Actelis Networks Q3 2026 revenue rises to $1.08M
Nasdaq denied continued listing, and ASNS began trading on OTCQB on April 24, 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Actelis Networks, Inc. reported revenue of $3.171 million for the nine months ended September 30, 2026, compared with $2.305 million in the same 2025 period; third-quarter revenue was $1.081 million versus $643,000. Nine-month net comprehensive loss was $5.096 million, compared with $5.741 million, and net cash used in operating activities was $4.559 million, versus $5.637 million. Cash and cash equivalents were $4.831 million at September 30, 2026.
Net cash provided by financing activities was $5.075 million for the nine months, including $7.311 million of ATM proceeds and $368,000 in offering costs. The company issued 18,429,137 shares through the ATM and repurchased 2,674,709 shares; 28,850,760 common shares were outstanding at September 30, 2026, versus 8,058,392 at December 31, 2025. A July 1, 2026 amendment with White Lion involved 9,850,000 securities, comprising 3,000,000 common shares, 3,850,000 pre-funded warrants and 3,000,000 common warrants; the related resale registration became effective July 7, 2026. Nasdaq denied continued listing, and OTCQB trading began April 24, 2026; the company says OTCQB quotation is less liquid.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue reached $3.171 million, versus $2.305 million in 2025.
- Moderate pointNine-month net comprehensive loss narrowed to $5.096 million from $5.741 million.
- Moderate pointOperating cash used fell to $4.559 million from $5.637 million.
Negative
- Major pointASNS began less-liquid OTCQB trading on April 24, 2026 after Nasdaq delisting.
Filing Explained
The company registered for resale up to 6,000,000 additional shares issuable under its equity line; the filing describes these as potential issuance, not completed share issuance, and any issuance would increase the share count and reduce existing holders’ ownership percentages.
Key Figures
Key Terms
pre-funded warrants financial
Equity Line of Credit financial
minimum bid price regulatory
Level 3 technical
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did ASNS report in the third quarter of 2026?
Why did ASNS lose its Nasdaq listing?
AI-generated analysis. How Rhea-AI works. Not financial advice.
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM
For the quarterly period ended
For the transition period from _________ to _________
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer I.D. No.) |
(Address of principal executive offices)
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: as of November 9, 2026,
ACTELIS NETWORKS, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED September 30, 2026
TABLE OF CONTENTS
| PAGE | |||
| PART I - FINANCIAL INFORMATION | F-1 | ||
| Item 1. | Condensed Consolidated Interim Financial Statements (Unaudited) | F-1 | |
| Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 | F-3 | ||
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2026 and 2025 | F-5 | ||
| Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 | F-6 | ||
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 | F-8 | ||
| Notes to Condensed Consolidated Financial Statements | F-10 | ||
| Item 2. | Management’s Discussion & Analysis of Financial Condition and Results of Operations | 1 | |
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 9 | |
| Item 4. | Controls and Procedures | 9 | |
| PART II - OTHER INFORMATION | 10 | ||
| Item 1. | Legal Proceedings | 10 | |
| Item 1A. | Risk Factors | 10 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 12 | |
| Item 3. | Defaults Upon Senior Securities | 13 | |
| Item 4. | Mine Safety Disclosures | 13 | |
| Item 5. | Other information | 13 | |
| Item 6. | Exhibits | 13 | |
| SIGNATURES | 14 | ||
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding Actelis Networks Inc.’s (the “Company,” “we”) financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performances, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performances or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Part II, Item 1A of this Quarterly Report on Form 10-Q and the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025, filed on March 18, 2026, with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.
In addition, forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
| ● | our history of losses and need for additional capital to fund our operations and our ability to obtain additional capital on acceptable terms, or at all; |
| ● | our ability to protect our intellectual property and continue to innovate; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors; |
| ● | the potential insufficiency of our disclosure controls and procedures to detect errors or acts of fraud; |
| ● | the accuracy of our estimates regarding expenses, future revenues and capital requirements; |
| ● | the success of competing products or technologies that are or may become available; |
| ● | our ability to comply with complex and increasing regulations by governmental authorities; | |
| ● | our ability to maintain the quotation of our common stock on the OTCQB Venture Market (“OTCQB”) operated by The OTC Markets Group, Inc. (“OTC Markets”) and the potential to achieve uplisting to the Nasdaq Capital Market; | |
| ● | our ability to continue as a going concern; | |
| ● | our ability to utilize and draw off of our Equity Line of Credit on the OTCQB market if needed | |
| ● | statements as to the impact of the political and security situation in Israel on our business, including due to the number of armed conflicts between Israel and Hamas (an Islamist militia and political group in the Gaza Strip), Hezbollah (an Islamist militia and political group in Lebanon), and Iran; |
ii
| ● | our public securities’ potential liquidity and trading; and | |
| ● | our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. In addition, statements that include the wording “we believe” or similar meaning terms reflect our beliefs and opinions on the relevant subject. Forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate.
The forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this filing. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date hereof.
iii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ACTELIS NETWORKS, INC.
QUARTERLY REPORT FOR THE PERIOD ENDED September 30, 2026
(Unaudited)
F-1
ACTELIS NETWORKS, INC.
QUARTERLY REPORT FOR THE PERIOD ENDED September 30, 2026
(Unaudited)
TABLE OF CONTENTS
| Page | |
| Condensed consolidated financial statements (unaudited) – U.S. dollars in thousands: | |
| Condensed consolidated balance sheets | F-3 - F-4 |
| Condensed consolidated statements of comprehensive loss | F-5 |
| Condensed consolidated statements of changes in Shareholders’ equity | F-6 - F-7 |
| Condensed consolidated statements of cash flows | F-8 - F-9 |
| Notes to condensed consolidated financial statements | F-10 - F-23 |
F-2
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(U. S. dollars in thousands, except share data)
| September 30, 2026 |
December 31, 2025 |
|||||||
| Assets | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash and bank deposits | ||||||||
| Trade receivables, net of allowance for credit losses of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Property and equipment, net | ||||||||
| Prepaid expenses and other assets | ||||||||
| Restricted bank deposits | ||||||||
| Funds in respect of employee rights upon retirement | ||||||||
| Operating lease right-of-use assets | ||||||||
| Long-term deposits | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | ||||||||
F-3
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(UNAUDITED)
(U. S. dollars in thousands, except share data)
| September 30, 2026 |
December 31, 2025 |
|||||||
| Liabilities and shareholders’ equity | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Credit line | - | |||||||
| Short-term loan | - | |||||||
| Trade payables | ||||||||
| Deferred revenues | ||||||||
| Employee and employee-related obligations | ||||||||
| Accrued royalties | ||||||||
| Current maturities of operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Long-term loan | ||||||||
| Deferred revenues | ||||||||
| Operating lease liabilities | ||||||||
| Liability for employee rights upon retirement | ||||||||
| Pre-funded warrants and warrant liability | ||||||||
| Other non-current liabilities | ||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 5) | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Common stock, $ | ||||||||
| Non-voting common stock, $ | - | - | ||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(U. S. dollars in thousands, except share and per share data)
| Nine months ended September 30, |
Three months ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| REVENUES | ||||||||||||||||
| COST OF REVENUES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Other income | - | ( | ) | - | ( | ) | ||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other financial income (expense), net | ( | ) | ( | ) | ( | ) | ||||||||||
| NET COMPREHENSIVE LOSS FOR THE PERIOD | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share attributable to common shareholders – basic and diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average shares of common stock used in computing net loss per share – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
U.S. dollars in thousands (except number of shares)
| Common Stock | Non-voting Common Stock | Additional | Total | |||||||||||||||||||||||||
| Nine months ended | Number of shares |
Amount | Number of shares |
Amount | paid-in capital | Accumulated deficit |
shareholders’ equity |
|||||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2025 | - | - | ( | ) | ||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
| Vesting of RSUs | * | - | - | (* | ) | - | - | |||||||||||||||||||||
| Issuance of common stock, net of offering costs - ATM | * | - | - | - | ||||||||||||||||||||||||
| Warrants to lender | - | - | - | - | - | |||||||||||||||||||||||
| Warrant inducement agreement, net of offering costs | * | - | - | - | ||||||||||||||||||||||||
