Actelis Networks, Inc_NASDAQ_ASNS_2023(10-K).pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,DC 20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF

2、1934 For the transition period from to Commission File Number:001-41375 Actelis Networks,Inc.(Exact Name of Registrant as Specified in Its Charter)Delaware 52-2160309(State or Other Jurisdiction ofIncorporation or Organization)(IRS EmployerIdentification No.)4039 Clipper CourtFremont,California 9453

3、8(Address of Principal Executive Offices)(Zip Code)(510)545-1045(Registrants 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 registeredCommon stock,par value$0.0001 pershare ASNS The Na

4、sdaq Stock Market LLC Securities registered pursuant to Section 12(g)of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Secti

5、on 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the SecuritiesExchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file suchreport

6、s),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submittedpursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 mont

7、hs(or for such shorter period thatthe registrant was required to submit such files).Yes No 2025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm1/136Indicate by check

8、mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smallerreporting company,or an emerging growth company.See the definitions of“large accelerated filer”,“accelerated filer”,“smallerreporting company”,and“emerging growth company”in Rule 12b-2 of t

9、he Exchange Act.Large accelerated filer Accelerated filer Non-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 forcomplying with any new or revised financia

10、l accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxle

11、y Act(15 U.S.C.7262(b)bythe registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of theregistrant included in the filing reflect the correction of an error t

12、o previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-basedcompensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).

13、Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 30,2023,the last business day of the registrants most recently completed

14、second fiscal quarter,was approximately$5,472,624 based on theclosing sale price on that date of$3.18.Shares of common stock held by each executive officer and director and by each otherperson who may be deemed to be an affiliate of the Registrant have been excluded from this computation.The determi

15、nation ofaffiliate status for this purpose is not necessarily a conclusive determination for other purposes.As of March 20,2024,there were 3,020,268 shares of the registrants common stock,par value$0.0001 per share,outstanding,including treasury shares.2025/2/11 21:03sec.gov/Archives/edgar/data/1141

16、284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm2/136 ACTELIS NETWORKS,INC.FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,2023 TABLE OF CONTENTS PART I ITEM 1.BUSINESS1ITEM 1A.RISK FACTORS16ITEM 1B.UNRESOLVED

17、 STAFF COMMENTS41ITEM 1C.CYBERSECURITY42ITEM 2.PROPERTIES42ITEM 3.LEGAL PROCEEDINGS42ITEM 4.MINE SAFETY DISCLOSURES42 PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES43ITEM 6.RESERVED43ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS

18、OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS44ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK51ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAF-1ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE52ITEM 9A.CONTROLS AND PROCEDURES52ITEM

19、9B.OTHER INFORMATION54ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS54 PART III ITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE55ITEM 11.EXECUTIVE COMPENSATION64ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MA

20、TTERS68ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTORINDEPENDENCE72ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES74 PART IV ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES75ITEM 16.FORM 10-K SUMMARY76 SIGNATURES77 i2025/2/11 21:03sec.gov/Archives/edgar/data/1141284/0001213900

21、24026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm3/136 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K(the“Annual Report”)contains forward-looking statements.The forward-lookingstatements

22、 are contained principally in the sections entitled“Risk Factors,”“Managements Discussion and Analysis of FinancialCondition and Results of Operations,”and“Business.”These forward-looking statements involve a number of risks anduncertainties.We caution readers that any forward-looking statement is n

23、ot a guarantee of future performance and that actualresults could differ materially from those contained in the forward-looking statement.These statements are based on currentexpectations of future events.Such statements include,but are not limited to,statements about future financial and operatingr

24、esults,plans,objectives,expectations and intentions,costs and expenses,interest rates,outcome of contingencies,financialcondition,results of operations,liquidity,cost savings,objectives of management,business strategies,financing,potential growthand market opportunities,products,and other statements

25、 that are not historical facts.In some cases,you can identify forward-looking statements by terms such as“may,”“will,”“should,”“would,”“expect,”“anticipate”“plan,”“anticipate,”“could,”“intend,”“target,”“project,”“contemplate,”“believe,”“estimate,”“predict,”“potential”“possible”or“continue”or the neg

26、ative of these terms or other similar expressions.Forward-looking statements contained in thisAnnual Report 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 onacceptable terms,or

27、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

28、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 grow the business due to the uncertainty resulting from the COVID-19 pandemic or any future pandemic;our ability to comply wi

29、th complex and increasing regulations by governmental authorities;our ability to regain and maintain compliance with continued listing requirements of the Nasdaq Capital Market;our ability to continue as a going concern;statements as to the impact of the political and security situation in Israel on

30、 our business,including due to the number ofarmed conflicts between Israel and Hamas(an Islamist militia and political group in the Gaza Strip)and Hezbollah(anIslamist militia and political group in Lebanon);our public securities potential liquidity and trading;and our expectations regarding the per

31、iod during which we qualify as an emerging growth company under the JOBS Act.Forward-looking statements are based on our managements current expectations,estimates,forecasts and projections aboutour business and the industry in which we operate and our managements beliefs and assumptions,and are not

32、 guarantees of futureperformance or development and involve known and unknown risks,uncertainties and other factors that are in some cases beyondour control.As a result,any or all of our forward-looking statements in this Annual Report may turn out to be inaccurate.Importantfactors that may cause ac

33、tual results to differ materially from current expectations include,among other things,those listed under“Risk Factors,”Use of Discussion and Analysis of Financial Condition and Results of Operations,”“Business”and elsewhere inthis Annual Report.Potential investors are urged to consider these factor

34、s carefully in evaluating the forward-looking statements.You should read thoroughly this Annual Report and the documents that we refer to with the understanding that our actual futureresults may be materially different from and worse than what we expect.We qualify all of our forward-looking statemen

35、ts by thesecautionary statements.The forward-looking statements included in this Annual Report speak only as of the date of this Annual Report.Although webelieve that the expectations reflected in the forward-looking statements are reasonable,we cannot guarantee that future results,levels of activit

36、y,performance and events and circumstances reflected in the forward-looking statements will be achieved or willoccur.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 shoul

37、d,however,review the factors and risks we describe in the2025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm4/136reports we will file from time to time with the SEC

38、after the date of this Annual Report.See“Where You Can Find MoreInformation.”On April 19,2023,we effected a reverse stock split of our shares of common stock at the ratio of 1-for-10.Unless indicatedotherwise by the context,all common stock,option,warrant and per share amounts as well as share price

39、s appearing this AnnualReport on Form 10-K have been adjusted to give retroactive effect to the stock split for all periods presented.ii2025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0

40、202031-10k_actelis.htm5/136 Item 1.Business Company Overview Actelis Networks,Inc.(“we,”“the Company”,“Actelis”,“us”,“our”)is a market leader in cyber-hardened,rapid-deploymentnetworking solutions for wide-area IoT applications including federal,state and local government,intelligent traffic systems

41、(“ITS”),military,utility,rail,telecom and campus applications.Our unique portfolio of hybrid fiber,environmentally hardenedaggregation switches,high density Ethernet devices,advanced management software and cyber-protection capabilities,unlocks thehidden value of essential networks,delivering safer

42、connectivity for rapid,cost-effective deployment.Our networking solutions use a combination of newly deployed fiber infrastructure and existing copper and coaxial lineswhich our patented technology can upgrade to Fiber-grade to jointly create what we believe to be a highly cost-effective,secureand q

43、uick-to-deploy network.Our patent protected hybrid fiber networking solutions deliver excellent communication over fiber tolocations that may be easy to reach with new fiber.However,for locations that are difficult,or too costly to reach with fiber,we canupgrade existing copper lines to deliver cybe

44、r-hardened,high-speed connectivity without needing to replace the existing copperinfrastructure with new fiber.We believe that such hybrid fiber-copper networking solution has distinct advantages in most real-lifeinstallations,while providing significant budget savings and accelerating deployment of

45、 modern IoT networks,as based on ourexperience,most IoT projects have challenging,hard to reach with fiber locations which may explode such projects timeline andbudgets.We believe that our solutions can provide connectivity over either fiber or copper with speeds of up to multi-Gigabitcommunication,

46、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-Shieldprotection of data delivered with coding,scrambling and encryption of the network traffic.We also provide secure,encryptedacce

47、ss to our network management software,and are working to further enhance system-level and device-level software protection.We are also working to introduce additional capabilities for network-wide cyber protection software as an additional SW andlicense-based service.When high speed,long reach,relia

48、ble and secure connectivity is required,network operators usually resort to using wirelinecommunication over physical communication lines such as fiber,coax and copper,rather than wireless communication that is morelimited in performance,reliability,reach and security.However,new fiber wireline infr

49、astructure is costly to deploy,involveslengthy civil works to install,and,based on our internal calculations,often accounts for more than 50%of total cost of ownership(ToC)and time to deploy wide-area IoT projects.Providing new fiber connectivity to hard-to-reach locations is especially costly and t

50、ime-consuming,often requiring permitsfor boring,trenching,and right-of-way,sometimes done over many miles.Connecting such hard-to-reach locations may causesignificant delays and budget overruns in IoT projects.Our solutions aim to solve these challenges by instantly enhancingperformance of such exis

51、ting copper and coax infrastructure to fiber-grade performance,through the use of advanced signalprocessing an unique,patented network architecture,without the need to run new fiber to hard-to-reach locations;thus,effectivelyaccelerating deployment of many IoT projects,as we estimate,sometimes from

