10q10k10q10k.net

What changed in ACTELIS NETWORKS INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of ACTELIS NETWORKS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+375 added−330 removedSource: 10-K (2025-03-24) vs 10-K (2024-03-26)

Top changes in ACTELIS NETWORKS INC's 2024 10-K

375 paragraphs added · 330 removed · 242 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

90 edited+52 added−23 removed81 unchanged
Biggest changeIn 2023, we introduced the next-generation product families for hybrid-fiber-copper (or in short “hybrid-fiber”) Gigabit grade connectivity under the product family name, “Gigaline” or GL. Under the Gigaline families of hybrid-fiber networking solutions for fiber, copper and coax environments, we solved new challenges faced by our IoT and telecom customers and expanded our offerings.
Biggest changeUnder the Gigaline families of hybrid-fiber networking solutions for fiber, copper and coax environments, we solved new challenges faced by our IoT and telecom customers and expanded our offerings. In 2024, we continued to refine and improve our multi-gigabit products, both hybrid-fiber and fiber-only, enabled their service to more types of use-cases, and launched the MetaShield cyber-aware networking product family.
Our hybrid fiber-copper network allowed for the city to use its 15% fiber deployment, upgrade instantly the performance of its existing 85% copper lines to fiber-grade and join the two under a comprehensive management and security software package from Actelis to create one seamless network, while providing major savings of both time and money.
Our hybrid fiber network allowed for the city to use its 15% fiber deployment, upgrade instantly the performance of its existing 85% copper lines to fiber-grade and join the two under a comprehensive management and security software package from Actelis to create one seamless network, while providing major savings of both time and money.
In addition to these main benefits, we have focused our efforts and implemented technologies in our products in order to achieve the following: ● Transmission in the copper lines to take into account signals in neighboring lines to minimize crosstalk interference and be “Spectrally Friendly”; ● Multi-line spatial coding scrambling of data in a way that enhances connection immunity to interference, and makes tapping into the data very difficult; ● Integration of remote powering and data on the same copper pairs; ● Minimizing transmission delay to support delay-sensitive applications; and ● Ability to safely, and accurately transmit clock signals for cellular base station synchronization (not available yet for 5G).
In addition to these main benefits, we have focused our efforts and implemented technologies in our products in order to achieve the following: ● Transmission in the copper lines to take into account signals in neighboring lines to minimize crosstalk interference and be “Spectrally Friendly”; 9 ● Multi-line spatial coding scrambling of data in a way that enhances connection immunity to interference, and makes tapping into the data very difficult; ● Integration of remote powering and data on the same copper pairs; ● Minimizing transmission delay to support delay-sensitive applications; and ● Ability to safely, and accurately transmit clock signals for cellular base station synchronization (not available yet for 5G).
We believe our products offer a unique solution on the market in terms of value, by providing the following: ● High performance hybrid-fiber communication system ● Speeds from 10Mbps to 10Gbps ● Reach of up to 100Km (speed declines over long distances in copper) ● Robust connectivity allowing Gigabit-grade service SLAs in various harsh environments over copper, coax or fiber Rapid installation in hours vs. weeks or months if new infrastructure is needed ● Cyber-protection on several levels, including Triple Shield Protection: ● Multi-line data scrambling and coding (copper) ● 256-bit system-wide encryption ● System level protection (encryption and other protections) of management software, operating system and traffic flow Military — grade, DoD certified FIPS cyber protection ● Dense, feature-full design to replace multiple alternative elements in the market, and allow for installation that is compact, lower cost and power saving: ● Advanced switching functions supporting complex network topologies ● Support for both advanced, digital IoT devices as well as existing analog devices with serial interfaces — to save the need to replace these devices while allowing them to join the digital network ● Power feeding for cameras and other IoT devices with the data cable 8 ● Ability to install our IoT building blocks in remote locations with no power.
We believe our products offer a unique solution on the market in terms of value, by providing the following: ● High performance hybrid-fiber communication system ● Speeds from 10Mbps to 10Gbps ● Reach of up to 100Km (speed declines over long distances in copper) ● Robust connectivity allowing Gigabit-grade service SLAs in various harsh environments over copper, coax or fiber Rapid installation in hours vs. weeks or months if new infrastructure is needed ● Cyber-protection on several levels, including Triple Shield Protection: ● Multi-line data scrambling and coding (copper) 10 ● 256-bit system-wide encryption ● System level protection (encryption and other protections) of management software, operating system and traffic flow Military — grade, DoD certified FIPS cyber protection ● Dense, feature-full design to replace multiple alternative elements in the market, and allow for installation that is compact, lower cost and power saving: ● Advanced switching functions supporting complex network topologies ● Support for both advanced, digital IoT devices as well as existing analog devices with serial interfaces — to save the need to replace these devices while allowing them to join the digital network ● Power feeding for cameras and other IoT devices with the data cable ● Ability to install our IoT building blocks in remote locations with no power.
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. 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 believe that our solutions can provide connectivity over either fiber, copper or coax with speeds of up to multi-Gigabit communication, while supporting Fiber-grade reliability and quality. 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 believe that connecting these 5G small cells to the network cost effectively and rapidly, in both hard-to-reach and easy-to-reach locations, as well as powering them cost-effectively is key to successful and timely deployment. 13 5G networks deployment is slowed down, as we believe, by the challenge to provide connectivity and power to millions of base station locations that are required for an effective 5G network.
We believe that connecting these 5G small cells to the network cost effectively and rapidly, in both hard-to-reach and easy-to-reach locations, as well as powering them cost-effectively is key to successful and timely deployment. 5G networks deployment is slowed down, as we believe, by the challenge to provide connectivity and power to millions of base station locations that are required for an effective 5G 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.
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 or coax lines to deliver cyber-hardened, high-speed connectivity without needing to replace the existing infrastructure with new fiber.
The types of applications within this vertical requiring communication include enterprise offices, branch offices, residential buildings, educational facilities and back-haul for mobile base stations. 10 Channel and Territory coverage The majority of our business is conducted indirectly through various types of business partners, namely system integrators, distributors, contractors, resellers and consultants.
The types of applications within this vertical requiring communication include enterprise offices, branch offices, residential buildings, educational facilities and back-haul for mobile base stations. Channel and Territory coverage The majority of our business is conducted indirectly through various types of business partners, namely system integrators, distributors, contractors, resellers and consultants.
We aim at having our products installed and help accelerate deployment of wire-area IoT projects and applications everywhere. 2 For example, in one of the projects where our solutions are deployed, we found that 70% of locations are easy-to-reach with new fiber optic installation.
We aim at having our products installed and help accelerate deployment of wire-area IoT projects and applications everywhere. For example, in one of the projects where our solutions are deployed, we found that 70% of locations are easy-to-reach with new fiber optic installation.
They are often buried in the ground, running in the walls of buildings or hanging from telephone poles, in bundles of tens or hundreds of wires. 7 Copper wires were never designed for long-reach, secure, high-speed communication.
They are often buried in the ground, running in the walls of buildings or hanging from telephone poles, in bundles of tens or hundreds of wires. Copper wires were never designed for long-reach, secure, high-speed communication.
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.
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 a 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.
Our U.S.-based employees are employed through a Professional Employer Organization, providing employee benefits and services. 14 We believe our culture and principles enable us to attract, retain, motivate and develop our workforce as well as drive employee engagement. We believe an engaged workforce leads to a more innovative and productive company that serves its customers better.
Our U.S.-based employees are employed through a Professional Employer Organization, providing employee benefits and services. 17 We believe our culture and principles enable us to attract, retain, motivate and develop our workforce as well as drive employee engagement. We believe an engaged workforce leads to a more innovative and productive company that serves its customers better.
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.
The result for the network owner is a 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.
In order to achieve the right level of global coverage, we continue to expand our network of partners and representatives, as well as reputable advisors, and aim increasingly at partnering with larger numbers of companies with global presence. These can be system-integrators, value-added resellers, contractors, distributors, and consultants.
In order to achieve the right level of global coverage, we continue to expand our network of partners and representatives, as well as reputable advisors with unique expertise , and aim increasingly at partnering with larger numbers of companies with global presence. These can be system-integrators, value-added resellers, contractors, distributors, and consultants.
Our products work over all types of wireline media on the global data network, whether owned or operated by telecom service providers or a private network operated by enterprises or government organizations. Our products are structured as building blocks for most IoT applications and are feature-rich.
Our products work over all types of wireline media on the global data network, whether owned or operated by telecom service providers or a private network operated by enterprises or government organizations as well as MDU buildings. Our products are structured as building blocks for most IoT applications and are feature-rich.
The contents of the websites referred to above are not incorporated into this filing.
The contents of the websites referred to above are not incorporated into this filing. 19
This includes consulting, telephone troubleshooting and remote support, training, product repairs, and software updates. 6 Product Specifications Our products use advanced signal processing implemented at the system level, with an approach that treats multiple copper lines as one multi-line channel, which we believe to achieve the following benefits: ● Speeds ranging from 10MB to 10GBPS; distances up to 100Km (speeds a lower for longer distances) infrastructure Supporting any hybrid combination of new Fiber infrastructure and existing copper and coax infrastructure, supporting data security an encryption protocols, certified for FIPS by US DoD labs; supporting outdoor hardened environmental requirements dense and compact to save space and allow for flexible location setting. ● Automatic calibration tools and automated management SW enable hassle-free installation withing hours vs. weeks over existing wiring. ● Improve communication reliability even if copper lines are of poor quality, so that network operators can, in most cases, guarantee their customers what we believe are Service Level Availabilities (SLAs) and uptime similar to that of fiber optic infrastructure regardless of the media used, and uptime that allows our customers to support mission-critical applications.
Product Specifications Our products use advanced signal processing implemented at the system level, with an approach that treats multiple copper lines as one multi-line channel, which we believe to achieve the following benefits: ● Speeds ranging from 10MB to 10GBPS; distances up to 100Km (speeds a lower for longer distances) infrastructure Supporting any hybrid combination of new Fiber infrastructure and existing copper and coax infrastructure, supporting data security an encryption protocols, certified for FIPS by US DoD labs; supporting outdoor hardened environmental requirements dense and compact to save space and allow for flexible location setting. ● Automatic calibration tools and automated management SW enable hassle-free installation withing hours vs. weeks over existing wiring. ● Improve communication reliability even if copper lines are of poor quality, so that network operators can, in most cases, guarantee their customers what we believe are Service Level Availabilities (SLAs) and uptime similar to that of fiber optic infrastructure regardless of the media used, and uptime that allows our customers to support mission-critical applications.
Item 1. Business Company Overview Actelis Networks, Inc. (“we,” “the Company”, “Actelis”, “us”, “our”) is a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area IoT applications including federal, state and local government, intelligent traffic systems (“ITS”), military, utility, rail, telecom and campus applications.
Item 1. Business Company Overview Actelis Networks, Inc. (“we,” “the Company”, “Actelis”, “us”, “our”) is a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area IoT applications including federal, state and local government, intelligent traffic systems (“ITS”), military, utility, rail, telecom (notably in multi-dwelling units) and campus applications.
Nasdaq Listing Compliance On August 25, 2023, we received a notification letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (the “Nasdaq Staff”) 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.
Nasdaq Listing Compliance 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.
We completed our initial public offering on May 17, 2022 and our common stock is currently listed on the Nasdaq Global Select Market under the symbol “ASNS.” Our principal executive offices are located at 4039 Clipper Court, Fremont, CA94538, and our telephone number is (510)-545-1040.
We completed our initial public offering on May 17, 2023 and our common stock is currently listed on the Nasdaq Global Select Market under the symbol “ASNS.” Our principal executive offices are located at 4039 Clipper Court, Fremont, CA 94538, and our telephone number is (510)-545-1040.
Without accounting for any potential patent term adjustments or extensions or other forms of exclusivity with respect to our U.S. issued patents, 4 expire between 2024 and 2026, 5 expire between 2027 and 2030, and 8 expire between 2031 and 2038. Any patent issuing from the pending WIPO patent application will begin to expire in 2041.
Without accounting for any potential patent term adjustments or extensions or other forms of exclusivity with respect to our U.S. issued patents, three patents expire between 2025 and 2026, five expire between 2027 and 2030, and 8 expire between 2031 and 2038. Any patent issuing from the pending WIPO patent application will begin to expire in 2041.
We have funded our operations to date through equity financing and we had cash on hand (including short term bank deposits and restricted cash equivalents ) of $2.4 million and long-term restricted cash and cash equivalents and restricted bank deposits of $3.4 million as of December 31, 2023.
We have funded our operations to date through equity and debt financing and we had cash on hand (including short term bank deposits and restricted cash equivalents) of $2.3 million and long-term restricted cash and cash equivalents and restricted bank deposits of $0.2 million as of December 31, 2024.
We also have 17 registered patents in the United States; 5 registered patents in Europe, 1 registered patent in Mexico, 1 registered patent in Indonesia, and 1 WIPO patent application, all of which in the general area of high-speed carrier class Ethernet service and transport over bonded VDSL2, G.SHDSL as well as Fiber covering various aspects of our technology.