| Issuance of common stock and warrants, net of offering costs - July 2025 PIPE | * | - | - | - | ||||||||||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of offering costs - September 2025 PIPE | * | - | - | - | ||||||||||||||||||||||||
| Net comprehensive loss for the period | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE AS OF SEPTEMBER 30, 2025 | - | - | ( | ) | ||||||||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2026 | - | - | ( | ) | ||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
| Vesting of RSUs | * | - | - | (* | ) | - | - | |||||||||||||||||||||
| Issuance of common stock, net of offering costs- ATM (Note 6c) | * | - | - | - | ||||||||||||||||||||||||
| Exercise of Pre-Funded Warrants into common stock | * | - | - | (* | ) | - | - | |||||||||||||||||||||
| Exercise of Pre-Funded Warrants (Liability) into common stock (Note 6b) | * | - | - | - | ||||||||||||||||||||||||
| Repurchase of common stock for retirement | ( | ) | * | - | - | ( | ) | - | ( | ) | ||||||||||||||||||
| Issuance of common stock in settlement of ELOC commitment fee liability (Note 6b) | * | - | - | - | ||||||||||||||||||||||||
| Net comprehensive loss for the period | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE AS OF SEPTEMBER 30, 2026 | - | - | ( | ) | ||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-6
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)
(UNAUDITED)
U.S. dollars in thousands (except number of shares)
| Common Stock | Non-voting Common Stock | Additional | Total | |||||||||||||||||||||||||
| Three months ended | Number of shares |
Amount | Number of shares |
Amount | paid-in capital |
Accumulated deficit |
shareholders’ equity |
|||||||||||||||||||||
| BALANCE AS OF JULY 1, 2025 | - | - | ( | ) | ||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
| Vesting of RSUs | * | - | - | (* | ) | - | - | |||||||||||||||||||||
| Issuance of common stock, net of offering costs - ATM | * | - | - | - | ||||||||||||||||||||||||
| Warrant inducement agreement, net of offering costs | * | - | - | - | ||||||||||||||||||||||||
| Issuance of common stock and warrants, net of offering costs - July 2025 PIPE | * | - | - | - | ||||||||||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of offering costs - September 2025 PIPE | * | - | - | - | ||||||||||||||||||||||||
| Net comprehensive loss for the period | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE AS OF SEPTEMBER 30, 2025 | - | - | ( | ) | ||||||||||||||||||||||||
| BALANCE AS OF JULY 1, 2026 | - | - | ( | ) | ||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
| Vesting of RSUs | * | - | - | (* | ) | - | - | |||||||||||||||||||||
| Issuance of common stock in settlement of ELOC commitment fee liability (Note 6b) | * | - | - | - | ||||||||||||||||||||||||
| Net comprehensive loss for the period | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| BALANCE AS OF SEPTEMBER 30, 2026 | - | - | ( | ) | ||||||||||||||||||||||||
| * | Represents an amount less than $1 thousand. |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-7
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(U. S. dollars in thousands)
| Nine months ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss for the period | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Inventories write-downs, net | ||||||||
| Financial expenses | ||||||||
| Share-based compensation | ||||||||
| Liability for commitment fee under ELOC agreement | - | |||||||
| Change in fair value of pre-funded warrants and warrants liability | ( | ) | - | |||||
| Gain on settlement of liability for commitment fee under ELOC agreement | ( | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivables, net | ||||||||
| Net change in operating lease assets and liabilities | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other non-current assets | - | |||||||
| Trade payables | ( | ) | ( | ) | ||||
| Deferred revenues | ( | ) | ||||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Other non-current liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Restricted bank deposits | ||||||||
| Long-term deposit | - | |||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock – ATM | ||||||||
| Offering cost from issuance of common stock – ATM | ( | ) | ( | ) | ||||
| Proceeds from issuance of common stock and warrants - July 2025 PIPE | - | |||||||
| Offering cost from issuance of common stock and warrants - July 2025 PIPE | - | ( | ) | |||||
| Credit lines with bank, net | ( | ) | ( | ) | ||||
| Proceeds from warrant inducement agreement | - | |||||||
| Underwriting commissions and other offering costs | - | ( | ) | |||||
| Proceeds from issuance of common stock and pre-funded warrants - September 2025 PIPE | - | |||||||
| Offering cost from issuance of common stock and pre-funded warrants - September 2025 PIPE | - | ( | ) | |||||
| Proceeds from short-term loans | - | |||||||
| Repurchase of common stock for retirement | ( | ) | - | |||||
| Repayment of short-term loan | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS | ||||||||
| INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| BALANCE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | ||||||||
| BALANCE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-8
ACTELIS NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)
(U. S. dollars in thousands)
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash, current | - | |||||||
| Total cash, cash equivalents and restricted cash | ||||||||
| Nine months ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | ||||||||
| SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: | ||||||||
| Warrant to lender | - | |||||||
| Issuance costs of warrant inducement agreement and warrants to underwriters | - | |||||||
| Pre-funded warrants converted to stock | - | |||||||
| Operating lease right of use assets obtained in exchange for operating lease liabilities | - | |||||||
| Settlement of liability for commitment fee through issuance of common stock, pre-funded warrants and warrants (Note 6b) | - | |||||||
| Other non-current assets | - | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-9
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 1 – GENERAL:
| a. | Actelis Networks, Inc. (hereafter- the Company) was established in 1998, under the laws of the state of Delaware. The Company has a wholly-owned subsidiary in Israel, Actelis Networks Israel Ltd. (hereafter – the Subsidiary). The Company is engaged in the design, development, manufacturing, and marketing of cyber hardened, hybrid fiber, networking solutions for IoT and Telecommunication governmental agencies and companies. The Company’s customers include governmental agencies, providers of telecommunication services, enterprises as well as resellers of the Company’s products. On May 12, 2022, the Company accepted a notification of effectiveness from the Securities and Exchange Commission (“SEC”), and on May 17, 2022, completed its IPO and the Company’s Common Stock commenced listing on the Nasdaq Capital Market (“Nasdaq”). On April 10, 2026 the Company’s common stock was delisted from Nasdaq and on the same day started trading on the OTC market, operated by OTC Markets Group (“OTC”). Effective April 24, 2026, its common stock commenced trading on the OTCQB Venture Market, operated by OTC. In July 2026, Nasdaq filed a Form 25-NSE with the SEC to complete the delisting of the Company’s common stock. For additional information, see Note 1(d). |
| b. | The Company has incurred significant losses and negative cash flows from operations. For the nine months ended September 30, 2026 and September 30, 2025, net loss was $
The Company has funded its operations to date through equity and debt financing and has cash on hand of $ |
| c. | On October 7, 2023, Hamas launched a series of attacks on civilian and military targets in Southern and Central Israel, to which the Israel Defense Forces responded. In addition, Iran, Hezbollah and the Houthi movement attacked military and civilian targets in Israel, to which Israel responded as well, through increased air and ground operations in Lebanon, Syria, Yemen and Iran. Following years of conflict in the region, on October 9, 2025, Israel, Hamas, the United States and other countries in the region agreed to a framework for a ceasefire in Gaza between Israel and Hamas. On February 28, 2026, the United States and Israel launched joint combat operations in Iran to which Iran and Hezbollah responded with ballistic missile and drone attacks on Israel as well as other countries and U.S. military bases in the region. Although the United States and Iran have announced ceasefire and de-escalation arrangements from time to time, including a memorandum of understanding entered into on June 17, 2026 that contemplates the termination of military operations on multiple fronts, hostilities have resumed and may continue or escalate. How long and how severe the current conflicts in Gaza, Northern Israel, Lebanon, Iran or the broader region last and become is unknown at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups in the region may escalate in the future into a greater regional conflict. To date, the Company’s operations have not been materially affected.
The Company does not anticipate any short-term material impact on its business performance due to the ongoing conflicts in the Gaza Strip, Lebanon, Iran and the overall geo-political situation in Israel. However, as this is an unpredictable event, its continuation or resolution could influence our expectations. We are closely monitoring political and military developments and assessing their potential impact on our operations, financial performance, and overall business conditions. |
F-10
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 1 – GENERAL (continued):
| d. | On February 4, 2026, the Company received a written notice (the “Notice”) from the Nasdaq Listing Qualifications Department of Nasdaq indicating that the Nasdaq staff (the “Staff”) had determined to delist the Company’s securities from The Nasdaq Capital Market. As disclosed in the Notice, the Staff determined that the Company’s common stock failed to maintain a minimum bid price of $
The Company requested an appeal hearing, which stayed the suspension and delisting action. At the appeal hearing, the Company presented to the Nasdaq Hearings Panel its plan to regain compliance with the Bid Price Rule.
