Key Highlights

● Actelis Networks lifted gross Margin to 51% while growing Revenue 20%, improving profitability metrics even as the company remains on OTC markets.

● Actelis specializes in extracting fiber-grade speeds from existing copper infrastructure, avoiding the cost and disruption of digging up roads and trackbeds for new fiber.

● The company is mapping a route back to Nasdaq, a milestone that would restore institutional eligibility and improve access to capital.

● Government, railway and carrier customers make up the core of Actelis' addressable market, drawn to its ability to avoid costly infrastructure replacement.

Actelis Networks, Inc. (OTC: ASNS) has an unusually specific job: pulling fiber-grade speeds out of the copper wiring that governments, railways and carriers already have in the ground. Digging up roads, tunnels and trackbeds for new fiber is slow and costly, and the Fremont, California company sells gear that avoids much of that.

Investors are watching because Actelis reported second-quarter 2026 results on 13 August: revenue grew, gross margin nearly doubled year over year, and losses narrowed.

The backdrop is that this is happening off-exchange. Actelis was suspended from the Nasdaq Capital Market in April 2026 after failing to hold the USD 1.00 minimum bid price, and now trades on the OTCQB Venture Market. Management says a Nasdaq return is the goal, and the release laid out the mechanics.

What Happened

Second-quarter revenue was approximately USD 1.1 million, up 20% from about USD 0.9 million a year earlier. First-half revenue reached roughly USD 2.1 million, a 26% increase. North America rose 39% in the quarter; EMEA rose 15%.

The more striking figure was gross margin - what is left after the direct cost of building and delivering the product. It came in at 51%, against 32% a year earlier and just 25% in the first quarter. Management credited a mix weighted toward software and services, which carry far lower incremental cost than hardware.

The company also reiterated its relisting plan. Shareholders voted on 13 April to authorise a Reverse Stock Split of between 1-for-10 and 1-for-25, with the ratio left to the board. Actelis separately amended its Equity line of Credit on 1 July, lifting capacity to USD 30 million.

Why It Matters

A move from 32% to 51% gross margin at this scale is not a rounding difference. Actelis spends roughly USD 2.2 million a quarter on research, sales and administration, so every margin point shortens the distance to breakeven.

The mix shift behind it matters too. On 1 July the company announced an approximately USD 0.85 million one-year renewal from a large North American carrier covering its Meta-Assist element management system - the software used to provision and monitor devices remotely. Recurring software contracts are stickier and higher-margin than one-off equipment shipments.

The listing question matters separately: many institutions cannot hold OTC securities, and analyst coverage thins sharply below exchange level.

The Numbers

Second-quarter Gross Profit was about USD 0.6 million. Operating costs ran roughly USD 0.7 million in research and development, USD 0.8 million in sales and Marketing and USD 0.7 million in general and administrative expense, giving an operating loss of USD 1.6 million against USD 1.8 million a year earlier. Net loss was USD 1.4 million, or USD 0.05 per share, versus USD 1.9 million and USD 2.08 a share a year ago - a comparison distorted by today's far larger share count.

For the half, net loss was USD 3.8 million, or USD 0.19 per share, level with a year earlier. Cash and restricted cash stood at about USD 5.8 million on 30 June, up from USD 4.4 million at the end of 2025, and shareholders equity was USD 7.2 million against USD 4.8 million.

Context matters: full-year 2025 revenue was USD 3.7 million, down from USD 7.8 million in 2024, with a net loss of USD 8.3 million. The company blamed deployment timing and a prolonged US Government Shutdown that hit public-sector budgets. It has since cited roughly USD 1 million of annualised savings.

What It Means for the Company

Actelis is positioning itself as an infrastructure-modernisation supplier rather than a general networking vendor, and recent orders fit. Since May it has disclosed follow-on orders from the Washington, D.C. Department of Transportation, an approximately USD 200,000 GL800 order from a Central European carrier, and an order above USD 100,000 on 10 August connecting remote Alaskan schools and healthcare facilities.

The Exaware relationship has been recast. In March Actelis announced a binding term sheet to acquire Exaware Routing Ltd., an Israeli developer of disaggregated IP/MPLS routing platforms. That was replaced by a memorandum of understanding effective 16 June, preserving joint customer pursuit and interoperability work while dropping the Acquisition structure. Both sides say they may revisit a broader transaction toward the end of 2026.

Read plainly, the swap takes a large all-stock acquisition off an already stretched balance sheet, at the cost of the scale it would have brought.

Risks Investors Should Watch

Dilution is the dominant risk. A 1-for-10 reverse split in November 2025 cut shares outstanding from roughly 17.5 million to about 1.75 million; by 1 July 2026 the count was back near 25.8 million. Some 18.4 million shares were issued in the first quarter alone under an at-the-market programme, since made unusable by the delisting.

The USD 30 million White Lion equity line replacing it converts issuance directly into pressure on the quoted price: under the amended rapid-purchase mechanism the price is 97.0% of the lowest traded price less USD 0.005 a share. Some 15.85 million shares are registered for resale, and shareholders vote on 25 August on raising authorised shares from 30 million to 80 million.

The Solvency language is explicit. The first-quarter filing stated that circumstances raise substantial doubt about the company's ability to continue as a going concern, with an accumulated Deficit near USD 54.8 million. Revenue is also lumpy and concentrated in public-sector and carrier projects tied to budget cycles, and there is no assurance Nasdaq would approve a relisting.

What Comes Next

The nearest scheduled event is the 25 August annual meeting, covering the authorised-share increase, election of directors Julie Kunstler and Gideon Marks, and ratification of PwC as auditor. That share vote carries immediate consequence: certain White Lion warrants become exercisable only if it passes.

After that sits a decision the board has not made public: whether and when to execute the approved reverse split, and at what ratio. Actelis says it will announce the ratio beforehand, and a relisting application would follow rather than precede it. Third-quarter results are due in November.

The Path Back to a National Exchange

Actelis is showing operational progress - revenue growth, better margins, smaller losses and more cash than at the end of 2025, with repeat orders from transportation, federal and carrier customers.

Against that sits a company earning about USD 1 million a quarter, carrying a going-concern warning, funding itself through a discount-priced equity line and trading off-exchange. Both halves are in the filings, and the second makes the first hard to value.