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Actelis Networks Reports Fiscal First Quarter 2024

FREMONT, Calif., May 14, 2024 (GLOBE NEWSWIRE) — Actelis Networks, Inc. (NASDAQ: ASNS) (“Actelis” or the “Company”), a market leader in cyber-hardened, rapid deployment networking solutions for wide area IoT applications, today reported financial results for the fiscal first quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights:

Recent Company Highlights:

“Actelis continues to drive momentum in customer acquisitions, partnerships in technology and sales distribution and expansion. I am pleased with our progress with cyber-aware networking as we combine our own expertise with those of 3rd party technology partners. Our solutions continue to win customers domestically and internationally, some already disclosed and others moving through our pipeline, and our partner network has expanded adding new names we just recently announced such as Carahsoft and Netceed to name a few,” said Tuvia Barlev, Chairman and CEO of Actelis. Despite macroeconomic headwinds, cyber-secure IoT connectivity of everything is essential in all our verticals for any data-oriented solution.”

“We will continue to invest in developing our target markets and look for cost saving measures operationally as we enter our third year as a publicly traded company. We are continuing our investment in the opportunities in IoT and cyber aware networking strengthened by our FIPS compliance and continue to serve residential and enterprise telecom customers with our new MDU solution,” Barlev added. “Overall, we are excited by our growth opportunity and future prospects as we continue to execute on our strategy.”

Fiscal First Quarter 2024 Financial Results:

Revenues for the three months ended March 31, 2024, amounted to $0.73 million, compared to $1.85 million for the three months ended March 31, 2023. The decrease from the corresponding period was primarily attributable to a decrease of $236,000 of revenues generated from North America, a decrease of $636,000 of revenues generated from Europe the Middle East and Africa as a major project phase completed in the three months ended March 31, 2023, and a decrease of $250,000 of revenues generated from Asia Pacific.

Cost of revenues for the three months ended March 31, 2024, amounted to $0.51 million compared to $1.16 million for the three months ended March 31, 2023. The decrease from the corresponding period was mainly due to the decrease in revenues, partially offset by the higher effect of indirect costs as a higher percent of the lower revenues.

Gross profit for the three months ended March 31, 2024, amounted to $220,000 or 30% of revenue, compared to $688,000, or 37% of revenue for the three months ended March 31, 2023. The decrease from the corresponding period was mainly due to a favorable product mix and higher effect of indirect costs as a higher percent of the lower revenues.

Research and development expenses for the three months ended March 31, 2024, amounted to $0.65 million compared to $0.76 million for the three months ended March 31, 2023. The decrease is mainly due to a decrease in payroll expenses.

Sales and marketing expenses for the three months ended March 31, 2024, amounted to $0.63 million compared to $0.93 million for the three months ended March 31, 2023. The decrease was mainly due to a decrease in commission expenses as a result of the decrease in revenues primarily driven by the project phase completion in Europe, and a decrease in payroll associated with the Company’s cost reduction measures.

General and administrative expenses for the three months ended March 31, 2024, amounted to $0.82 million compared to $0.87 million for the three months ended March 31, 2023.

Operating loss for the three months ended March 31, 2024, was $1.87 million, compared to an operating income of $1.86 million for the three months ended March 31, 2023.

Other Financial expenses, net and interest expenses for the three months ended March 31, 2024, were $0.12 million (including $0.2 million interest expenses) compared to $0.03 million (including $0.2 million interest expenses) for the three months ended March 31, 2023. The increase is mainly due to a decrease in income from exchange rate differences.

Net loss for the three months ended March 31, 2024, was $2.0 million, compared to net loss of $1.9 million for the three months ended March 31, 2023.

Adjusted EBITDA loss, a non-GAAP measurement of operating performance (reconciled below to Net Loss), for the three months ended March 31, 2024, was $1.8 million, compared to $1.6 million in the comparable year-ago period. This was primarily a result of a decrease in revenues.

The Company reported a balance sheet with $10.5 million of total assets compared to $11.2 million as of December 31, 2023, $12.0 million of total liabilities compared to $10.8 million as of December 31, 2023, $0.2 million of Mezzanine equity compared to $0.2 million as of December 31,2023, and $1.7 million of capital deficiency compared to shareholders equity of $0.2 million as of December 31, 2023.