On April 8, 2026, Nasdaq delivered a letter to the Company confirming to the Company that it had denied the Company’s request for continued listing and therefore that trading of the Company’s common stock, par value $
On April 24, 2026, the Company announced that it had been approved for and commenced trading on the OTCQB Venture Market operated by OTC, effective at the open of business on April 24, 2026. The Company’s common stock continues to trade under the symbol “ASNS.” In July 2026, Nasdaq filed a Form 25-NSE with the SEC to complete the delisting of the Company’s common stock.
In connection with the Company’s Common Stock Purchase Agreement with White Lion (the “ELOC Holder”) as described in Note 6b below, since the Company failed to maintain its listing on the Nasdaq Capital Market, the Commitment Fee Amount has been increased pursuant to the terms of the Delisting Penalty Provision of such agreement. On July 1, 2026, the Company entered into an Exchange and Amendment Agreement with the ELOC Holder, pursuant to which the Company’s obligations under the Commitment Shares provisions and the Delisting Penalty Provision were amended through the issuance of the Amendment Commitment Securities. See Note 6b. |
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES:
| a. | Basis of presentation |
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with Article 10 of the SEC’s Regulation S-X. As permitted under those rules, certain footnotes and other financial information that are normally required by generally accepted accounting principles in the United States (“U.S. GAAP”) can be condensed or omitted. These financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of its financial position as of and for the periods presented. These condensed consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2025. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of results that could be expected for the 2026 fiscal year or any other interim period or for any other future year. All intercompany transactions and balances have been eliminated in consolidation.
| b. | Use of estimates in preparation of financial statements |
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions, including those related to fair values of financial instruments, inventory write-offs, provisions, as well as estimates used in applying the revenue recognition policy. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
F-11
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued):
| c. | Fair value of financial instruments |
Fair value measurements are classified and disclosed in one of the following three categories:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The liability associated with the pre-funded warrants issued in December 2025 amounted to $
On July 1, 2026, in connection with the Exchange and Amendment Agreement with White Lion (see Note 6b), the Company issued pre-funded warrants and common warrants as part of the amendment consideration. As of September 30, 2026, these warrants were classified as liabilities.
The Amendment Commitment pre-funded warrants are measured using the quoted price of the Company’s common stock less the nominal exercise price. The Amendment Commitment Common Warrants are measured using a probability-weighted Black-Scholes model (Level 3).
As of September 30, 2026, the pre-funded warrants liability and the common warrants liability amounted to $
As of September 30, 2026, and December 31, 2025, the fair values of the Company’s cash, cash equivalents, short and long-term deposits, restricted bank deposits, trade receivables, other current assets, trade payables, long-term loan and restricted cash approximated the carrying values of these instruments presented in the Company’s consolidated balance sheets because of their nature.
| d. | Concentration of risk |
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash and bank deposits, and trade receivables. Cash and cash equivalents and restricted cash equivalents are placed with banks and financial institutions in the United States and Israel.
Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, present minimal credit risk with respect to those investments.
The Company’s trade receivables are derived primarily from Governmental authorities such as municipalities, military and other federal agencies, enterprises and telecommunication operators, as well as the Company’s reseller customers located mainly in the United States, Europe, and Asia.
F-12
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued):
Credit risk with respect to trade receivables exists to the full extent of the amounts presented in the condensed consolidated financial statements. Management makes judgments as to its ability to collect outstanding accounts receivable and provides allowances for the applicable portion of accounts receivable when collection becomes doubtful.
Management provides allowances based upon a specific review of all significant outstanding invoices, analysis of its historical collection experience, and current economic trends.
The Company has customer balances representing
| 1. | Customer A represented | |
| 2. | Customer B represented | |
| 3. | Customer C represented | |
| 4. | Customer D represented |
The Company does not see any material credit risk regarding the major trade receivable balance.
| e. | Segments |
Our Chief Executive Officer (CEO), as the Chief Operating Decision Maker (CODM), oversees the Company’s business activities as a single operating and reportable segment at the consolidated level.
| f. | New Accounting Pronouncements |
As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.
Recently adopted accounting pronouncements:
In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim reporting periods within those fiscal years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. ASU 2025-05 did not have a material impact on the Company’s consolidated financial statements.
F-13
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued):
Accounting pronouncements effective in future periods- not yet adopted
In December 2023, the FASB issued ASU 2023-09 Improvements to Income Tax Disclosures. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective for the Company for annual periods beginning after December 15, 2025. The Company will be implementing the new income tax disclosures. The Company expects the adoption of this standard to result in expanded disclosures in its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expense and ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The ASU improves the disclosures about a public business entity’s expense and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such as cost of sales, general and administrative, and research and development). The ASU is effective for annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on its consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which refines the scope of derivative accounting under Topic 815 and clarifies the treatment of share-based noncash consideration under ASC 606. The ASU is effective for annual periods beginning after December 15, 2026, including interim periods within those annual periods, with early adoption permitted. Entities may apply the amendments prospectively to new contracts or retrospectively with a cumulative-effect adjustment. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10 “Government Grants (Topic 832)” to establish authoritative guidance on the accounting for government grants received by business entities. This update is effective beginning with the Company’s 2029 fiscal year annual reporting period, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.
F-14
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 3 – INVENTORIES:
| September 30, 2026 | December 31, 2025 | |||||||
| Raw materials | ||||||||
| Finished goods | ||||||||
Inventory write-downs amounted to $
NOTE 4 – EVENTS OCCURRED DURING THE PERIOD:
| a. | The Company’s Israeli subsidiary has an operating lease agreement for a facility in Israel, which was renewed on |
As of February 23, 2026, the Company recorded the related asset and liability at the present value of payments over the lease term, discounted using the lessee’s incremental borrowing rate, which was
As of September 30, 2026, the maturity of lease liabilities under our non-cancelable operating leases was as follows:
| 2026 (remaining three months) | ||||
| 2027 | ||||
| 2028 | ||||
| Total future minimum lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of operating lease liabilities |
| b. | The Company entered into a bridge loan agreement with Bank Mizrahi-Tefahot on December 3, 2025, pursuant to which it received a loan in the principal amount of $ |
| c. | On March 18, 2026, the Board of Directors authorized an expansion of the Company’s share repurchase program, pursuant to which the Company may repurchase up to $ |
In March 2026, the Company repurchased an aggregate of
F-15
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 5 – COMMITMENTS AND CONTINGENCIES:
| a. | The Company is obligated to repay certain research and development grants received from the Israel Innovation Authority (“IIA”) in the form of a royalty rate on future sales of products derived from the funded research and development activities. The aggregate amount of royalties to be paid is determined based on |
In October 2024, the Company entered into a payment plan with the Israel Innovation Authority (“IIA”) to settle the outstanding balance as of the prior year. Pursuant to the agreement, the IIA agreed to offset a delayed payment of approximately $
In addition, the Company is required to report and pay ongoing royalties commencing from the first half of 2024.
During the three and nine months ended September 30, 2026, the Company repaid $
As of September 30, 2026, and December 31, 2025, the Company had a liability to pay royalties in the amount of approximately $
| b. | For information related to the settlement of the liability for commitment fee under the ELOC agreement, see Note 6b. |
NOTE 6 – SHAREHOLDERS’ EQUITY:
| a. | As of September 30, 2026 a total of |
| b. | Equity Line of Credit Agreement:
October 2025 Equity Line of Credit Agreement
On September 27, 2025, the Company entered into an equity line of credit agreement (the “ELOC Purchase Agreement”) with the ELOC Holder and a registration rights agreement (the “White Lion RRA”) commencing from October 1, 2025 (the “Effective Date”) provided that the Company did not cancel the ELOC Purchase Agreement prior to the Effective Date. Pursuant to the ELOC Purchase Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to the Commitment Amount of $
The maximum number of shares issuable under the ELOC Purchase Agreement is subject to the exchange cap equal to
As consideration for the ELOC Holder’s irrevocable commitment to purchase the Company’s Common Stock up to the Commitment Fee Amount, the Company agreed to issue Commitment Shares equal to the Commitment Fee Amount of $
The ELOC does not meet the requirement to be classified as equity pursuant to ASC 815-40.
