Key Highlights:
- Strategic shift to IoT sales: Total revenue was
$5.6 million for the full year 2023, compared to$8.8 million in the prior year. The Company nearly completed its strategic shift to IoT, with a proportional increase of IoT sales to 77% of annual sales, and further significant decline in Telecom revenue. A significant portion of the decline was a result of delays in on-going customer activities, which are expected to catch up in 2024. - Direct margin increase: Gross Margin was 34% for the full year 2023, compared to 47% in the prior year. A consistently healthy direct margin year over year was offset by an increase of indirect expenses as % of revenues. Most indirect expenses are fixed, related to inventory and new product introduction costs, and are represented as a higher % of revenue against the revenue decline.
- Substantial improvement in operating expenses: Operating expenses declined by 9% to
$9.3 million for the full year 2023. Operating expenses for the fourth quarter on an annualized basis declined to$8 million , or 35% from the year-ago quarter, driven by efficiencies created with cost reduction and restructuring measures. We expect this reduction to continue into 2024. - Substantial improvement in net loss: Net Loss dropped by 43% to
$6.3 million for the full year 2023 compared to$11 million in the prior year, with the decline of financial expenses associated with warrants and convertible facilities. - Adjusted EBITDA loss trends with shift of Telco to IoT revenues: Adjusted EBITDA loss in 2023 was
$6.1 million compared to$4.1 million in the prior year due to the effects associated with the investments made in sales and marketing, as well as the impact of the shift to the IoT business and associated decline in Telco revenues.
“We are coming close to completing our strategic focus shift to the growing vertical business areas in IoT in 2023 and are driving strongly towards our goal of delivering the world’s best, most secure, hybrid-fiber networking solutions,” said
“In our continued efforts to create robust cyber secure and cyber aware networking solutions, we completed our
“Operationally, I am encouraged by the efficiencies we continue to create resulting in operational cost reductions, preparing us well for 2024. While we have seen delays in realizing some expected large new orders, we are ready for the new year with better market coverage such as with the partnerships we have created with Netceed,
Key operational highlights of 2023 to-date:
- After 18 months of development, rigorous testing and certification process, the DoD Information Network (DoDIN) added Actelis’ products in
January 2024 to the approved list of products (“APL”) that have met cybersecurity and interoperability certification requirements. Actelis’ hybrid-copper-fiber networking products are the only ones of their kind on this list. Achieved National Institute of Standards and Technology (NIST) certification for data cyber security, as well as third-party validation for FIPS 140-2 standard from UL labs.- Launched the new Multi-Dwelling-Unit (MDU) solution consisting of a last mile hybrid-fiber multi-gigabit broadband solution for buildings and IoT applications (GigaLine 800) and the new ultra-low power in-building gigabit connectivity solution for instant service provisioning (GigaLine 900).
- Launched new line of advanced, software managed, temperature and cyber-hardened, layer 2 and layer 3 fiber optic switching devices, enabling the delivery of a broad selection of solutions for large and small networks, at higher speeds, in support of hybrid fiber-copper networks that contain a larger portion of fiber.
- Signed partnership agreements for distribution and resale of Actelis portfolio of products and services with Netceed, a leading value-added distributor for the telecom, traffic, and digital infrastructure industries in
North America and withCarahsoft , the trusted public sector IT solutions provider, supporting federal, state and local government agencies through its “Master Government Aggregator” model for their vendor partners with over 2,000 professionals nationwide. InAsia Pacific , through the hiring of Tzachy Givaty, Vice President of Sales for the region, signed multiple resale agreements with new partners inIndia ,Philippines andVietnam . - Continued its service of the multi-year agreement with customer SITA, a worldwide industry leader in infrastructure provision and management for airports. Total orders to-date have reached approximately
$0.9 million . - Multiple customer wins and deployments in the various IoT verticals of Intelligent Traffic Systems (“ITS”), smart cities, railways, and energy such as
City of Napa , major North American rail operator, City of Everett, US Naval base, major European natural gas operator, major US Air-Force base,Northern Ireland Railways and many more, extending its hybrid-fiber cyber-hardened IoT networking connectivity and network management software and services. - Hired and restructured sales and marketing presence and strategy with the hiring of
Bret Harrison , Senior Vice President of Sales,Americas , alongside new members coveringLatin America andCentral Europe . - The war in
Israel has not affected the Company’s operations, we are keeping a close look as the situation evolves and preparing for any necessary adjustments.