We also have 16 registered patents in the United States; 3 registered patents in Europe, 1 registered patent in Mexico, 1 registered patent in Indonesia, one pending application in the United States and one pending application in Europe, all of which in the general area of high-speed carrier class Ethernet service and transport over bonded VDSL2, G.SHDSL as well as Fiber covering various aspects of our technology.
See “Item 1.A - Risk Factors — New competitors may enter the marketplace and begin to compete with the Company.” Manufacturing, Procurement and Logistics We take advantage of the combination of our inhouse skills and those of the third parties we partner with to execute our operational tasks which are planning and manufacturing finished goods inventory, planning and procuring raw materials and delivering products to our customers based on promised delivery schedules.
See “Item 1.A - Risk Factors — New competitors may enter the marketplace and begin to compete with the Company.” Manufacturing, Procurement and Logistics We take advantage of the combination of our inhouse skills and those of the third parties we partner with to execute our operational tasks which are planning and manufacturing finished goods inventory, planning and procuring raw materials and delivering products to our customers based on promised delivery schedules. 14 Our raw material consists of electronic chipsets, FPGA components, modems, and other electronic and mechanical components.
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 such hybrid fiber networking solutions have distinct advantages in most real-life installations, while providing significant budget savings and accelerating deployment of modern IoT networks. Based on our experience, most IoT projects have challenging, hard to reach with fiber locations which may significantly increase such projects’ timeline and budgets.
To date, we have been most successful in selling to customers in the intelligent transportation systems, rail, federal and military, and airports markets, primarily in the US, Canada, Europe, and Japan. State of IoT Connectivity Market IoT infrastructure connectivity demand is growing rapidly.
To date, we have been most successful in selling to customers in the intelligent transportation systems, rail, federal and military, airports, and MDU markets, primarily in the US, Canada, Europe, and Japan. 4 Recent Trends in our Markets State of IoT Connectivity Market, including Federal and DoD IoT infrastructure connectivity demand is growing rapidly.
For the years ended December 31, 2023 and December 31, 2022, our top ten customers in the aggregate accounted for approximately 66% and 82% of our revenues. We have incurred significant losses and negative cash flows from operations and as of December 31, 2023, we had an accumulated deficit of $39. 7 million.
For the years ended December 31, 2024 and December 31, 2023, our top ten customers in the aggregate accounted for approximately 74% and 66% of our revenues. 2 We have incurred significant losses and negative cash flows from operations and as of December 31, 2024, we had an accumulated deficit of $44.0 million.
EMS may also manage other software keys and elements (for example, for encryption or other cyber-safety functions), for which customers may pay separately for the licenses. We also offer support and maintenance services together with the sales of our product.
EMS may also manage other software keys and elements (for example, for encryption or other cyber-safety functions), for which customers may pay separately for the licenses. We also offer support and maintenance services together with the sales of our product. This includes consulting, telephone troubleshooting and remote support, training, product repairs, and software updates.
We have also received the JITC (Joint Interoperability Test Command) certification of meeting certain cybersecurity standards required by the U.S. Department of Defense.
We have also received the JITC (Joint Interoperability Test Command) certification of meeting certain cybersecurity standards required by the DoD.
The company uses state-of-the-art logistics services from the best providers worldwide and also has in-house expertise in executing such required processes. We believe that we can add and/or replace our contract manufacturer if necessary.
Some of our products are manufactured to our specifications under an OEM arrangement. The company uses state-of-the-art logistics services from the best providers worldwide and also has in-house expertise in executing such required processes. We believe that we can add and/or replace our contract manufacturer if necessary.
Intellectual Property We rely on a combination of trade secrets, patent, trademark and copyright laws in the United States, as well as intellectual property licenses and other contractual rights (including confidentiality procedures, contractual provisions, and non-disclosure and assignment-of-intellectual property agreements with our employees, independent contractors, consultants and companies with which we conduct business) to establish and protect our A.I. technology, intellectual property and proprietary rights, trade secrets, databases, and our brand.
Intellectual Property We rely on a combination of trade secrets, patent, trademark and copyright laws in the United States, as well as intellectual property licenses and other contractual rights (including confidentiality procedures, contractual provisions, and non-disclosure and assignment-of-intellectual property agreements with our employees, independent contractors, consultants and companies with which we conduct business) to establish and protect our A.I. technology, intellectual property and proprietary rights, trade secrets, databases, and our brand. 18 We have registered Actelis Networks as a service trademark in the United States, and we are the registered holder of the domain name Actelis.com that includes “Actelis Networks, Inc.”.
The types of applications within this vertical that requiring communication include radars, perimeter security systems, energy systems, offices, laboratories and residences. We currently have projects within this vertical in North America, Europe and Asia Pacific. Airports Airports include customers who are either a State or Federal airport agency, or a service provider to the airport industry.
We currently have projects within this vertical in North America, Europe and Asia Pacific. Airports Airports include customers who are either a State or Federal airport agency, or a service provider to the airport industry. The types of applications within this vertical requiring communication are airport security, baggage management, and airport Wi-Fi.
With respect to our European patents, 3 European patents are expected to expire between 2024 and 2026, and 2 European patent is expected to expire between 2027 and 2038.
With respect to our European patents, 1 European patent is expected to expire between 2024 and 2026, and 2 European patent are expected to expire between 2027 and 2038. Our Mexican patent is expected to expire in 2026 and our Indonesian patent is expected to expire in 2028.
Our technology is both powerful and compact and is built as a relatively small set of feature-rich network elements, that serve as building block in many IoT verticals.
We continue to invest in sales and marketing resources to fuel our growth. Our technology is both powerful and compact and is built as a relatively small set of feature-rich network elements, that serve as building block in many IoT verticals.
Human Capital Resources As of December 31, 2023, we had approximately 49 employees and contractors, of which 43 were full-time employees, including 19 in sales and marketing, 22 in research development, engineering, and operations and 8 in general and administration. We have approximately 34 employees and contractors in Israel, 11 in the U.S., 3 in Europe and 1 in Asia.
Human Capital Resources As of December 31, 2024, we had approximately 49 employees and contractors, of which 38 were full-time employees, including 18 in sales and marketing, 22 in research development, engineering, and operations and 9 in general and administration. We have approximately 35 employees and contractors in Israel, 9 in the U.S., 3 in Europe and 2 in Asia.
This allows for one Actelis platform to often replace multiple other platforms available in the market, allowing for space-saving installation, energy conservation (which we believe results in a greener network), and making network planning easier for our customers.
This allows for one Actelis platform to often replace multiple other platforms available in the market, allowing for space-saving installation, energy conservation (which we believe results in a more environmentally sustainable network, through the avoidance of need to add new physical infrastructure), and making network planning easier for our customers.
Additionally, our customers can purchase software support service which allow them to receive some additional features or free upgrades. Such support service is sold as a separate contract.
Additionally, our customers can purchase software support service which allow them to receive some additional features or free upgrades.
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.
Our unique portfolio of hybrid fiber, environmentally hardened aggregation switches, high density Ethernet devices, advanced management software and AI-based cyber-security offering, unlocks the hidden value of essential networks and the devices they connect, delivering a safe and cyber-aware connectivity for rapid, cost-effective deployment.
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. We derive a growing portion of our revenue from our existing and new IoT customers.
Our operations are focused on our fast-growing IoT, federal and DoD markets, while maintaining our commitment to our existing Telco customers, and particularly MDUs. In 2024, we introduced new product offering, some of which could serve both the IoT markets and our Telco customers.
For the years ended December 31, 2023 and December 31, 2022, our IoT customers in the aggregate accounted for approximately 73% and 65% of our revenues, respectively. We derive a significant portion of our revenue from a limited number of our customers.
We derive a majority of our revenues from our existing and new IoT (including federal and DoD) customers. For the years ended December 31, 2024 and December 31, 2023, our IoT customers in the aggregate accounted for approximately 72% and 73% of our revenues, respectively. We derive a significant portion of our revenues from a limited number of our customers.
We believe this strategy will provide for accelerated growth and maximize investor returns. Environmental We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business.
Environmental We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business.
Advanced, software managed, temperature and cyber-hardened, layer 2 and layer 3, hybrid-fiber-copper switching devices, at multi-gigabit speeds of up to 10Gbps. These devices deliver a much broader selection of solutions for large and small networks, at higher speeds, and better security, in support of hybrid-fiber networks that contain more fiber, and covering IoT, MDU and MTU markets. ● MetaLight ML500/600/700/Series.
These devices deliver a much broader selection of solutions for large and small networks, at higher speeds, and better security, in support of hybrid-fiber networks that contain more fiber, and covering IoT, MDU and MTU markets. ● MetaLight ML500/600/700/Series.
This product is designed for large, medium, and small aggregation/operating and control centers. Network aggregators can connect hundreds of locations or elements. For example, control centers of highways could use such aggregators to communicate with hundreds of EADs installed in cabinets along highways in order to securely connect IoT devices (e.g. security cameras) to the highway network. ● XR239 Series.
For example, control centers of highways could use such aggregators to communicate with hundreds of EADs installed in cabinets along highways in order to securely connect IoT devices (e.g. security cameras) to the highway network. 8 ● XR239 Series.
Within the warranty agreement, we offer to repair or replace defective products, or software bug fixes. Upon expiration of the warranty period, the customer has an option to purchase an extended warranty contract for an additional fee, typically for one or more periods of 12 months.
Upon expiration of the warranty period, the customer has an option to purchase an extended warranty contract for an additional fee, typically for one or more periods of 12 months.
We offer service contracts at different levels (Silver, Gold, Platinum), which may include different levels of support (remotely or in the field), hardware repairs, spare parts, help with network design, and SW/HW upgrades. Such service contracts are sold separately from the sale of hardware products and may be sold combined with our EMS software licenses.
Such support service is sold as a separate contract. 13 We offer service contracts at different levels (Silver, Gold, Platinum), which may include different levels of support (remotely or in the field), hardware repairs, spare parts, help with network design, and SW/HW upgrades.
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.
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. 1 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.
For example, we achieved UL laboratories compliance with FIPS 140-2 cybersecurity standard required by the United States Department of Defence (DoD) and the Joint Interoperability Test Command (JITC) labs approval of the Company’s products for cybersecurity and interoperability, putting the products in the DoD Approved Products List (APL). 9 We operate a vertical-based marketing plan where we dedicate tailored solutions and individual resources to each specific vertical.
For example, we achieved UL laboratories compliance with FIPS 140-2 cybersecurity standard required by the United States Department of Defense (the “DoD”) and the Joint Interoperability Test Command (JITC) labs approval of the Company’s products for cybersecurity and interoperability, putting the products in the DoD Approved Products List (APL).
We believe that connecting and powering these 5G small cells to the network cost effectively and rapidly, in both hard-to-reach and easy-to-reach locations is key to successful and timely deployment for such network. In 2022, we released our first product family of hardened, hybrid, encrypted fiber-copper product family with 10Gbps switching capacity.
We believe that connecting and powering these 5G small cells to the network cost effectively and rapidly, in both hard-to-reach and easy-to-reach locations is key to successful and timely deployment for such network.
For example, our EAD is used to connect street traffic lights and nearby controllers, cameras and IoT devices to the traffic control center, where either fiber, copper or coax infrastructure cabling exists. This product family can be installed either indoors or outdoors, including under extreme weather conditions. ● ML2300 Aggregator Series.
For example, our EAD is used to connect street traffic lights and nearby controllers, cameras and IoT devices to the traffic control center, where either fiber, copper or coax infrastructure cabling exists.
We believe that over the past years, we have built a reputation for providing, according to our customers, reliable, high-quality communication solutions with better copper and hybrid fiber performance than other alternatives on the market.
All of these advantages constitute an entry barrier, which we believe may make it more difficult for a competitor to reach a similar status. 11 We believe that over the past years, we have built a reputation for providing, according to our customers, reliable, high-quality communication solutions with better copper and hybrid fiber performance than other alternatives on the market.
Rail Rail systems include customers who own and operate traditional inter-city rail lines as well as light rails. Some applications requiring communication in this vertical are central train control systems, rail signals, safety cameras and alert sensors, and rail station communication. We currently have projects within this vertical in North America, Europe, and Asia Pacific.
The types of applications in this vertical that require communication include road cameras, lane management systems, and road signs. Rail Rail systems include customers who own and operate traditional inter-city rail lines as well as light rails. Some applications requiring communication in this vertical are central train control systems, rail signals, safety cameras and alert sensors, and rail station communication.
Energy and Water Energy and water include customers such as electric utilities, oil companies and water utilities. The types of applications within this vertical that require communication are sub-station monitoring, oil and gas pipeline and refineries, electric and water flow monitoring, and perimeter security. We have projects within this vertical in North America and Europe.
The types of applications within this vertical that require communication are sub-station monitoring, oil and gas pipeline and refineries, electric and water flow monitoring, and perimeter security.
Such applications may include video analysis, data monitoring and extraction, firewalls and many others, and would enable our customers, as we believe, to develop recurring revenue models for them as well as for us.