On December 31, 2025, the Company and ELOC holder entered into a pre-funded warrant for a number of shares with an aggregate value of $ |
F-16
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 6 – SHAREHOLDERS’ EQUITY (continued):
According to the agreement, if, at any point during the term of the Common Stock Purchase Agreement, the Company fails to be listed on the Nasdaq, the Commitment Fee Amount will increase to $
Since the Company failed to maintain its listing on the Nasdaq Capital Market, the Company recorded additional liability to commitment fees in the amount of $
In December 2025, the Company initiated a draw under the Equity Line of Credit Purchase Agreement (the “ELOC”). In connection with this draw, the Company issued
During April and May 2026, White Lion exercised all
The Company may terminate the ELOC Purchase Agreement at any time, which shall be effected by written notice being sent by the Company to White Lion.
Exchange and Amendment Agreement - July 2026
On July 1, 2026, the Company and the ELOC Holder entered into an Exchange and Amendment Agreement (the “ELOC Amendment”), pursuant to which, in exchange for White Lion’s right to receive shares of common stock under the Commitment Shares provisions and the Delisting Penalty Provision, the Company issued to White Lion an aggregate of
The Amendment Commitment Pre-Funded Warrants and common warrants have been classified as liabilities.
F-17
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 6 – SHAREHOLDERS’ EQUITY (continued):
As of September 30, 2026, neither the Amendment Commitment Pre-Funded Warrants nor the Amendment Commitment Common Warrants were exercisable.
In addition, the ELOC Amendment modified the purchase notice mechanisms under the original ELOC Purchase Agreement, including the replacement of the delisting purchase notice mechanism with amended Rapid Purchase Notice and Regular Purchase Notice provisions. Under the amended provisions, the purchase price is generally determined as
The Company agreed not to submit purchase notices until the later of 30 days following the ELOC Amendment and the effectiveness of the applicable resale registration statement.
On July 1, 2026, the Company filed a registration statement covering the resale of the Amendment Commitment Securities and up to
Except as amended, the ELOC Purchase Agreement remains in effect in accordance with its terms.
Following the ELOC Amendment, on July 1, 2026, the Company derecognized the outstanding commitment fee liability of $
| ● | Common stock with a fair value of $ |
| ● | Amendment Commitment Pre-Funded Warrants with a fair value of $ |
| ● | Amendment Commitment Common Warrants with a fair value of $ |
The difference of $
The Amendment Commitment Pre-Funded Warrants and Amendment Commitment Common Warrants were classified as liabilities in accordance with ASC 815-40 because the Company did not have sufficient authorized and unissued shares available to settle the warrants. These liabilities are subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in other financial income (expense), net.
F-18
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 6 – SHAREHOLDERS’ EQUITY (continued):
As of September 30, 2026, the liabilities associated with the Amendment Commitment Pre-Funded Warrants and Amendment Commitment Common Warrants amounted to $
For the three and nine months ended September 30, 2026, the Company recognized net financial income of $
No shares of common stock were sold pursuant to purchase notices under the ELOC Purchase Agreement during the three months ended September 30, 2026.
| c. | At the Market Offering Agreement: |
On September 18, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”), with H.C. Wainwright & Co. (“Wainwright”), as sales agent, pursuant to which the Company may issue and sell shares of its common stock, from time to time, through Wainwright.
Under the ATM Agreement, Wainwright may sell shares in transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, as amended, or in any other method permitted by law, including in privately negotiated transactions.
The Company or Wainwright may suspend or terminate the ATM Agreement upon notice to the other party and subject to other conditions.
The Company will pay Wainwright a commission of
On January 5, 2026, the Company updated the offering amount based on the issuance in the preceding twelve months to $
During the nine months ended September 30, 2026, the Company issued and sold
The Company is currently unable to utilize its ATM facility as a result of its delisting from Nasdaq until it is relisted.
F-19
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 6 – SHAREHOLDERS’ EQUITY (continued):
| d. | Total outstanding warrants as of September 30, 2026, are as follows: |
| Number of warrants | Exercise price | Period left in years | ||||||||||
| Warrants May 2023 | $ | |||||||||||
| Warrants December 2023 | $ | |||||||||||
| Warrants June 2024 | $ | |||||||||||
| Warrants July 2025 | $ | |||||||||||
| Warrants September 2025 | $ | |||||||||||
| Warrants October 2025 | $ | |||||||||||
| Warrants December 2025 | $ | |||||||||||
| Commitment Common Warrants July 2026 * | $ | * | ||||||||||
| Other | $ | |||||||||||
| Outstanding as of September 30, 2026 | ||||||||||||
| * |
| e. | Share-based compensation: |
| 1) | A summary of the Company’s share options, granted to employees, directors, under option plans is as follows: |
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||
| Outstanding – January 1, 2026 | $ | |||||||||||
| Granted | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Forfeited | ( | ) | - | |||||||||
| Outstanding – September 30, 2026 | ||||||||||||
| Exercisable – September 30, 2026 | ||||||||||||
The majority of the share-based compensation expenses are included in the condensed consolidated statements of comprehensive loss under General and Administrative.
F-20
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 6 – SHAREHOLDERS’ EQUITY (continued):
As of September 30, 2026, the unrecognized compensation costs related to those unvested stock options are $
| 2) | A summary of the Company’s RSUs, granted to employees, directors, under option plans is as follows: |
| Number of RSUs | Weighted- Average Grant Date Fair Value | |||||||
| RSUs outstanding – January 1, 2026 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Outstanding – September 30, 2026 | ||||||||
The majority of the RSUs expenses are included in the condensed consolidated statements of comprehensive loss under General and Administrative.
As of September 30, 2026, the unrecognized compensation cost related to unvested RSUs totaled approximately $
NOTE 7 – BASIC AND DILUTED LOSS PER SHARE:
Basic net loss per share is computed using the weighted average number of shares of common stock and pre-funded warrants and fully vested RSUs outstanding during the period, net of treasury shares. In computing diluted loss per share, basic loss per share is adjusted to take into account the potential dilution that could occur upon the exercise of options and RSUs granted under employee stock compensation plans, and the exercise of warrants using the treasury stock method.
Diluted loss per share excludes
F-21
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 7 – BASIC AND DILUTED LOSS PER SHARE (continued):
Diluted loss per share excludes
The following table sets forth the computation of basic and diluted net loss per share attributable to common shareholders:
| Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Common shares outstanding used in computing net loss per share | ||||||||||||||||
| Pre-funded warrants to purchase common shares | ||||||||||||||||
| Weighted average number of shares used in computing basic and diluted net loss per share | ||||||||||||||||
| Net loss per share – basic and diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
NOTE 8 – ENTITY WIDE INFORMATION AND DISAGGREGATED REVENUES:
The Company operates as one operating segment (developing and marketing access broadband equipment for copper and fiber networks).
| a. | Geographic information: |
Following is a summary of revenues by geographic areas. Revenues are attributed to geographic areas, based on the location of the end customers:
| Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||
| Europe, the Middle East and Africa | ||||||||||||||||
| Asia Pacific | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
F-22
ACTELIS NETWORKS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 8 – ENTITY WIDE INFORMATION AND DISAGGREGATED REVENUES (continued):
| b. | Deferred revenues: |
| Nine months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Opening balance | ||||||||
| Revenue recognized that was included in the contract liability balance at the beginning of the year | ( | ) | ( | ) | ||||
| Additions, net of amounts recognized in the current period | ||||||||
| Ending balance | ||||||||
As of September 30, 2026, the aggregate amount of the transaction price allocated to the remaining performance obligation is $
| c. | Customers representing 10% or more of net revenues and the amount of revenues recognized are as follows: |
| Nine months ended September 30, 2026 | Three months ended September 30, 2026 | |||||||||||||||
| Customer A | % | $ | % | $ | ||||||||||||
| Customer B | % | $ | % | $ | ||||||||||||
| Customer C | % | $ | % | $ | ||||||||||||
| Customer D | % | $ | % | $ | ||||||||||||
| Customer E | % | $ | % | $ | ||||||||||||
| Nine months ended September 30, 2025 | Three months ended September 30, 2025 | |||||||||||||||
| Customer A | % | $ | % | $ | ||||||||||||
| Customer B | % | $ | % | $ | ||||||||||||
| Customer C | % | $ | % | $ | ||||||||||||
| Customer D | % | $ | % | $ | ||||||||||||
| Customer E | % | $ | % | $ | ||||||||||||
The majority of the Company’s revenues are recognized at a point in time.
