ACTELIS NETWORKS INC
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
ASNS$0.080.0%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-069173
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001213900-24-097877
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 76 current paragraphs.
24 unchanged; 29 reworded; 23 added; 7 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Actelis Networks Inc.’s (the “Company”, “we”) financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performances, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performances or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Part II, Item 1A of this Quarterly Report on Form 10-Q and the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 26, 2024, with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.
Current report
In addition, forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
Current report
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. Forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions, and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate.
Current report
The forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this filing. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date hereof.
Current report
Overview
Current report
We are a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area IoT applications including federal, state and local government, intelligent traffic systems, military, utility, rail, telecom and campus applications. Our unique portfolio of hybrid fiber, 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.
Current report
Our networking solutions use a combination of newly deployed fiber infrastructure and existing copper and coaxial lines which our patented technology can upgrade to Fiber-grade to jointly create what we believe to be a highly cost-effective, secure and quick-to-deploy network. Our patent protected hybrid fiber networking solutions deliver excellent communication over fiber to locations that may be easy to reach with new fiber. However, for locations that are difficult, or too costly to reach with fiber, we can upgrade existing copper lines to deliver cyber-hardened, high-speed connectivity without needing to replace the existing copper infrastructure with new fiber. We believe that such hybrid fiber-copper networking solution has distinct advantages in most real-life installations, while providing significant budget savings and accelerating deployment of modern IoT networks, as based on our experience, most IoT projects have challenging, hard to reach with fiber locations which may explode such projects’ timeline and budgets. We believe that our solutions can provide connectivity over either fiber or copper with speeds of up to multi-Gigabit communication, while supporting Fiber-grade reliability and quality.
Current report
A primary focus of ours is to provide our customers with a cyber-secure network solution. We currently offer Triple-Shield protection of data delivered with coding, scrambling and encryption of the network traffic. We also provide secure, encrypted access to our network management software, and are working to further enhance system-level and device-level software protection. We are also working to introduce additional capabilities for network-wide cyber protection software as an additional SW and license-based service.
Current report
When high speed, long reach, reliable and secure connectivity is required, network operators usually resort to using wireline communication over physical communication lines such as fiber, coax and copper, rather than wireless communication that is more limited in performance, reliability, reach and security. However, new fiber wireline infrastructure is costly to deploy, involves lengthy civil works to install, and, based on our internal calculations, often accounts for more than 50% of total cost of ownership (ToC) and time to deploy wide-area IoT projects.
Current report
Providing new fiber connectivity to hard-to-reach locations is especially costly and time-consuming, often requiring permits for boring, trenching, and right-of-way, sometimes done over many miles. Connecting such hard-to-reach locations may cause significant delays and budget overruns in IoT projects. Our solutions aim to solve these challenges by instantly enhancing performance of such existing copper and coax infrastructure to fiber-grade performance, through the use of advanced signal processing an unique, patented network architecture, without the need to run new fiber to hard-to-reach locations; thus, effectively accelerating deployment of many IoT projects, as we estimate, sometimes from many months to only days. The result for the network owner isa hybrid network that optimizes the use of both new Fiber (where available) as well as upgraded, fiber-grade copper and coax that is now modernized, digitized and cyber-hardened. This unique hybrid network approach is making IoT projects often significantly more affordable, fast to deploy and predictable to plan and budget.
Current report
In addition, our solutions can also provide power over existing copper and coax lines to remotely power up network elements and IoT components connected to them (like cameras, small cell and Wi-Fi base stations sensors etc.). Connecting power lines to millions of IoT locations can be costly and very time consuming as well (similar to data connectivity, for the same reason-need for civil works). By offering the ability to combine power delivery over the same existing copper and coax lines that we use for high-speed data, we believe our solutions are solving yet another important challenge in connecting hard-to-reach locations. We believe that combining communication and power over the same existing lines is particularly important to help connect many fifth generation, or 5G, small cells and Wi-Fi base stations, as high cost of connectivity and power is often slowing their deployment.