Such applications may include video analysis, data monitoring and extraction, firewalls and many others, and would enable our customers, as we believe, to develop recurring revenue models for them as well as for us. We are exploring and working on these objectives, either as part of our own development, as well as in partnership with third-party technology partners.
We believe that this significant increase in infrastructure spending by the United States Government will likely result in investments in our communication infrastructure solutions, as these spending initiatives are aimed at our targeted verticals.
Also, the United States has stable trade agreements with Israel, where our subsidiary manages our operations, and from which exports our products to the Unites States. We believe that this significant increase in infrastructure spending by the United States Government will likely result in investments in our communication infrastructure solutions, as these spending initiatives are aimed at our targeted verticals.
We currently have projects in more than 100 cities, mostly in North America and Europe. Telco Telco customers include communication service providers of both wired and wireless services (including 4G and 5G).
The types of applications in this vertical requiring communication include security cameras, parking management, energy and water management, waste management, digital signs, and provision of Wi-Fi connectivity. We currently have projects in more than 100 cities, mostly in North America and Europe. Telco Telco customers include communication service providers of both wired and wireless services (including 4G and 5G).
For instance, we have a policy of requiring all employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting relationship with us. Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us in accordance with applicable law.
Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us in accordance with applicable law. In addition, we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosure agreements.
The types of applications within this vertical requiring communication are airport security, baggage management, and airport Wi-Fi. Since 2022, we are delivering to our airport integration customer, who is a worldwide market-leader in airport operation technology, with which we signed an agreement to provide our solutions to hundreds of airports in 39 countries.
Since 2022, we are delivering to our airport integration customer, who is a worldwide market-leader in airport operation technology, with which we signed an agreement to provide our solutions to hundreds of airports in 39 countries. Energy and Water Energy and water include customers such as electric utilities, oil companies and water utilities.
These non-exclusive third-party distributors are used to selling our products, and we believe that they appreciate the reliability of our products and the quality of service and support that we provide. All of these advantages constitute an entry barrier, which we believe may make it more difficult for a competitor to reach a similar status.
These non-exclusive third-party distributors are used to selling our products, and we believe that they appreciate the reliability of our products and the quality of service and support that we provide.
Our verticals include Intelligent Traffic Systems (ITS), rail, smart city, Telecom, utilities, federal and military. ITS ITS include customers who manage road systems such as departments of traffic on either the municipality, county, state, or national level. The types of applications in this vertical that require communication include road cameras, lane management systems, and road signs.
We operate a vertical-based marketing plan where we dedicate tailored solutions and individual resources to each specific vertical. Our verticals include Intelligent Traffic Systems (ITS), rail, smart city, Telecom, utilities, federal and military. ITS ITS include customers who manage road systems such as departments of traffic on either the municipality, county, state, or national level.
In addition, we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosure agreements. Lastly, our agreements with clients include confidentiality and non-disclosure provisions. Corporate Information We were incorporated in Delaware in 1998.
Lastly, our agreements with clients include confidentiality and non-disclosure provisions. Corporate Information We were incorporated in Delaware in 1998.
One such product line, the GL800 aims at extending multi-gigabit fiber-grade connectivity to buildings, enterprises, IoT installations, campuses, and 5G/4G base stations. 5 A second product line, the GL900, extends Gigabit connectivity from fiber installations outside buildings (“homes passed” by fiber) into individual offices and apartments within MDUs and MTUs, without the need for landlord investment in re-wiring buildings with fiber.
A second product line, the GL900, extends Gigabit connectivity from fiber installations outside buildings (“homes passed” by fiber) into individual offices and apartments within MDUs and MTUs, without the need for landlord investment in re-wiring buildings with fiber. MDU/MTU market in the US alone is estimated by the company to include more than 18M buildings.
Our products are utilized within networks that have been deployed, for example by the City of Los Angeles, Highways England, Federal Aviation Administration, the US military, including Air Force and Navy, and Stanford University.
Our products are utilized within networks deployed by cities such as the City of Los Angeles, the District of Columbia the City of Seattle, the City of Munich, Germany, as well as notable entities such as Highways England, the Federal Aviation Administration, the U.S. military, including the Air Force, Navy and National Guard, as well as Stanford University.
We will also seek to include cutting-edge computing capabilities to serve all connectivity needs for our IoT customers, in an effective and easily deployable way, while maintaining our commitment to serve our existing Telco customers.
We will also seek to include cutting-edge computing capabilities to serve all connectivity needs for our IoT customers, in an effective and easily deployable way, while maintaining our commitment to serve our existing Telco customers. 7 We believe that our strong reputation as a provider of high-quality solutions, and the trust we gain from being recognized as a solid solution provider by prominent customers (such as the U.S.
While our hybrid-fiber offerings are unique in our opinion, providing the highest value to network operators, our customer may still elect to implement their networks in other ways. 11 As such we compete with a number of companies in the markets we serve. Our key competitors include Moxa Technologies, FlexDSL Telecommunications AG, EtherWAN Systems, Inc. and Belden Inc.
As such we compete with a number of companies in the markets we serve. Our key competitors include Moxa Technologies, FlexDSL Telecommunications AG, EtherWAN Systems, Inc. and Belden Inc.
Our products are assembled by various contract manufacturers, located in Israel and in Taiwan who possess the expertise of assembly and quality control required for electronic manufacturing in a turn-key fashion. Some of our products are manufactured to our specifications under an OEM arrangement.
We also secure components as have been designated to be the close to end of life by their manufacturers to ensure adequate quantities of future product shipments. Our products are assembled by various contract manufacturers, located in Israel and in Taiwan who possess the expertise of assembly and quality control required for electronic manufacturing in a turn-key fashion.
Smart City We believe the goal of nearly any city worldwide is to become smarter and better serve its residents and visitors. Smart city customers include such municipalities. The types of applications in this vertical requiring communication include security cameras, parking management, energy and water management, waste management, digital signs, and provision of Wi-Fi connectivity.
We have projects within this vertical in North America and Europe. 12 Smart City We believe the goal of nearly any city worldwide is to become smarter and better serve its residents and visitors. Smart city customers include such municipalities.
For example, since the breakout of COVID-19, as the world is experiencing shortages of electronic components, we have assisted our manufacturers in acquiring components that are harder to find. We also secure components as have been designated to be the close to end of life by their manufacturers to ensure adequate quantities of future product shipments.
Most of those components are procured by our contract manufacturers and we assist them as needed in specific cases. For example, since the breakout of COVID-19, as the world is experiencing shortages of electronic components, we have assisted our manufacturers in acquiring components that are harder to find.
The resulting combination of our existing products and services, new key personnel, and strategic partnerships through M&A could provide new offerings to our existing market. If we target businesses in the same sector or location, we hope to combine resources to reduce costs, eliminate duplicate facilities or departments and increase revenue.
The resulting combination of our existing products and services, new key personnel, and strategic partnerships through M&A could provide new offerings to our existing market.
Under the Gigaline families of hybrid-fiber networking solutions for fiber, copper and coax environments, we solved new challenges faced by our IoT and telecm customers and expanded our offerings.
Under the Gigaline families of hybrid-fiber networking solutions for fiber, copper and coax environments, we solved new challenges faced by our IoT and telecom customers and expanded our offerings. One such product line, the GL800 aims at extending multi-gigabit fiber-grade connectivity to buildings, enterprises, IoT installations, campuses, and 5G/4G base stations.
Growth Strategy Global Expansion and Recognition We intend to leverage (a) the customers, partners, and representatives’ presence in over 30 countries including the Americas, Europe and Asia, (b) brand recognition developed over more than 10 years, and (c) the fact that our products are differentiated, as we believe, and offer unique value — to expand into virtually all IoT verticals, and become the vendor of choice for cyber-protected building blocks for all IoT networking globally.
Growth Strategy Global Expansion and Recognition We intend to leverage (a) the customers, partners, and representatives’ presence in over 30 countries including the Americas, Europe and Asia, (b) brand recognition developed over more than 20 years, and (c) the fact that our products are differentiated, as we believe, offering unique value in IoT verticals, particularly in Federal/Military, Smart Cities, Smart Roads, Utilities and Rail, as well as for Telecom carriers and in particular our differentiation in providing critical Gigabit and fiber grade solutions to Multi-Dwelling Units (“MDU”).
In order to maintain our listing on the Nasdaq Capital Market, we submitted a plan of compliance addressing how we intended to regain compliance. We had until February 21, 2024 to evidence compliance with the Minimum Shareholders’ Equity Requirement. As of the date of this Annual Report, we have not provided such evidence.
In order to maintain our listing on the Nasdaq Capital Market, we submitted a plan of compliance addressing how we intended to regain compliance.
Expansion of Multi-year deals Over the past years, we entered into several large multi-year contracts with ITS, military, airports, and more that will generate more predictable sales for the next several years.
During 2024, we deployed subject matter consultants who are helping the Company in focusing its go-to-market strategy in product marketing, as well as in marketing campaigns such as outreach, targeting desired audiences and more. 15 Expansion of Multi-year deals Over the past years, we entered into several large multi-year contracts with ITS, military, airports, and more that will generate more predictable sales for the next several years.
We have successfully transitioned from one contract manufacturer to another in the past, and we believe that a transition would be achievable, if necessary, in the future typically within three to six months. 12 Warranty Our products are generally sold with a standard warranty of two years for product defects, as well as technical center support with properly trained personnel, during normal business hours, to address incidents raised customers.
Warranty Our products are generally sold with a standard warranty of two years for product defects, as well as technical center support with properly trained personnel, during normal business hours, to address incidents raised customers. Within the warranty agreement, we offer to repair or replace defective products, or software bug fixes.
Federal and Military Our current and future federal and military federal aviation authorities, US military, Air Force and Navy bases, and other government and military facilities. For example, during 2022, we were selected by Norseman Defense Technologies as an authorized sales partner to provide our solutions to all branches of the US Military and Government.
For example, during 2022, we were selected by Norseman Defense Technologies as an authorized sales partner to provide our solutions to all branches of the US Military and Government. The types of applications within this vertical that requiring communication include radars, perimeter security systems, energy systems, offices, laboratories and residences.
It usually covers periods post the expiration of our warranty period and would be renewed on an annual basis. The cost of the service is derived from the size of the network, and the level of support required. Competition We compete in markets for networking and communications services and solutions for service providers, businesses, government agencies and other organizations worldwide.
Such service contracts are sold separately from the sale of hardware products and may be sold combined with our EMS software licenses. It usually covers periods post the expiration of our warranty period and would be renewed on an annual basis. The cost of the service is derived from the size of the network, and the level of support required.
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.
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.
The IoT verticals that we have focused on include: (1) ITS; (4) rail; (2) federal and military; (3) airports; (5) energy and water; (6) smart city; (7) education campuses; and (8) industrial campuses.
We operate a vertical-based marketing plan where we dedicate efforts and resources to each vertical. The IoT verticals that we have focused on include: intelligent transportation systems (ITS), rail, federal and military, airports, energy and water, smart city, education campuses, industrial campuses, and MDU.
We began working on such capabilities in 2023, and expect applications to be released starting late 2024. United States’ Bipartisan Infrastructure Law In November 2021, President Biden signed the Bipartisan Infrastructure Law to invest approximately $1.2 trillion to significantly upgrade the United States’ infrastructure.
We continue to work on the remaining components mentioned above relative to edge computing. 16 United States’ Bipartisan Infrastructure Law In November 2021, Former President Biden signed the Bipartisan Infrastructure Law to invest approximately $1.2 trillion to significantly upgrade the United States’ infrastructure.
Cybersecurity IoT networks are vulnerable to cyber-attacks as they often carry data related to critical processes and applications, such as provision of energy, water, gas and transportation services, to large populations. We believe that this data requires enhanced security within the network. Our products all include cyber safety features that we are constantly developing.
Cybersecurity IoT networks are vulnerable to cyber-attacks as they often carry data related to critical processes and applications, such as provision of energy, water, gas and transportation services, to large populations. At the same time, they are often found in the wide range, meaning, in public locations, adding further risks of tampering and break-ins.
MDU/MTU market in the US alone is estimated by the company to include more than 18M buildings. A third product group, GL5000 and GL6000, that was introduced in 2023 includes over 40 variants of hardened, 10Gbps fiber switches to expand our fiber offering into the IoT market.
A third product group, GL5000 and GL6000, that was introduced in 2023 includes over 40 variants of hardened, 10Gbps fiber switches to expand our fiber offering into the IoT market. Our product offering includes our EMS network management software, providing built-in automation to help configure, manage, monitor, safeguard, install and maintain complex, hybrid networks of thousands of elements remotely.

… 85 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

102 edited+31 added−44 removed196 unchanged
Biggest changeIf we experience material weaknesses in the future or otherwise fail to implement and maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations which may adversely affect investor confidence in us, and as a result, the value of our common stock. ● If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Biggest changeIf we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, our shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.
If any of the risks actually occur, our business, results of operations, financial condition and prospects could be harmed. In that event, the trading price of our common stock could decline, and you could lose part or all of your investment.
