Key Highlights

  • Actelis Networks grew second-quarter Revenue 20% to roughly $1.1 million while gross Margin nearly doubled to 51% from 32% a year earlier, driven by a shift toward higher-margin software and services contracts.
  • The company was suspended from Nasdaq in April 2026 for failing the minimum bid price requirement and now trades on the OTCQB, with shareholders having authorized a reverse split of between 1-for-10 and 1-for-25 to enable relisting.
  • A planned all-stock Acquisition of Israeli routing company Exaware was replaced with a non-binding memorandum of understanding in June, preserving a Partnership while removing the deal from an already stretched balance sheet.

Actelis Networks, Inc. (OTCQB: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.

Conclusion

Actelis is showing real operating improvement, the shift toward software and services is genuinely reshaping the margin structure, not just a one-quarter blip, and the Nasdaq relisting plan has concrete mechanics behind it rather than vague intent. But the same filings that show 51% gross margin also carry explicit going-concern language and a share count that nearly regrew to its pre-split level within eight months. The August 25 Shareholder vote and whatever reverse-split ratio the board eventually sets will matter more to shareholders than this quarter's margin number, since it determines how much dilution stands between today and a Nasdaq application.