Current report
Since our inception, our business was focused on serving telecommunication service providers, also known as Telcos, to provide connectivity for enterprises and residential customers. Our products and solutions have been deployed with more than 100 telecommunication service providers worldwide, in enterprise, residential and mobile base station connectivity applications. In recent years, as we have further developed our technology and introduced additional products, we turned our focus on serving the wide-area IoT markets. Our operations are focused on our fast-growing IoT business, while maintaining our commitment to our existing Telco customers. In 2023, we introduced new product offering, some of which could serve both the IoT markets and our Telco customers.
Current report
Recent Developments
Current report
Nasdaq Listing Compliance
Current report
On August 25, 2023, we received a notification letter from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that we are not in compliance with Nasdaq Listing Rule 5550(b)(1) due to our failure to maintain a minimum of $2,500,000 in shareholders’ equity (the “Minimum Shareholders’ Equity Requirement”) or any alternatives to such requirement. In order to maintain our listing on the Nasdaq Capital Market, we submitted a plan of compliance addressing how we intended to regain compliance. On March 27, 2024, we received a delist determination letter from Nasdaq advising us that the Staff had determined to delist our securities from Nasdaq due to non-compliance with the Minimum Shareholders’ Equity Requirement, unless we timely request a hearing before the Nasdaq Hearings Panel (the “Panel”). We timely requested a hearing before the Panel.
Current report
On August 27, 2024, we received formal written notice from Nasdaq confirming that we have evidenced compliance with all applicable criteria for continued listing on Nasdaq as set forth in Nasdaq Listing Rule 5550, including the Minimum Shareholders’ Equity Requirement. In accordance with Nasdaq Listing Rule 5815(d)(4)(B), we will remain subject to a panel monitor for equity compliance through August 27, 2025.
Current report
Hamas-Israel War
Current report
In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas and these terrorist organizations in parallel continued rocket and terror attacks. Nevertheless, our clinical and business development activities remain on track. See also Risk Factors – “We conduct our operations in Israel. Conditions in Israel, including the recent attack by Hamas and other terrorist organizations and Israel’s war against them, may affect our operations”.
Current report
On November 11, 2024, the Company notified the Target that the Term Sheet is terminated.
Current report
Our cost of revenues for the three months ended September 30, 2024, amounted to $0.8 million compared to $0.6 million for the three months ended September 30, 2023. The increase from the corresponding period was primarily attributable to the increase in revenues as well as change in the product mix as well as indirect costs not increasing significantly with revenues growing.
Current report
Operating Loss
Current report
Non-GAAP Financial Measures
Current report
On September 18, 2024, we filed a shelf registration statement on Form S-3 (the “Registration Statement”). Pursuant to the Registration Statement, we may offer and sell securities having an aggregate public offering price of up to $50.0 million. In connection with the filing of the Registration Statement, on September 25, 2024, we entered into a sales agreement with H.C. Wainwright & Co. (the “Sales Agent”), pursuant to which we may issue and sell shares of our common stock for an aggregate offering price of up to $3.4 million under an at-the-market offering program (the “ATM”), which is included in the $50.0 million of securities that may be offered pursuant to the Registration Statement. Pursuant to the ATM, we will pay the Sales Agent a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of our common stock. We are not obligated to make any sales of shares under the ATM. As of September 30, 2024, we have sold 227,939 shares of our common stock and received approximately $317,000 in net proceeds under the ATM.
Removed paragraphs (7)
Previous report
Operating profit (Loss)
Previous report
Non-GAAP adjusted EBITDA
Previous report
June 2024 Warrant Inducement
Previous report
H.C. Wainwright & Co., LLC (the “Placement Agent”) acted as our exclusive placement agent in connection with the June 2024 Warrant Inducement. In connection with the June 2024 Warrant Inducement, we issued to certain designees of the Placement Agent warrants (the “June 2024 Placement Agent Warrants”) to purchase up to 69,977 shares of common stock (representing 7.0% of the Existing Warrants being exercised), which have the same terms as the June 2024 Warrants, except that the Placement Agent Warrants have an exercise price equal to $3.4375 per share (125% of the exercise price of the May 2023 Warrants). The June 2024 Warrants were immediately exercisable from the date of issuance, until five and one-half year anniversary of such date for 999,670 of the June 2024 Warrants, and until twenty four months anniversary of such date for the remaining 999,670 of the June 2024 Warrants. The Placement Agent Warrants are immediately exercisable from the date of issuance, until the five and one-half year anniversary of such date. The closing of the June 2024 Warrant Inducement occurred on June 6, 2024.