52、many months to only days.The result for thenetwork owner isa hybrid network that optimizes the use of both new Fiber(where available)as well as upgraded,fiber-gradecopper and coax that is now modernized,digitized and cyber-hardened.This unique hybrid network approach is making IoTprojects often sign

53、ificantly more affordable,fast to deploy and predictable to plan and budget.In addition,our solutions can also provide power over existing copper and coax lines to remotely power up network elementsand IoT components connected to them(like cameras,small cell and Wi-Fi base stations sensors etc.).Con

54、necting power lines tomillions of IoT locations can be costly and very time consuming as well(similar to data connectivity,for the same reason-need forcivil 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 believ

55、e our solutions are solving yet another important challenge in connecting hard-to-reach locations.We believethat combining communication and power over the same existing lines is particularly important to help connect many fifthgeneration,or 5G,small cells and Wi-Fi base stations,as high cost of con

56、nectivity and power is often slowing their deployment.12025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm6/136 Since our inception,our business was focused on servi

57、ng telecommunication service providers,also known as Telcos,toprovide connectivity for enterprises and residential customers.Our products and solutions have been deployed with more than 100telecommunication service providers worldwide,in enterprise,residential and mobile base station connectivity ap

58、plications.Inrecent years,as we have further developed our technology and introduced additional products,we turned our focus on serving thewide-area IoT markets.Our operations are focused on our fast-growing IoT business,while maintaining our commitment to ourexisting Telco customers.In 2023,we intr

59、oduced new product offering,some of which could serve both the IoT markets and ourTelco customers.We derive a growing portion of our revenue from our existing and new IoT customers.For the years ended December 31,2023and December 31,2022,our IoT customers in the aggregate accounted for approximately

60、 73%and 65%of our revenues,respectively.We derive a significant portion of our revenue from a limited number of our customers.For the years ended December 31,2023 and December 31,2022,our top ten customers in the aggregate accounted for approximately 66%and 82%of our revenues.We have incurred signif

61、icant losses and negative cash flows from operations and as of December 31,2023,we had anaccumulated deficit of$39.7 million.We have funded our operations to date through equity financing and we had cash on hand(including short term bank deposits and restricted cash equivalents)of$2.4 million and lo

62、ng-term restricted cash and cashequivalents and restricted bank deposits of$3.4 million as of December 31,2023.We continue to invest in sales and marketingresources to fuel our growth.To address many of the most difficult wide-area IoT connectivity challenges,we combine the benefits of fiber-opticin

63、frastructure,where available,with the hidden potential in existing legacy copper/coax wires that already connect billions oflocations and devices globally(often at low speed,experiencing interruptions and presenting poor information security,deliveringmostly voice,or low speed control signals).Howev

64、er,these lines are readily available at no additional deployment cost and canreach,as we believe,most locations.Using our patented signal-processing software and hardware technology and systemarchitecture,we can“upgrade”these lines,by deriving fiber-grade performance from them,and integrate them wit

65、h new fiberinstallations,where available,to create a seamless end-to-end hybrid-fiber network,enabling fast,reliable,and safe fiber-gradeconnectivity that is rapid to deploy and highly cost effective.Our technology is both powerful and compact and is built as a relatively small set of feature-rich n

66、etwork elements,that serveas building block in many IoT verticals.These elements include switches,typically enhanced with signal processing SW,concentrators,reach extenders,data encryption elements,power sources and a smart networking software that allows for remotemanagement and monitoring down to

67、the single element and line performance,configuration management making complexnetwork topologies easy to deploy,analyze,debug and remote SW download to help with remote handling of large and smallnetworks.Our solutions can also provide remote power over the same existing copper lines to power up ne

68、twork elements and IoTcomponents connected to them(like cameras and meters).Connecting power lines to millions of IoT locations can be costly andvery time consuming(similar to data connectivity).By offering the ability to combine power delivery over the same copper linesused for high-speed data,we b

69、elieve our solutions are solving yet another important challenge in connecting hard-to-reachlocations.We believe that combining communication and power over the same existing lines is particularly important to helpconnect many fifth generation,or 5G,small cells and Wi-Fi base stations,as high cost o

70、f connectivity and power is often slowingtheir deployment.Rapid Deployment and Lower Cost of Critical Connectivity for IoT We aim to become the global leading provider of cyber-secure,cost-effective and quick-to-deploy hybrid networking for allwide-area IoT applications.Our products work over all ty

71、pes of wireline media on the global data network,whether owned oroperated by telecom service providers or a private network operated by enterprises or government organizations.Our products arestructured as building blocks for most IoT applications and are feature-rich.This allows for one Actelis pla

72、tform to often replacemultiple other platforms available in the market,allowing for space-saving installation,energy conservation(which we believeresults in a greener network),and making network planning easier for our customers.We aim at having our products installed andhelp accelerate deployment o

73、f wire-area IoT projects and applications everywhere.22025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm7/136 For example,in one of the projects where our solutions

74、 are deployed,we found that 70%of locations are easy-to-reach withnew fiber optic installation.Connectivity for such easy-to-reach locations may,as we believe,average$26,000 per mile for newfiber laid on poles,and can take between days to weeks to connect.However,the remaining 30%of locations were h

75、ard-to-reachwith new fiber optics,and accordingly may require boring or trenching to reach IoT sensors or camera locations.Getting fiber tothose 30%of hard-to-reach would require potentially connecting over obstacles,roads,long distances,and may also requireobtaining the right of way and permits for

76、 extensive civil works.We believe this aspect of the deployment of new fiber optics maycost up to$400,000 per mile,which for this particular project would have impacted thousands of miles of roads,resulting inenormous cost,delay and interruption to traffic.In another project,we have been selected to

77、 provide networking for a major city that has fiber installed to 15%of its trafficjunctions,however 85%of its junctions are connected to low performance copper lines susceptible for bad actors to tamper with.Upgrading the entire citys infrastructure to Fiber would have involved major civil works,per

78、mit delays and traffic interruptionsfor months or years,with a cost that would greatly exceed citys budget.Our hybrid fiber-copper network allowed for the city touse its 15%fiber deployment,upgrade instantly the performance of its existing 85%copper lines to fiber-grade and join the twounder a compr

79、ehensive management and security software package from Actelis to create one seamless network,while providingmajor savings of both time and money.In another project,we provided our hybrid networking connectivity solution with remote powering over the data lines to 3Gand 4G base stations.Looking forw

80、ard,we believe that a dense grid of 5G small cells would be required to enable global 5Gcoverage,which,may accelerate IoT deployment in many smart city projects and other dense areas.We believe that connecting andpowering these 5G small cells to the network cost effectively and rapidly,in both hard-

81、to-reach and easy-to-reach locations is keyto successful and timely deployment for such network.In 2022,we released our first product family of hardened,hybrid,encrypted fiber-copper product family with 10Gbpsswitching capacity.In 2023,we introduced the next-generation product families for hybrid-fi

82、ber-copper(or in short“hybrid-fiber”)Gigabit gradeconnectivity under the product family name,“Gigaline”or GL.Under the Gigaline families of hybrid-fiber networking solutionsfor fiber,copper and coax environments,we solved new challenges faced by our IoT and telecom customers and expanded ouroffering

83、s.Cybersecurity IoT networks are vulnerable to cyber-attacks as they often carry data related to critical processes and applications,such asprovision of energy,water,gas and transportation services,to large populations.We believe that this data requires enhancedsecurity within the network.Our produc

84、ts all include cyber safety features that we are constantly developing.They currently include network trafficencryption and coding.We have developed and implemented a multi-layered“Triple Shield”technology that includes(i)information coding for resilience and security(for copper wires);(ii)multi-lin

85、e information scrambling for increased resilienceand added security(for copper wires);and(iii)an additional 256-bit hardware-based real-time encryption of data running overfiber,coax or copper creating end-to-end protection for the entire hybrid network.Our network management software is alsocyber-h

86、ardened and helps protect the system.Our systems have been selected for deployment in sensitive applications withU.S.DoD and other governments and military organizations,airports,utility companies,oil and gas companies,smart cities,railand traffic applications globally.We continue to invest in furth

87、er strengthening our focus on cybersecurity capabilities and solutions for our customers.We haveinvested in software and hardware capabilities enhancing encryption of the data carried by our systems;we have introducedencrypted,cyber-hardened network management protocols;we have also introduced encry

88、ption of operating systems running onour devices.Furthermore,we successfully completed the certification of our product lines for Federal Intelligence ProtocolStandards(FIPS)and were approved by the DoDs Joint Interoperability Test Command(JITC)for interoperability andcybersecurity approved product

89、list(APL)in 2024.We are exploring directions to provide software services to our customers thatwould allow them to flexibly safeguard their critical networks,and intelligently isolate and protect from bad actors attacking theirnetworks.We refer to such objective as Cyber-Aware Networking.32025/2/11

90、21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm8/136 Market Verticals We Address We execute our vision through a multi-channel,global approach that combines our expertise,

91、with the expertise of our trustedbusiness partners,system integrators,distributors,and consultants.We operate a vertical based marketing plan where we dedicate efforts and resources to each vertical.The IoT verticals that wehave focused on include:(1)ITS;(4)rail;(2)federal and military;(3)airports;(