F-23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References in this report to “we,” “Actelis,” “us,” “our,” or the “Company” refer to Actelis Networks, Inc. and its wholly owned subsidiary. References to our “management” or our “management team” refer to our officers and directors. You should read the following discussion of our historical performance, financial condition and future prospects in conjunction with the management’s discussion and analysis of financial conditions and results of operations and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 18, 2026 (referred to herein as the “Annual Report”). The following discussion and analysis of our financial condition and results of operations should also be read in conjunction with the condensed consolidated financial statements (including the notes thereto) contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risk and uncertainties. For further information on items that could impact our future operating performance or financial condition, see the sections titled “Risk Factors” included in the Annual Report, as updated in Part II, Item 1A below, and the Special Note Regarding Forward Looking Statements above.
Overview
We are a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area internet of things (“IoT”) applications including federal, state, and local government, intelligent traffic systems (“ITS”), military, utility, rail, telecom, and campus applications. Our unique portfolio of hybrid fiber, environmentally hardened aggregation switches, high density Ethernet devices, advanced management software and cyber-protection capabilities, unlocks the hidden value of essential networks, delivering safer connectivity for rapid, cost-effective deployment.
Our networking solutions use a combination of newly deployed fiber infrastructure and existing copper and coaxial lines which our patented technology can upgrade to Fiber-grade to jointly create what we believe to be a highly cost-effective, secure, and quick-to-deploy network. Our patent protected hybrid fiber networking solutions deliver excellent communication over fiber to locations that may be easy to reach with new fiber. However, for locations that are difficult, or too costly to reach with fiber, we can upgrade existing copper lines to deliver cyber-hardened, high-speed connectivity without needing to replace the existing copper infrastructure with new fiber. We believe that such hybrid fiber copper networking solution has distinct advantages in most real-life installations, while providing significant budget savings and accelerating deployment of modern IoT networks. Based on our experience, most IoT projects have challenging, hard to reach with fiber locations which may explode such projects’ timeline and budgets. We believe that our solutions can provide connectivity over either fiber or copper with speeds of up to multi-Gigabit communication, while supporting fiber-grade reliability and quality.
A primary focus of ours is to provide our customers with a cyber-secure network solution. We currently offer Triple-Shield protection of data delivered with coding, scrambling, and encryption of the network traffic. We also provide secure, encrypted access to our network management software, and are working to further enhance system-level and device-level software protection. We are also working to introduce additional capabilities for network-wide cyber protection software as an additional software and as a license-based service.
When high speed, long reach, reliable and secure connectivity is required, network operators usually resort to using wireline communication over physical communication lines such as fiber, coax, and copper, rather than wireless communication that is more limited in performance, reliability, reach, and security. However, new fiber wireline infrastructure is costly to deploy, involves lengthy civil works to install, and, based on our internal calculations, often accounts for more than 50% of total cost of ownership and time to deploy wide-area IoT projects.
Providing new fiber connectivity to hard-to-reach locations is especially costly and time-consuming, often requiring permits for boring, trenching, and right-of-way, sometimes done over many miles. Connecting such hard-to-reach locations may cause significant delays and budget overruns in IoT projects. Our solutions aim to solve these challenges by instantly enhancing performance of such existing copper and coax infrastructure to fiber-grade performance, through the use of advanced signal processing and unique, patented network architecture, without the need to run new fiber to hard-to-reach locations; thus, effectively accelerating deployment of many IoT projects, as we estimate, sometimes from many months to only days. The result for the network owner 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.
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In addition, our solutions can also provide power over existing copper and coax lines to remotely power up network elements and components connected to them (like cameras, small cell and Wi-Fi base stations sensors etc.). Connecting power lines to millions of locations can be costly and very time consuming as well (similar to data connectivity, for the same reason — need for civil works). By offering the ability to combine power delivery over the same existing copper and coax lines that we use for high-speed data, we believe our solutions are solving yet another important challenge in connecting hard-to-reach locations. We believe that combining communication and power over the same existing lines is particularly important to help connect many fifth generation, or 5G, small cells and Wi-Fi base stations, as high cost of connectivity and power is often slowing their deployment.
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 hundreds of 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, federal, and U.S. Department of War markets, as well as multi-dwelling units, and introduced, in 2024, our cyber-aware networking solutions for IoT markets as well.
Results of Operations
The table below provides our results of operations for the periods indicated.
| Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| (dollars in thousands) | (dollars in thousands) | |||||||||||||||
| Revenues | $ | 3,171 | $ | 2,305 | $ | 1,081 | $ | 643 | ||||||||
| Cost of revenues | 1,926 | 1,566 | 650 | 460 | ||||||||||||
| Gross profit | 1,245 | 739 | 431 | 183 | ||||||||||||
| Research and development expenses | 1,963 | 1,947 | 616 | 591 | ||||||||||||
| Sales and marketing | 2,041 | 2,155 | 600 | 789 | ||||||||||||
| General and administrative | 2,164 | 2,224 | 693 | 805 | ||||||||||||
| Other income | - | (73 | ) | - | (73 | ) | ||||||||||
| Operating loss | (4,923 | ) | (5,514 | ) | (1,478 | ) | (1,929 | ) | ||||||||
| Interest expense | (132 | ) | (83 | ) | (12 | ) | (27 | ) | ||||||||
| Other financial income (expenses), net | (41 | ) | (144 | ) | 243 | (24 | ) | |||||||||
| Net comprehensive loss for the period | $ | (5,096 | ) | $ | (5,741 | ) | $ | (1,247 | ) | $ | (1,980 | ) | ||||
Three and Nine Months Ended September 30, 2026, Compared to Three and Nine Months Ended September 30, 2025
Revenues
Our revenues for the three months ended September 30, 2026, amounted to $1.1 million, compared to $0.6 million for the three months ended September 30, 2025. The increase was primarily attributable to an expansion of the Company’s sales footprint to Federal and Intelligent Transportation Systems (“ITS”) customers in the US, as well as to other customers in Europe, the Middle East and Africa (“EMEA”), with revenue increases of 170% in North America, 3% in EMEA and 233% in Asia.
Our revenues for the nine months ended September 30, 2026, amounted to $3.2 million, compared to $2.3 million for the nine months ended September 30, 2025. The increase was primarily attributable to an expansion of the Company’s sales footprint, including delivery of a renewal order to a large U.S. carrier for software and service and ITS customers in the US and EMEA, with revenue increases of 56% in North America, 13% in EMEA and 13% in Asia.
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Cost of Revenues
Our cost of revenues for the three months ended September 30, 2026, amounted to $0.7 million, compared to $0.5 million for the three months ended September 30, 2025. The increase was primarily attributable to higher sales volume during the period and in line with the increase in revenue and software revenue mix.
Our cost of revenues for the nine months ended September 30, 2026, amounted to $1.9 million, compared to $1.6 million for the nine months ended September 30, 2025. The increase was primarily attributable to higher sales volume during the period and in line with the increase in revenue and software revenue mix.
Research and Development Expenses
Our research and development expenses for the three months ended September 30, 2026, amounted to $0.6 million, compared to $0.6 million for the three months ended September 30, 2025. The expense remained substantially consistent with prior year period. The Company implemented cost reduction measures during the period; however, the resulting savings were offset by the unfavorable impact of foreign exchange rate fluctuations.
Our research and development expenses for the nine months ended September 30, 2026, amounted to $2.0 million, compared to $1.9 million for the nine months ended September 30, 2025. The expense remained substantially consistent with prior year period. The Company implemented cost reduction measures during the period; however, the resulting savings were offset by the unfavorable impact of foreign exchange rate fluctuations.
Sales and Marketing Expenses
Our sales and marketing expenses for the three months ended September 30, 2026, amounted to $0.6 million, compared to $0.8 million for the three months ended September 30, 2025. The decrease is associated with cost reduction measures taken, including reduction in payroll expense, partially offset by the unfavorable impact of foreign exchange rate fluctuations.
Our sales and marketing expenses for the nine months ended September 30, 2026, amounted to $2.0 million, compared to $2.2 million for the nine months ended September 30, 2025. The decrease is primarily attributable to cost reduction measures taken, partially offset by the unfavorable impact of foreign exchange rate fluctuations.
General and Administrative Expenses
Our general and administrative expenses for the three months ended September 30, 2026, amounted to $0.7 million, compared to $0.8 million for the three months ended September 30, 2025. The decrease is primarily attributable to cost reduction measures taken, partially offset by the unfavorable impact of foreign exchange rate fluctuations.