Previous report
July 2024 Warrant Inducement
Previous report
We engaged the Placement Agent to act as our exclusive placement agent in connection with the July 2024 Warrant Inducement. In connection with the July 2024 Warrant Inducement, weissued to certain designees of the Placement Agent warrants (the “July 2024 Placement Agent Warrants”) to purchase up to 69,977 shares of common stock (representing 7.0% of the Existing Warrants being exercised), which have the same terms as the July 2024 Warrants, except that the Placement Agent Warrants have an exercise price equal to $2.50 per share (125% of the exercise price of the June 2024 Warrants). The July 2024 Warrants were immediately exercisable from the date of issuance, until twenty four months anniversary of such date. The July 2024 Placement Agent Warrants are immediately exercisable from the date of issuance, until the five and one-half year anniversary of such date. The closing of the July 2024 Warrant Inducement occurred on July 2, 2024.
Previous report
On August 2, 2024, we, Target and Seller agreed to further extend the non-solicitation and no-shop periods provided in the Term Sheet until August 16, 2024, unless mutually terminated earlier by the parties.
Reworded paragraphs (29)
Previous wording
On May 23, 2024, we entered into a binding term sheet (the “Term Sheet”) with Quality Industrial Corp, a Nevada corporation traded on the OTC under the symbol QIND (“Target”), and Ilustrato Pictures International Inc., a Nevada corporation (“Seller”), pursuant to which we will acquire from Seller and additional shareholders of Target shares of Target constituting between 61% to 75% of the issued and outstanding shares of the Target’s share capital. We originally intended to close the transaction, pending regulatory requirements and due diligence, within 60 days. However, on July 19, 2024, we, Target and Seller agreed to extend the non-solicitation and no-shop periods provided in the Term Sheet until August 2, 2024, unless mutually terminated earlier by the parties.
Current wording
On May 23, 2024, we announced that we have entered into a binding term sheet (as amended, the “Term Sheet”) with Quality Industrial Corp, a Nevada corporation traded on the OTC under the symbol QIND (“Target”), and Ilustrato Pictures International Inc., a Nevada corporation, providing for the potential acquisition of between 61% to 75% of the issued and outstanding shares of the Target’s share capital.
Previous wording
Three and Six Months Ended June 30, 2024, Compared to Three and Six Months Ended June 30, 2023
Current wording
Three and Nine Months Ended September 30, 2024, Compared to Three and Nine Months Ended September 30, 2023
Previous wording
Our revenues for the six months ended June 30, 2024, amounted to $4.16 million, compared to $3.74 million for the six months ended June 30, 2023. The increase from the corresponding period was primarily attributable to an increase of $2.05 million in revenues generated from North America, offset by a decrease of $1.64 million in revenues generated from Europe, the Middle East and Africa and Asia Pacific.
Current wording
Our revenues for the three months ended September 30, 2024 amounted to $2.54 million compared to $0.85 million for the three months ended September 30, 2023. The increase from the corresponding period was primarily attributable to an increase of $1.4 million of revenues generated from North America driven by volume increase and a renewal of a service and software contract and an increase of $0.3 million of revenues generated from Asia Pacific and Europe, the Middle East and Africa driven by volume increase.
Previous wording
Our revenues for the three months ended June 30, 2024 amounted to $3.4 million, compared to $1.9 million for the three months ended June 30, 2023. The increase from the corresponding period was primarily attributable to an increase of $2.3 million of revenues generated from increased volume in North America, offset by a decrease of $0.8 million in revenues generated from Europe, the Middle East and Africa.
Current wording
Our revenues for the nine months ended September 30, 2024 amounted to $6.7 compared to $4.6 million for the nine months ended September 30, 2023. The increase from the corresponding period was primarily attributable to an increase of $3.4 million in revenues generated from North America associated with volume increase and a renewal of a service and software contract offset by decrease of $1.3 million in revenues generated from Asia Pacific and Europe, the Middle East and Africa associated with completed projects in the prior year period.
