Actelis Networks Signs Binding Term Sheet to Acquire Quality Industrial Corporation and Expand Operations in Critical Energy Industry

Rhea-AI Summary

Actelis Networks (NASDAQ: ASNS) has signed a binding term sheet to acquire 61% to 75% of Quality Industrial (OTC: QIND). QIND, based in Dubai, provides solutions for the critical infrastructure and energy sectors, generating $11 million in revenue and $1.8 million in net income in 2023. The acquisition is expected to expand Actelis' market reach into the UAE, Gulf Region, and Africa while enhancing QIND’s operations with Actelis’ IoT technology. The deal, subject to regulatory approval and due diligence, will involve Actelis issuing 19.99% of its common stock to QIND's shareholders and additional preferred shares. The companies aim to close the transaction within 60 days.

Positive

• Acquisition of 61-75% of QIND could significantly expand Actelis' market reach.
• QIND reported $11 million in revenue in 2023 with $1.8 million net income.
• QIND's revenue for Q1 2024 was $3.1 million, with $0.76 million in net income, indicating strong performance.
• QIND services nearly 40,000 customers, including prominent names like Emirates Airlines and the Government of Dubai.
• Actelis’ IoT technology could enhance QIND’s operations, improving efficiency and reducing operational costs.
• Expected combined revenue of $17 million in 2023 with substantial growth projected for 2024.
• The transaction is expected to result in recurring, inorganic profitable revenue for Actelis.

Negative

• The acquisition is subject to regulatory approval and customary due diligence, which could delay or prevent the completion.
• Issuing 19.99% of common stock and preferred shares could dilute Actelis' shareholders' value.
• The exact number of shares to be issued is dependent on the valuations of both companies, leading to potential uncertainties.
• The deal includes a 60-day non-solicitation obligation and a break-up fee, which might pose financial risks.

Insights

Financial Analyst

The acquisition of Quality Industrial Corporation (QIND) by Actelis Networks introduces significant financial implications. QIND's reported revenue of $11 million and net income of $1.8 million in 2023 demonstrate a profitable operation. Actelis' acquisition aims to leverage this profitability, projecting substantial growth for both companies in 2024. From a financial perspective, integrating QIND’s revenues with Actelis could create a combined entity with stronger financial stability.

The transaction is structured to include 19.99% of Actelis' common stock and preferred non-voting shares. This mix reduces immediate cash outflow, which is beneficial for Actelis' cash management. The issuance of preferred shares that are non-convertible before six months helps mitigate dilution risks for current shareholders in the short term.

Potential investors should note the financial health and growth prospects of QIND, as well as the strategic geographical expansion into the UAE and Gulf regions. However, the transaction's success depends on due diligence completion and regulatory approvals, which introduces a level of uncertainty.

Market Research Analyst

From a market perspective, this acquisition positions Actelis Networks to enter new markets in the UAE, Gulf Region and Africa. QIND’s established customer base of nearly 40,000 in the UAE, including prominent clients like Emirates Airlines and Emaar, presents a strong competitive advantage. Actelis can leverage these connections to expand its IoT solutions in critical infrastructure and energy sectors.

The energy and public safety sectors' increasing reliance on IoT for remote monitoring and automation indicates solid demand potential for Actelis' technology. The integration of Actelis’ cyber-hardened networking solutions with QIND’s industrial operations could enhance operational efficiencies and open new revenue streams.

However, the success of this strategy hinges on Actelis’ ability to integrate and optimize QIND’s operations effectively. The potential for synergies, like automation of product delivery and system monitoring, is promising but requires careful execution. Investors should consider the broader market expansion opportunities and the operational challenges that may arise during the integration phase.

Tech Expert

In the technology domain, Actelis Networks’ acquisition of QIND is strategic for expanding IoT applications in the critical infrastructure and energy sectors. Actelis specializes in secure and rapid deployment networking solutions, which can significantly enhance QIND’s operational capabilities. The implementation of remote monitoring, automation and forecasting through IoT can streamline QIND’s processes, leading to cost reductions and efficiency gains.

Technological integration will allow Actelis to enhance QIND’s service offerings, making their operations smarter and more connected. The synergy between Actelis’ cyber-hardened technology and QIND’s industrial products can lead to innovative solutions that cater to the specific needs of critical infrastructure markets.

Nevertheless, the complexity of integrating these technologies across different sectors and regions cannot be underestimated. Technical challenges and potential cybersecurity risks must be managed efficiently to realize the full potential of this acquisition.

FREMONT, Calif., May 23, 2024 (GLOBE NEWSWIRE) -- Actelis Networks, Inc. (NASDAQ: ASNS) (“Actelis” or the “Company”) a market leader in cyber-hardened, rapid deployment networking solutions for IoT applications, today announced the signing of a binding term sheet to acquire between 61% to 75% of the issued and outstanding shares of Quality Industrial Corporation, a Nevada corporation (“QIND”) (OTC: QIND), subject to customary terms for closing.

QIND, whose operations are based out of Dubai, United Arab Emirates (“UAE”), designs, manufactures and supplies solutions for the critical infrastructure industrial and energy sectors. Its operating business reported $11 million in revenue and $1.8 million in net income in 2023 and is projecting substantial growth in 2024. For the first quarter ending March 31, 2024, QIND’s revenues were approximately $3.1 million, and its net income was approximately $0.76 million. With expansion of its customer base, QIND is expecting substantial growth in 2024. QIND currently services nearly 40,000 customers across the UAE with 7 operating facilities and a fleet of dozens of vehicles and approximately 100 employees. They are also internationally certified, local government approved, and its customers include household names such as Emirates Airlines, Emaar, Government of Dubai, Dubai Properties, WASL Group and many others. QIND’s sister company Emergency Response Technologies Inc., who is not part of this transaction, designs, manufactures and supplies patented firefighting technologies and solutions for the public safety sector, and is expected to enable further synergies with Actelis.

