - 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] PART II - OTHER INFORMATION Legal Proceedings 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] Risk Factors 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][136][137] - 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][146] - 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][147] - 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][151][152] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[153] Other Information The company reported no other information for this item - None[157] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files