Previous wording
Our cost of revenues for the six months ended June 30, 2024 amounted to $2.0 million, compared to $2.4 million for the six months ended June 30, 2023. The decrease from the corresponding period was primarily attributable to the change in regional mix of revenue of an increase in North America revenues, which are more profitable, and a decrease in Europe, Middle East and Africa revenues which are less profitable.
Current wording
Our cost of revenues for the nine months ended September 30, 2024, amounted to $2.8 million compared to $3.0 million for the nine months ended September 30, 2023. The decrease from the corresponding period was primarily attributable to the change in regional mix of revenue of an increase in North America revenues, which are more profitable, and a decrease in Europe, Middle East and Africa revenues which are less profitable as well as indirect costs not increasing significantly with revenues growing.
Previous wording
Our research and development expenses for the three months ended June 30, 2024, amounted to $0.6 million compared to $0.7 million for the three months ended June 30, 2023. The decrease is primarily attributable to cost reduction measures taken.
Current wording
Our research and development expenses for the three months ended September 30, 2024, amounted to $0.5 million compared to $0.7 million for the three months ended September 30, 2023. The decrease is primarily attributable to cost reduction measures taken.
Previous wording
Our research and development expenses for the six months ended June 30, 2024, amounted to $1.25 million compared to $1.4 million for the six months ended June 30, 2023. The decrease is primarily attributable to cost reduction measures taken.
Current wording
Our research and development expenses for the nine months ended September 30, 2024, amounted to $1.7 million compared to $2.1 million for the nine months ended September 30, 2023. The decrease is primarily attributable to cost reduction measures taken.
Previous wording
Our sales and marketing expenses for the three months ended June 30, 2024, amounted to $0.65 million compared to $0.7 million for the three months ended June 30, 2023. The decrease was mainly due to cost reduction measures taken, offset partially by increase in commission expense driven by the increase in revenues.
Current wording
Our sales and marketing expenses for the three months ended September 30, 2024, amounted to $0.7 million compared to $0.7 for the three months ended September 30, 2023.
Previous wording
Our sales and marketing expenses for the six months ended June 30, 2024, amounted to $1.3 compared to $1.6 million for the six months ended June 30, 2023. The decrease was mainly due to cost reduction measures taken.
Current wording
Our sales and marketing expenses for the nine months ended September 30, 2024 amounted to $2.0 million compared to $2.3 for the nine months ended September 30, 2023. The decrease was mainly due to cost reduction measures taken.
Previous wording
Our general and administrative expenses for the three months ended June 30, 2024 amounted to $0.79 million compared to $0.97 million for the three months ended June 30, 2023. The decrease is driven by cost reduction measures taken.
Current wording
Our general and administrative expenses for the three months ended September 30, 2024, amounted to $0.8 million compared to $1.0 million for the three months ended September 30, 2023. The decrease is driven by cost reduction measures taken.
Previous wording
Our general and administrative expenses for the six months ended June 30, 2024, amounted to $1.6 million compared to $1.8 million for the six months ended June 30, 2023. This decrease was mainly due to cost reduction measures taken.
Current wording
Our general and administrative expenses for the nine months ended September 30, 2024, amounted to $2.4 million compared to $2.8 million for the nine months ended September 30, 2023. The decrease is driven by cost reduction measures taken.
Previous wording
Our Other Income for the three and six months ended June 30, 2024 amounted to $163,000 vs, $0 in the three and six months ended June 30, 2023. The increase is driven by a government grant from the State of Israel associated with the Swords of Iron war.
Current wording
Our Other Income for the nine months ended September 30, 2024 amounted to $163,000 compared to none for the nine months ended September 30, 2023. The increase is driven by a government grant from the State of Israel associated with the Iron Swords war received during the second quarter of 2024.
Previous wording
Our operating loss for the six months ended June 30, 2024, was $1.8 million, compared to an operating loss of $3.6 million for the six months ended June 30, 2023. The decrease was mainly due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses.
