ACTELIS NETWORKS INC

Current report

The table below provides our results of operations for the periods indicated.

Current report

Our revenues for the three months ended June 30, 2025, amounted to $0.9 million, compared to approximately $3.4 million for the three months ended June 30, 2024. The decline is associated with a software and services renewal last year for 2 years which will be up for renewal in 2027, as well as a large deal to the City of Washington D.C. last year, while 2025’s revenues are more backend loaded.

Current report

Our revenues for the six months ended June 30, 2025, amounted to $1.7 million, compared to approximately $4.16 million for the six months ended June 30, 2024. The decline is associated with a software and services renewal last year for 2 years which will be up for renewal in 2027, as well as a large deal to the City of Washington D.C. last year, while 2025’s revenues are more backend loaded.

Current report

Our cost of revenues for the three months ended June 30, 2025, amounted to $0.6 million, compared to approximately $1.5 million for the three months ended June 30, 2024. The decrease from the corresponding period was mainly attributable to fixed cost remaining constant and sales reduced.

Current report

Our cost of revenues for the six months ended June 30, 2025, amounted to $1.1 million, compared to approximately $2.0 million for the six months ended June 30, 2024. The decrease from the corresponding period was mainly attributable to fixed cost remaining constant and sales reduced.

Current report

Our research and development expenses for the six months ended June 30, 2025, amounted to $1.4 million, compared to $1.25 million for the six months ended June 30, 2024. The increase was primarily driven by a rise in the utilization of professional services for our GL900 product line and exchange rate differences.

Current report

Our sales and marketing expenses for the three months ended June 30, 2025, amounted to $0.7 million, compared to $0.65 million for the three months ended June 30, 2024. The increase was primarily due to payroll expenses and engaging consultants to expand market reach in different countries in Europe and Asia.

Current report

Our sales and marketing expenses for the six months ended June 30, 2025, amounted to $1.4 million, compared to $1.3 million for the six months ended June 30, 2024. The increase was primarily due to payroll expenses and engaging consultants to expand market reach in different countries in Europe and Asia.

Current report

Operating (Loss) Income

Current report

Our operating loss for the three months ended June 30, 2025, was $1.8 million, compared to an operating income of approximately $66,000 for the three months ended June 30, 2024. The increase is due to the decline in sales, while operating expenditure remained consistent. The effects of exchange rate fluctuations and increased vacation expenses have contributed to the increase in operating loss.

Current report

Our operating loss for the six months ended June 30, 2025, was $3.6 million, compared to an operating loss of approximately $1.8 million for the six months ended June 30, 2024. The increase is due to the decline in sales, while operating expenditure remained consistent. The effects of exchange rate fluctuations and increased vacation expenses have contributed to the increase in operating loss.

Current report

Our financial expense, net for the six months ended June 30, 2025, was $176,000 (including $56,000 interest expenses) compared to financial expense, net of $259,000 (including $344,000 interest expenses) for the six months ended June 30, 2024. The exchange rate expense lead to an increase in financial expenses which is offset by a decrease in interest expense and other bank related charges mainly due to the repayment of loan.

Current report

Our net loss for the three months ended June 30, 2025 was $1.9 million, compared to net loss of approximately $78,000 for the three months ended June 30, 2024. The increase in net loss is due to lower sales, while operating expenditure remained consistent and exchange rate effect.

Current report

Our net loss for the six months ended June 30, 2025 was $3.8 million, compared to net loss of approximately $2.06 million for the six months ended June 30, 2024. The increase in net loss is due to lower sales, while operating expenditure remained consistent and exchange rate effect.

Current report

July 2025 Private Placement

Current report

On June 30, 2025, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which we agreed to issue and sell to the Investors in a private placement (the “July 2025 Private Placement” or the “Offering”) (a) 1,626,019 shares of Common Stock, (b) Series A-3 warrants to purchase up to 1,626,019 shares of Common Stock, and (c) Series A-4 Warrants to purchase up to 3,252,038 shares of Common Stock, for a purchase price of $0.615 per share and related Common Warrants, for a total aggregate gross proceeds of approximately $1 million. The July 2025 Private Placement closed on July 2, 2025.