92、5)energy and water;(6)smart city;(7)educationcampuses;and(8)industrial campuses.Our products are utilized within networks that have been deployed,for example by the Cityof Los Angeles,Highways England,Federal Aviation Administration,the US military,including Air Force and Navy,and StanfordUniversity

93、.Our customers benefit from rapidly and cost-effectively enabling their critical IoT functions such as traffic cameras andsmart signaling,security cameras,smart parking meters and ticketing,rail signaling and control,electrical substation managementand protection,military operations,and many more.To

94、 date,we have been most successful in selling to customers in the intelligenttransportation systems,rail,federal and military,and airports markets,primarily in the US,Canada,Europe,and Japan.State of IoT Connectivity Market IoT infrastructure connectivity demand is growing rapidly.We believe there i

95、s an urgent need to connect tens of millions oflocations with a fast and secure connection.A huge challenge for IoT projects is that implementing connectivity between differentIoT points in a network can consume the majority of a projects cost and time to implement,including unpredictable andunantic

96、ipated challenges that arise in each individual project.According to a report by Facts and Factors(January 2022)Global Internet of Things(IoT)market is expected to grow to$1.8 trillion by 2028,at a Compounded Average Growth Rate(CAGR)of 24.5%.According to a report by Grand View Research(December 202

97、2),the smart city market for connectivity infrastructure alone isexpected to reach to$6,965.02 billion by 2030 at a CAGR of 25.8%.Accordingly,we believe that the number of IoT applicationsrequiring our fast,smart,and secure connectivity is immense and provides us with a great market opportunity to g

98、row our business.From smart transportation systems(smart cameras,smart lights and signals,Vehicle to Everything,or V2X communication)andsmart security(cameras and radars),to smart parking,smart rail,power station monitoring,and industrial and warehouseautomation,we believe that we are uniquely posit

99、ioned to address all of these applications in a versatile and flexible manner.We believe that there is an unserved segment that is extremely large within that market pertaining to the challenges inprotecting the interface between the physical security and the cybersecurity of campuses,enterprises,in

100、dustrial IoT(IIoT),government facilities,Smart Cities and utility plants.We believe that 5G mobile technology will play a major role in the implementation and scaling of IoT networks.According toresearch published by ABI Research in January 2021,5G technology is expected to grow at a CAGR of 41.2%be

101、tween 2021 and2027 with a major part of that growth coming from servicing IoT networks.According to Grand View Research,the global smallcell 5G network market size was valued at$999.43 million in 2021.The market is expected to grow at a CAGR of 72.7%between 2022-2030.5G base stations and small cells

102、 need to be deployed in a dense grid of millions of locations and need to be connected toGigabit speed communication and power.We are addressing these needs for the rapid connectivity and power,aiming at enablingfaster and more cost-effective deployment of 5G in IoT.42025/2/11 21:03sec.gov/Archives/

103、edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm9/136 Recent Developments December 2023 Private Placement Offering On December 17,2023,we entered into a securities purchase agreement(the“Purchas

104、e Agreement”)with an accreditedinvestor(the“Investor”),pursuant to which we agreed to issue and sell to the Investor in a private placement(the“Offering”)(i)301,000 shares(the“Shares”)of common stock of the Company,$0.0001 par value(the“Common Stock”),(ii)970,187 pre-funded warrants(the“Pre-Funded W

105、arrants”)to purchase up to 970,187 shares of Common Stock and(iii)warrants to purchase upto 1,271,187 shares of Common Stock(“Common Warrants”and collectively with the Shares and the Common Warrants,the“Securities”)for a purchase price of$1.18 per share of Common Stock and related Common Warrant or$

106、1.1799 per Pre-FundedWarrant and related Common Warrant,for a total aggregate gross proceeds of approximately$1.5 million.The Offering closed onDecember 20,2023.Nasdaq Listing Compliance On August 25,2023,we received a notification letter from the Listing Qualifications Department of the Nasdaq Stoc

107、k MarketLLC(the“Nasdaq Staff”)indicating that we are not in compliance with Nasdaq Listing Rule 5550(b)(1)due to our failure tomaintain a minimum of$2,500,000 in shareholders equity(the“Minimum Shareholders Equity Requirement”)or any alternativesto such requirement.In order to maintain our listing o

108、n the Nasdaq Capital Market,we submitted a plan of compliance addressinghow we intended to regain compliance.We had until February 21,2024 to evidence compliance with the Minimum ShareholdersEquity Requirement.As of the date of this Annual Report,we have not provided such evidence.In the event that

109、our shares ofcommon stock would be subject to delisting,we intend to timely request a hearing before the Nasdaq Hearings Panel(the“Panel”).For more information about this risk,please see“Item 1.A Risk Factors Risks Related to Our Business Operations Our sharesof common stock could be delisted from t

110、he Nasdaq Capital Market if we fail to regain compliance with the Nasdaqs stockholdersequity continued listing standards.Our ability to publicly or privately sell equity securities and the liquidity of our shares ofcommon stock could be adversely affected if we are delisted from the Nasdaq Capital M

111、arket”.May 2023 Private Placement Offering On May 4,2023,we entered into a securities purchase agreement with an accredited investor(the“Investor”),pursuant towhich we agreed to issue and sell to the Investor in a private placement(the“May 2023 Private Placement”)(i)190,000 shares(the“Shares”)of Com

112、mon Stock,(ii)754,670 pre-funded warrants(the“Pre-Funded Warrants”)to purchase up to 754,670 shares ofCommon Stock and(iii)warrants to purchase up to 944,670 shares of Common Stock(“Common Warrants”and collectively withthe Shares and the Common Warrants,the“Securities”)for a purchase price of$3.705

113、per share of Common Stock and relatedCommon Warrant or$3.7049 per Pre-Funded Warrant and related Common Warrant,for a total aggregate gross proceeds ofapproximately$3.5 million.The Offering closed on May 8,2023.The Common Warrants have an exercise price of$3.58 per share,are exercisable immediately

114、upon issuance and expire five and one-half years following the issuance.Our Solutions We have invested nearly$100 million over the years to develop our patented,multi-layered“Triple Shield”technology,whichcan serve all connectivity markets.Our Triple Shield technology includes signal processing soft

115、ware that is implementingoptimization of multi-line signal coordination,the elimination of interference to boost connectivity performance,the optimizationof coding for resilience and security,multi-line data scrambling for low latency,increased resilience,and added security.Oursolutions also offer i

116、mplementation of 256-bit encryption of transmission for data running over fiber or copper for network-wideprotection of data.Our technology is packaged into a small set of compact,hardened,feature-rich network elements(such asswitches,concentrators and reach extenders)the MetaLIGHT product family th

117、at are used as building blocks addressing theneeds of most wide-area IoT verticals and applications,in a space-and energy-saving fashion.The ability to drive remote poweringand synchronization signals to network ends over existing copper transmission lines provides additional significant cost-and-ti

118、mebenefits to network operators.In 2023,we introduced the next-generation product families for hybrid-fiber-copper(or in short“hybrid-fiber”)Gigabit gradeconnectivity under the product family name,“Gigaline”or GL.Under the Gigaline families of hybrid-fiber networking solutionsfor fiber,copper and co

119、ax environments,we solved new challenges faced by our IoT and telecm customers and expanded ourofferings.One such product line,the GL800 aims at extending multi-gigabit fiber-grade connectivity to buildings,enterprises,IoTinstallations,campuses,and 5G/4G base stations.52025/2/11 21:03sec.gov/Archive

120、s/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm10/136 A second product line,the GL900,extends Gigabit connectivity from fiber installations outside buildings(“homes passed”byfiber)into indivi

121、dual offices and apartments within MDUs and MTUs,without the need for landlord investment in re-wiringbuildings with fiber.MDU/MTU market in the US alone is estimated by the company to include more than 18M buildings.A third product group,GL5000 and GL6000,that was introduced in 2023 includes over 4

122、0 variants of hardened,10Gbps fiberswitches to expand our fiber offering into the IoT market.Our product offering includes our EMS network management software,providing built-in automation to help configure,manage,monitor,safeguard,install and maintain complex,hybrid networks of thousands of element

123、s remotely.Our EMSmanagement Software was enhanced to support these new products and strengthened with advanced security features to supportbetter cyber production and meet DoD demands.Our products are also built for future integration with enhanced security serviceswe may introduce in the future.We

124、 aim to continue developing our technology to include more system-wide security and further hybridity across all types ofinfrastructure.We will also seek to include cutting-edge computing capabilities to serve all connectivity needs for our IoTcustomers,in an effective and easily deployable way,whil

125、e maintaining our commitment to serve our existing Telco customers.We believe that our strong reputation as a provider of high-quality solutions,and the trust we gain from being recognized as asolid solution provider by prominent customers(such as the U.S.DoD)help us execute our strategy.Products Gi

126、galine 800/900/5000/6000 Series.Advanced,software managed,temperature and cyber-hardened,layer 2 and layer 3,hybrid-fiber-copper switching devices,at multi-gigabit speeds of up to 10Gbps.These devices deliver a much broader selection of solutions for largeand small networks,at higher speeds,and bett

127、er security,in support ofhybrid-fiber networks that contain more fiber,and covering IoT,MDUand MTU markets.MetaLight ML500/600/700/Series.EADs(Ethernet Access Devices)are a series of products which are cost efficient,compact and hardenedEthernet switches for long-distance hybrid-fiber networks,locat

128、ed nearthe IoT devices connected to the network.For example,our EAD isused to connect street traffic lights and nearby controllers,cameras andIoT devices to the traffic control center,where either fiber,copper orcoax infrastructure cabling exists.This product family can be installedeither indoors or

129、 outdoors,including under extreme weather conditions.ML2300 Aggregator Series.This product is designed for large,medium,and small aggregation/operating and control centers.Networkaggregators can connect hundreds of locations or elements.Forexample,control centers of highways could use such aggregato

130、rs tocommunicate with hundreds of EADs installed in cabinets alonghighways in order to securely connect IoT devices(e.g.securitycameras)to the highway network.XR239 Series.This product is installed on long copper lines and can beremotely powered from the data lines themselves,while a specialalgorith

131、m(Dynamic Spectral Software)is ensuring minimalinterference with other signals running on adjacent conduits in the samecable.It features a repeater to extend connectivity range to longdistances,in some cases up to 100Km.The repeater is installedoutdoors and is resistant to cold,hot,rain,ice or snow.