Current wording
Our operating loss for the three months ended September 30, 2024, was $0.3 million, compared to an operating loss of $2.1 million for the three months ended September 30, 2023. The decrease was mainly due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses.
Previous wording
Our operating profit for the three months ended June 30, 2024, was $66,000, compared to an operating loss of $1.7 million for the three months ended June 30, 2023. The increase was mainly due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses.
Current wording
Our operating loss for the nine months ended September 30, 2024, was $2.1 million, compared to an operating loss of $5.7 million for the nine months ended September 30, 2023. The decrease was mainly due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses.
Previous wording
Other Financial Expenses, Net and Interest Expenses
Current wording
Financial Expenses, Net and Interest Expenses
Previous wording
Our financial expense, net for the three months ended June 30, 2024 was net of $0.1 million (including $0.1 million interest expenses) compared to financial income, net of $0.1 million (including $0.2 million interest expenses) for the three months ended June 30, 2023. The increase is mainly due to financial income in the prior year from bank deposits and exchange rate differences not repeated in current period.
Current wording
Our financial income, net was $52,000 million and our interest expense was $0.2 million for the three months ended September 30, 2024 compared to financial income, net of $1.4 million and including $0.2 million interest expenses for the three months ended September 30, 2023. The increase is mainly due to financial income in the prior year from bank deposits and exchange rate differences not repeated in current period.
Previous wording
Our financial expense, net for the six months ended June 30, 2024 was $0.26 million (including $0.3 million interest expenses) compared to financial income, net of $0.1 million (including $0.3 million interest expenses) for the six months ended June 30, 2023. The increase is mainly due to financial income in the prior year from bank deposits and exchange rate differences not repeated in current period.
Current wording
Our financial income, net was $138,000 and our interest expense was $0.6 million for the nine months ended September 30, 2024 compared to financial income, net of $1.9 million and interest expense of $0.5 million interest expenses for the nine months ended September 30, 2023. The increase is mainly due to financial income in the prior year from bank deposits and exchange rate differences not repeated in current period.
Previous wording
Our net loss for the six months ended June 30, 2024, was $2.06 million, compared to net loss of $3.5 million for the six months ended June 30, 2023. This decrease was primarily due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses, partially offset by financial income in the prior year not repeating itself.
Current wording
Our net loss for the three months ended September 30, 2024, was $0.5 million, compared to net loss of $0.9 million for the three months ended September 30, 2023. This decrease was primarily due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses, partially offset by financial income in the prior year not repeating itself.
Previous wording
Our net loss for the three months ended June 30, 2024, was $78,000, compared to net loss of $1.6 million for the three months ended June 30, 2023. The increase was primarily due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses, partially offset by financial income in the prior year not repeating itself.
Current wording
Our net loss for the nine months ended September 30, 2024, was $2.6 million, compared to net loss of $4.4 million for the nine months ended September 30, 2023. This decrease was primarily due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses, partially offset by financial income in the prior year not repeating itself.
Previous wording
To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all. In particular, the war in Israel and the war between Russia and the Ukraine, has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
Current wording
To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all. In particular, the repercussions from the COVID 19 pandemic, as well as the war in Israel and the war between Russia and the Ukraine, has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
Previous wording
On June 5, 2024, we entered into an inducement agreement with a certain holder of certain of our existing warrants to purchase up to an aggregate of 999,670 shares of our common stock originally issued on May 8, 2023, with a five and one-half year term, at an exercise price of $2.75 per share (the “May 2023 Warrants”).
Current wording
On June 5, 2024, we entered into an inducement agreement with a certain holder of certain of our existing warrants to purchase up to an aggregate of 999,670 shares of our common stock originally issued on May 8, 2023, with a five and one-half year term, at an exercise price of $2.75 per share (the “May 2023 Warrants”). Pursuant to the inducement agreement, the holder agreed to exercise for cash its May 2023 Warrants to purchase an aggregate of 999,670 shares of our common stock at an exercise price of $2.75 per share, in consideration of our agreement to issue new common stock purchase warrants (the “June 2024 Warrants”), as described below, to purchase up to an aggregate of 1,999,340 shares of our common stock, at an exercise price of $2.00 per share. The closing of the June 2024 Warrant Inducement occurred on June 6, 2024, and resulted in gross proceeds from the exercise of the existing warrants by the holder to the Company of $3.0 million, before deducting placement agent fees and other offering expenses payable by the Company.