Current report

The Series A-3 Warrants have an exercise price of $0.615 per share, are exercisable commencing on the effective date of shareholder approval (the “Shareholder Approval Date”) of the issuance of the shares issuable upon exercise of the Common Warrants (“Shareholder Approval”) and expire five years following the Shareholder Approval Date.

Current report

The Series A-4 Warrants have an exercise price of $0.615 per share, are exercisable commencing on the Shareholder Approval Date and expire eighteen months following the Shareholder Approval Date.

Current report

Under the terms of the Common Warrants, the Investors may not exercise the warrants to the extent such exercise would cause the Investor, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% (or, at such Investor’s option upon issuance, 9.99%), of the Company’s then outstanding Common Stock following such exercise, excluding for purposes of such determination shares of Common Stock issuable upon exercise of such warrants which have not been exercised.

Current report

H.C. Wainwright & Co., LLC acted as the Placement Agent for the issuance and sale of the Securities. The Company has agreed to pay up to an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from the Offering. The Company also agreed to pay the Placement Agent $35,000 for accountable expenses which include a management fee equal to 1.0% of the gross proceeds raised in the Offering. The Company also agreed to issue to the Placement Agent, or its designees, Placement Agent Warrants to purchase up to 7.0% of the aggregate number of the shares of Common Stock sold to the Investors (or warrants to purchase up to 113,821 shares of Common Stock) at an exercise price per share of $0.7688 which will be exercisable commencing on the Shareholder Approval Date and a have term of five years after the Shareholder Approval Date (the “July 2025 Placement Agent Warrants,” and collectively with the Common Warrants, the “July 2025 Warrants”).

Current report

Cash used in operating activities amounted to $3.2 million for the six months ended June 30, 2025, compared to approximately $2.3 million for the six months ended June 30, 2024. The increase from the corresponding period was mainly due to lower sales.

Current report

Net cash used in investing activities was $4,000 for the six months ended June 30, 2025, compared to net cash provided by investing activities of $197,000 million for the six months ended June 30, 2024. The decrease from the corresponding period was mainly due to the absence of short-term bank deposits in six months ended June 2025 which had been present in the same period of 2024.

Previous report

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q and the Consolidated Financial Statements and related Notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous 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, 2024, filed on March 24, 2025, 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.

Previous report

In addition, forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

Previous 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.

Previous 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.

Previous report

Our revenues for the three months ended March 31, 2025 amounted to $721,000 compared to $726,000 for the three months ended March 31, 2024. The slight decrease was primarily due to a 31% decline in revenues from the Europe, Middle East, and Africa (EMEA) region. This was partially offset by a 23% increase in revenues from North America and growth in market size within the Asia-Pacific region.

Previous report

Our cost of revenues for the three months ended March 31, 2025, amounted to $470,000 compared to approximately $506,000 for the three months ended March 31, 2024. 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.

Previous report

Our sales and marketing expenses for the three months ended March 31, 2025 amounted to $666,000 compared to $627,000 for the three months ended March 31, 2024. The increase was primarily by engaging consultants in the different regions.

Previous report

Operating Loss

Previous report

Our net loss for the three months ended March 31, 2025 was approximately $1.9 million, compared to net loss of approximately $2.0 million for the three months ended March 31, 2024. This decrease was primarily attributable to the 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 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.

Previous report

In March 2025, we increased the at-the-market equity program by an additional $1.3 million. As of March 31, 2025, we have sold 2,989,784 shares of our common stock and received approximately $3.7 million in net proceeds under the ATM, and we had approximately $0.9 million available for future offerings under the prospectus filed with respect to the ATM.

Previous report

Cash used in operating activities amounted to $2,175,000 for the three months ended March 31, 2025, compared to approximately $205,000 for the three months ended March 31, 2024. The increase in cash outflows in operating activities was mainly due to an advance payment/ cash inflow received from a customer of approx. $1,143,000 in first quarter of 2024, which contributed to higher cash balance during that period.

Previous report

Net cash received in investing activities was $ 1000 for the three months ended March 31, 2025, compared to cash used in investing activities of $(1,000) for the three months ended March 31, 2024.

Previous report — wording carried elsewhere

Cautionary Note Regarding Forward-Looking Statements