Actelis Networks — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third-quarter revenue increased 68% year-over-year to $1.1 million, compared to $0.64 million in Q3 2025; revenue for the first nine months of 2026 rose 38% to $3.2 million versus $2.3 million in the prior-year period.
• Gross margin improved to 40% in Q3 2026 from 28% in Q3 2025, with gross profit more than doubling to $0.43 million from $0.18 million; gross margin for the first nine months was 39% compared to 32% in 2025.
• Total operating expenses declined 13% (excluding $73,000 government grant income in the prior-year quarter) to $1.9 million in Q3 2026 from $2.1 million in Q3 2025, driven by a 24% decrease in sales and marketing expenses and a 14% decrease in general and administrative expenses.
• Operating loss narrowed 23% to $1.5 million in Q3 2026 from $1.9 million in Q3 2025; net loss decreased 37% to $1.2 million ($0.04 per share) in Q3 2026 from $2.0 million ($1.68 per share) in Q3 2025.
• Adjusted EBITDA loss was $1.4 million in Q3 2026, a 23% improvement from $1.8 million in Q3 2025; for the first nine months, Adjusted EBITDA loss was $4.7 million, down from $5.2 million in 2025.
• Cash, cash equivalents, and restricted cash totaled $4.8 million as of September 30, 2026, compared to $1.8 million as of September 30, 2025.
• Deferred revenue increased to $350,000 ($340,000 current, $10,000 non-current) as of September 30, 2026, from $243,000 ($223,000 current, $20,000 non-current) as of December 31, 2025.
• Total liabilities decreased to $3.4 million as of September 30, 2026, from $4.7 million as of December 31, 2025, with the credit line and short-term loan reduced to zero.

Guidance and Future Outlook:

• The company aims to return to Nasdaq listing, with a reverse stock split (range 1-for-10 to 1-for-25) approved by shareholders in April 2026, to be decided upon by the Board by April 2027.
• Actelis plans to introduce the GL800 Gigabit-speed product in the fourth quarter of 2026 for transportation and smart-city applications.
• Management is focused on converting federal, military, intelligent transportation, and hospitality opportunities into revenue while maintaining a lean cost base.
• The company is pursuing M&A with a cyber and AI focus to accelerate growth and scale.

Business Segments and Product Lines:

• North American revenue surged 170% in Q3 2026, driven by federal and intelligent transportation customer deliveries; Asia-Pacific revenue increased 233% and EMEA revenue increased 3% in Q3.
• A cyber-hardened networking upgrade was delivered to the U.S. Marine Corps, providing fiber-grade VoIP service to 65 buildings using existing wiring without new fiber construction.
• Regional carriers in Alaska placed orders to extend business-class broadband to remote schools and healthcare facilities over existing infrastructure.
• New cyber-hardened software for vulnerability mitigation was released alongside related services to help customers meet security standards.
• The company is expanding work with large partners in hospitality and professional AV, including VITEC, to accelerate deployment in buildings by upgrading existing wiring.
• Engagement with U.S. Army communications networking leaders and defense integrators deepened, with solutions trialing for over 15 federal programs of record.

Market and Competitive Landscape:

• Actelis positions itself as a market leader in cyber-hardened, rapid-deployment networking solutions for IoT and broadband applications, including government, military, utility, rail, telecom, and campus networks.
• The company highlights a strong fit with federal programs where major partners are trialing solutions for larger programmatic deployments.
• Momentum is accelerating in federal and military networking, intelligent transportation, cyber-hardened software and services, and hospitality applications.

Risks and Challenges:

• Foreign exchange rate fluctuations, particularly NIS against USD, negatively impacted results, partially offsetting cost-reduction measures.
• Forward-looking statements carry risks regarding future revenue growth, gross margin, demand across verticals, timing of cost-reduction initiatives, and the ability to satisfy Nasdaq listing standards.
• Risks include the ability to identify and complete acquisitions, the timing and effect of any reverse stock split, and the ability to continue as a going concern or access additional financing.

Management Commentary and Tone:

• Tuvia Barlev, Chairman and CEO, stated that the company achieved the third consecutive quarter of year-over-year revenue growth with a wider margin and lower cost base, cutting the net loss by more than a third compared to Q3 2025.
• Management emphasized that the Marine Corps delivery illustrates the value proposition of bringing fiber-grade service to existing wiring at a fraction of the cost and time of new fiber construction.
• The tone reflects confidence in accelerating momentum across federal, military, and commercial sectors while executing a strategy to return to Nasdaq.

Other Key Points:

• In July 2026, the company amended its $30 million equity line of credit to allow usage while shares trade on the OTCQB.
• Shareholders approved a reverse stock split in April 2026, with the Board having until April 2027 to decide on implementation.
• The company recognized no other income in the first nine months of 2026, whereas the prior-year period included $73,000 of government grant income from the State of Israel.
• Net cash used in operating activities for the first nine months of 2026 was $4.6 million, while net cash provided by financing activities was $5.1 million, primarily driven by $7.3 million in proceeds from ATM stock issuance.
• The company repurchased $1.0 million of common stock for retirement during the first nine months of 2026.
• A liability for commitment fee under the ELOC agreement was settled through the issuance of common stock, pre-funded warrants, and warrants, valued at $544,000.