8-K: Actelis Networks Secures $1 Million in Private Placement to Boost Working Capital

Actelis Networks, Inc. has successfully closed a private placement offering, raising approximately $1 million in gross proceeds through the issuance of common stock and associated warrants to accredited investors.

Summary

• Actelis Networks, Inc. entered into a securities purchase agreement on June 30, 2025, with certain accredited investors for a private placement.
• The offering, which closed on July 2, 2025, involved the issuance and sale of 1,626,019 shares of common stock, Series A-3 warrants to purchase up to 1,626,019 shares, and Series A-4 warrants to purchase up to 3,252,038 shares.
• The purchase price for each share of common stock and related common warrants was $0.615, resulting in total aggregate gross proceeds of approximately $1 million.
• Both Series A-3 and Series A-4 warrants have an exercise price of $0.615 per share and become exercisable upon shareholder approval.
• Series A-3 warrants expire five years after the shareholder approval date, while Series A-4 warrants expire eighteen months after the shareholder approval date.
• The company estimates potential additional gross proceeds of approximately $3 million if all warrants are fully exercised on a cash basis, though no assurance is given for their exercise.
• H.C. Wainwright & Co., LLC acted as the exclusive placement agent, receiving a 7.0% cash fee (approximately $70,000) of gross proceeds, $25,000 for accountable expenses, and a 1.0% management fee (approximately $10,000) of gross proceeds.
• The placement agent also received unregistered warrants to purchase up to 113,821 shares of common stock (7.0% of shares sold to investors) at an exercise price of $0.7688, exercisable for five years after shareholder approval.

Sentiment

Score: 6

Explanation: The capital raise provides necessary working capital, which is positive for operations. However, the significant dilution from the shares and warrants, coupled with substantial placement agent fees, tempers the overall positive impact. The 'at-the-market' pricing is neutral, reflecting current market conditions.

Positives

• Successfully raised approximately $1 million in gross proceeds, providing additional working capital for general corporate purposes.
• The offering was priced 'at-the-market' under Nasdaq rules, indicating a market-aligned valuation for the capital raise.
• The company secured potential future capital of approximately $3 million from warrant exercises, if they are fully exercised on a cash basis.

Negatives

• The issuance of 1,626,019 shares of common stock and the potential issuance of up to 4,878,057 shares from warrant exercises will result in significant dilution for existing shareholders.
• Substantial fees and expenses were paid to the placement agent, including a 7.0% cash fee, a 1.0% management fee, and warrants to purchase 113,821 shares, reducing net proceeds.
• The exercise of warrants is contingent on shareholder approval, introducing a potential delay or uncertainty for future capital inflow from warrant exercises.
• The company is subject to liquidated damages if it fails to meet deadlines for registration statement filing and effectiveness, or if it fails to maintain current public information under Rule 144(c).

Risks

• Investors may not exercise the warrants if it causes their beneficial ownership to exceed 4.99% (or 9.99% at their option) of the company's then outstanding common stock.
• There is no assurance that the warrants will become exercisable or will be exercised, meaning the potential additional $3 million in proceeds is not guaranteed.
• The company is prohibited from certain equity issuances, including variable rate transactions, for one year after the registration statement's effective date, which could limit future financing flexibility.
• Failure to obtain shareholder approval for the issuance of shares upon exercise of the common warrants within 90 days could impact the exercisability of the warrants.

Future Outlook

The company intends to use the net proceeds from the offering for working capital and general corporate purposes. It will seek shareholder approval for the issuance of shares upon exercise of the common warrants within 90 days of the closing date and will file a registration statement for the resale of the unregistered securities.

Management Comments

• Tuvia Barlev, Chief Executive Officer, signed the Form 8-K on behalf of Actelis Networks, Inc.

Industry Context

Actelis Networks operates in the IoT and broadband applications sector, providing cyber-hardened, rapid deployment networking solutions. This capital raise is a common strategy for technology companies to secure funding for ongoing operations, product development, and market expansion, aligning with typical growth-stage financing activities in the industry.

Comparison to Industry Standards

• The offering was priced 'at-the-market under Nasdaq rules,' suggesting the pricing mechanism is consistent with current market practices for similar private placements on Nasdaq.
• The placement agent fees (7.0% cash fee, 1.0% management fee, and 7.0% warrants) are within the typical range for small-cap private placements, though on the higher end, reflecting the size and nature of the raise.
• The inclusion of both short-term (18-month) and longer-term (5-year) warrants is a common structure in private placements, offering investors different risk/reward profiles and providing the company with potential future capital infusions.

Corporate Governance

Stakeholder Impact

• Shareholders will experience immediate dilution from the issuance of 1,626,019 shares and potential further dilution from the exercise of up to 4,878,057 warrants.
• Investors (Purchasers) gain equity and warrant positions in the company, with registration rights for resale, providing liquidity options.
• The company benefits from approximately $1 million in gross proceeds for working capital, supporting ongoing operations and strategic initiatives.
• H.C. Wainwright & Co., LLC, as the placement agent, received substantial fees and warrants, indicating a significant financial benefit for their role in facilitating the capital raise.

Next Steps

• The company will seek shareholder approval for the issuance of shares upon exercise of the common warrants within 90 days following the closing date.
• The company will file a registration statement with the SEC by the 15th calendar day after the Registration Rights Agreement date to cover the resale of the unregistered securities.
• The company will use its best efforts to cause the registration statement to be declared effective within 30 days (or 60 days if reviewed in full) of June 30, 2025.
• The company will maintain the listing or quotation of its common stock on the Nasdaq Capital Market and apply to list all newly issued shares and warrant shares.

Key Dates

Recommendation

Keywords

Private Placement, Common Stock, Warrants, Capital Raise, SEC Filing, ASNS, Actelis Networks, Nasdaq, Shareholder Approval, Dilution, Working Capital, Securities Act, Registration Rights