About Actelis Networks, Inc.

Actelis Networks, Inc. (NASDAQ: ASNS) is a market leader in cyber-hardened, rapid-deployment hybrid fiber networking solutions for wide-area IoT applications including federal, state and local government, ITS, military, utility, rail, telecom and campus applications. Actelis’ unique portfolio of hybrid fiber-copper, environmentally hardened aggregation switches, high density Ethernet devices, advanced management software and cyber-protection capabilities, unlocks the hidden value of essential networks, delivering safer connectivity for rapid, cost-effective deployment. For more information, please visit www.actelis.com.

Use of Non-GAAP Financial Information

Non-GAAP Adjusted EBITDA, and backlog of open orders are Non-GAAP financial measures. In addition to reporting financial results in accordance with GAAP, we provide Non-GAAP operating results adjusted for certain items, including: financial expenses, which are interest, financial instrument fair value adjustments, exchange rate differences of assets and liabilities, stock based compensation expenses, depreciation and amortization expense, tax expense, and impact of development expenses ahead of product launch. We adjust for the items listed above and show Non-GAAP financial measures in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.

Cautionary Statement Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov.

Forward-looking statements speak only as of the date the statements are made. 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. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. Actelis is not responsible for the contents of third-party websites.

Investor Relations Contact:
Kirin Smith
PCG Advisory
ksmith@pcgadvisory.com

ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(U. S. dollars in thousands except for share and per share amounts)

  March 31,
2024
  December 31,
2023
Assets      
CURRENT ASSETS:      
Cash and cash equivalents 1,211   620
Restricted cash equivalents 1,392   1,565
Short term deposits 197   197
Trade receivables, net of allowance for credit losses of  $168 as of March 31, 2024, and December 31, 2023. 533   664
Inventories 2,608   2,526
Prepaid expenses and other current assets, net of allowance for doubtful debts of $181 and $144 as of March 31, 2024, and December 31, 2023, respectively 249   340
TOTAL CURRENT ASSETS 6,190   5,912
       
NON-CURRENT ASSETS:      
Property and equipment, net 58   61
Prepaid expenses 592   592
Restricted cash and cash equivalents 2,542   3,330
Restricted bank deposits 90   94
Severance pay fund 238   238
Operating lease right of use assets 728   918
Long term deposits 78   78
TOTAL NON-CURRENT ASSETS 4,326   5,311
       
TOTAL ASSETS 10,516   11,223
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
UNAUDITED
(U. S. dollars in thousands except for share and per share amounts)
  March 31,
2024
    December 31,
2023
 
Liabilities, Mezzanine Equity and shareholders’ equity (capital deficiency)          
CURRENT LIABILITIES:          
Short term loan 574      
Current maturities of long-term loans 1,088     1,335  
Trade payables 2,258     1,769  
Deferred revenues 305     389  
Employee and employee-related obligations 855     737  
Advances from reseller 1,143      
Accrued royalties 1,087     1,062  
Operating lease liabilities 465     498  
Other accrued liabilities 1,115     1,122  
TOTAL CURRENT LIABILITIES 8,890     6,912  
NON-CURRENT LIABILITIES:          
Long-term loan, net of current maturities 2,521     3,154  
Deferred revenues 68     71  
Operating lease liabilities 254     405  
Accrued severance 269     270  
Other long-term liabilities 23     23  
TOTAL NON-CURRENT LIABILITIES 3,135     3,923  
           
TOTAL LIABILITIES 12,025     10,835  
COMMITMENTS AND CONTINGENCIES (Note 6)          
MEZZANINE EQUITY        
Redeemable Convertible Preferred Stock $0.0001 par value, 10,000,000 authorized; None issued and outstanding as of March 31, 2024 and December 31, 2023.      
WARRANTS TO PLACEMENT AGENT (Note 7d) 159     159  
SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY):          
Common stock, $0.0001 par value: 30,000,000 shares authorized; 3,010,244 and 3,007,745 shares issued and outstanding as of March 31, 2024, and December 31, 2023, respectively. 1     1  
Non-voting common stock, $0.0001 par value: 2,803,774 shares authorized as of March 31, 2024, and December 31, 2023, None issued and outstanding as of March 31, 2024, and December 31, 2023.      
Additional paid-in capital 40,005     39,916  
Accumulated deficit (41,674 )   (39,688 )
TOTAL SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY) (1,668 )   229  
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY) 10,516     11,223  


The accompanying notes are an integral part of these condensed consolidated financial statements (Unaudited).

ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(U. S. dollars in thousands except for share and per share amounts)
  Three months ended
March 31,
 
  2024     2023  
           
REVENUES   726       1,848  
COST OF REVENUES   506       1,160  
GROSS PROFIT   220       688  
               
OPERATING EXPENSES:              
Research and development expenses   647       757  
Sales and marketing expenses, net   627       929  
General and administrative expenses   817       865  
TOTAL OPERATING EXPENSES   2,091       2,551  
               
OPERATING LOSS   (1,871 )     (1,863 )
Interest expenses   (207 )     (180 )
Other Financial income, net   92       148  
NET COMPREHENSIVE LOSS FOR THE PERIOD   (1,986 )     (1,895 )
               
Net loss per share attributable to common shareholders – basic and diluted $ (0.50 )   $ (1.09 )
Weighted average number of common stocks used in computing net loss per share – basic and diluted   3,978,828       1,734,160  

The accompanying notes are an integral part of these condensed consolidated financial statements (Unaudited).

ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
  Three months ended
March 31,
 
  2024     2023  
  U.S. dollars in thousands  
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss for the period (1,986 )   (1,895 )
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation 4     7  
Inventory write-downs     7  
Exchange rate differences (70 )   (130 )
Share-based compensation 89     95  
Interest expenses (61 )    
Financial income from long term bank deposit (1 )   (51 )
Changes in operating assets and liabilities:          
Trade receivables 131     561  
Net change in operating lease assets and liabilities 6     16  
Inventories (83 )   (102 )
Prepaid expenses and other current assets 91     265  
Trade payables 490     (381 )
Deferred revenues (87 )   (35 )
Advances from reseller 1,143      
Other current liabilities 131     (46 )
Other long-term liabilities     (16 )
Net cash used in operating activities (203 )   (1,705 )
CASH FLOWS FROM INVESTING ACTIVITIES:          
Short term deposits     812  
Short term Restricted bank deposits     (329 )
Long term Restricted bank deposits     (811 )
Long term deposits     (3 )
Purchase of property and equipment (1 )   (3 )
Net cash used in investing activities (1 )   (334 )
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repurchase of common stock     (50 )
Proceeds from credit lines with bank 574      
Early repayment of long-term loan (545 )      
Repayment of long-term loan (193 )   (192 )
Net cash used in financing activities (164 )   (242 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH (2 )   (5 )
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (370 )   (2,281 )
BALANCE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD 5,515     4,279  
BALANCE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD 5,145     1,998  

The accompanying notes are an integral part of these condensed consolidated financial statements (Unaudited).

F-6

ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)
  March 31,
2024
  December 31,
2023
  U.S. dollars in thousands
       
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:      
Cash and cash equivalents 1,211   808
Restricted cash equivalents, current 1,392  
Restricted cash and cash equivalents, non-current 2,542   1,190
Total cash, cash equivalents and restricted cash 5,145   1,998
  Three months ended
March 31,
  2024   2023
  U.S. dollars in thousands
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:      
Cash paid for interest 273   116

The accompanying notes are an integral part of these condensed consolidated financial statements (Unaudited).

Non-GAAP Financial Measures

(U.S. dollars in thousands) Three months
Ended
March 31,
2024
    Three months
Ended
March 31,
2023
 
Revenues $ 726     $ 1,848  
GAAP net loss   (1,986 )     (1,895 )
Interest Expense $ 207     $ 180  
Other financial (income) expenses, net   (92 )     (148 )
Tax Expense   17       21  
Fixed asset depreciation expense   4       7  
Stock based compensation   89       95  
Research and development, capitalization         146  
Other one time costs and expenses   (26 )      
Non-GAAP Adjusted EBITDA   (1,787 )   $ (1,594 )
GAAP net loss margin   (246.27 )%     (102.54 )%
Adjusted EBITDA margin   (90.00 )%     (84.12 )%


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