If any of the risks actually occur, our business, results of operations, financial condition and prospects could be harmed. In that event, the trading price of our common stock could decline, and you could lose part or all of your investment.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: ● overall performance of the equity markets and/or publicly listed technology companies; ● actual or anticipated fluctuations in our net revenues or other operating metrics; ● changes in the financial projections we provide to the public or our failure to meet these projections; ● failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; ● the economy as a whole and market conditions in our industry; ● political and economic stability in Israel; ● exchange rate fluctuations between U.S. dollars and Israeli New Shekel; ● rumors and market speculation involving us or other companies in our industry; ● announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● lawsuits threatened or filed against us; ● recruitment or departure of key personnel; ● other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and ● the expiration of contractual lock-up or market standoff agreements.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: ● overall performance of the equity markets and/or publicly listed technology companies; ● actual or anticipated fluctuations in our net revenues or other operating metrics; ● changes in the financial projections we provide to the public or our failure to meet these projections; ● failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; ● the economy as a whole and market conditions in our industry; ● political and economic stability in Israel; ● exchange rate fluctuations between U.S. dollars and Israeli New Shekel; ● rumors and market speculation involving us or other companies in our industry; ● announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; 43 ● lawsuits threatened or filed against us; ● recruitment or departure of key personnel; ● other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and ● the expiration of contractual lock-up or market standoff agreements.
Our ability to publicly or privately sell equity securities and the liquidity of our shares of common stock could be adversely affected if we are delisted from the Nasdaq Capital Market. ● Our financial condition raises substantial doubt as to our ability to continue as a going concern. 16 ● Unfavorable global economic or political conditions could adversely affect our business, financial condition or results of operations. ● Prolonged inflation rates could negatively impact our revenues and profitability if increases in the prices of our products or a decrease in customer spending results in lower sales. ● We may need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute our stockholders’ ownership interests. ● Our indebtedness could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our financial obligations. ● To support our business growth, in the past years we increased our focus on serving certain IoT verticals, while continuing to serve our existing Telco customers.
Our ability to publicly or privately sell equity securities and the liquidity of our shares of common stock could be adversely affected if we are delisted from the Nasdaq Capital Market. ● Our financial condition raises substantial doubt as to our ability to continue as a going concern. ● Unfavorable global economic or political conditions could adversely affect our business, financial condition or results of operations. ● Prolonged inflation rates could negatively impact our revenues and profitability if increases in the prices of our products or a decrease in customer spending results in lower sales. ● We may need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute our stockholders’ ownership interests. ● Our indebtedness could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our financial obligations. ● To support our business growth, in the past years we increased our focus on serving certain IoT verticals, while continuing to serve our existing Telco customers.
Any such claims or lawsuit could: ● be time-consuming and expensive to defend, whether meritorious or not; ● require us to stop providing products or services that use the technology that infringes the other party’s intellectual property; 29 ● divert the attention of our technical and managerial resources; ● require us to enter into royalty or licensing agreements with third-parties, which may not be available on terms that we deem acceptable; ● prevent us from operating all or a portion of our business or force us to redesign our products, services or technology, which could be difficult and expensive and may make the performance or value of our product or service offerings less attractive; ● subject us to significant liability for damages or result in significant settlement payments; or ● require us to indemnify our customers.
Any such claims or lawsuit could: ● be time-consuming and expensive to defend, whether meritorious or not; ● require us to stop providing products or services that use the technology that infringes the other party’s intellectual property; ● divert the attention of our technical and managerial resources; ● require us to enter into royalty or licensing agreements with third-parties, which may not be available on terms that we deem acceptable; ● prevent us from operating all or a portion of our business or force us to redesign our products, services or technology, which could be difficult and expensive and may make the performance or value of our product or service offerings less attractive; ● subject us to significant liability for damages or result in significant settlement payments; or ● require us to indemnify our customers.
The duration and extent of the impact from the COVID-19 pandemic or any future epidemic or pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions, the effects of measures enacted by policy makers and central banks around the globe, and the impact of these and other factors on our employees, customers, channel partners and suppliers.
The duration and extent of any future epidemic or pandemic such as the COVID 19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions, the effects of measures enacted by policy makers and central banks around the globe, and the impact of these and other factors on our employees, customers, channel partners and suppliers.
Furthermore, the consideration available to our shareholders in a transaction involving the transfer outside of Israel of technology or know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA. 33 There are costs and difficulties inherent in managing cross-border business operations.
Furthermore, the consideration available to our shareholders in a transaction involving the transfer outside of Israel of technology or know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA. There are costs and difficulties inherent in managing cross-border business operations.
Our Charter and Bylaws, include provisions that: ● permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; ● classify our board of directors is classified into three classes of directors with staggered three-year terms and stockholders will only be able to remove directors from office for cause; and ● provide that the board of directors is expressly authorized to make, alter, or repeal our Bylaws.
Our Charter and Bylaws, include provisions that: ● permit the board of directors to establish the number of directors and fill any vacancies and newly-created directorships; 44 ● classify our board of directors is classified into three classes of directors with staggered three-year terms and stockholders will only be able to remove directors from office for cause; and ● provide that the board of directors is expressly authorized to make, alter, or repeal our Bylaws.
Risks Related to Managing Our Business Operations in Israel ● Conditions in the Middle East and in Israel, where our research and development facilities are located, may harm our operations. ● Actelis Israel received Israeli government grants for certain of our research and development activities, the terms of which require us to pay royalties and satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel.
Risks Related to Managing Our Business Operations in Israel ● Conditions in the Middle East and in Israel, where our research and development facilities are located, may harm our operations. 21 ● Actelis Israel received Israeli government grants for certain of our research and development activities, the terms of which require us to pay royalties and satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel.
This change in our strategy may make it more difficult to evaluate our business growth and future prospects, and may increase the risk that we will not be successful in our plans. ● We may have ineffective sales and marketing efforts. ● We outsource our product manufacturing and are dependent on our key manufacturers, and on our component and OEM suppliers.
This change in our strategy may make it more difficult to evaluate our business growth and future prospects, and may increase the risk that we will not be successful in our plans. ● We may have ineffective sales and marketing efforts. 20 ● We outsource our product manufacturing and are dependent on our key manufacturers, and on our component and OEM suppliers.
In addition, changes in tax and trade laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect our tax position. 34 Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual effective tax rate.
In addition, changes in tax and trade laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect our tax position. Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual effective tax rate.
We may have ineffective sales and marketing efforts. Our sales and marketing efforts to drive growth may be ineffective as we try to win new deals either directly with end-user customers, or indirectly through business partners, distributors, system integrators or value-add resellers. These ineffective efforts may cause us to miss our planned growth and harm our financial results.
Our sales and marketing efforts to drive growth may be ineffective as we try to win new deals either directly with end-user customers, or indirectly through business partners, distributors, system integrators or value-add resellers. These ineffective efforts may cause us to miss our planned growth and harm our financial results.
Undetected material weaknesses in our internal controls over financial reporting could lead to restatements of our financial statements and require us to incur the expense of remediation. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to certain reporting requirements of the Exchange Act.
Undetected material weaknesses in our internal controls over financial reporting could lead to restatements of our financial statements and require us to incur the expense of remediation. 41 Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to certain reporting requirements of the Exchange Act.
Our gross margins may deteriorate as a result of either reductions of customers price points, increases in product component and manufacturing costs, or unfavorable changes in the mix between more and less profitable customers and/or products. 23 Changes in the price and availability of our raw materials and shipping could be detrimental to our profitability.
Our gross margins may deteriorate as a result of either reductions of customers price points, increases in product component and manufacturing costs, or unfavorable changes in the mix between more and less profitable customers and/or products. Changes in the price and availability of our raw materials and shipping could be detrimental to our profitability.
We cannot assure you that we will be able to compete successfully against any of these competitors. Our failure to compete successfully with our competitors could harm our business. 25 We are dependent on skilled human capital. Our ability to innovate and execute its business plans is dependent on the ability to hire, replace, and train skilled personnel.
We cannot assure you that we will be able to compete successfully against any of these competitors. Our failure to compete successfully with our competitors could harm our business. We are dependent on skilled human capital. Our ability to innovate and execute its business plans is dependent on the ability to hire, replace, and train skilled personnel.
A significant portion of the world’s semiconductor manufacturing is in Taiwan, and similar geopolitical tensions there could create further supply chain disruptions, which could result in further delays for our products’ components. 27 The world’s largest semiconductor chip manufacturer is located in Taiwan and a large part of equipment and materials, is manufactured in, and imported from, Taiwan.
A significant portion of the world’s semiconductor manufacturing is in Taiwan, and similar geopolitical tensions there could create further supply chain disruptions, which could result in further delays for our products’ components. The world’s largest semiconductor chip manufacturer is located in Taiwan and a large part of equipment and materials, is manufactured in, and imported from, Taiwan.
In particular, 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.
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 Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel.
Those cyber-attack attempts may take advantage of vulnerabilities of our products within the networks, vulnerabilities that may be known or unknown to us. 24 Our products and services include information systems and digital data of various types, including data kept by our employees, suppliers, and customers (and their own customers).
Those cyber-attack attempts may take advantage of vulnerabilities of our products within the networks, vulnerabilities that may be known or unknown to us. Our products and services include information systems and digital data of various types, including data kept by our employees, suppliers, and customers (and their own customers).
Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. 40 Stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
In the event of a delisting, we would attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our shares of common stock to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our shares of common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. 20 Unfavorable global economic or political conditions could adversely affect our business, financial condition or results of operations.
In the event of a delisting, we would attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our shares of common stock to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our shares of common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. 24 Unfavorable global economic or political conditions could adversely affect our business, financial condition or results of operations.
If we do not have sufficient patent life to protect our products, our business and results of operations will be adversely affected. 31 We may not be able to adequately defend against piracy of intellectual property in foreign jurisdictions.
If we do not have sufficient patent life to protect our products, our business and results of operations will be adversely affected. We may not be able to adequately defend against piracy of intellectual property in foreign jurisdictions.
Factors that may cause fluctuations in our quarterly financial results include: ● our ability to attract new customers and increase revenue from our existing customers; ● the loss of existing customers; ● customer satisfaction with our products, solutions, platform capabilities and customer support; ● mergers and acquisitions or other factors resulting in the consolidation of our customer base; ● mix of our revenue; ● our ability to gain new partners and retain existing partners; ● fluctuations in share-based compensation expense; ● decisions by potential customers to purchase competing offerings or develop in-house technologies and solutions as alternatives to our offerings; ● changes in the spending patterns of our customers; ● the amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including investments in research and development, sales and marketing, and general and administrative resources; ● network outages; ● developments or disputes concerning our intellectual property or proprietary rights, our products and services, or third-party intellectual property or proprietary rights; ● negative publicity about our company, our offerings or our partners, including as a result of actual or perceived breaches of, or failures relating to, privacy, data protection or data security; ● the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies; ● general economic, industry, and market conditions; ● the impact of the ongoing COVID-19 pandemic, or any other pandemic, epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and general economic conditions; ● the impact of political uncertainty or unrest; ● changes in our pricing policies or those of our competitors; ● fluctuations in the growth rate of the markets that our offerings address; 26 ● seasonality in the underlying businesses of our customers, including budgeting cycles, purchasing practices and usage patterns; ● the business strengths or weakness of our customers; ● our ability to collect timely on invoices or receivables; ● the cost and potential outcomes of future litigation or other disputes; ● future accounting pronouncements or changes in our accounting policies; ● our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; ● our ability to successfully expand our business in the United States and internationally; ● fluctuations in foreign currency exchange rates; and ● the timing and success of new products and solutions introduced by us or our competitors, or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners.
Factors that may cause fluctuations in our quarterly financial results include: ● our ability to attract new customers and increase revenue from our existing customers; ● the loss of existing customers; ● customer satisfaction with our products, solutions, platform capabilities and customer support; ● mergers and acquisitions or other factors resulting in the consolidation of our customer base; 29 ● mix of our revenue; ● our ability to gain new partners and retain existing partners; ● fluctuations in share-based compensation expense; ● decisions by potential customers to purchase competing offerings or develop in-house technologies and solutions as alternatives to our offerings; ● changes in the spending patterns of our customers; ● the amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including investments in research and development, sales and marketing, and general and administrative resources; ● network outages; ● developments or disputes concerning our intellectual property or proprietary rights, our products and services, or third-party intellectual property or proprietary rights; ● negative publicity about our company, our offerings or our partners, including as a result of actual or perceived breaches of, or failures relating to, privacy, data protection or data security; ● the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies; ● general economic, industry, and market conditions; ● the impact of pandemics, such as the COVID-19 pandemic, or any other, epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and general economic conditions; ● the impact of political uncertainty or unrest; ● changes in our pricing policies or those of our competitors; ● fluctuations in the growth rate of the markets that our offerings address; ● seasonality in the underlying businesses of our customers, including budgeting cycles, purchasing practices and usage patterns; ● the business strengths or weakness of our customers; ● our ability to collect timely on invoices or receivables; ● the cost and potential outcomes of future litigation or other disputes; ● future accounting pronouncements or changes in our accounting policies; ● our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; ● our ability to successfully expand our business in the United States and internationally; ● fluctuations in foreign currency exchange rates; and 30 ● the timing and success of new products and solutions introduced by us or our competitors, or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners.