Previous wording
Pursuant to the inducement letter, the holder agreed to exercise for cash its warrants to purchase an aggregate of 999,670 shares of our common stock at an exercise price of $2.00 per share, in consideration of our agreement to issue new common stock purchase warrants (the “July 2024 Warrants”), as descried below, to purchase up to an aggregate of 1,999,340 shares of our common stock, at an exercise price of $1.75 per share.
Current wording
On June 30, 2024, we entered into an inducement letter with a holder of our June 2024 Warrants, to purchase up to an aggregate of 999,670 shares of the June 2024 Warrants, originally issued on June 6, 2024, with a twenty-four month term, at an exercise price of $2.00 per share. Pursuant to the inducement letter, the holder agreed to exercise for cash its warrants to purchase an aggregate of 999,670 shares of our common stock at an exercise price of $2.00 per share, in consideration of our agreement to issue new common stock purchase warrants (the “July 2024 Warrants”), as descried below, to purchase up to an aggregate of 1,999,340 shares of our common stock, at an exercise price of $1.75 per share. The closing of the July 2024 Warrant Inducement occurred on July 2, 2024, and resulted in gross proceeds from the exercise of the existing warrants by the holder to the Company of $2.25 million, before deducting placement agent fees and other offering expenses payable by the Company.
Previous wording
As discussed in Note 1(b) to the condensed consolidated financial statements appearing elsewhere in this Quarterly report on Form 10-Q, we have incurred significant losses and negative cash flows from operations and incurred losses of approximately $1.94 million and approximately $3.5 million for the six months ended June 30, 2024 and 2023, respectively. During the six months ended June 30, 2024 and 2023, we had negative cash flows from operations of $2.3 million and $2.9 million, respectively.
Current wording
As discussed in Note 1(c) to the condensed consolidated financial statements appearing elsewhere in this Quarterly report on Form 10-Q, we have incurred significant losses and negative cash flows from operations and incurred losses of $2.5 million and $6.2 million for the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively. During the nine months ended September 30, 2024 and the year ended December 31, 2023, we had negative cash flows from operations of $4.7 million and $6.5 million, respectively. As of September 30, 2024, we had negative working capital and an accumulated deficit of $42.2 million.
Previous wording
We expect to fund operations using cash on hand, through operational cash flows and raising additional proceeds. There are no assurances, however, that we will be able to generate the revenue necessary to support our cost structure or that we will be successful in obtaining the level of financing necessary for our operations. Management has evaluated the significance of these conditions and has determined that we do not have sufficient resources to meet our operating obligations for at least one year from the issuance date of these condensed consolidated financial statements. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments that might result from the outcome of this uncertainty.
Current wording
As of September 30, 2024, we had cash on hand (including short term deposits and restricted bank deposits) of approximately $2.3 million and long-term deposits, restricted bank deposits and restricted cash of $300,000. We monitor our cash flow projections on a current basis and take active measures to obtain the funding we require to continue our operations, as well as make adjustments to our cost structure that were done year to date. However, these cash flow projections are subject to various uncertainties concerning their fulfilment, such as the ability to increase revenues by attracting and expanding our customer base or reducing cost structure. If we are not successful in generating sufficient cash flow or completing additional financing, then we will need to execute additional cost reduction actions that have been planned. Our transition to profitable operations is dependent on generating a level of revenue adequate to support our cost structure. We expect to fund operations using cash on hand, through operational cash flows and raising additional proceeds. There are no assurances, however, that we will be able to generate the revenue necessary to support our cost structure or that we will be successful in obtaining the level of financing necessary for our operations. Management has evaluated the significance of these conditions and has determined that we do not have sufficient resources to meet our operating obligations for at least one year from the issuance date of these condensed consolidated financial statements. These factors raise substantial doubt about the Company's ability to continue as a going concern. These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments that might result from the outcome of this uncertainty.
