THE THINKEQUITY CONFERENCE 2026 - ACTELIS NETWORKS INC

Financial Performance:

• 2025 was characterized by a significant revenue decline, finishing with less than $4 million.
• First half of 2026 reported revenue of $2.1 million, representing a 26% year-over-year increase.
• Bookings surged 80% in the first half of 2026, with Q3 results pending release.
• Gross margins recovered to 51%, aligning with historical operational targets.
• The company is currently in a "MEND" (Modernize, Evolve, and New Direction) phase following cost reductions and reorganization.
• A major U.S. Marine Corps IP telephony upgrade (65 buildings) delivered in Q3 contributed significantly to recent financial momentum.

Guidance and Future Outlook:

• Management forecasts a stronger 2026 compared to the previous year, citing improved market access and new product adoption.
• Long-term goals include returning to NASDAQ listing and achieving inorganic growth through M&A.
• Q3 delivered order momentum suggests continued growth trajectory into 2027, particularly in federal "programs of record."
• The company aims to capitalize on the massive spending cycle in federal modernization (defense), smart cities, and edge AI infrastructure.

Business Segments and Product Lines:

• Federal/Military: Focus on "programs of record" (continuous modernization contracts) rather than sporadic project sales; recent win includes a large U.S. Marine Corps deployment.
• Intelligent Transportation & Smart Cities: Provides connectivity for sensors, cameras, and signage; active in 300+ U.S. cities and major road agencies (e.g., Highways England).
• Hospitality: New segment targeting multi-gigabit upgrades for legacy analog hotel systems to enable streaming and modern guest experiences.
• Technology: Specializes in "fiber-grade performance over existing copper, coax, or hybrid infrastructure," eliminating the need for expensive re-cabling.
• Cybersecurity: Embedded "Meta Shield" AI-driven threat management and anomaly detection for IT and Operational Technology (OT) networks.

Market and Competitive Landscape:

• Targeting a trillion-dollar federal defense modernization market alongside growing Edge AI and Cyber Safety sectors.
• Differentiation lies in hybrid networking (fiber/copper/coax) and legacy infrastructure modernization, a niche often too small for giants like Cisco or Juniper.
• Competitive set includes Adtran, Extreme Networks, Belden, and Hirschmann, with Actelis claiming superior capabilities in hybrid synchronization and cyber hardening.
• Regulatory tailwinds include the EU Cyber Resilience Act (mandatory 2027) and U.S. FIPS compliance requirements for federal contracts.

Risks and Challenges:

• Revenue Volatility: The 2025 revenue collapse highlights dependency on large, sporadic contract wins and execution risk during transition.
• M&A Execution: The path to NASDAQ and growth relies on successfully closing a synergistic, cyber-oriented acquisition, which remains non-disclosed.
• Legacy Modernization Barriers: Customer reluctance to disrupt operations (e.g., hotels or transit systems) can slow adoption rates.
• Supply Chain: Hardware relies on external vendors for chips and memory; product security is heavily dependent on internal firmware updates.

Management Commentary and Tone:

• CFO Yoav Efron acknowledged the "terrible" 2025 results but expressed strong confidence in the turnaround and future "MEND" strategy.
• Tone is pragmatic regarding past performance but aggressive and optimistic about upcoming federal and smart city opportunities.
• Management emphasizes the critical need for "cyber hardening" and the inability of wireless to replace wired infrastructure in critical applications.
• Confidence is high regarding the company's technical superiority in synchronizing and securing legacy copper/coax networks.

Analyst Questions and Answers:

• Hospitality Adoption: Management noted that while demand exists for modernizing analog hotel TV to streaming, project timing is constrained by the need to keep rooms vacant during upgrades.
• Competitive Position: Clarified that Actelis competes in the mid-market where large vendors find projects too small; highlighted past wins against Adtran and Cisco in the UK highway sector.
• Supply Chain & Firmware: Confirmed hardware is assembled using vendor chips, but proprietary firmware and cyber-hardening tools are developed in-house.
• Security Protocols: Disclosed weekly code scanning processes to identify and patch vulnerabilities immediately, even for legacy hardware support.

Other Key Points:

• Edge AI Relevance: Highlighted that AI automation requires low-latency processing at the edge (cars, robotics, critical infrastructure) rather than the cloud, positioning Actelis as a key enabler.
• Power over Ethernet (PoE): Technology supports power delivery alongside data transmission, essential for deploying sensors and devices on existing infrastructure.
• Strategic Partnerships: Leveraging new federal sales talent and a network of integrators/contractors to secure long-term government contracts.
• Market Tailwinds: The convergence of defense modernization, smart city digitization, and the rise of Edge AI creates a unique intersection for Actelis's hybrid connectivity solutions.