We are committed to pay royalties at a rate of 3.0% on revenues up to the total amount of grants received, linked to the U.S. dollar and bearing interest at an annual rate of LIBOR applicable to U.S. dollar deposits.
We are committed to pay royalties at a rate of 3% on revenues up to the total amount of grants received, linked to the U.S. dollar and bearing interest at an annual rate of LIBOR applicable to U.S. dollar deposits.
If we are not able to respond to and manage the impact of such events effectively, our business will be affected. 28 Our performance is affected by general economic and political conditions and taxation policies .
If we are not able to respond to and manage the impact of such events effectively, our business will be affected. Our performance is affected by general economic and political conditions and taxation policies .
We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition. 21 Our indebtedness could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our financial obligations.
We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition. 25 Our indebtedness could adversely affect our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our financial obligations.
Our wholly owned subsidiary, Actelis Israel, which manages our research and development efforts, has been financed in part through royalty-bearing grants in an aggregate amount of approximately $14 million (plus accrued interest), received from the Israeli Innovation Authority (formerly known as the Office of the Chief Scientist of the Israeli Ministry of Economy), or the IIA, as of December 31, 2023.
Our wholly owned subsidiary, Actelis Israel, which manages our research and development efforts, has been financed in part through royalty-bearing grants in an aggregate amount of approximately $14 million (plus accrued interest), received from the Israeli Innovation Authority (formerly known as the Office of the Chief Scientist of the Israeli Ministry of Economy), or the IIA, as of December 31, 2024.
You should carefully consider all of the risks described more fully in the section titled “Risk Factors” in this Annual Report on page 19, before deciding to invest in our common stock. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected.
You should carefully consider all of the risks described more fully in the section titled “Risk Factors” in this Annual Report on page 23, before deciding to invest in our common stock. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected.
There can be no assurance that we will achieve positive cash flow in the near future or at all. 19 Our financial condition raises substantial doubt as to our ability to continue as a going concern. Our consolidated financial statements have been prepared assuming that we will continue to operate as a going concern.
There can be no assurance that we will achieve positive cash flow in the near future or at all. 23 Our financial condition raises substantial doubt as to our ability to continue as a going concern. Our consolidated financial statements have been prepared assuming that we will continue to operate as a going concern.
Sales of substantial amounts of our common stock in the public market after our IPO, or the perception that these sales may occur, could materially and adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could materially and adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
The effects of health pandemics, such as the ongoing global COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business, financial condition and results of operations. In December 2019, a novel coronavirus disease, or COVID-19, was first reported and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.
The effects of health pandemics, such as the global COVID-19 pandemic could have an adverse impact on our business, financial condition and results of operations. In December 2019, a novel coronavirus disease, or COVID-19, was first reported and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.
We are an “emerging growth company,” as defined in the JOBS Act, and we have elected to take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These provisions include, but are not limited to: requiring only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosures; being exempt from compliance with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; being exempt from any rules that could be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements; being subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and not being required to hold nonbinding advisory votes on executive compensation or on any golden parachute payments not previously approved. 35 In addition, while we are an “emerging growth company,” we will not be required to comply with any new financial accounting standard until such standard is generally applicable to private companies.
We are an “emerging growth company,” as defined in the JOBS Act, and we have elected to take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These provisions include, but are not limited to: requiring only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosures; being exempt from compliance with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; being exempt from any rules that could be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements; being subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and not being required to hold nonbinding advisory votes on executive compensation or on any golden parachute payments not previously approved.
If we cannot achieve and sustain profitability, our business, financial condition, and operating results will be adversely affected. We have incurred net losses in recent years, and we may not achieve or maintain profitability in the future. We experienced a net loss of $6. 3 million and $11.0 million in the years ended December 31, 2023 and 2022, respectively.
If we cannot achieve and sustain profitability, our business, financial condition, and operating results will be adversely affected. We have incurred net losses in recent years, and we may not achieve or maintain profitability in the future. We experienced a net loss of $4.4 million and $6.3 million in the years ended December 31, 2024 and 2023, respectively.
We currently derive a significant portion of our revenue from a limited number of our customers. For the years ended December 31, 2023 and December 31, 2022, our top ten customers in the aggregate accounted for approximately 66% and 82% of our revenues.
We currently derive a significant portion of our revenue from a limited number of our customers. For the years ended December 31, 2024 and December 31, 2023, our top ten customers in the aggregate accounted for approximately 74% and 66% of our revenues.
Additionally, COVID-19 has resulted, and likely will continue to result, in delays in non-residential construction, non-crisis-related IT purchases and project completion schedules in general, all of which can negatively impact our results in both current and future periods.
Additionally, COVID-19 has resulted in delays in non-residential construction, non-crisis-related IT purchases and project completion schedules in general, all of which can negatively impact our results in both current and future periods.
As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock. 18 RISK FACTORS Investing in our common stock involves a high degree of risk.
As a result, our shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our commons stock. 22 RISK FACTORS Investing in our common stock involves a high degree of risk.
Unanticipated changes in our effective tax rate and additional tax liabilities, including those resulting from our international operations or the implementation of new tax rules, could harm our future results. We are subject to income taxes in the United States and Israel.
The strengthening of the shekel against the dollar and the euro could erode our profitability. 38 Unanticipated changes in our effective tax rate and additional tax liabilities, including those resulting from our international operations or the implementation of new tax rules, could harm our future results. We are subject to income taxes in the United States and Israel.
We are susceptible to problems, and have encountered problems in the past, in connection with procurement, decreasing quality, reliability, and protectability. ● Demand for our products and solutions may not grow or may decline. ● Our gross margins may not increase or may deteriorate. ● Changes in the price and availability of our raw materials and shipping could be detrimental to our profitability. ● Expanding our operations and marketing efforts to meet expected growth may impact profitability if actual growth is less than expected. ● If our internal Company cyber-security measures are breached or fail and unauthorized access is obtained to our IT environment, we may incur significant losses of data, which we may not be able to recover and may experience a delay in our ability to conduct our day-to-day business. ● We provide cyber security features as part of our products that may not completely prevent information security breaches, and our products are installed in live customer environments and may be compromised by cyber-attacks and damage customer assets. ● We depend on key information systems and third-party service providers. ● We depend on our management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business. ● We may face the effects of increased competition and rapid technological changes. ● Our results of operations are likely to fluctuate from quarter to quarter and year to year, which could adversely affect the trading price of our common stock. ● The loss of one or more of our significant customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial condition, results of operations and growth prospects. ● We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and between Israel and Hamas and Hezbollah.
We are susceptible to problems, and have encountered problems in the past, in connection with procurement, decreasing quality, reliability, and protectability. ● Demand for our products and solutions may not grow or may decline. ● Our gross margins may not increase or may deteriorate. ● Changes in the price and availability of our raw materials and shipping could be detrimental to our profitability. ● Expanding our operations and marketing efforts to meet expected growth may impact profitability if actual growth is less than expected. ● If our internal Company cyber-security measures are breached or fail and unauthorized access is obtained to our IT environment, we may incur significant losses of data, which we may not be able to recover and may experience a delay in our ability to conduct our day-to-day business. ● We provide cyber security features as part of our products that may not completely prevent information security breaches, and our products are installed in live customer environments and may be compromised by cyber-attacks and damage customer assets. ● We depend on key information systems and third-party service providers. ● We depend on our management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business. ● We may face the effects of increased competition and rapid technological changes. ● Our results of operations are likely to fluctuate from quarter to quarter and year to year, which could adversely affect the trading price of our common stock. ● The loss of one or more of our significant customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial condition, results of operations and growth prospects. ● Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk.
As a result, we had an accumulated deficit of $39.7 million as of December 31, 2023. We cannot predict when or whether we will reach or maintain profitability.
As a result, we had an accumulated deficit of $44 million as of December 31, 2024. We cannot predict when or whether we will reach or maintain profitability.
As of December 31, 2023, our accumulated deficit was $39. 7 million. We have funded our operations to date through equity financing and have cash on hand ( including short term bank deposits and restricted cash equivalents ) of $2.4 million and long-term restricted cash and cash equivalents and restricted bank deposits of $3.4 million as of December 31, 2023.
As of December 31, 2024, our accumulated deficit was $ 44 million. We have funded our operations to date through equity and debt financing and have cash on hand (including short term bank deposits and restricted cash equivalents) of $2.3 million and long-term restricted cash and cash equivalents and restricted bank deposits of $0.2 million as of December 31, 2024.
Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations. To-date, we have received Israeli government war related support funding of approximately $100,000. Finally, political conditions within Israel may affect our operations.
Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations. To-date, we have received Israeli government war related support funding of approximately $100,000. Finally, political conditions within Israel may affect our operations.
The success of our activities may be affected by general economic and market conditions, like interest rates, currency exchange rate fluctuations, availability of credit, inflation rates, economic uncertainty, changes in laws, and United States and international political circumstances. Unexpected volatility or illiquidity could impair profitability or result in losses.
The success of our activities may be affected by general economic and market conditions, like interest rates, currency exchange rate fluctuations, availability of credit, inflation rates, economic uncertainty, changes in laws, and United States and international political circumstances.
In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price and trading volume to decline.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price and trading volume to decline.
To date, we have 17 registered patents in the United States; 5 registered patents in Europe, one registered patent in Mexico, , one registered patent in Indonesia, and one patent application pending in WIPO, all of which in the general area of high-speed carrier class Ethernet service and transport over bonded VDSL2, G.SHDSL as well as Fiber.
To date, we have 16 registered patents in the United States; 3 registered patents in Europe, 1 registered patent in Mexico, 1 registered patent in Indonesia, one pending application in the United States and one pending application in Europe, all of which in the general area of high-speed carrier class Ethernet service and transport over bonded VDSL2, G.SHDSL as well as Fiber covering various aspects of our technology.
We have incurred significant losses and negative cash flows from operations and incurred losses of $6. 3 million and $11.0 million for the years ended December 31, 2023 and 2022, respectively. During the years ended December 31, 2023 and 2022, we had negative cash flows from operations of $6.6 million and $7.8 million, respectively.
We have incurred significant losses and negative cash flows from operations and incurred losses of $ 4.4 million and $6.3 million for the years ended December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, we had negative cash flows from operations of $6.5 million and $6.6 million, respectively.
Israel has held five general elections between 2019 and 2022, and prior to October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest. To date, these initiatives have been substantially put on hold.
Israel has held five general elections between 2019 and 2022, and prior to October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest.
This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to the performance or prospects of our common stock and once investors purchase the shares of common stock necessary to cover their short position the price of our common stock may decline. 39 If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline.
This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to the performance or prospects of our common stock and once investors purchase the shares of common stock necessary to cover their short position the price of our common stock may decline.
However, we cannot predict the extent to which investor interest in our Company will lead to the development of an active trading market in our common stock or how liquid that market might become.
An active trading market may not develop for our securities. Our common stock is listed on the Nasdaq Capital Market. However, we cannot predict the extent to which investor interest in our Company will lead to the development of an active trading market in our common stock or how liquid that market might become.
We compute a significant number of expenses in Israeli Shekels, both expenses from employees and suppliers. Our customers buy our products priced in US dollars or Euros. The strengthening of the shekel against the dollar and the euro could erode our profitability.
We compute a significant number of expenses in Israeli Shekels, both expenses from employees and suppliers. Our customers buy our products priced in US dollars or Euros.
On August 25, 2023, we received a notification letter from the Nasdaq Staff indicating that we are not in compliance with Nasdaq Listing Rule 5550(b)(1) due to our failure to meet the Minimum Shareholders’ Equity Requirement or any alternatives to such requirement.
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.
The transfer or license of IIA-supported technology or know-how outside of Israel and the transfer of manufacturing of IIA-supported products, technology or know-how outside of Israel may involve the payment of significant amounts, depending upon the value of the transferred or licensed technology or know-how, our research and development expenses, the amount of IIA support, the time of completion of the IIA-supported research project and other factors.
Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development outside of Israel. 37 The transfer or license of IIA-supported technology or know-how outside of Israel and the transfer of manufacturing of IIA-supported products, technology or know-how outside of Israel may involve the payment of significant amounts, depending upon the value of the transferred or licensed technology or know-how, our research and development expenses, the amount of IIA support, the time of completion of the IIA-supported research project and other factors.
The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline. The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business.
Any disruption or failure of these systems or services could cause substantial errors, processing inefficiencies, security breaches, inability to use the systems or process transactions, loss of customers or other business disruptions, all of which could negatively affect our business and financial performance.
Any disruption or failure of these systems or services could cause substantial errors, processing inefficiencies, security breaches, inability to use the systems or process transactions, loss of customers or other business disruptions, all of which could negatively affect our business and financial performance. 28 We depend on our management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business.