Previous wording
As of June 30, 2024, we had cash, cash equivalents, and restricted cash of $3.3 million compared to $4.8 million of cash, cash equivalents and restricted cash as of June 30, 2023.
Current wording
As of September 30, 2024, we had cash, cash equivalents, and restricted cash of $2.5 million compared to $3.1 million of cash, cash equivalents and restricted cash as of September 30, 2023.
Previous wording
Cash used in operating activities amounted to $2.3 million for the six months ended June 30, 2024, compared to $2.9 million for the six months ended June 30, 2023. The decrease in cash used in operating activities was mainly due to cost reduction measures taken.
Current wording
Cash used in operating activities amounted to $4.7 million for the nine months ended September 30, 2024, compared to $5.2 for the nine months ended September 30, 2023. The decrease in cash used in operating activities was mainly due to cost reduction measures taken.
Previous wording
Net cash provided by investing activities was $0.2 million for the six months ended June 30, 2024, compared to cash provided by investing activities of $0.7 million for the six months ended June 30, 2023. The decrease from the corresponding period was mainly due to the reduction in short-term bank deposits.
Current wording
Net cash provided by investing activities was $0.2 million for the nine months ended September 30, 2024, compared to cash used in investing activities of $1.4 for the nine months ended September 30, 2023. The decrease from the corresponding period was mainly due to the reduction in short-term bank deposits.
Previous wording
Net cash provided by financing activities was $3,000 for the six months ended June 30, 2024, compared to $2.8 million provided for the six months ended June 30, 2023. The cash flow from financing activities for the six months ended June 30, 2024, resulted from exercise of investor warrants, offset by repayments of a long-term loan. The decrease is related to the repayment of long-term loan, offset by funds raised from an investor warrant exercise. See notes 2 to the condensed consolidated financial statements.
Current wording
Net cash provided by financing activities was $1.6 million for the nine months ended September 30, 2024, compared to $2.6 million for the nine months ended September 30, 2023. The decrease is related to the repayment of long-term loan, offset by funds raised from an investor warrant exercise. See notes 2 to the condensed consolidated financial statements
Previous wording
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles issued by the Financial Accounting Standards Board, or FASB.
Current wording
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles issued by the Financial Accounting Standards Board, or FASB. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Our cost of revenues for the three months ended June 30, 2024, amounted to $1.5 million, compared to $1.3 million for the three months ended June 30, 2023. The cost of revenues for the recent period was primarily attributable to the change in regional mix of revenue, of an increase in North America revenues which are more profitable, and a decrease in Europe, Middle East and Africa revenues which are less profitable.
Previous report — wording carried elsewhere
As of June 30, 2024, we had an accumulated deficit of $41.75 million, cash on hand (including short term deposits and restricted cash equivalents) of $3.1 million, and long-term restricted cash and cash equivalents and restricted bank deposits of $0.3 million. We monitor our cash flow projections on a current basis and take active measures to obtain the funding we require to continue our operations. However, these cash flow projections are subject to various uncertainties concerning their fulfillment, such as the ability to increase revenues due to lack of customers or decrease cost structure. Our transition to profitable operations is dependent on generating a level of revenue adequate to support our cost structure through growth of existing and new customers.
Previous report — wording carried elsewhere
Pursuant to the inducement agreement, the holder agreed to exercise for cash its May 2023 Warrants to purchase an aggregate of 999,670 shares of our common stock at an exercise price of $2.75 per share, in consideration of our agreement to issue new common stock purchase warrants (the “June 2024 Warrants”), as described below, to purchase up to an aggregate of 1,999,340 shares of our common stock, at an exercise price of $2.00 per share.
Previous report — wording carried elsewhere
On June 30, 2024, we entered into an inducement letter with a holder of our June 2024 Warrants, to purchase up to an aggregate of 999,670 shares of the June 2024 Warrants, originally issued on June 6, 2024, with a twenty-four month term, at an exercise price of $2.00 per share (the “June 30, 2024 Inducement Letter Agreement”).