Fiscal Full Year 2023 Financial Highlights:
Revenues
Revenues for the year ended
Cost of Revenues
Cost of revenues for the year ended
Research and Development Expenses
Research and development expenses for the year ended
Sales and Marketing Expenses
Sales and marketing expenses for the year ended
General and Administrative Expenses
General and administrative expenses for the year ended
Operating Loss
Operating loss for the year ended
Financial Expenses (income), Net
Financial expenses (income), net for the year ended
Net Loss
Net loss for the year ended
Adjusted EBITDA loss, a non-GAAP measurement of operating performance (reconciled below to Net Loss), for the full year ended
About
Use of Non-GAAP Financial Information
Non-GAAP Adjusted EBITDA, and backlog of open orders are Non-GAAP financial measures. In addition to reporting financial results in accordance with GAAP, we provide Non-GAAP operating results adjusted for certain items, including: financial expenses, which are interest, financial instrument fair value adjustments, exchange rate differences of assets and liabilities, stock based compensation expenses, depreciation and amortization expense, tax expense, and impact of development expenses ahead of product launch. We adjust for the items listed above and show Non-GAAP financial measures in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the
Investor Relations Contact:
ksmith@pcgadvisory.com
CONSOLIDATED BALANCE SHEETS (U. S. dollars in thousands except for share and per share amounts) | ||||||||||
Note | 2023 | 2022 | ||||||||
Assets | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | 620 | 3,943 | ||||||||
Restricted cash equivalents | 1,565 | - | ||||||||
Short-term deposits | 197 | 1,622 | ||||||||
Restricted bank deposits | - | 451 | ||||||||
Trade receivables, net of allowance for credit losses of | 664 | 3,034 | ||||||||
Inventories | 3 | 2,526 | 1,179 | |||||||
Prepaid expenses and other current assets, net of allowance for doubtful debts of | 4 | 340 | 678 | |||||||
TOTAL CURRENT ASSETS | 5,912 | 10,907 | ||||||||
NON-CURRENT ASSETS: | ||||||||||
Property and equipment, net | 5 | 61 | 80 | |||||||
Prepaid expenses | 592 | 492 | ||||||||
Restricted cash and cash equivalents | 3,330 | 336 | ||||||||
Restricted bank deposits | 94 | 2,027 | ||||||||
Severance pay fund | 238 | 239 | ||||||||
Operating lease right of use assets | 6 | 918 | 726 | |||||||
Long-term deposits | 78 | 12 | ||||||||
TOTAL NON-CURRENT ASSETS | 5,311 | 3,912 | ||||||||
TOTAL ASSETS | 11,223 | 14,819 |
F-3
CONSOLIDATED BALANCE SHEETS (continued)
(U. S. dollars in thousands except for share and per share amounts)
Note | 2023 | 2022 | ||||||||
Liabilities, Mezzanine Equity and shareholders’ equity | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Current maturities of long-term loans | 8 | 1,335 | 553 | |||||||
Trade payables | 1,769 | 1,781 | ||||||||
Deferred revenues | 389 | 484 | ||||||||
Employee and employee-related obligations | 737 | 793 | ||||||||
Accrued royalties | 11 | 1,062 | 900 | |||||||
Operating lease liabilities | 6 | 498 | 445 | |||||||
Other current liabilities | 7 | 1,122 | 1,246 | |||||||
TOTAL CURRENT LIABILITIES | 6,912 | 6,202 | ||||||||
NON-CURRENT LIABILITIES: | ||||||||||
Long-term loan, net of current maturities | 8 | 3,154 | 4,625 | |||||||
Deferred revenues | 71 | 164 | ||||||||
Operating lease liabilities | 405 | 237 | ||||||||
Accrued severance | 270 | 278 | ||||||||
Other long-term liabilities | 23 | 48 | ||||||||
TOTAL NON-CURRENT LIABILITIES | 3,923 | 5,352 | ||||||||
TOTAL LIABILITIES | 10,835 | 11,554 | ||||||||
COMMITMENTS AND CONTINGENCIES | 11 | |||||||||
MEZZANINE EQUITY | ||||||||||
Redeemable Convertible Preferred Stock | - | - | ||||||||
Warrants to Placement Agent | 14d | 159 | - | |||||||
SHAREHOLDERS’ EQUITY : (*) | 14 | |||||||||
Common stock, | 1 | 1 | ||||||||
Non-voting common stock, | - | - | ||||||||
Additional paid-in capital | 39,916 | 36,666 | ||||||||
Accumulated deficit | (39,688 | ) | (33,402 | ) | ||||||
TOTAL SHAREHOLDERS’ EQUITY | 229 | 3,265 | ||||||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | 11,223 | 14,819 |
* | Adjusted to reflect reverse stock split, see note 2(ff). |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (U. S. dollars in thousands except for share and per share amounts) | ||||||||||
Year ended | ||||||||||
Note | 2023 | 2022 | ||||||||
REVENUES | 17 | 5,606 | 8,831 | |||||||
COST OF REVENUES | 3,706 | 4,721 | ||||||||
GROSS PROFIT | 1,900 | 4,110 | ||||||||
OPERATING EXPENSES: | ||||||||||
Research and development expenses | 2,702 | 2,766 | ||||||||
Sales and marketing expenses, net | 3,030 | 3,282 | ||||||||
General and administrative expenses | 3,531 | 4,163 | ||||||||
TOTAL OPERATING EXPENSES | 9,263 | 10,211 | ||||||||
OPERATING LOSS | (7,363 | ) | (6,101 | ) | ||||||
Interest expenses | (766 | ) | (830 | ) | ||||||
Other financial income (expenses), net | 18 | 1,843 | (4,051 | ) | ||||||