As of the date of this Annual Report, we have not been impacted by any absences of personnel at our service providers or counterparties located in Israel. Military service call ups that result in absences of personnel from us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations.
Military service call ups that result in absences of personnel from us for an extended period of time may materially and adversely affect our business, prospects, financial condition and results of operations. As of the date of this Annual Report, we currently have 38 full-time employees, with 33 employees located in Israel and 5 employee located outside of Israel.
We suffered delays in realization of certain new orders from our customers, delay in testing of some of our new technologies in customer premises and difficulty conducting business development activities in an effective way (face-to-face). In addition, we had to increase our credit lines by $2.0 million to support the loss of revenue and profit.
We suffered delays in realization of certain new orders from our customers, delay in testing of some of our new technologies in customer premises and difficulty conducting business development activities in an effective way (face-to-face).
Inflation rates, particularly in the United States and Israel, have increased in 2023 and are prolonged in the past months, at levels not seen in years in many countries where our customers reside.
Inflation rates, particularly in the United States, have increased in 2022 through 2024 at levels not seen in years in many countries where our customers reside.
We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations or our policies and procedures.
We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations or our policies and procedures. Scrutiny of sustainability and environmental, social, and governance (“ESG”) initiatives could increase our costs or otherwise adversely impact our business.
However, the intensity and duration of the war in the Middle East is difficult to predict at this stage, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy in general. if the war in the other fronts, such as Lebanon, Syria and the West Bank expands further, our operations may be adversely affected.
However, the intensity and duration of Israel’s current war is difficult to predict at this stage, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy in general. If the ceasefires declared collapse or a new war commences or hostilities expand to other fronts, our operations may be adversely affected.
Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine and Israel or any other geopolitical tensions. 17 Risks Related to Protecting Our Technology and Intellectual Property ● Claims by others that we infringe their intellectual property could force us to incur significant costs or revise the way we conduct our business. ● Our patents and proprietary technology may be challenged or disputed. ● Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand. ● The lives of our patents may not be sufficient to effectively protect our products and business.
Risks Related to Protecting Our Technology and Intellectual Property ● Claims by others that we infringe their intellectual property could force us to incur significant costs or revise the way we conduct our business. ● Our patents and proprietary technology may be challenged or disputed. ● Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand. ● The lives of our patents may not be sufficient to effectively protect our products and business.
A setback to the current state of relative peace and stability in the region could compromise existing semiconductor chip production and have downstream implications for our company. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.
A setback to the current state of relative peace and stability in the region could compromise existing semiconductor chip production and have downstream implications for our company.
We concluded that the material weakness in our internal control over financial reporting occurs because as a newly public company, we do not have the necessary business processes, systems, personnel, and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.
We concluded that the material weakness in our internal control over financial reporting occurs because as a newly public company, we do not have the necessary business processes, systems, personnel, and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company. 40 We may not be able to fully remediate the identified material weakness until the steps described above have been completed and our internal controls have been operating effectively for a sufficient period of time.
If no securities or industry analysts commence coverage of our company, the trading price for our common stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline.
In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline.
The individuals who now constitute our senior management team have limited experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to public companies. Our senior management team may not successfully or efficiently manage our transition to a public company that is subject to significant regulatory oversight and reporting obligations.
The individuals who now constitute our senior management team have limited experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to public companies.
We have already experienced instances of limited supply of certain raw materials and shipping delays, which resulted in extended lead times, increased shipping costs and higher-than-usual backlogs.
We have experienced instances of limited supply of certain raw materials and shipping delays, which resulted in extended lead times, increased shipping costs and higher-than-usual backlogs. Economic and political circumstances may negatively affect the price and availability of raw materials, shipping and availability of assembly capacity of contract manufacturers.
Risks Related to our Common Stock ● The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members. ● We have identified a material weakness in our internal control over financial reporting.
Risks Related to our Common Stock ● The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members. ● If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Our manufacturing process has been disrupted in the past, and may be disrupted in the future, by various factors, including but not limited to shipping delays, bottlenecks resulting from raw materials specific shortages, quality problems or a decrease in quality, manpower shortages by the manufacturers or political unease that would trigger the closure of a facility or financial insolvency.
Our manufacturing process has been disrupted in the past, and may be disrupted in the future, by various factors, including but not limited to shipping delays, bottlenecks resulting from raw materials specific shortages, quality problems or a decrease in quality, manpower shortages by the manufacturers or political unease that would trigger the closure of a facility or financial insolvency. 26 Furthermore, a supplier may discontinue production of a particular part for any number of reasons, which may require us to purchase a large inventory of such discontinued parts in order to ensure that a continuous supply of such parts remains available to our customers.
On May 3, 2023, we received a notification from the Nasdaq Staff that we had regained compliance with the Nasdaq Listing Rule 5550(a)(2). If we fail to satisfy the continued listing requirements of Nasdaq, such as minimum stockholders’ equity requirements or minimum bid price requirements, Nasdaq may take steps to delist our shares of common stock.
If we fail to satisfy the continued listing requirements of Nasdaq, such as minimum stockholders’ equity requirements or minimum bid price requirements, Nasdaq may take steps to delist our shares of common stock.
For the years ended December 31, 2023 and December 31, 2022, our Telco customers in the aggregate decreased from approximately 35% of our revenues in the year ended December 31, 2022, to 27% in the year ended December 31, 2023. 22 Our change in strategy and our efforts to serve the IoT verticals that we have focused on may prove more expensive than we currently anticipate, or may require longer development and deployment times, and we may not succeed in fully penetrating such IoT verticals, or at all.
Our change in strategy and our efforts to serve the IoT verticals that we have focused on may prove more expensive than we currently anticipate, or may require longer development and deployment times, and we may not succeed in fully penetrating such IoT verticals, or at all. We may have ineffective sales and marketing efforts.
Sales of substantial amounts of our common stock in the public market after the completion of the IPO, or the perception that such sales could occur, could adversely affect the market price of our common stock and could materially impair our ability to raise capital through offerings of our common stock. 38 The market price of our common stock may be volatile and may decline regardless of our operating performance, and you may lose all or part of your investments.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could depress the market price of our common stock. The market price of our common stock may be volatile and may decline regardless of our operating performance, and you may lose all or part of your investments.
If our internal company cyber-security measures are breached or fail and unauthorized access is obtained to our IT environment, we may incur significant losses of data, which we may not be able to recover and may experience a delay in our ability to conduct our day-to-day business.
If actual growth is less than expected, it would negatively impact our ability to become profitable, which would require we raise additional capital if required, which may not be available on favorable terms, or at all, which would impact our ability to carry on operations. 27 If our internal company cyber-security measures are breached or fail and unauthorized access is obtained to our IT environment, we may incur significant losses of data, which we may not be able to recover and may experience a delay in our ability to conduct our day-to-day business.
An adverse determination of any litigation proceedings could put our intellectual property at risk of being invalidated or interpreted narrowly and could put our related pending patent applications at risk of not issuing.
Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. An adverse determination of any litigation proceedings could put our intellectual property at risk of being invalidated or interpreted narrowly and could put our related pending patent applications at risk of not issuing.
Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information, and we may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.
Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information, and we may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. 34 We make business decisions about when to seek patent protection for a particular technology and when to rely upon trade secret protection, and the approach we select may ultimately prove to be inadequate.
We have not conducted an independent review of patents and other intellectual property issued to third parties, who may have patents or patent applications relating to our proprietary technology. We may receive letters from third parties alleging, or inquiring about, possible infringement, misappropriation, or violation of their intellectual property rights.
Our competitors protect their proprietary rights by means of patents, trade secrets, copyrights, trademarks and other intellectual property. We have not conducted an independent review of patents and other intellectual property issued to third parties, who may have patents or patent applications relating to our proprietary technology.
As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per-share value of our common stock to decline.
As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.
Our patents issued as of March 20, 2024 will expire on dates ranging from September 25, 2024 to October 31, 2038, subject to any patent extensions that may be available for such patents. More specifically, the following patents will expire over the next three years: EP02250273.6, US7606315, US7613235, EP1943827, EP1964377, GB2556826, MX279453, US7587042, IDP0030744.
Our patents issued as of March 20, 2025 will expire on dates ranging from September 25, 2025 to October 31, 2038, subject to any patent extensions that may be available for such patents.
We may be adversely affected by the political and economic situation in the U.S., Europe and a number of countries in Asia. The U.S. communications market is directly affected by economic developments in the U.S. economy. The European and Asian communications market is similarly reliant on political and economic stability in those regions.
Unexpected volatility or illiquidity could impair profitability or result in losses. 32 We may be adversely affected by the political and economic situation in the U.S., Europe and a number of countries in Asia. The U.S. communications market is directly affected by economic developments in the U.S. economy.
Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights.
In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property.
As of the date of this Annual Report, we currently have 42 full-time employees, with 33 employees located in Israel and 9 employee located outside of Israel. Since the war broke out on October 7, 2023, our operations have not been adversely affected by this situation, and we have not experienced any material disruptions to our operations.
Since the war broke out on October 7, 2023, our operations have not been adversely affected by this situation, and we have not experienced any material disruptions to our operations.
Changing trends in these markets may lead to a decrease in investments and a delay in projects, which could harm our business. To reduce our sensitivity to market changes, we operate in a large number of different vertical markets and territories. Our business could be adversely impacted by changes in laws and regulations related to government contracts.
The European and Asian communications market is similarly reliant on political and economic stability in those regions. Changing trends in these markets may lead to a decrease in investments and a delay in projects, which could harm our business. To reduce our sensitivity to market changes, we operate in a large number of different vertical markets and territories.
Federal or state government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the Internet as a commercial medium. Legislators, regulators, or government bodies or agencies may also make legal or regulatory changes or interpret or apply existing laws or regulations that relate to government contracts.
Our business could be adversely impacted by changes in laws, regulations and tariffs related to government contracts. Federal or state government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the Internet as a commercial medium.
We do not plan to declare or pay any dividends on our capital stock in the foreseeable future. Instead, we intend to retain any earnings to finance the operation and expansion of our business. Any credit agreements, which we may enter into with institutional lenders, may restrict our ability to pay dividends.
You should not rely on an investment in our common stock to provide dividend income. We do not plan to declare or pay any dividends on our capital stock in the foreseeable future. Instead, we intend to retain any earnings to finance the operation and expansion of our business.

… 97 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−0 removed7 unchanged
Biggest changeThe Chief Financial Officer reports to our board of directors, as well as our Chief Executive Officer and other members of senior management as appropriate.
Biggest changeOur Deputy Chief Executive Officer and Chief Financial Officer has extensive operational responsibility for IT, of more than seven years, and he manages our external IT team, The Deputy Chief Executive Officer and Chief Financial Officer reports to our board of directors, as well as our Chief Executive Officer and other members of senior management as appropriate.
Governance Our board of directors provides oversight of our cybersecurity program and helps guide our strategy for managing cybersecurity risks in the context of our overall risk management system. Our cybersecurity program is managed by our Chief Financial Officer and our external IT team whose is responsible for leading enterprise-wide cybersecurity execution, protocols, framework, standards and processes.
Governance Our board of directors provides oversight of our cybersecurity program and helps guide our strategy for managing cybersecurity risks in the context of our overall risk management system.
Added
Our cybersecurity program is managed by our Deputy Chief Executive Officer and Chief Financial Officer and our external IT team, who are responsible for leading enterprise-wide cybersecurity execution, protocols, framework, standards and processes.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES. We lease our facility in California, which consists of approximately 3,000 square feet of office, lab and warehouse space. Our lease expires in October 2025. We also sublease our previous facility in California of approximately 9,000 square feet to a third party. This lease expires on March 31, 2024, and we do intend to renew the lease.
Biggest changeITEM 2. PROPERTIES. We lease our facility in California, which consists of approximately 3,000 square feet of office, lab and warehouse space. Our lease expires in October 2025.
We believe our facilities are sufficient to meet our current needs and that suitable space will be available as and when needed. We do not own any real property.
We intend to reduce our real estate footprint as much as possible by moving to a smaller space in Petach-Tikva, Israel in order to reduce costs. We believe our facilities are sufficient to meet our current needs and that suitable space will be available as and when needed. We do not own any real property.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed4 unchanged
Biggest changeUnregistered Sales of Equity Securities We have previously disclosed all sales of securities without registration under the Securities Act of 1933, as amended (the “Securities Act”). Repurchases of Equity Securities by the Issuer and Affiliated Purchasers During the year ended December 2023, the Company purchased 7,920 shares of its common stock, for a total price of $50,000.
Biggest changeUnregistered Sales of Equity Securities We have previously disclosed all sales of securities without registration under the Securities Act of 1933, as amended (the “Securities Act”). Repurchases of Equity Securities by the Issuer and Affiliated Purchasers During the year ended December 2024, the Company did not make any repurchases of its shares of common stock.
Stockholders As of March 20, 2024, we had 3,020,268 outstanding shares of common stock outstanding, including treasury shares, no outstanding shares of preferred stock, and approximately 54 holders of record of our outstanding shares of common stock.