Our general and administrative expenses for the nine months ended September 30, 2026, amounted to $2.2 million, compared to $2.2 million for the nine months ended September 30, 2025. The expense remained substantially consistent with prior year period. The Company implemented cost reduction measures during the period; however, the resulting savings were offset by the unfavorable impact of foreign exchange rate fluctuations.
Other Income
Other income for the three and nine months ended September 30, 2025 was attributable to a government grant provided by the State of Israel in connection with the economic impact of the military conflict with Iran. No other income was recognized during the three and nine months ended September 30, 2026.
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Operating Loss
Our operating loss for the three months ended September 30, 2026, was $1.5 million, compared to $1.9 million for the three months ended September 30, 2025. The decrease in operating loss was primarily attributable to an increase in sales, an improvement in gross margin to 40% from 28% in the prior-year period, and the impact of cost-reduction measures which is partially offset by the unfavorable impact of foreign exchange rate fluctuations.
Our operating loss for the nine months ended September 30, 2026, was $4.9 million, compared to an operating loss of approximately $5.5 million for the nine months ended September 30, 2025. The decrease in operating loss was primarily attributable to an increase in sales, an improvement in gross margin to 39% from 32% in the prior-year period, and the impact of cost-reduction measures which is partially offset by the unfavorable impact of foreign exchange rate fluctuations.
Other Financial Income (Expenses), Net
Our financial income, net for the three months ended September 30, 2026, was $0.2 million compared to financial expense, net of $24 thousand for the three months ended September 30, 2025. Other financial income, net is primarily attributable to gain from the change in the fair value of pre-funded warrants and common warrants classified as liabilities, interest expenses and exchange rate differences of certain currencies (mainly NIS against USD).
Our financial expense, net for the nine months ended September 30, 2026, was $41 thousand compared to financial expense, net of $0.1 million for the nine months ended September 30, 2025. Other financial expenses mainly consisted of commitment-fee expense, gain from the change in the fair value of pre-funded warrants and common warrants classified as liabilities, interest expenses and exchange rate differences of certain currencies (mainly NIS against USD).
Net Comprehensive Loss
Our net comprehensive loss for the three months ended September 30, 2026 was $1.2 million, compared to net loss of $2.0 million for the three months ended September 30, 2025. The decrease was primarily due to higher sales, improved gross margins, and continued efforts to reduce operating expenses as well as income from the changes in the fair value of pre-funded warrants and common warrants liabilities. These favorable factors were partially offset by the adverse impact of foreign exchange rate.
Our net comprehensive loss for the nine months ended September 30, 2026 was $5.1 million, compared to net loss of $5.7 million for the nine months ended September 30, 2025. The decrease was primarily due to higher sales, improved gross margins, and continued reductions of operating expenses as well as income from the changes in the fair value of pre-funded warrants and common warrants liabilities. These favorable factors were partially offset by the adverse impact of foreign exchange rate.
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Non-GAAP Financial Measures
| Nine months Ended September 30, | Three months Ended September 30, | |||||||||||||||
| (U.S. dollars in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Revenues | $ | 3,171 | $ | 2,305 | $ | 1,081 | $ | 643 | ||||||||
| GAAP net loss | (5,096 | ) | (5,741 | ) | (1,247 | ) | (1,980 | ) | ||||||||
| Interest expense | 132 | 83 | 12 | 27 | ||||||||||||
| Other financial expenses (income), net | 41 | 144 | (243 | ) | 24 | |||||||||||
| Tax expense | - | 29 | - | - | ||||||||||||
| Fixed asset depreciation expense | 17 | 14 | 10 | 2 | ||||||||||||
| Stock based compensation | 200 | 308 | 62 | 179 | ||||||||||||
| Other one-time expenses (income) | - | (73 | ) | - | (73 | ) | ||||||||||
| Non-GAAP Adjusted EBITDA | (4,706 | ) | (5,236 | ) | (1,406 | ) | (1,821 | ) | ||||||||
Use of Non-GAAP Financial Information
Non-GAAP Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP financial measures. In addition to reporting financial results in accordance with GAAP, we provide Non-GAAP supplemental operating results adjusted for certain items, including: financial expenses, which are interest, financial instrument fair value adjustments, exchange rate differences of assets and liabilities, share based compensation expenses, depreciation and amortization expense. 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 utilize the adjusted results to review our ongoing operations without the effect of these adjustments but not for comparison to budgeted operating results. We believe the supplemental adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees and optimizes our business operations on a day-to-day basis. We exclude the costs in calculating adjusted results to allow us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe the adjusted measures, accompanied by the disclosure of the costs of these programs, provide valuable insight into our financial performance. Adjusted results should be considered only in conjunction with results reported according to GAAP.
| For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
| (U.S. dollars in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Revenues | $ | 3,171 | $ | 2,305 | $ | 1,081 | $ | 643 | ||||||||
| Non-GAAP Adjusted EBITDA | (4,706 | ) | (5,236 | ) | (1,406 | ) | (1,821 | ) | ||||||||
| As a percentage of revenues | (148.4 | )% | (227.2 | )% | (130.1 | )% | (283.2 | )% | ||||||||
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. Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes.
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Our future capital requirements will be affected by many factors, including our revenues and resulting gross margin growth, the timing and extent of investments to support such growth compared to our resulting increase in revenues and gross margin, the associated expansion of sales and marketing activities, increases or decreases in general and administrative costs, working capital to support securing raw material supply and other factors as described under “Risk Factors.” At the same time, our investments, including in sales and marketing, as well as the cost reduction measures we are taking, are aimed at reaching a break-even point with respect to our profits and losses and resulting cash flow.
To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all. In particular, our delisting from the Nasdaq Capital Market to the OTCQB limits our ability to raise equity, which will remain limited if we are unsuccessful in re-listing on Nasdaq. Additionally, the wars in the Middle East and the war between Russia and the Ukraine, have resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital.
As discussed in Note 1(b) to the condensed consolidated financial statements appearing elsewhere in this quarterly report on Form 10-Q, we have incurred significant losses and negative cash flows from operations and incurred losses of approximately $5.1 million and approximately $5.7 million for the nine months ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026 and 2025, we had negative cash flows from operations of $4.6 million and $5.6 million, respectively.
As of September 30, 2026, we had an accumulated deficit of $57.4 million, cash on hand of approximately $4.8 million and deposits and restricted bank deposits of $0.2 million as of September 30, 2026. We monitor our cash flow projections on a current basis and take active measures to obtain the funding we require to continue our operations. However, these cash flow projections are subject to various uncertainties concerning their fulfillment, such as the ability to increase revenues due to lack of customers or decrease cost structure. Our transition to profitable operations is dependent on generating a level of revenue adequate to support our cost structure through growth of existing and new customers.
We expect to fund operations using cash on hand, through operational cash flows and raising additional proceeds. There are no assurances, however, that we will be able to generate the revenue necessary to support our cost structure or that we will be successful in obtaining the level of financing necessary for our operations. Management has evaluated the significance of these conditions and has determined that we do not have sufficient resources to meet our operating obligations for at least one year from the issuance date of these condensed consolidated financial statements. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments that might result from the outcome of this uncertainty.
Amendment to Equity Line of Credit
On September 27, 2025, we entered into common stock purchase agreement (the “ELOC Purchase Agreement”), with an effective date of October 1, 2025 (the “Commencement Date”), and the registration rights agreement (the “White Lion RRA”) with White Lion Capital LLC, a Nevada limited liability company (“White Lion”). Pursuant to the ELOC Purchase Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to $30,000,000 (the “Commitment Amount”) in aggregate gross purchase price of newly issued shares of the Company’s common stock for the 36-month period beginning on the Commencement Date, subject to certain limitations and conditions set forth in the ELOC Purchase Agreement.
As consideration for White Lion’s irrevocable commitment to purchase the Company’s common stock up to the Commitment Amount, the Company agreed to issue commitment shares (“Commitment Shares”) equal to the commitment amount of $750,000 (the “Commitment Fee Amount”) divided by the lowest traded price of the Company’s common stock during the 30 business days prior to the issuance of the commitment shares.
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If at any point during the term of the ELOC Purchase Agreement the Company failed to be listed on the Nasdaq Capital Market, the Commitment Fee Amount would increase to $1,000,000 if remedied within six months or less, to $1,250,000 if remedied after six months but before twelve months, and $1,500,000 if not remedied within twelve months (the “Delisting Penalty Provision”).