132、Our repeatershave been installed along rail systems in Alaska and Canada and havebeen safely performing for more than five years.2025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-

133、10k_actelis.htm11/136 Advanced MetaLIGHT/Gigaline EMS software.Our EMS(ElementManagement Systems)software enable remote management,monitoring,maintenance,and configuration of the installed equipmentin the network.It is designed to monitor,control and configure ournetwork elements in the field,locall

134、y or remotely,for networks ofvarious scales up to thousands of elements.Our implementation during2021 and 2022 for our end-user customer Highways England,as anexample,is using such EMS systems to control thousands of EADsconnecting IoT devices along thousands of highway miles.It includesdetailed mon

135、itoring,logging and tracking of functions both locally andremotely,to allow for easy debugging and configuration of networks,security management,graphical display of network topologies,management of licenses,remote software download,and connectivityto other network and management systems.EMS may als

136、o manageother software keys and elements(for example,for encryption or othercyber-safety functions),for which customers may pay separately for thelicenses.We also offer support and maintenance services together with the sales of our product.This includes consulting,telephonetroubleshooting and remot

137、e support,training,product repairs,and software updates.62025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm12/136 Product Specifications Our products use advanced s

138、ignal processing implemented at the system level,with an approach that treats multiple copperlines as one multi-line channel,which we believe to achieve the following benefits:Speeds ranging from 10MB to 10GBPS;distances up to 100Km(speeds a lower for longer distances)infrastructure Supporting any h

139、ybrid combination of new Fiber infrastructure and existing copper and coax infrastructure,supportingdata security an encryption protocols,certified for FIPS by US DoD labs;supporting outdoor hardened environmentalrequirements dense and compact to save space and allow for flexible location setting.Au

140、tomatic calibration tools and automated management SW enable hassle-free installation withing hours vs.weeks overexisting wiring.Improve communication reliability even if copper lines are of poor quality,so that network operators can,in most cases,guarantee their customers what we believe are Servic

141、e Level Availabilities(SLAs)and uptime similar to that of fiber opticinfrastructure regardless of the media used,and uptime that allows our customers to support mission-critical applications.In addition to these main benefits,we have focused our efforts and implemented technologies in our products i

142、n order toachieve the following:Transmission in the copper lines to take into account signals in neighboring lines to minimize crosstalk interference and be“Spectrally Friendly”;Multi-line spatial coding scrambling of data in a way that enhances connection immunity to interference,and makestapping i

143、nto the data very difficult;Integration of remote powering and data on the same copper pairs;Minimizing transmission delay to support delay-sensitive applications;and Ability to safely,and accurately transmit clock signals for cellular base station synchronization(not available yet for 5G).Since our

144、 inception,our business was focused on serving telecommunication service providers(Telecom),also known asTelcos,for enterprises and residential customers.Our products and solutions have been deployed with more than 100telecommunication service providers worldwide,in enterprise,residential and mobile

145、 base station connectivity applications.Inrecent years,as we have further developed our technology and rolled out additional products,we turned our focus on serving theIoT markets.Our operations are focused on our fast-growing IoT business while maintaining our commitment to our existingTelecom cust

146、omers.Our Competitive Advantage We have invested heavily and over more than 10 years in the development of copper technologies and hybrid-fibercommunication systems to create a solution that enables high-speed communication over real-life networks of mixed media,securely,reliably,and with Gigabit-gr

147、ade resilience.Copper and coax lines are readily available in billions of locations.They are often buried in the ground,running in the walls ofbuildings or hanging from telephone poles,in bundles of tens or hundreds of wires.72025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea02

148、02031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm13/136 Copper wires were never designed for long-reach,secure,high-speed communication.Attempts to deliver high-speed wouldencounter many problems,including signal attenuation,cross-talk i

149、nterference from other lines in the Bundle and from any externalelectrical sources,variable quality and signal interruptions,and variable latency.Such wires are also relatively easy to tap intophysically,and the information is also radiated outside of the cable and may be exposed to security threats

150、.In order to correct the issues with providing high speed communications over copper wiring,we developed technologiesutilizing a multi-line approach,encoding,scrambling and processing the signals at system level(rather than at the single lineslevel),and finally also offering data encryption,to comba

151、t interference,electromagnetic noise,and issues with copper line qualityand data security.The next step was to integrate our existing technologies into hybrid-fiber building blocks,that provide seamlesscommunication over mixed,real-life fiber-copper-coax networks,and many other advantages.We believe

152、 our products offer a unique solution on the market in terms of value,by providing the following:High performance hybrid-fiber communication system Speeds from 10Mbps to 10Gbps Reach of up to 100Km(speed declines over long distances in copper)Robust connectivity allowing Gigabit-grade service SLAs i

153、n various harsh environments over copper,coax or fiber Rapid installation in hours vs.weeks or months if new infrastructure is needed Cyber-protection on several levels,including Triple Shield Protection:Multi-line data scrambling and coding(copper)256-bit system-wide encryption System level protect

154、ion(encryption and other protections)of management software,operating system and traffic flow Military grade,DoD certified FIPS cyber protection Dense,feature-full design to replace multiple alternative elements in the market,and allow for installation that is compact,lower cost and power saving:Adv

155、anced switching functions supporting complex network topologies Support for both advanced,digital IoT devices as well as existing analog devices with serial interfaces to save theneed to replace these devices while allowing them to join the digital network Power feeding for cameras and other IoT dev

156、ices with the data cable 82025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm14/136 Ability to install our IoT building blocks in remote locations with no power.Powe

157、r can be provided from thecommunication line Ability to provide precise synchronization over the communication lines to base stations Routing functions Support for spectrally-friendly reach extenders up to 100Km with minimal impact on other communication lines Automated software tools for installati

158、on and management(including automated line calibration and configurationrecognition during installation to avoid manual work,advanced management systems that allow remote troubleshooting ofany line connected to the system to save on operation and management time)We believe that the combination of th

159、ese advantages provides our customers with a highly cost-effective solution to quicklyobtain IoT connectivity anywhere in their network.We believe that our hybrid-fiber solutions have a significant competitive advantage in several layers:(a)copper performance(speed,reach,link stability and data secu

160、rity);(b)seamless fiber-copper-coax integration and end-to-end data encryption;(c)overall system cyber-hardened design;(d)versatile,compact and feature-dense products with a good fit to the vast majority ofapplications;(e)very high product and transmission reliability;automatic configuration tools a

161、nd advanced management of everyelement in the field;and(f)highly cost-effective when compared to alternatives.We believe that these advantages lead to verygood value for our customers for both rapid deployment to all locations,regardless of whether these locations are hard to reach.Wealso believe th

162、at these characteristics provide us with a competitive advantage against many,if not all,companies in our space,such as Cisco,Rad,Nokia,Siemens,Belden and others.We have hundreds of large,medium and small network operators as end users of our products,including municipalities,railway,airports,electr

163、icity,water infrastructure companies as well as other governmental agencies and military customers.Webelieve that we enjoy a strong reputation for offering reliable,high-performance and high-end products.We expect that theacceptance process for our new products for existing customers will become sim

164、pler due to customers positive accumulatedexperience working with us.We also have many non-exclusive third-party distributors,resellers and system integrators andpartners around the world,located in the U.S.,Canada,Philippines,Germany,Italy,Spain,Scandinavian countries,Greece,Netherlands,Japan and I

165、ndia.These non-exclusive third-party distributors are used to selling our products,and we believe that theyappreciate the reliability of our products and the quality of service and support that we provide.All of these advantages constitutean entry barrier,which we believe may make it more difficult

166、for a competitor to reach a similar status.We believe that over the past years,we have built a reputation for providing,according to our customers,reliable,high-qualitycommunication solutions with better copper and hybrid fiber performance than other alternatives on the market.A competitor whowants

167、to enter the market will have to compete with our reputation,which has been acquired over a long period by providing long-term quality service to hundreds of network operators and hundreds of thousands of end customers and IoT elements.Our Sales and Marketing Strategy We operate through two regions

168、Americas and International(consisting of EMEA,or Europe,Middle East and Africa,andAPAC,or Asia Pacific)in a matrix with a vertical structure that is described below.Our sales and support teams are currentlylocated in the United States,Mexico,Germany,Israel,and India.We also execute our sales and mar