Stockholders As of March 21, 2025, we had 8,513,181 outstanding shares of common stock outstanding, including treasury shares, no outstanding shares of preferred stock, and approximately 51 holders of record of our outstanding shares of common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+49 added−21 removed25 unchanged
Biggest changeFinancial Expenses (income), Net Our financial expenses (income), net for the year ended December 31, 2023, was ($1.1) million (including $0.8 million interest expenses) compared to $4.9 million (including $0.8 million interest expenses) for the year ended December 31, 2022.
Biggest changeFinancial Expenses (income), Net Our financial expenses, net for the year ended December 31, 2024, was approximately $620,000 of interest expense compared to $1.1 million (including approximately $800,000 in interest expenses) for the year ended December 31, 2023 The increase is mainly due to financial income in the prior year from bank deposits, increase due to warrant valuation and exchange rate differences not repeated in current period.
Adjusted results should be considered only in conjunction with results reported according to GAAP. 47 The non-GAAP financial measures are presented for supplemental informational purposes only. They should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.
Adjusted results should be considered only in conjunction with results reported according to GAAP. The non-GAAP financial measures are presented for supplemental informational purposes only. They should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.
Critical judgement and estimates Critical judgement and estimates have been used primarily in estimating the fair value of our financial instruments (for example, warrants, notes and stock options), as well as the estimate of future usage of existing inventory to determine the net value of our inventory (see notes in financial statements).
Critical judgement and estimates Critical judgement and estimates have been used primarily in estimating revenues the fair value of our financial instruments (for example, warrants, notes and stock options), as well as the estimate of future usage of existing inventory to determine the net value of our inventory (see notes in financial statements).
The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period.
By offering the ability to combine power delivery over the same existing copper lines that we use for high-speed data, we believe our solutions are solving yet another important challenge in connecting hard-to-reach locations.
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.
Since our inception, our business was focused on serving telecommunication service providers, also known as Telcos, providing 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.
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 May and December 2023, we also received proceeds of $4.6 million, net of underwriting discounts and commissions and other offering costs of $0.4 million, following our private placements.
In May and December 2023, proceeds of $4.6 million, net of underwriting discounts and commissions and other offering costs of $0.4 million, were also received following our private placements.
As a result of many factors, including those factors set forth in “Part I, Item 1A - Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview Actelis Networks, Inc.
As a result of many factors, including those factors set forth in “Part I, Item 1A - Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Accounting standards updates not yet adopted Please see Note 2(hh) to our consolidated financial statements included elsewhere in this prospectus for information.
Accounting standards updates not yet adopted Please see Note 2 (dd) to our consolidated financial statements included elsewhere in this prospectus for information.
We regularly evaluate the carrying value of our inventories and when, based on such evaluation, factors indicate that impairment has occurred, we impair the inventories’ carrying value. Revenue recognition The Company’s products consist of hardware and embedded software that function together to deliver the product’s essential functionality. The embedded software is essential to the functionality of the Company’s products.
When, based on such evaluation, factors indicate that impairment has occurred, we impair the inventories’ carrying value. Revenue recognition The Company’s products consist of hardware and embedded software that function together to deliver the product’s essential functionality. The embedded software is essential to the functionality of the Company’s products.
We have funded our operations to date through equity and debt financing and have cash on hand (including short term bank deposits and restricted cash equivalents ) of $2.4 million and long-term restricted cash and cash equivalents and restricted bank deposits of $3.4 as of December 31, 2023.
We have funded our operations to date through equity and debt financing and have cash on hand (including short term bank deposits and restricted cash equivalents) of $2.3 million and long-term restricted cash and cash equivalents and restricted bank deposits of $0.2 million as of December 31, 2024.
When high speed, long reach, reliable and secure connectivity is required, network operators usually resort to using wireline communication over physical communication lines rather than wireless communication that is more limited in performance, reliability and security.
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.
Services relating to repair or replacement of hardware beyond the standard warranty period are offered under renewable, fee-based contracts and include telephone support, remote diagnostics and access to on-site technical support personnel. 50 The Company also offers its customers other management software. The Company sells its other non-embedded software either as perpetual or as term-based licenses.
Services relating to repair or replacement of hardware beyond the standard warranty period are offered under renewable, fee-based contracts and include telephone support, remote diagnostics and access to on-site technical support personnel. The Company also offers its customers other management software.
For the year ended December 31 (U.S. dollars in thousands) 2023 2022 Revenues $ 5,606 $ 8,831 Non-GAAP Adjusted EBITDA (6,066 ) (4,065 ) As a percentage of revenues (108.20 )% (46.03 )% Liquidity and Capital Resources Since our inception, we have financed our operations primarily through the sale of equity securities, debt financing, convertible loans and royalty-bearing grants that we received from the Israel Innovation Authority.
For the year ended December 31 (U.S. dollars in thousands) 2024 2023 Revenues $ 7,760 $ 5,606 Non-GAAP Adjusted EBITDA (3,481 ) (6,066 ) As a percentage of revenues (44.86 )% (108.20 )% Liquidity and Capital Resources Since our inception, we have financed our operations primarily through the sale of equity securities, debt financing, convertible loans and royalty-bearing grants that we received from the Israel Innovation Authority.
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. Our solutions have been tested for performance and security by the U.S.
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.
However, wireline communication infrastructure is costly, 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. Typically, providing new fiber connectivity to hard-to-reach locations is costly and time-consuming, often requiring permits for boring, trenching, and right-of-way.
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. 48 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.
Year ended December 31 2023 2022 (dollars in thousands) Revenues 5,606 8,831 Cost of revenues 3,706 4,721 Gross profit 1,900 4,110 Research and development expenses 2,702 2,766 Sales and marketing, net 3,030 3,282 General and administrative 3,531 4,163 Operating loss (7,363 ) (6,101 ) Interest expenses (766 ) (830 ) Other financial income (expenses), net 1,843 (4,051 ) Net Comprehensive Loss for the year (6,286 ) (10,982 ) 45 Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 Revenues Our revenues for the year ended December 31, 2023 amounted to $5.6 million, compared to $8.8 million for the year ended December 31, 2022.
Year ended December 31 2024 2023 (dollars in thousands) Revenues 7,760 5,606 Cost of revenues 3,490 3,706 Gross profit 4,270 1,900 Research and development expenses 2,383 2,702 Sales and marketing, net 2,639 3,030 General and administrative 3,169 3,531 Other Income, net (163 ) - Operating loss (3,758 ) (7,363 ) Interest expenses (618 ) (766 ) Other financial income (expense), net 2 1,843 Net Comprehensive Loss for the year (4,374 ) (6,286 ) Year Ended December 31, 2024, Compared to Year Ended December 31, 2023 Revenues Our revenues for the year ended December 31, 2024 amounted to $7.8 million, compared to $5.6 million for the year ended December 31, 2023.
We have incurred significant losses and negative cash flows from operations and net loss was $6.3 million and $11.0 million for the years ended December 31, 2023, and December 31, 2022, respectively. During the years ended December 31, 2023, and December 31, 2022, we had negative cash flows from operations of $6.6 million and $7.8 million, respectively.
We have incurred significant losses and negative cash flows from operations and net loss was $4.4 million and $6.3 million for the years ended December 31, 2024, and December 31, 2023, respectively.
For the years ended December 31, 2023 and December 31, 2022, our IoT customers in the aggregate accounted for approximately 73% and 65% of our revenues, respectively. We derive a significant portion of our revenue from a limited number of our customers.
We derive a majority of our revenues from our existing and new IoT (including federal and DoD) customers. For the years ended December 31, 2024 and December 31, 2023, our IoT customers in the aggregate accounted for approximately 72% and 73% of our revenues, respectively. We derive a significant portion of our revenues from a limited number of our customers.
Cash used in operating activities (including the effect of exchange rate changes on cash and cash equivalents and restricted cash) amounted to $6.3 million for the year ended December 31, 2023, compared to $7.8 million for the year ended December 31, 2022.
Cash used in operating activities (including the effect of exchange rate changes on cash and cash equivalents and restricted cash) amounted to $6.5 million for the year ended December 31, 2024, compared to $6.3 million for the year ended December 31, 2023. The decrease in cash used in operating activities was mainly due to cost reduction measures taken.
Net cash provided by investing activities was $3.8 million for the year ended December 31, 2023, compared to cash used in investing activities of $4.0 million for the year ended December 31, 2022. The increase in cash used in investing activities was mainly due to changes in short term deposits and restricted bank deposits.
Net cash provided by investing activities was $197,000 for the year ended December 31, 2024, compared to cash provided by investing activities of $3.8 million for the year ended December 31, 2023. The increase from the corresponding period was mainly due to the reduction in short-term bank deposits.
In particular, the repercussions from the COVID 19 pandemic, inflation, economic uncertainty, as well as the war between Russia and the Ukraine and Israel, Hamas and Hezbollah, has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
However, such financing may not be available on favorable terms, or at all. In particular, inflation, economic uncertainty, as well as the war between Russia and the Ukraine and Israel, Hamas and Hezbollah, has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
Non-GAAP Financial Measures (U.S. dollars in thousands) Year Ended December 31, 2023 Year Ended December 31, 2022 Revenues $ 5,606 $ 8,831 GAAP net loss (6,286 ) (10,982 ) Interest Expense 766 830 Other financial expenses (income), net (1,843 ) 4,051 Tax Expense 78 94 Fixed asset depreciation expense 27 23 Stock based compensation 377 220 Research and development, capitalization 444 525 Other one-time costs and expenses 371 1,174 Non-GAAP Adjusted EBITDA (6,066 ) (4,065 ) GAAP net loss margin (112.14 )% (124.36 )% Adjusted EBITDA margin (108.20 )% (46.03 )% Use of Non-GAAP Financial Information Non-GAAP Adjusted EBITDA, Adjusted EBITDA margin are Non-GAAP financial measures.
Non-GAAP Financial Measures (U.S. dollars in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Revenues $ 7,760 $ 5,606 GAAP net loss (4,374 ) (6,286 ) Interest Expense 618 766 Other financial (expense) income, net (2 ) (1,843 ) Tax Expense 103 78 Fixed asset depreciation expense 26 27 Stock based compensation 337 377 Research and development, capitalization - 444 Other one-time costs and expenses/(income) (189 ) 371 Non-GAAP Adjusted EBITDA (3,481 ) (6,066 ) GAAP net loss margin (56.37 )% (112.14 )% Adjusted EBITDA margin (44.86 )% (108.20 )% 51 Use of Non-GAAP Financial Information Non-GAAP Adjusted EBITDA, Adjusted EBITDA margin are Non-GAAP financial measures.
Operating Loss Our operating loss for the year ended December 31, 2023, was $7.4 million, compared to an operating loss of $6.1 million for the year ended December 31, 2022.
Net Loss Our net loss for the year ended December 31, 2024 was $4.4 million, compared to a net loss of $6.3 million for the year ended December 31, 2023.
General and Administrative Expenses Our general and administrative expenses for the year ended December 31, 2023, amounted to $3.5 million compared to $4.2 million for the year ended December 31, 2022.
General and Administrative Expenses Our general and administrative expenses for the year ended December 31, 2024, amounted to $3.2 million compared to $3.5 million for the year ended December 31, 2023. The decrease was mainly due to cost reduction measures taken.
If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected. 48 Cash Flows The table below, for the periods indicated, provides selected cash flow information: (U.S. dollars in thousands) Year Ended December 31, 2023 Year Ended December 31, 2022 Net cash used in operating activities (including the effect of exchange rate changes on cash and cash equivalents and restricted cash) $ (6,346 ) $ (7,768 ) Net cash provided by (used in) investing activities 3,821 (4,034 ) Net cash provided by financing activities 3,761 15,286 Net change in cash $ 1,236 $ 3,484 As of December 31, 2023, we had cash, cash equivalents, and restricted cash of $5.5 million compared to $4.3 million of cash, cash equivalents and restricted cash as of December 31, 2022.
Cash Flows The table below, for the periods indicated, provides selected cash flow information: (U.S. dollars in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Net cash used in operating activities (including the effect of exchange rate changes on cash and cash equivalents and restricted cash) $ (6,538 ) $ (6,346 ) Net cash provided by investing activities 197 3,821 Net cash provided by financing activities 3,093 3,761 Net change in cash $ (3,248 ) $ 1,236 As of December 31, 2024, we had cash, cash equivalents, and restricted cash of $2.3 million compared to $5.5 million of cash, cash equivalents and restricted cash as of December 31, 2023.
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. A primary focus of ours is to provide our customers with a cyber-secure network solution.
Our unique portfolio of hybrid fiber, environmentally hardened aggregation switches, high density Ethernet devices, advanced management software and AI-based cyber-security offering, unlocks the hidden value of essential networks and the devices they connect, delivering a safe and cyber-aware connectivity for rapid, cost-effective deployment.
(“we,” “the Company”, “Actelis”, “us”, “our”) is a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area IoT applications including federal, state and local government, intelligent traffic systems (“ITS”), military, utility, rail, telecom and campus applications.
Overview We are a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area IoT applications including federal, state and local government, ITS, military, utility, rail, telecom (notably in multi-dwelling units) and campus applications.