Subject to the satisfaction of certain customary conditions including, without limitation, the effectiveness of a registration statement registering the shares issuable pursuant to the ELOC Purchase Agreement, the Company’s right to sell shares to White Lion will commence on the Commencement Date and extend until 36 months through the Commitment Period, unless the Company has exercised its right in full to sell shares to White Lion under the ELOC Purchase Agreement prior to such date. During such term, subject to the terms and conditions of the ELOC Purchase Agreement, the Company shall notify White Lion through a purchase notice (“Purchase Notice”) when the Company exercises its right to sell shares (the effective date of such notice, a “Notice Date”). The Purchase Notice may be a Regular Purchase Notice or a Rapid Purchase Notice, each as described in the form of ELOC Purchase Agreement. In the event the Company was delisted from the Nasdaq Capital Market, White Lion would only be obligated to make any Purchase Notices at a value equal to $0.0001 per share of common stock (the “Delisting Purchase Notice Mechanism”). On April 10, 2026, the Company was delisted from the Nasdaq Capital Market triggering the Delisting Purchase Notice Mechanism.
On July 1, 2026, the Company and White Lion entered into the Amendment to the ELOC Purchase Agreement pursuant to which the Company agreed to issue to White Lion an aggregate of 9,850,000 Amendment Commitment Securities (the “Amendment Commitment Securities”) in exchange for White Lion’s right to receive shares of common stock under the Commitment Shares provisions and the Delisting Penalty Provision due to the Company’s delisting from the Nasdaq Capital Market in April 2026. The Amendment Commitment Securities are comprised of (i) 3,000,000 shares of common stock, (ii) 3,850,000 pre-funded warrants (“Amendment Commitment Pre-Funded Warrants”), and (iii) 3,000,000 common warrants (“Amendment Commitment Common Warrants”).
The Amendment Commitment Pre-Funded Warrants will have an initial exercise date at the earlier of (i) the effective date of a reverse stock split of the Company’s common stock, and (ii) the effective date of an increase in the Company’s authorized share count sufficient for the issuance of the shares underlying the Amendment Commitment Pre-Funded Warrants (the “Pre-Funded Warrant Initial Exercise Date”). The exercise price of the Amendment Commitment Pre-Funded Warrants is $0.0001 per share, and the warrants shall be exercisable from the Pre-Funded Warrant Initial Exercise Date until exercised in full.
The Amendment Commitment Common Warrants will have an initial exercise date on the date on which the Company successfully lists its common stock on an “Eligible Market,” as such term is defined in the Amendment Commitment Common Warrants (the “Common Warrant Initial Exercise Date”). The exercise price of the Amendment Commitment Common Warrants is $0.20 per share, and the warrants shall be exercisable until the eighteen-month anniversary of the Common Warrant Initial Exercise Date.
In addition, pursuant to the ELOC Purchase Agreement Amendment, the Company and White Lion agreed to remove the Delisting Purchase Notice Mechanism and replace it with amended purchase notice mechanisms which will allow the Company to more effectively utilize Purchase Notices under the ELOC Purchase Agreement while the Company remains delisted from the Nasdaq Capital Market.
Under an amended Rapid Purchase Notice Option 1, the purchase price to be paid by White Lion shall mean (a) ninety-seven percent (97.0%) multiplied by the lowest traded price of the common stock on Rapid Purchase Notice Date, minus (b) $0.005 (provided that, notwithstanding anything in the ELOC Purchase Agreement to the contrary, if the Company, at any time, combines (by any reverse stock split, stock dividend, stock combination, recapitalization, or other similar transaction) one or more classes of its outstanding common stock into a smaller number of shares, the $0.005 amount shall not be proportionately increased or otherwise adjusted).
Under an amended Rapid Purchase Notice Option 2, the purchase price to be paid by White Lion shall mean (a) ninety-seven percent (97.0%) multiplied by the lowest traded price of the common stock two hours following the written confirmation of the acceptance of the Rapid Purchase Notice by White Lion, minus (b) $0.005 (provided that, notwithstanding anything in the ELOC Purchase Agreement to the contrary, if the Company, at any time, combines (by any reverse stock split, stock dividend, stock combination, recapitalization, or other similar transaction) one or more classes of its outstanding common stock into a smaller number of shares, the $0.005 amount shall not be proportionately increased or otherwise adjusted).
Under an amended Regular Purchase Notice Option, the purchase price to be paid by White Lion shall mean (a) ninety-seven percent (97.0%) multiplied by the lower of (i) the lowest daily VWAP of the common stock during the Regular Purchase Valuation Period (as such term is defined in the ELOC Purchase Agreement) or (ii) the closing price of common stock one business day prior to the delivery of the applicable Regular Purchase Notice, minus (b) $0.005 (provided that, notwithstanding anything in the ELOC Purchase Agreement to the contrary, if the Company, at any time, combines (by any reverse stock split, stock dividend, stock combination, recapitalization, or other similar transaction) one or more classes of its outstanding common stock into a smaller number of shares, the $0.005 amount shall not be proportionately increased or otherwise adjusted).
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Cash Flows
The table below, for the periods indicated, provides selected cash flow information:
| Nine months ended September 30, | ||||||||
| (U.S. dollars in thousands) | 2026 | 2025 | ||||||
| Net cash used in operating activities (including the effect of exchange rate changes on cash and cash equivalents and restricted cash) | $ | (4,552 | ) | $ | (5,626 | ) | ||
| Net cash used in investing activities | (54 | ) | (4 | ) | ||||
| Net cash provided by financing activities | 5,075 | 5,121 | ||||||
| Net change in cash | $ | 469 | $ | (509 | ) | |||
As of September 30, 2026, we had cash, cash equivalents, and restricted cash and cash equivalents of approximately $4.8 million compared to approximately $1.8 million of cash, cash equivalents and restricted cash as of September 30, 2025.
Cash used in operating activities amounted to $4.6 million for the nine months ended September 30, 2026, compared to approximately $5.6 million for the nine months ended September 30, 2025. The decrease in cash used in operating activities was primarily attributable to cost reduction, favorable changes in working capital, operating assets and liabilities compared to the prior-year period.
Net cash used in investing activities was $54 thousand for the nine months ended September 30, 2026, compared to net cash used in investing activities of $4 thousand for the nine months ended September 30, 2025. The increase is associated with an increase in the purchase of fixed assets during the period.
Net cash provided by financing activities was $5.1 million for each of the nine months ended September 30, 2026 and 2025. During the nine months ended September 30, 2026, net proceeds from the issuance of common stock under our ATM program increased to approximately $6.9 million, compared to approximately $2.4 million in the corresponding period of 2025. This increase was primarily offset by proceeds from equity financings, warrant inducements and short-term borrowings received during the nine months ended September 30, 2025, which did not recur in 2026, as well as approximately $1.0 million used for repurchases of common stock during the nine months ended September 30, 2026.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the applicable periods. We evaluate our estimates, assumptions and judgments on an ongoing basis. Our estimates, assumptions and judgments are based on historical experience and various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our condensed consolidated financial statements, which, in turn, could change the results from those reported.
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles issued by the Financial Accounting Standards Board, or FASB.
Our significant accounting policies include revenue from contracts with customers which is more fully described in the notes to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and our annual financial statements for the year ended December 31, 2025, including the footnotes, for a description of our significant accounting policies. We believe that these accounting policies discussed are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time we were making our estimate; and (2) changes in the estimate could have a material impact on our financial condition or results of operations.
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Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not required for a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We continued to conduct ongoing evaluation of the effectiveness of our “disclosure controls and procedures,” as defined by Rules 13a-15(e) and 15d-15(e) of Exchange Act, as of September 30, 2026, the end of the period covered by this Quarterly Report. This evaluation, which was performed under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), is performed to determine whether our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Disclosure controls and procedures, no matter how well designed and effectively operated, can only provide reasonable assurance of achieving their control objectives.
Based upon that evaluation, our CEO and CFO concluded our disclosure controls and procedures were effective at a reasonable assurance level as of the period covered by this Quarterly Report on Form 10-Q.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings.
From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. To the knowledge of our management, there are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened.
Item 1A. Risk Factors.