169、keting plan through a multi-channel by vertical global approach that combines our expertise with the expertise of our trusted business partners.Our currentbusiness partners,as well as the partners we will seek in the future,are system integrators,distributors,contractors,resellers,andconsultants.Our

170、 business partners are currently located in North America,Central America,Europe,India,Singapore,China,Australia,Vietnam and Japan.Once we identify a relevant business opportunity in a new territory,we seek to partner with localbusiness partners or agents.We believe our strong brand name of high-qua

171、lity communication solutions,as well as the credibilitywe gain with esteemed customers such as the U.S.DoD,enhances our ability to provide our products and services.For example,we achieved UL laboratories compliance with FIPS 140-2 cybersecurity standard required by the United States Department ofDe

172、fence(DoD)and the Joint Interoperability Test Command(JITC)labs approval of the Companys products for cybersecurity andinteroperability,putting the products in the DoD Approved Products List(APL).92025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/w

173、ww.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm15/136 We operate a vertical-based marketing plan where we dedicate tailored solutions and individual resources to each specificvertical.Our verticals include Intelligent Traffic Systems(ITS),rail,smart city,Telecom,u

174、tilities,federal and military.ITS ITS include customers who manage road systems such as departments of traffic on either the municipality,county,state,ornational level.The types of applications in this vertical that require communication include road cameras,lane managementsystems,and road signs.Rai

175、l Rail systems include customers who own and operate traditional inter-city rail lines as well as light rails.Some applicationsrequiring communication in this vertical are central train control systems,rail signals,safety cameras and alert sensors,and railstation communication.We currently have proj

176、ects within this vertical in North America,Europe,and Asia Pacific.Federal and Military Our current and future federal and military federal aviation authorities,US military,Air Force and Navy bases,and othergovernment and military facilities.For example,during 2022,we were selected by Norseman Defen

177、se Technologies as anauthorized sales partner to provide our solutions to all branches of the US Military and Government.The types of applicationswithin this vertical that requiring communication include radars,perimeter security systems,energy systems,offices,laboratoriesand residences.We currently

178、 have projects within this vertical in North America,Europe and Asia Pacific.Airports Airports include customers who are either a State or Federal airport agency,or a service provider to the airport industry.Thetypes of applications within this vertical requiring communication are airport security,b

179、aggage management,and airport Wi-Fi.Since 2022,we are delivering to our airport integration customer,who is a worldwide market-leader in airport operationtechnology,with which we signed an agreement to provide our solutions to hundreds of airports in 39 countries.Energy and Water Energy and water in

180、clude customers such as electric utilities,oil companies and water utilities.The types of applicationswithin this vertical that require communication are sub-station monitoring,oil and gas pipeline and refineries,electric and waterflow monitoring,and perimeter security.We have projects within this v

181、ertical in North America and Europe.Smart City We believe the goal of nearly any city worldwide is to become smarter and better serve its residents and visitors.Smart citycustomers include such municipalities.The types of applications in this vertical requiring communication include security cameras

182、,parking management,energy and water management,waste management,digital signs,and provision of Wi-Fi connectivity.Wecurrently have projects in more than 100 cities,mostly in North America and Europe.Telco Telco customers include communication service providers of both wired and wireless services(in

183、cluding 4G and 5G).Thetypes of applications within this vertical requiring communication include enterprise offices,branch offices,residential buildings,educational facilities and back-haul for mobile base stations.102025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k

184、_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm16/136 Channel and Territory coverage The majority of our business is conducted indirectly through various types of business partners,namely system integrators,distributors,contractors,resellers an

185、d consultants.Nevertheless,our team often accompanies a channel partner during the sellingprocess to help secure a deal with an end-user.We seek to cover the geographic territories in which we sell,in combination with thetarget verticals described above.In this effort,we take advantage of existing s

186、trong relationships with business partners in theUnited States,Canada,Europe,Latin America,and Asia Pacific and also seek to recruit new business partners that can help usexpand our coverage.In addition,we maintain a website(at )tailored to the IoT strategy and is expanding our marketing initiatives

187、(professional organizations,shows,online targeting,online campaigns and lead generation)to grow our opportunity pipeline.We operate through two main regional sales teams Americas and International(consisting of EMEA(Europe,Middle Eastand Africa)and APAC(Asia Pacific)in a vertical model similar to th

188、at which was described in our marketing strategy above andgenerates its pipeline of leads and opportunities through a combination of channel presence,on-line presence as well as directtouch.Our sales teams are very experienced in the target verticals and have significant competencies in the target n

189、etworks ofdecision makers.We intend to invest in expanding this presence and strength.Software and Services Our products consist of hardware and an embedded software that function together to deliver the products essentialfunctionality.Our products are sold with a two-year warranty for repairs or re

190、placements of the product in the event of damage orfailure during the term of the support period,which is accounted for as a standard warranty.Services relating to repair orreplacement of hardware beyond the standard warranty period are offered under renewable,fee-based contracts and includetelephon

191、e support,remote diagnostics,and access to on-site technical support personnel.We also offer our customers our EMS management software,either as perpetual or term-based.EMS is optional and is beingsold separately from our hardware products,and has been sold either as a per-element license,or as a li

192、cense for a whole network.Our customers may request added functions and features for their specific need which we can customize for an additional fee.We also offer our customers product support services which include telephone support,remote diagnostics,and access to on-site technical support person

193、nel.Such support service is sold as a standalone contract or in combination with EMS managementsoftware and is offered for a term,usually 12 months with a renewal option.Additionally,our customers can purchase software support service which allow them to receive some additional features orfree upgra

194、des.Such support service is sold as a separate contract.We offer service contracts at different levels(Silver,Gold,Platinum),which may include different levels of support(remotelyor in the field),hardware repairs,spare parts,help with network design,and SW/HW upgrades.Such service contracts are sold

195、separately from the sale of hardware products and may be sold combined with our EMS software licenses.It usually covers periodspost the expiration of our warranty period and would be renewed on an annual basis.The cost of the service is derived from thesize of the network,and the level of support re

196、quired.Competition We compete in markets for networking and communications services and solutions for service providers,businesses,government agencies and other organizations worldwide.While our hybrid-fiber offerings are unique in our opinion,providing thehighest value to network operators,our cust

197、omer may still elect to implement their networks in other ways.112025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm17/136 As such we compete with a number of compan

198、ies in the markets we serve.Our key competitors include Moxa Technologies,FlexDSL Telecommunications AG,EtherWAN Systems,Inc.and Belden Inc.We believe the following competitive attributes are necessary for our solutions to successfully compete in IoT and Telecomnetworking markets,and likewise we bel

199、ieve that we are providing leading products in all the categories below:the performance and reliability of our solutions over any wireline(non-wireless)medium;Rapid deployment/implementation cost of deployment and return on investment in terms of cost savings;sophistication,novel and innovative inte

200、llectual property and technology,and functionality of our offerings;cross-platform operability;security;ease of implementation and use of service;management capabilities;high-quality customer support;and price.We believe that we compare favorably on the basis of the factors listed above.However,many

201、 of our competitors havesubstantially greater financial,technical,and marketing resources;relationships with large vendor partners;larger global presence;larger customer bases;longer operating histories;greater brand recognition;and more established relationships in the industry thanwe do.Furthermor

202、e,new entrants not currently considered to be competitors may enter the market through acquisitions,partnerships,or strategic relationships.See“Item 1.A-Risk Factors New competitors may enter the marketplace and begin tocompete with the Company.”Manufacturing,Procurement and Logistics We take advant

203、age of the combination of our inhouse skills and those of the third parties we partner with to execute ouroperational tasks which are planning and manufacturing finished goods inventory,planning and procuring raw materials anddelivering products to our customers based on promised delivery schedules.

204、Our raw material consists of electronic chipsets,FPGA components,modems,and other electronic and mechanicalcomponents.Most of those components are procured by our contract manufacturers and we assist them as needed in specific cases.For example,since the breakout of COVID-19,as the world is experien

205、cing shortages of electronic components,we have assistedour manufacturers in acquiring components that are harder to find.We also secure components as have been designated to be theclose to end of life by their manufacturers to ensure adequate quantities of future product shipments.Our products are

206、assembled by various contract manufacturers,located in Israel and in Taiwan who possess the expertise ofassembly and quality control required for electronic manufacturing in a turn-key fashion.Some of our products are manufactured toour specifications under an OEM arrangement.The company uses state-

207、of-the-art logistics services from the best providersworldwide and also has in-house expertise in executing such required processes.We believe that we can add and/or replace our contract manufacturer if necessary.We have successfully transitioned from onecontract manufacturer to another in the past,

208、and we believe that a transition would be achievable,if necessary,in the futuretypically within three to six months.122025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis

209、.htm18/136 Warranty Our products are generally sold with a standard warranty of two years for product defects,as well as technical center supportwith properly trained personnel,during normal business hours,to address incidents raised customers.Within the warrantyagreement,we offer to repair or repla

210、ce defective products,or software bug fixes.Upon expiration of the warranty period,thecustomer has an option to purchase an extended warranty contract for an additional fee,typically for one or more periods of12 months.Growth Strategy Global Expansion and Recognition We intend to leverage(a)the cust

