ACTELIS NETWORKS INC

Current report

Ourcryptocurrency strategy faces high risk and uncertainty in light of market volatility and an evolving regulatory landscape.**

Current report

On August 6, 2025, we announced that our Board of Directors approved a new treasury management strategy that includes the strategic allocation of corporate funds to cryptocurrencies as part of the Company’s broader capital allocation framework. Our decision to allow investments in digital assets - including Bitcoin and other major cryptocurrencies-as a recent addition to our treasury management strategy, poses considerable risks that could materially harm our operating results and financial condition. The inherent volatility in cryptocurrency markets can lead to rapid and substantial fluctuations in the value of our digital asset holdings; such volatility may force us to liquidate positions at unfavorable prices, thereby significantly impairing our liquidity and overall financial stability.

Current report

Moreover, our cryptocurrency strategy is developing amid a continuously changing and uncertain regulatory environment. Evolving cryptocurrency regulations and varying interpretations and enforcement policies of existing laws in the United States and internationally may impose new compliance burdens, disrupt our planned operations, or necessitate significant modifications to our existing business practices. Any adverse regulatory action or delay in clarity could escalate our operational costs, materially harm the value of our digital asset holdings, restrict our flexibility in managing these assets, and damage our reputation with investors and counterparties.

Current report

Additionally, the unique audit, accounting, and internal control challenges associated with managing digital assets add further complexity. As current financial reporting standards may not fully capture the nuances of digital asset investments, future modifications to these standards could require us to amend in our accounting policies and internal controls. Our reliance on third-party custodial, trading and transaction platforms for the storage and processing of these assets also exposes us to increased cybersecurity threats, operational disruptions, and risks stemming from third-party service providers, each of which could result in significant financial inaccuracies, legal liabilities, or reputational damage. Relatedly, digital asset custodial accounts do not benefit from customary regulatory, insurance and safeguard regimes available to traditional brokerage and deposit accounts.

Current report

Given the nascent and rapidly evolving nature of digital asset markets, any unfavorable developments in market conditions, regulatory frameworks, or technological vulnerabilities could severely undermine our ability to execute our digital asset strategy effectively. Any significant adverse developments in the digital asset space may have a material negative impact on our long-term performance and strategic goals.

Current report

July 2025 Private Placement

Current report

On June 30, 2025, we entered into the Purchase Agreement with certain Investors, pursuant to which we agreed to issue and sell to the Investors in the July 2025 Private Placement (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 shares of Common Stock and July 2025 Warrants (and the shares of Common Stock issuable upon exercise thereof), will be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act as were not involving a public offering and in reliance on similar exemptions under applicable state laws.

Current report

As part of the July 2025 Private Placement, we entered into a Registration Rights Agreement, dated June 30, 2025 (the “Registration Rights Agreement”), with the Investors, pursuant to which the Company agreed to file a registration statement (the “Registration Statement”) to register for resale the shares of Common Stock sold in the Offering and the shares of Common Stock issuable upon exercise of the July 2025 Warrants. The Company agreed to file the Registration Statement within 15 calendar days after the date of the Registration Rights Agreement. The Registration Statement was filed on July 9, 2025 and was declared effective by the SEC on July 15, 2025.

Previous report

In connection with the Israeli security cabinet’s declaration of war against Hamas and possible hostilities with other organizations, several hundred thousand Israeli military reservists were drafted to perform immediate military service.

Previous report

Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our business and operating results.

Previous report

Changes to international trade policies and tariffs affecting imports and exports have recently been announced. Geopolitical tensions and trade disputes can disrupt supply chains and increase the cost of our products. This could cause our products to be more expensive for customers, which could reduce the demand for, or attractiveness of, such products or could result in our need to increase customer pricing. As a result, any significant increases in tariffs on goods or materials or other changes in trade policy could negatively affect business and operating results

Previous report

Recently, the U.S. has announced its intent to implement a range of new tariffs and increases to existing import tariffs. In response to the tariffs announced by the U.S., other countries have imposed, are considering imposing, and may in the future impose new or increased tariffs on certain imports to those countries from the United States. There is currently significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations and tariffs. and we cannot predict whether, and to what extent, current tariffs will continue or trade policies will change in the future.

Previous report

We manufacture our products in Israel and Taiwan. Procurement of raw material is done directly to these countries. Our products are then imported to the United States from our manufacturing locations in Israel and Taiwan. The tariffs could affect inputs to our products, as well as equipment, materials, or components that we import into the United States, which could significantly impact the cost of these items.

Previous report

The above and other potential tariffs and trade restrictions may cause the cost of our products, and as a result, prices of our products, to increase, which could reduce demand for such products, and adversely impact our revenue and financial results.

Previous report

None.