NET COMPREHENSIVE LOSS FOR THE YEAR | (6,286 | ) | (10,982 | ) | ||||||
Net loss per share attributable to common shareholders – basic and diluted | 16 | $ | (*)(2.61 | ) | $ | (*)(9.45 | ) | |||
Weighted average number of common stocks used in computing net loss per share – basic and diluted | (*)2,412,717 | (*)1,162,124 |
* | Adjusted to reflect reverse stock split, see note 2(ff). |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Year ended | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss for the year | (6,286 | ) | (10,982 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 27 | 23 | ||||||
Changes in fair value related to warrants to lenders and investors | (1,658 | ) | 1,049 | |||||
Warrant issuance costs | 223 | - | ||||||
Inventory write-downs | 239 | 147 | ||||||
Exchange rate differences | (460 | ) | (627 | ) | ||||
Share-based compensation | 377 | 220 | ||||||
Changes in fair value related to convertible loan | - | 1,648 | ||||||
Changes in fair value related to convertible note | - | 1,753 | ||||||
Interest expenses | 295 | 830 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade receivables | 2,370 | (887 | ) | |||||
Net change in operating lease assets and liabilities | 19 | (44 | ) | |||||
Inventories | (1,585 | ) | (429 | ) | ||||
Prepaid expenses and other current assets | 357 | (280 | ) | |||||
Other long-term assets | (100 | ) | (492 | ) | ||||
Trade payables | (25 | ) | (139 | ) | ||||
Deferred revenues | (188 | ) | (25 | ) | ||||
Other current liabilities | (172 | ) | 508 | |||||
Other long-term liabilities | (10 | ) | (41 | ) | ||||
Net cash used in operating activities | (6,577 | ) | (7,768 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Short term deposit, net | 1,418 | (1,622 | ) | |||||
Long- term deposit | (56 | ) | 66 | |||||
Proceeds from restricted long term bank deposits | 4,827 | |||||||
Deposit of restricted long-term bank deposits | (2,810 | ) | (27 | ) | ||||
Restricted short term bank deposit | 451 | (2,451 | ) | |||||
Purchase of property and equipment | (9 | ) | - | |||||
Net cash provided by (used in) investing activities | 3,821 | (4,034 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of options | - | 5 | ||||||
Proceeds from initial public offering | - | 18,697 | ||||||
Proceeds from issuance of common stocks, pre-funded warrants and warrants (see note 14d) | 5,000 | - | ||||||
Underwriting discounts and commissions and other offering costs | (420 | ) | (2,175 | ) | ||||
Repurchase of common stock | (50 | ) | ||||||
Repayment of long-term loan | (769 | ) | (1,241 | ) | ||||
Net cash provided by financing activities | 3,761 | 15,286 | ||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 231 | (72 | ) | |||||
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 1,236 | 3,484 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR | 4,279 | 795 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR | 5,515 | 4,279 | ||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||
Cash and cash equivalents | 620 | 3,943 | ||||||
Restricted cash equivalents, current | 1,565 | - | ||||||
Restricted cash and cash equivalents, non-current | 3,330 | 336 | ||||||
Total cash, cash equivalents and restricted cash | 5,515 | 4,279 |
F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) | ||||||||
2023 | 2022 | |||||||
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | 431 | 818 | ||||||
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: | ||||||||
Right of use assets obtained in exchange for new operating lease liabilities | 702 | 237 | ||||||
Conversion of convertible loan to common stock upon initial public offering | - | 6,553 | ||||||
Conversion of convertible note to common stock upon initial public offering | - | 3,600 | ||||||
Conversion of warrants to common stock upon initial public offering | - | 3,190 | ||||||
Conversion of convertible redeemable preferred stock to common stock upon initial public offering | - | 5,585 | ||||||
Repurchase of common stock | - | 15 | ||||||
Issuance costs of common stock, pre-funded warrants and warrants | 159 | - | ||||||
Reclassification of warrants from liability to equity upon amendment to private placement agreement (see Note 14(d)) | 314 | - |
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Non-GAAP Financial Measures
(U.S. dollars in thousands) | Year Ended 2023 | Year Ended 2022 | ||||||
Revenues | $ | 5,606 | $ | 8,831 | ||||
GAAP net loss | (6,286 | ) | (10,982 | ) | ||||
Interest Expense | 766 | 830 | ||||||
Other financial expenses (income), net | (1,843 | ) | 4,051 | |||||
Tax Expense | 78 | 94 | ||||||
Fixed asset depreciation expense | 27 | 23 | ||||||
Stock based compensation | 377 | 220 | ||||||
Research and development, capitalization | 444 | 525 | ||||||
Other one-time costs and expenses | 371 | 1,174 | ||||||
Non-GAAP Adjusted EBITDA | (6,066 | ) | (4,065 | ) | ||||
GAAP net loss margin | (112.14 | )% | (124.36 | )% | ||||
Adjusted EBITDA margin | (108.20 | )% | (46.03 | )% |
Source:
2024 GlobeNewswire, Inc., source