211、omers,partners,and representatives presence in over 30 countries including the Americas,Europe and Asia,(b)brand recognition developed over more than 10 years,and(c)the fact that our products are differentiated,aswe believe,and offer unique value to expand into virtually all IoT verticals,and become

212、 the vendor of choice for cyber-protected building blocks for all IoT networking globally.In order to achieve the right level of global coverage,we continue to expand our network of partners and representatives,aswell as reputable advisors,and aim increasingly at partnering with larger numbers of co

213、mpanies with global presence.These can besystem-integrators,value-added resellers,contractors,distributors,and consultants.For example,in 2022,we selected NorsemanTechnologies to serve as a business partner integrator of our products to the Federal and military markets in the US through theiracquisi

214、tion contracts.Additionally,we signed up new business partners in Europe and Asia Pacific,such as in Singapore,China,Vietnam and Malaysia.We are investing in growing our sales,channel management and support teams,and dedicate resources which specialize inspecific verticals in each of the theaters.In

215、 July 2023,we hired a new SVP of Sales,Americas who is executing campaigns oursales strategy in the United States,Canada,Central and South America.We continued in 2023 to invest in marketing activitiesthrough social media,industry shows and conferences and other online means.We also are investing in

216、 lead-generation andmanagement internally and through third-parties who specialize in this practice.Expansion of Multi-year deals Over the past years,we entered into several large multi-year contracts with ITS,military,airports,and more that will generatemore predictable sales for the next several y

217、ears.For example,since the IPO,we announced several new deals we won or started todeliver,such as the worldwide airport technology provider,a provider of energy services to a major European city in a majorEuropean country,the city of San Jose,California and Northern Ireland railways.We intend to exp

218、and this strategy by investing insales and marketing presence to extend the length these contracts and add many others.Expansion into Cybersecurity,Recurring Revenue Model Cybersecurity is essential for IoT infrastructure.Such security must be addressed at the data traffic,switching,and networkmanag

219、ement level.Encryption is a fundamental building block to achieve the necessary protection,preferably at a low networkinglayer.Our products are already capable of delivering sensitive information for many critical IoT applications,and we are investingmore in making this a strong differentiator,and t

220、o have our products recognized as the most cyber-safe IoT building blocks in thegrowing secure IoT communication market.Beyond that,we are expanding our cyber-protection capabilities to provide protection not only of the data that is running in thesystem but also to help protect elements and devices

221、 connected to the network,especially in the interface between the physical andcybersecurity systems.We are referring to such objective as Cyber-Aware Networking.Adding the 5G Connectivity for IoT A dense grid of 5G small cells is required in order to build a global 5G coverage,which,as we believe,ma

222、y be key to IoTdeployment in many smart cities and other dense areas.We believe that connecting these 5G small cells to the network costeffectively and rapidly,in both hard-to-reach and easy-to-reach locations,as well as powering them cost-effectively is key tosuccessful and timely deployment.132025

223、/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm19/136 5G networks deployment is slowed down,as we believe,by the challenge to provide connectivity and power to milli

224、ons ofbase station locations that are required for an effective 5G network.Adding Edge Computing Capabilities Once mass deployment of our IoT connectivity building blocks is achieved,we are planning to leverage our presence in thefield to offer our customers the option to host and integrate various

225、applications into our building blocks,many of which will beinstalled in critical information junctions for IoT networks.Such applications may include video analysis,data monitoring andextraction,firewalls and many others,and would enable our customers,as we believe,to develop recurring revenue model

226、s forthem as well as for us.Some examples for such applications that we have been evaluating are:Enhanced cyber-protection for devices and users;Video processing and machine vision(serving the AI ecosystem such as,intruder detection,road safety and robotics);and Smart video transmission/compression

227、for delivery of video over 5G/mobile networks.We began working on such capabilities in 2023,and expect applications to be released starting late 2024.United States Bipartisan Infrastructure Law In November 2021,President Biden signed the Bipartisan Infrastructure Law to invest approximately$1.2 tril

228、lion tosignificantly upgrade the United States infrastructure.Specifically,the Bipartisan Infrastructure Law mandates investing thefollowing amounts:$110 billion to rebuild many of Americas roads and bridges;$39 billion in public transit;$66 billion in high-speed rail;$108 billion to upgrade the nat

229、ions electricity grid;$55 billion to expand access to clean drinking water;$25 billion tomodernize several US airports;$650 billion in previous authorized funding for roads including nearly$300 billion for the HighwayTrust Fund;and$65 billion to ensure that every American has access to high-speed in

230、ternet through deploying broadbandinfrastructure.We believe that this significant increase in infrastructure spending by the United States Government will likely result ininvestments in our communication infrastructure solutions,as these spending initiatives are aimed at our targeted verticals.Growt

231、h through Mergers and Acquisitions We continue to evaluate potential growth through mergers and acquisitions opportunities in situations where we believe that atransaction will fill business gaps or add key business operations without requiring us to wait years for marketing and sales cyclesto mater

232、ialize.The resulting combination of our existing products and services,new key personnel,and strategic partnershipsthrough M&A could provide new offerings to our existing market.If we target businesses in the same sector or location,we hope to combine resources to reduce costs,eliminate duplicatefac

233、ilities or departments and increase revenue.We believe this strategy will provide for accelerated growth and maximize investorreturns.Environmental We are not aware of any environmental laws that have been enacted,nor are we aware of any such laws being contemplatedfor the future,that impact issues

234、specific to our business.Human Capital Resources As of December 31,2023,we had approximately 49 employees and contractors,of which 43 were full-time employees,including 19 in sales and marketing,22 in research development,engineering,and operations and 8 in general and administration.We have approxi

235、mately 34 employees and contractors in Israel,11 in the U.S.,3 in Europe and 1 in Asia.Our U.S.-basedemployees are employed through a Professional Employer Organization,providing employee benefits and services.142025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_acte

236、lis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm20/136 We believe our culture and principles enable us to attract,retain,motivate and develop our workforce as well as driveemployee engagement.We believe an engaged workforce leads to a more innovative

237、 and productive company that serves itscustomers better.Our employees work to ensure that our products and services connect and protect our customers criticalinfrastructure.A testament to that is the long-term retention of many of our employees and their loyalty to us.We measure each onethrough a go

238、al setting and measurement system to maximize our enterprise value and employee career potential.We support and strive for ethnic and gender diversity.Legal Proceedings From time to time,we may be involved in various claims and legal actions arising in the ordinary course of business.To theknowledge

239、 of our management,there are no legal proceedings currently pending against us which we believe would have amaterial adverse effect on our business,financial position,results of operations and,to the best of our knowledge,there are no suchlegal proceedings contemplated or threatened.Regardless of ou

240、tcome,litigation can have an adverse impact on us because ofdefense and settlement costs,diversion of management resources and other factors.Government Regulation Our products are required to be certified for safety and local standards in each country that we sell in as needed.In theUnited States,Ca

241、nada,Europe,and Japan our products are UL certified(safety),EN(emissions Regulation),VCCI(Japaneseemissions standard),CISPR(European emission standard),ICES(Canadian radio frequency emissions standards),ETSI(Europeanelectromagnetic compatibility standard),CFR(US Federal Broadcasting Regulation),as w

242、ell as IEC(European Safety Standard).We have also received the JITC(Joint Interoperability Test Command)certification of meeting certain cybersecurity standardsrequired by the U.S.Department of Defense.We are subject to numerous federal,state,provincial,local,and foreign laws and regulations relatin

243、g to the storage,handling,emission,and discharge of materials into the environment,including the Comprehensive Environmental Response,Compensation,and Liability Act;the Clean Water Act;the Clean Air Act;the Emergency Planning and Community Right-To-Know Act;theResource Conservation and Recovery Act;

244、and similar laws in the other countries in which we operate.While we believe that ourexisting environmental control procedures are adequate,we will continue to evaluate and update our procedures as needed toaddress new or changing aspects of environmental matters.Intellectual Property We rely on a c

245、ombination of trade secrets,patent,trademark and copyright laws in the United States,as well as intellectualproperty licenses and other contractual rights(including confidentiality procedures,contractual provisions,and non-disclosure andassignment-of-intellectual property agreements with our employe

246、es,independent contractors,consultants and companies withwhich we conduct business)to establish and protect our A.I.technology,intellectual property and proprietary rights,trade secrets,databases,and our brand.We have registered Actelis Networks as a service trademark in the United States,and we are

247、 the registered holder of thedomain name A that includes“Actelis Networks,Inc.”.We also have 17 registered patents in the United States;5registered patents in Europe,1 registered patent in Mexico,1 registered patent in Indonesia,and 1 WIPO patent application,all ofwhich in the general area of high-s

248、peed carrier class Ethernet service and transport over bonded VDSL2,G.SHDSL as well as Fibercovering various aspects of our technology.While we continue to consult with counsel on the advisability to seek patent protectionof some of our algorithms,we rely heavily on trade secrets to protect our inte

249、llectual property around our technology.Without accounting for any potential patent term adjustments or extensions or other forms of exclusivity with respect to ourU.S.issued patents,4 expire between 2024 and 2026,5 expire between 2027 and 2030,and 8 expire between 2031 and 2038.Anypatent issuing fr