Except as set forth below in this Item 1A and the Risk Factors included in our previous filings made with the SEC, there have been no material changes to our risk factors from those disclosed in “Part I. Item 1A. Risk Factors” in the Form 10-K filed with the SEC on March 18, 2026.
Our common stock is quoted on the OTCQB, which may limit the liquidity and price of our common stock more than if our common stock were listed on The NASDAQ Stock Market or another national exchange.
On February 4, 2026, the Company received a written notice (the “Notice”) from the Nasdaq Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Nasdaq staff (the “Staff”) had determined to delist the Company’s securities from The Nasdaq Capital Market. As disclosed in the Notice, the Staff determined that the Company’s common stock failed to maintain a minimum bid price of $1.00 per share for 30 consecutive business days, in violation of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). While companies are typically afforded a 180-calendar-day compliance period to comply with the Nasdaq Listing Rule, the Staff concluded that the Company is not eligible for the compliance period pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv) due to the fact that the Company effected a reverse stock split within the prior one-year period, specifically a 1-for-10 reverse stock split on November 18, 2025, and therefore was subject to immediate delisting.
The Company requested an appeal hearing, which stayed the suspension and delisting action. At the appeal hearing, the Company presented to the Nasdaq Hearings Panel its plan to regain compliance with the Bid Price Rule.
On April 8, 2026, Nasdaq delivered a letter to the Company confirming to the Company that it had denied the Company’s request for continued listing and therefore that trading of the Company’s common stock, par value $0.0001 per share (“Common Stock”), would be suspended at the open of trading on April 10, 2026.
On April 24, 2026, the Company announced that it had commenced trading on the OTCQB Venture Market operated by OTC Markets Group, effective at the open of business on April 24, 2026. The Company’s common stock continues to trade under the symbol “ASNS.”
The OTCQB is a significantly more limited market than the Nasdaq Capital Market, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Common Stock to trade their shares and could further depress the trading price of the Common Stock. We can provide no assurance that the Common Stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the Common Stock on this market, or whether the trading volume of the Common Stock will be sufficient to provide for an efficient trading market. Delisting from Nasdaq could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities, as well as a limited amount of news and analyst coverage of us. Delisting could also result in a determination that our shares of common stock are a “penny stock,” which would require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary market for our shares of common stock.
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We also intend to apply to list our Common Stock for up-listing back onto the Nasdaq Capital Market. We do not currently meet all of the requirements for initial listing, and may not meet all of the requirements for uplisting in the future. We hope to list our Common Stock on the Nasdaq Capital Market in the future and expect that a reverse stock split will be necessary for us to meet the minimum bid price and/or minimum closing stock price requirements of Nasdaq. We may not be able to meet the initial listing standards of the Nasdaq Capital Market, even after a reverse stock split, may meet such listing standards without having to effect a reverse stock split, and/or may have our application to Nasdaq rejected.
Geo-Political conditions in the Middle East and in Israel, where our research and development facilities are located, may harm our operations.
Our office where we conduct our research and development, operations, sales outside the Americas, and administration activities, is located in Israel. Many of our employees are residents of Israel. Most of our officers and directors are residents of Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, and between Israel and the Hamas (an Islamist terror and political group in the Gaza Strip), Hezbollah (an Islamist terror and political group in Lebanon), and Iran, including its accomplices.
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. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. On January 19, 2025, a temporary ceasefire went into effect. On March 18, 2025 the ceasefire ended with the resumption of the war between Israel and Hamas.
In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and on other fronts from various extremist groups in the region, such as the Houthis in Yemen and various rebel militia groups in Syria and Iraq. In October 2024, Israel began limited ground operations against Hezbollah in Lebanon, and in November 2024, a ceasefire was brokered between Israel and Hezbollah. In addition, Iran recently launched direct attacks on Israel involving hundreds of drones and missiles and has threatened to continue to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. These situations may potentially escalate in the future to more violent events which may affect Israel and us. Additionally, Yemeni rebel group, the Houthis, launched series of attacks on global shipping routes in the Red Sea, causing disruptions of supply chain. Such clashes may escalate in the future into a greater regional conflict. In March 2026, hostilities resumed along Israel’s northern border with Lebanon, when Hezbollah resumed its attacks as part of a broader regional escalation. In response, Israel resumed military operations against Hezbollah in southern Lebanon.
On February 28, 2026, the United States and Israel launched coordinated military strikes against Iran, including attacks on strategic military infrastructure and leadership targets, with the stated aim of degrading Iran’s capacity to conduct or support hostile operations against them. In response, Iran has fired missiles and drones toward population centers and military installations in Israel, Europe and neighboring countries in the Gulf region, and also launched counter-strikes against U.S. forces and allied bases throughout the Gulf region. Although a temporary ceasefire is currently in place as of the date of this quarterly report, tensions remain high in the region.
As of the date of this quarterly report, other than one employee who has been called for military service, we have not been materially 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. As of the date of this quarterly report, we currently have 33 full-time employees, with 26 employees located in Israel and 7 employees located outside of Israel.
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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. We have the ability, if necessary, to shift our manufacturing from Israel to other countries where we have business partners, and we have not had customers in Israel in the last year. 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 commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained. 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.
The continued political instability and hostilities between Israel and its neighbors and any future armed conflict, terrorist activity or political instability in the region could adversely affect our operations in Israel and adversely affect the market price of our shares of common stock. In addition, several organizations and countries may restrict doing business with Israel and Israeli companies have been and are today subjected to economic boycotts. The interruption or curtailment of trade between Israel and its present trading partners could adversely affect our business, financial condition and results of operations.
Finally, political conditions within Israel may affect our operations. 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. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and growth prospects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Amendment to Equity Line of Credit
On July 1, 2026, the Company and White Lion entered into the Amendment to the ELOC Purchase Agreement pursuant to which the Company agreed to issue to White Lion an aggregate of 9,850,000 Amendment Commitment Securities, comprised of (i) 3,000,000 shares of common stock, (ii) 3,850,000 Amendment Commitment Pre-Funded Warrants and (iii) 3,000,000 Amendment Commitment Common Warrants.
The securities described above were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, as the transaction did not involve a public offering, and in reliance on similar exemptions under applicable state laws.
As part of the Amendment with White Lion, we agreed to file a registration statement (the “Registration Statement”) to register for resale the Amendment Commitment Securities and up to 6,000,000 additional shares issuable under the ELOC Purchase Agreement. The Company agreed to file the Registration Statement within 10 business days after the date of the Amendment. The Registration Statement was filed on July 1, 2026 and was declared effective by the SEC on July 7, 2026. As a result, the unregistered shares sold are now registered.
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
| Exhibit Number | Description of Exhibits | |
| 3.1 | Form of the Twenty-Fourth Amended and Restated Certificate of Incorporation of the Registrant, dated May 2, 2022 (incorporated by reference to Exhibit 3.5 to the Company’s Form S-1/A, filed on May 10, 2022) | |
| 3.2 | Certificate of Amendment to the Twenty-Fourth Amended And Restated Certificate of Incorporation of the Registrant, dated April 17, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 18, 2023) | |
| 3.3 | Certificate of Amendment to the Twenty-Fourth Amended And Restated Certificate of Incorporation of the Registrant, dated November 14, 2025 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on November 14, 2025) | |
| 3.4 | Amended and Restated Bylaws of Actelis Networks, Inc. (incorporated by reference to Exhibit 3.4 to the Company’s Form S-1/A, filed on May 10, 2022) | |
| 4.1 | Form of Amendment Commitment Pre-Funded Warrant (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 1, 2026) | |
| 4.2 | Form of Amendment Commitment Common Warrant (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on July 1, 2026) | |
| 10.1 | Form of Exchange and Amendment Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 1, 2026) | |
| 31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
| 31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
| 32.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Schema | |
| 101.CAL* | Inline XBRL Taxonomy Calculation Linkbase | |
| 101.DEF* | Inline XBRL Taxonomy Definition Linkbase | |
| 101.LAB* | Inline XBRL Taxonomy Label Linkbase | |
| 101.PRE* | Inline XBRL Taxonomy Presentation Linkbase | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL document and contained in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Actelis Networks, Inc. | ||
| Date: November 10, 2026 | By: | /s/ Tuvia Barlev |
| Tuvia Barlev | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: November 10, 2026 | By: | /s/ Yoav Efron |
| Yoav Efron | ||
| Chief Financial Officer and Deputy Chief Executive Officer (Principal Financial and Accounting Officer) | ||
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