Sales and Marketing Expenses Our sales and marketing expenses for the year ended December 31, 2023, amounted to $3.0 million compared to $3.3 for the year ended December 31, 2022. The decrease was mainly due to a decrease in commission expenses as a result of the decrease in revenues.
The decrease is primarily attributable to cost reduction measures taken. Sales and Marketing Expenses Our sales and marketing expenses for the year ended December 31, 2024, amounted to $2.6 million compared to $3.0 for the year ended December 31, 2023. The decrease was mainly due to cost reduction measures taken.
For the years ended December 31, 2023 and December 31, 2022, our top ten customers in the aggregate accounted for approximately 66% and 82% of our revenues.
For the years ended December 31, 2024 and December 31, 2023, our top ten customers in the aggregate accounted for approximately 74% and 66% of our revenues. In December 2020, we entered into the Migdalor Loan, for a loan of up to approximately $6.0 million.
By region, it is primarily attributable to a decrease of $1.7 million of revenues generated from North America and a decrease of $1.5 million of revenues generated from Europe, the Middle East and Africa.
The increase was primarily attributable to increase of sales in North America region, it is primarily attributable to an increase of 134% of revenues generated from North America and a decrease of 42% and 61% of revenues generated from Europe, the Middle East and Africa respectively compared to last year.
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.
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. We utilize the adjusted results to review our ongoing operations without the effect of these adjustments but not for comparison to budgeted operating results.
The Company provides, to certain customers, software updates that it chooses to develop, which the Company refers to as unspecified software updates, and enhancements related to the Company’s management software through support service contracts. The Company also offers its customers product support services which include telephone support, remote diagnostics and access to on-site technical support personnel.
The Company sells its other non-embedded software either as perpetual or as term-based licenses. 55 The Company provides, to certain customers, software updates that it chooses to develop, which the Company refers to as unspecified software updates, and enhancements related to the Company’s management software through support service contracts.
Connecting such hard-to-reach locations may cause significant delays and budget overruns in IoT projects. Our solutions aim to solve these challenges effectively accelerating deployment of IoT projects, and making IoT projects more affordable and predictable to plan and budget.
Connecting such hard-to-reach locations may cause significant delays and budget overruns in IoT projects.
In February 2024, we entered into a new credit line facility from an Israeli bank of up to $1.5 million that increases the Company’s operating liquidity while not increasing the Company’s total debt, as the Company will perform an early repayment of its existing debt using its restricted cash in a similar amount.
In February 2024, we entered into the Credit Line, which increased our operating liquidity while not increasing our total debt, as we will perform an early repayment of our existing debt using our restricted cash in a similar amount. The Credit Line is secured by customer invoices and incurs interest at a Federal SOFR rate plus 5.5%.
Net cash provided by financing activities was $3.8 million for the year ended December 31, 2023, compared to $15.3 million for the year ended December 31, 2022.
Net cash provided by financing activities was $3.1 million for the year ended December 31, 2024, compared to $3.8 million for the year ended December 31, 2023. The decrease is related to the repayment of long-term loan, offset by funds raised from an investor warrant exercise.
Actelis bases its estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
Actelis bases its estimates primarily on historical and anticipated operations, market and customer trends and feedback, financial factors and indicators (for example, interest rates, volatility of market share price etc.), product quality and manufacturing expectations, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.
Changes in fair value, realized gains and losses on sales of marketable securities, are reflected in the statements of operation as finance expense (income), net. Inventory Inventories are stated at the lower of cost (cost is determined on a weighted average cost method) or net realizable value. Our inventories generally are subject to impairment as they age.
Inventory Inventories are stated at the lower of cost (cost is determined on a weighted average cost method) or net realizable value.
Our solutions can also provide remote power over existing copper lines to power up network elements and IoT components connected to them (like cameras and meters). Connecting power lines to millions of IoT locations can be costly and very time consuming (similar to data connectivity).
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.).
Cost of Revenues Our cost of revenues for the year ended December 31, 2023, amounted to $3.7 million compared to $4.7 million for the year ended December 31, 2022. The decrease from the corresponding period was mainly due to the decrease in revenues, partially offset by the higher effect of indirect costs as the percent of the lower revenues.
Cost of Revenues Our cost of revenues for the year ended December 31, 2024, amounted to $3.5 million compared to $3.7 million for the year ended December 31, 2023.
The cash flow from financing activities for the year ended December 31, 2022, resulted from proceeds from the Company’s IPO in the amount of $15.4, net of underwriting discounts and commissions and other offering costs of $1.0 million. 49 Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on the audited consolidated financial statements which are included elsewhere in this prospectus.
See notes 2 to the condensed consolidated financial statements 54 Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on the audited consolidated financial statements which are included elsewhere in this report.
The Company’s customers are comprised of end-users, resellers, system integrators and distributors.
The Company also offers its customers product support services which include telephone support, remote diagnostics and access to on-site technical support personnel. The Company’s customers are comprised of end-users, resellers, system integrators and distributors.
Research and Development Expenses Our research and development expenses for the year ended December 31, 2023, amounted to $2.7 million compared to $2.8 million for the year ended December 31, 2022. The decrease is mainly due to a decrease in payroll expenses.
Operating Loss Our operating loss for the year ended December 31, 2024, was $3.8 million, compared to an operating loss of $7.4 million for the year ended December 31, 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.
In recent years, as we have further developed our technology and rolled out 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. 44 We derive a growing portion of our revenue from our existing and new IoT customers.
In recent years, as we have further developed our technology and introduced additional products, we turned our focus on serving the wide-area IoT, federal and DoD markets, as well as MDUs, and introduced, in 2024, our cyber-aware networking solutions for IoT markets as well.
Removed
We provide Triple-Shield protection of coding, scrambling and encryption of the network traffic. We are working to expand our cyber-security offering by introducing a convergence of our network presence with the IoT devices at the edge of such networks, to which we call “Cyber Aware Networking”.
Added
Additionally, through our “Cyber Aware Networking” initiative, we provide an AI-based cyber monitoring and protection software-based system for all edge devices, enhancing network security and resilience and operational continuity.
Removed
DoD laboratories and approved for deployment with U.S. Federal Government and U.S. defense forces as part of APL (Approved Product List) in 2019. In 2023, we received the U.S. DoD certification for cyber-security and interoperability and Federal Information Processing Standard (“FIPS”) compliance 140-2 compliance and inclusion in the Approved Product List.
Added
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.
Removed
As of December 31, 2023, we have one outstanding loan with Migdalor Business Investments Fund (“Migdalor”) in the original principal amount of approximately $6 million which is secured by all our assets (the “Migdalor Loan”), and of which approximately $4. 3 million remains outstanding.
Added
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 or coax lines to deliver cyber-hardened, high-speed connectivity without needing to replace the existing infrastructure with new fiber.
Removed
In December 2022, we deposited $2 million to a Company-owned interest bearing bank account, or the “designated account” and an additional $2 million was deposited on or about February 28, 2023.
Added
We believe that such hybrid fiber networking solutions have distinct advantages in most real-life installations, while providing significant budget savings and accelerating deployment of modern IoT networks. Based on our experience, most IoT projects have challenging, hard to reach with fiber locations which may significantly increase such projects’ timeline and budgets.
Removed
Migdalor consented to allow us to seek additional accounts receivable financing which would be used to partially repay the Migdalor Loan, which would reduce or eliminate the Additional Deposit (as defined in our agreement with Migdalor) and increase free operating cashflow.
Added
We believe that our solutions can provide connectivity over either fiber, copper or coax with speeds of up to multi-Gigabit communication, while supporting Fiber-grade reliability and quality. 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.
Removed
The new credit line will be secured by customer invoices and will incur interest at a Federal SOFR rate plus 5.5% and is available until the end of 2024, with possible extension.
Added
We also provide secure, encrypted access to our network management software, and are working to further enhance system-level and device-level software protection. Our IoT cyber-security software solution implements AI to monitor, identify vulnerabilities and threats, offers or implements automatically AI generated plans addressing such exposures and constant reporting of all such activities, for the sake of documentation and compliance.
Removed
The Company performed a partial early repayment of its existing debt facility with Migdalor under the Loan Agreement using its restricted cash at an amount equal to the amount of funding from the new credit line to-date of approximately $550,000, therefore leaving the total debt amount of the Company at a similar level.
Added
This solution comes with the network itself, and uses the network traffic to become cyber-aware of the risks imminent to the IoT devices that are connected to that network.
Removed
If we cannot generate sufficient cash flow from operations to service our debt, we may need to further refinance our debt, dispose of assets or issue equity to obtain necessary funds.
Added
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 a 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.
Removed
Migdalor consented to allow us to seek additional accounts receivable financing which would be used to partially repay the Migdalor Loan, which would reduce or eliminate the Additional Deposit (as defined in our agreement with Migdalor). We expect to continue repaying the principal and interest of the Migdalor Loan from our operating cash flow.
Added
The result for the network owner is a 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.
Removed
Please refer to the “Liquidity and Financial Condition” section below for further discussion. Results of Operations The table below provides our results of operations for the periods indicated.
Added
The same is correct in multi-dwelling unit buildings where the wiring from the roof (in case of a wireless based connectivity) or from the basement in case of a wired connectivity to the building. In such cases we utilize existing in-building wiring, preventing the need for brand-new ones and enables multi-gigabit connectivity to each apartment or suite.
Removed
The decrease was primarily attributable to the decline of revenues generated from telco customers, as our focus continued to shift to IoT customers by $1.6 million significantly impacted by a two-year software license renewal in 2022, therefore not repeated in 2023, driving a $0.5 million decline, and to delays of IoT projects into 2024.
Added
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).
Removed
This decrease was mainly due to a reduction in professional services of approximately $0.2 million, a decrease in management bonus expenses of $0.2 million, as well as a reduction in other non-payroll expenses associated with the IPO in 2022.
Added
Our operations are focused on our fast-growing IoT, federal and DoD markets, while maintaining our commitment to our existing Telco customers, and particularly MDUs. In 2024, we introduced new product offering, some of which could serve both the IoT markets and our Telco customers.
Removed
The increase was mainly due to the decrease in revenues and gross margin while continuing to invest in Sales and Marketing and Research and Development expenses, which was offset by a decrease in sales commission expenses as well as general and administrative one-time expenses due to the IPO in 2022.
Added
In August 2024, we announced signing a strategic partnership with an advanced cybersecurity provider to develop and deliver a novel, AI-Powered SaaS offering, under Actelis’ ‘Cyber Aware Networking’ initiative.
Removed
In 2023, the Company recorded financial income in connection with a decrease in fair value of warrants in the amount of $1.7 million, while in 2022 the Company recorded finance expenses as a result of increase in fair value of various financial instruments prior to the IPO completed in May 2022, such as a convertible loan, note and warrants, in the amount of $4.5 million.
Added
This software, designed as an intelligence layer integrated into Actelis’ networking devices, leverages the network’s power and proximity to IoT devices to monitor and protect physical assets such as cameras, sensors, and other devices at the edge, enabling corrective actions before issues propagate throughout the network.
Removed
The decrease in the finance expenses, net partially offset by a decrease in income from exchange rate differences in the amount of $0.3 million for the year ended December 31, 2023, compared to $0.5 during the year ended December 31, 2022. 46 Net Loss Our net loss for the year ended December 31, 2023 was $6.3 million, compared to a net loss of 11.0 million for the year ended December 31, 2022.
Added
In February 2024, we performed a partial early repayment of Migdalor Loan in the amount of 2.0 million NIS (approximately $550,000). During April and May 2024, we made an additional partial early repayment of Migdalor loan in the amount of NIS 10.9 million (approximately $2.9 million).
Removed
This decrease was primarily due to the decrease in revenues and gross margin offset by a decrease in financial expenses, net resulting from the expenses incur by the conversion of the financial instruments the Company had such as a convertible loan, note and warrants from the IPO completed in May 2022 for the year ended December 31, 2022, compared to income in connection with a decrease in fair value of warrants for the year ended December 31, 2023.
Added
In May 2024, we signed an amendment to the agreement with Migdalor, pursuant to which the remaining $470,000 of the one-time interest payment which was originally due in January 2024 to Migdalor, will be paid in 12 equal monthly payments bearing 9.6% interest from February 2024 until February 2025.
Removed
We utilize the adjusted results to review our ongoing operations without the effect of these adjustments but not for comparison to budgeted operating results.
Added
In addition, we are obligated to issue Migdalor warrants to acquire common stock of the Company for up to $150,000, based on a share price as of February 8, 2024. 49 As of the date of this report, we have fully repaid the loan principal, and we have an interest outstanding balance of $111,000.
Removed
As of December 31, 2023, our accumulated deficit was $3 9 .7 million.
Added
The Credit Line has been extended under February 1, 2026. The Credit Line balance drawn is examined every month and adjusted up to every three months, and the repayment of the Credit Line will be made up to every three months subject to the expiration of the financing period for the invoices that were financed.

… 34 more changes not shown on this page.

Other ASNS 10-K year-over-year comparisons