250、om the pending WIPO patent application will begin to expire in 2041.With respect to our European patents,3European patents are expected to expire between 2024 and 2026,and 2 European patent is expected to expire between 2027 and2038.Our Mexican patent is expected to expire in 2026 and our Indonesian

251、 patent is expected to expire in 2028.152025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm21/136 We continue to maintain our intellectual property and confidential

252、business information in a number of ways.For instance,wehave a policy of requiring all employees and consultants to execute confidentiality agreements upon the commencement of anemployment or consulting relationship with us.Our employee agreements also require relevant employees to assign to us all

253、rightsto any inventions made or conceived during their employment with us in accordance with applicable law.In addition,we have apolicy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosureagreements.Lastly,our agreements with clients inc

254、lude confidentiality and non-disclosure provisions.Corporate Information We were incorporated in Delaware in 1998.We completed our initial public offering on May 17,2022 and our common stockis currently listed on the Nasdaq Global Select Market under the symbol“ASNS.”Our principal executive offices

255、are located at4039 Clipper Court,Fremont,CA94538,and our telephone number is(510)-545-1040.Available Information Our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and amendments toreports filed pursuant to Sections 13(a)and 15(d)of the Securities Exchange Act

256、 of 1934,as amended(the“Exchange Act”),arefiled with the U.S.Securities and Exchange Commission(the“SEC”).We are subject to the informational requirements of theExchange Act and file or furnish reports,proxy statements,and other information with the SEC.Such reports and other informationfiled by us

257、with the SEC are available free of charge on the SECs website at www.sec.gov.or on our website athttps:/ such reports are available on the SECs website.We use our website as a means of disclosing materialnon-public information and for complying with our disclosure obligations under Regulation FD.The

258、 contents of the websitesreferred to above are not incorporated into this filing.Item 1A.Risk Factors Investing in our common stock involves a high degree of risk.You should carefully consider the risks and uncertainties describedbelow,together with all of the other information in this Annual Report

259、,before deciding to invest in our common stock.The risksand uncertainties described below may not be the only ones we face.If any of the risks actually occur,our business,results ofoperations,financial condition and prospects could be harmed.In that event,the trading price of our common stock could

260、decline,and you could lose part or all of your investment.Additional risks and uncertainties not presently known to us or that we currentlydeem immaterial may also impair our business operations.Summary Risk Factors Our business is subject to numerous risks and uncertainties that you should consider

261、 before investing in our company.Youshould carefully consider all of the risks described more fully in the section titled“Risk Factors”in this Annual Report on page 19,before deciding to invest in our common stock.If any of these risks actually occurs,our business,financial condition and results ofo

262、perations would likely be materially adversely affected.These key risks,include,but are not limited to,the following:Risks Related to Our Business We have a history of net losses,may incur substantial net losses in the future,and may not achieve or sustain profitabilityor growth in future periods.If

263、 we cannot achieve and sustain profitability,our business,financial condition,and operatingresults will be adversely affected.We have negative cash flow from our operations and,given our projected funding needs,our ability to generate positivecash flow is uncertain.Our shares of common stock could b

264、e delisted from the Nasdaq Capital Market if we fail to regain compliance with theNasdaqs stockholders equity continued listing standards.Our ability to publicly or privately sell equity securities and theliquidity of our shares of common stock could be adversely affected if we are delisted from the

265、 Nasdaq Capital Market.Our financial condition raises substantial doubt as to our ability to continue as a going concern.162025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_ac

266、telis.htm22/136 Unfavorable global economic or political conditions could adversely affect our business,financial condition or results ofoperations.Prolonged inflation rates could negatively impact our revenues and profitability if increases in the prices of our productsor a decrease in customer spe

267、nding results in lower sales.We may need to raise additional capital to meet our business requirements in the future,and such capital raising may becostly or difficult to obtain and could dilute our stockholders ownership interests.Our indebtedness could adversely affect our ability to raise additio

268、nal capital to fund operations,limit our ability to reactto changes in the economy or our industry and prevent us from meeting our financial obligations.To support our business growth,in the past years we increased our focus on serving certain IoT verticals,while continuingto serve our existing Telc

269、o customers.This change in our strategy may make it more difficult to evaluate our businessgrowth and future prospects,and may increase the risk that we will not be successful in our plans.We may have ineffective sales and marketing efforts.We outsource our product manufacturing and are dependent on

270、 our key manufacturers,and on our component and OEMsuppliers.We are susceptible to problems,and have encountered problems in the past,in connection with procurement,decreasing quality,reliability,and protectability.Demand for our products and solutions may not grow or may decline.Our gross margins m

271、ay not increase or may deteriorate.Changes in the price and availability of our raw materials and shipping could be detrimental to our profitability.Expanding our operations and marketing efforts to meet expected growth may impact profitability if actual growth is lessthan expected.If our internal C

272、ompany cyber-security measures are breached or fail and unauthorized access is obtained to our ITenvironment,we may incur significant losses of data,which we may not be able to recover and may experience a delay inour ability to conduct our day-to-day business.We provide cyber security features as p

273、art of our products that may not completely prevent information security breaches,and our products are installed in live customer environments and may be compromised by cyber-attacks and damagecustomer assets.We depend on key information systems and third-party service providers.We depend on our man

274、agement team and other key employees,and the loss of one or more of these employees or aninability to attract and retain highly skilled employees could adversely affect our business.We may face the effects of increased competition and rapid technological changes.Our results of operations are likely

275、to fluctuate from quarter to quarter and year to year,which could adversely affect thetrading price of our common stock.The loss of one or more of our significant customers,or any other reduction in the amount of revenue we derive from anysuch customer,would adversely affect our business,financial c

276、ondition,results of operations and growth prospects.We are currently operating in a period of economic uncertainty and capital markets disruption,which has beensignificantly impacted by geopolitical instability due to the ongoing military conflicts between Russia and Ukraine andbetween Israel and Ha

277、mas and Hezbollah.Our business,financial condition and results of operations may be materiallyadversely affected by any negative impact on the global economy and capital markets resulting from the conflict inUkraine and Israel or any other geopolitical tensions.172025/2/11 21:03sec.gov/Archives/edga

278、r/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm23/136 Risks Related to Protecting Our Technology and Intellectual Property Claims by others that we infringe their intellectual property could force

279、us to incur significant costs or revise the way weconduct our business.Our patents and proprietary technology may be challenged or disputed.Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and ourbrand.The lives of our patents may

280、 not be sufficient to effectively protect our products and business.Risks Related to Managing Our Business Operations in Israel Conditions in the Middle East and in Israel,where our research and development facilities are located,may harm ouroperations.Actelis Israel received Israeli government gran

281、ts for certain of our research and development activities,the terms of whichrequire us to pay royalties and satisfy specified conditions in order to manufacture products and transfer technologiesoutside of Israel.If we fail to satisfy these conditions,we may be required to pay penalties and refund g

282、rants previouslyreceived.We may be adversely affected by fluctuations in the currency exchange rate of the Israeli Shekel.Unanticipated changes in our effective tax rate and additional tax liabilities,including those resulting from ourinternational operations or the implementation of new tax rules,c

283、ould harm our future results.Risks Related to our Common Stock The requirements of being a public company may strain our resources,divert managements attention,and affect ourability to attract and retain executive management and qualified board members.We have identified a material weakness in our i

284、nternal control over financial reporting.If we experience materialweaknesses in the future or otherwise fail to implement and maintain an effective system of internal controls in the future,we may not be able to accurately report our financial condition or results of operations which may adversely a

285、ffectinvestor confidence in us,and as a result,the value of our common stock.If we fail to maintain an effective system of internal control over financial reporting,we may not be able to accuratelyreport our financial results or prevent fraud.As a result,stockholders could lose confidence in our fin

286、ancial and otherpublic reporting,which would harm our business and the trading price of our common stock.182025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm24/136

287、RISK FACTORS Investing in our common stock involves a high degree of risk.You should carefully consider the risks and uncertaintiesdescribed below,together with all of the other information in this Annual Report,before deciding to invest in our common stock.The risks and uncertainties described belo

288、w may not be the only ones we face.If any of the risks actually occur,our business,results of operations,financial condition and prospects could be harmed.In that event,the trading price of our common stockcould decline,and you could lose part or all of your investment.Additional risks and uncertain

289、ties not presently known to us orthat we currently deem immaterial may also impair our business operations.Risks Related to Our Business We have a history of net losses,may incur substantial net losses in the future,and may not achieve or sustain profitability orgrowth in future periods.If we cannot

290、 achieve and sustain profitability,our business,financial condition,and operating resultswill be adversely affected.We have incurred net losses in recent years,and we may not achieve or maintain profitability in the future.We experienced anet loss of$6.3 million and$11.0 million in the years ended D

291、ecember 31,2023 and 2022,respectively.As a result,we had anaccumulated deficit of$39.7 million as of December 31,2023.We cannot predict when or whether we will reach or maintainprofitability.We may also increase our operating expenses in the future as we continue to invest for our future growth,incl

292、uding expandingour research and development function to drive further development of our platform,expanding our sales and marketing activities,developing the functionality to expand into adjacent markets,and reaching customers in new geographic locations,which willnegatively affect our operating res

293、ults if our total revenues do not increase.In addition to the anticipated costs to grow ourbusiness,we also expect to incur significant additional legal,accounting,and other expenses as a newly public company.Theseefforts and additional expenses may be more costly than we expect,and we cannot guaran

294、tee that we will be able to increase ourrevenues to offset our operating expenses.Any failure to increase our revenues or to manage our costs as we invest in our businesswould prevent us from achieving or maintaining profitability.There is no guaranty that we will be able to generate the revenue nec

295、essary to support our cost structure or obtain the level offinancing necessary for our operations.We have incurred significant losses and negative cash flows from operations and incurred losses of$6.3 million and$11.0 million for the years ended December 31,2023 and 2022,respectively.During the year

296、s ended December 31,2023 and 2022,we had negative cash flows from operations of$6.6 million and$7.8 million,respectively.As of December 31,2023,ouraccumulated deficit was$39.7 million.We have funded our operations to date through equity financing and have cash on hand(including short term bank depos

297、its and restricted cash equivalents)of$2.4 million and long-term restricted cash and cashequivalents and restricted bank deposits of$3.4 million as of December 31,2023.We monitor our cash flow projections on acurrent basis and take active measures to obtain the funding it requires to continue our op

298、erations.However,these cash flowprojections are subject to various uncertainties concerning their fulfilment such as the ability to increase revenues by attracting andexpanding its customer base or reducing cost structure.If we will not succeed in generating sufficient cash flow or completingadditio

299、nal financing,then it will need to execute a cost reduction plan that has been prepared.Our transition to profitableoperations is dependent on generating a level of revenue adequate to support our cost structure.We expect to fund operations usingcash on hand,through operational cash flows and raisin

300、g additional proceeds.There are no assurances,however,we will be able togenerate the revenue necessary to support our cost structure or that we will be successful in obtaining the level of financingnecessary for its operations.Furthermore,we may continue to incur negative cash flow from operating an

301、d investing activities for the foreseeable future aswe expect to incur research and development,sales and marketing,and general and administrative expenses and make capitalexpenditures in our efforts to increase our sales.Our business also will at times require significant amounts of working capital

302、 tosupport our growth of additional platforms.An inability to generate positive cash flow from operating activities for the near termmay adversely affect our ability to raise needed capital for our business on reasonable terms,or at all,diminish supplier orcustomer willingness to enter into transact

303、ions with us,and have other adverse effects that may decrease our long-term viability.There can be no assurance that we will achieve positive cash flow in the near future or at all.192025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Arc

304、hives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htm25/136 Our financial condition raises substantial doubt as to our ability to continue as a going concern.Our consolidated financial statements have been prepared assuming that we will continue to operate as a going concern.Theseeve

305、nts and conditions,along with other matters,indicate that a material uncertainty exists that may cast significant doubt on ourability to continue as a going concern.This going concern determination could materially limit our ability to raise additional fundsthrough the issuance of equity or debt sec

306、urities or otherwise.Further financial statements may include an explanatory paragraphwith respect to our ability to continue as a going concern.There can be no assurance that we will succeed in generating sufficientrevenues from our product sales to continue our operations as a going concern.If fun

307、ds are not available to us,we may be requiredto delay,reduce the scope of,or eliminate research or development plans for,or commercialization efforts with respect to ourproducts.This may raise substantial doubts about our ability to continue as a going concern.Our shares of common stock could be del

308、isted from the Nasdaq Capital Market if we fail to regain compliance with theNasdaqs stockholders equity continued listing standards.Our ability to publicly or privately sell equity securities and theliquidity of our shares of common stock could be adversely affected if we are delisted from the Nasd

309、aq Capital Market.On August 25,2023,we received a notification letter from the Nasdaq Staff indicating that we are not in compliance withNasdaq Listing Rule 5550(b)(1)due to our failure to meet the Minimum Shareholders Equity Requirement or any alternatives tosuch requirement.In order to maintain ou

310、r listing on the Nasdaq Capital Market,we submitted a plan of compliance addressinghow we intended to regain compliance.We had until February 21,2024 to evidence compliance with the Minimum ShareholdersEquity Requirement.As of the date of this Annual Report,we have not provided such evidence.In the

311、event that our shares ofcommon stock would be subject to delisting,we intend to timely request a hearing before the Panel.We have in the past,and may in the future,be unable to comply with certain of the listing standards that we are required tomeet to maintain the listing of our ordinary shares on

312、Nasdaq.For instance,on November 3,2022,we received notification fromthe Nasdaq Staff that we were not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2).Nasdaq Listing Rule 5550(a)(2)requires listed securities to maintain a minimum bid price of$1.00 per

313、share and NasdaqListing Rule 5810(c)(3)(A)provides that a failure to meet the minimum bid price requirement exists if the deficiency continues fora period of 30 consecutive business days.In accordance with Nasdaq Listing Rule 5810(c)(3)(A),we had an initial grace period of180 calendar days,or until

314、May 2,2023(the“Minimum Bid Price Compliance Period”),to regain compliance with the minimumbid price requirement.On April 19,2023,we implemented a 1-for-10 reverse stock split.One of the primary intents for theconsolidation was that the anticipated increase in the price of our shares of common stock

315、immediately following and resultingfrom a reverse stock split due to the reduction in the number of issued and outstanding shares of ordinary shares would help usmeet the price criteria for continued listing on the Nasdaq Capital Market.On May 3,2023,we received a notification from theNasdaq Staff t

316、hat we had regained compliance with the Nasdaq Listing Rule 5550(a)(2).If we fail to satisfy the continued listing requirements of Nasdaq,such as minimum stockholders equity requirements orminimum bid price requirements,Nasdaq may take steps to delist our shares of common stock.Such a delisting woul

317、d have anegative effect on the price of our shares of common stock,impair the ability to sell or purchase our shares of common stock whenpersons wish to do so,and any delisting materially adversely affect our ability to raise capital or pursue strategic restructuring,refinancing or other transaction

318、s on acceptable terms,or at all.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 limitedamount of news and analyst coverage of us.Delisting could also result in a det

319、ermination 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,possiblyresulting in a reduced level of trading activity in the secondary market for our shares of common stock.In the event of a delistin

320、g,we would attempt to take actions to restore our compliance with Nasdaqs listing requirements,but we can provide no assurancethat any such action taken by us would allow our shares of common stock to become listed again,stabilize the market price orimprove the liquidity of our securities,prevent ou

321、r shares of common stock from dropping below the Nasdaq minimum bid pricerequirement or prevent future non-compliance with Nasdaqs listing requirements.202025/2/11 21:03sec.gov/Archives/edgar/data/1141284/000121390024026069/ea0202031-10k_actelis.htmhttps:/www.sec.gov/Archives/edgar/data/1141284/0001

322、21390024026069/ea0202031-10k_actelis.htm26/136 Unfavorable global economic or political conditions could adversely affect our business,financial condition or results ofoperations.Our business is susceptible to general conditions in the global economy and in the global financial markets.A global fina

323、ncialcrisis or a global or regional political disruption has caused,and could in the future cause,extreme volatility in the capital andcredit markets.A severe or prolonged economic downturn,including a recession,the currently prolonged inflationary economicenvironment,continued rising interest rates

324、,debt and equity market fluctuations,diminished liquidity and credit availability,increased unemployment rates,decreased investor and consumer confidence,supply chain challenges,natural catastrophes,theeffects of climate change,regional and global conflicts and terrorist attacks or political disrupt

325、ion or turmoil could result in avariety of risks to our business,including weakened demand for our product candidates or any future product candidates,ifapproved,and our ability to raise additional capital when needed on acceptable terms,if at all.A weak or declining economy orpolitical disruption c

326、ould also strain our manufacturers or suppliers,possibly resulting in supply disruption,or cause our customersto delay making payments for our potential products.Any of the foregoing could materially and adversely affect our business,financial condition,results of operations and prospects,and we can

327、not anticipate all of the ways in which the political or economicclimate and financial market conditions could adversely impact our business.Prolonged inflation rates could negatively impact our revenues and profitability if increases in the prices of our products or adecrease in customer spending r

328、esults in lower sales which would adversely affect our business,results of operations andfinancial condition.Inflation rates,particularly in the United States and Israel,have increased in 2023 and are prolonged in the past months,atlevels not seen in years in many countries where our customers resid

329、e.Continued and increased inflation may result in decreaseddemand for our products and services,increased operating costs(including our labor costs),reduced liquidity,and limitations onour ability to access credit or otherwise raise debt and equity capital.In addition,the United States Federal Reser

330、ve has raised,andmay again raise,interest rates in response to concerns about inflation.Increases in interest rates,especially if coupled with reducedgovernment spending and volatility in financial markets,may have the effect of further increasing economic uncertainty andheightening these risks.In a

331、n inflationary environment,we may be unable to raise the sales prices of our products at or above therate at which our costs increase,which could have a material and adverse effect on our business,results of operations and financialcondition.Accordingly,the U.S.dollar has strengthened against foreig

332、n currencies as a result of the United States FederalReserves actions to lower inflation,which is affecting our business partners,where they sell local currency to the end-user of ourproducts and services.We may need to raise additional capital to meet our business requirements in the future,and suc

333、h capital raising may be costlyor difficult to obtain and could dilute our stockholders ownership interests.In order for us to pursue our business objectives,we may need to raise additional capital,which additional capital may not beavailable on reasonable terms or at all.Any additional capital raised through the sale of equity or equity-backed securities maydilute our shareholders ownership perce