Tuvia Barlev, Chairman and CEO of Actelis, stated, “We are excited to team-up with QIND as it opens for us new geographies in the UAE, Gulf Region and Africa with applications in new, critical verticals such as energy, utilities, and public safety. Actelis’ technology is focused on innovation, enabling rapid modernization of critical infrastructure and industries, providing rapid deployment networking in a secure and cost-effective manner, and enabling smart IoT applications and sensors. QIND and other companies in the energy sector need reliable networking, cyber protection, and smart applications to improve their business operations. Remote monitoring for quality of service and safety, automation of delivery and billing, as well as forecasting and supply-chain optimization are all areas that can be strengthened with the Actelis’ technology. The acquisition of QIND allows Actelis to add inorganic, profitable revenue of a recurring nature while offering IoT technology to enhance the operations of QIND and its customers, resulting in smarter and more efficient operation, and enabling faster growth. As contemplated, the acquisition would result in a combined company which had on a proforma basis $17 million in revenue in 2023 with substantial growth projected for 2024.”

John-Paul Backwell, CEO of Quality Industrial Corp., stated, “The joining of Actelis and QIND aligns with our goal of expanding our company by harnessing advanced technologies to increase business efficiencies. Actelis’ solutions can assist in reducing our operational costs through the automation of product delivery and system monitoring, thereby improving our competitiveness and accelerating the growth of our business.”

Terms of the Transaction

At the Closing, in consideration for the purchased shares, Actelis will issue to the Sellers 19.99% of its common stock and preferred non-voting shares for the balance of the consideration. The companies are planning to close the transaction, pending regulatory requirements and due diligence, within 60 days. The preferred shares shall not be convertible to common stock prior to six months after the closing until such time as a registration statement is declared effective, whichever occurs sooner and shareholders’ approval will be obtained. The exact number of shares of the Company to be issued to the sellers will be based on a ratio of valuations of ASNS and QIND to be determined between the parties until closing.

The binding term sheet is subject to customary due diligence requirements and other covenants including but not limited to the raising of additional funding. The Term Sheet includes a 60-day non-solicitation obligation and a break-up fee.

About Actelis Networks, Inc.

Actelis Networks, Inc. (NASDAQ: ASNS) is a market leader in cyber-hardened, rapid-deployment networking solutions for wide-area IoT applications including federal, state and local government, ITS, military, utility, rail, telecom and campus applications. Actelis’ unique portfolio of hybrid fiber-copper, environmentally hardened aggregation switches, high density Ethernet devices, advanced management software and cyber-protection capabilities, unlocks the hidden value of essential networks, delivering safer connectivity for rapid, cost-effective deployment. For more information, please visit www.actelis.com.

About Quality Industrial Corporation:

Quality Industrial Corp. (OTC: QIND) is a Manufacturer and Service Provider for the Industrial, Oil and Gas, as well as the Utility sectors. It is involved in the design, consultation, supply, installation, and maintenance of liquefied petroleum gas (LPG) systems. The company also provides LPG cylinder distribution and bulk gas supply solutions. It serves commercial buildings, mixed use apartment complexes, shopping complexes, food courts, heavy industries, labor accommodations, catering units, commercial kitchens, and restaurants. The company was formerly known as Wikisoft Corp. and changed its name to Quality Industrial Corp. in August 2022. The company is headquartered in San Francisco, California. For more information, please visit www.qualityindustrial.com.

Forward-looking Statements

This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words "could," "believe," "anticipate," "intend," "estimate," "expect," "may," "continue," "predict," "potential," "project" and similar expressions that are intended to identify forward-looking statements, and include statements regarding the completion of the private placement, satisfaction of the closing conditions and use of proceeds therefrom and obtaining shareholder approval. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements are reasonable, we can give no assurance that these plans, objectives, expectations or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond our control), including, but not limited to, market and other conditions, and assumptions that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results to differ materially from those in the forward-looking statements and the trading price for our common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company's filings with the U.S. Securities and Exchange Commission. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Media Contact:
Sean Renn
Global VP Marketing & Communications
srenn@actelis.com

Investor Relations Contact:
Kirin Smith
PCG Advisory, Inc.
Ksmith@pcgadvisory.com

FAQ

What is the significance of Actelis Networks acquiring Quality Industrial ?

The acquisition is significant as it expands Actelis' market reach into the UAE, Gulf Region, and Africa while enhancing QIND's operations with advanced IoT technology.

How much revenue did Quality Industrial generate in 2023?

QIND generated $11 million in revenue in 2023.

What were Quality Industrial 's earnings for Q1 2024?

QIND's revenue for Q1 2024 was approximately $3.1 million, with a net income of approximately $0.76 million.

What percentage of Quality Industrial is Actelis Networks acquiring?

Actelis Networks is acquiring between 61% to 75% of QIND's issued and outstanding shares.

How will the acquisition affect Actelis Networks' stockholders?

Actelis Networks will issue 19.99% of its common stock and preferred shares, which could lead to shareholder dilution.

When is the transaction between Actelis Networks and Quality Industrial expected to close?

The transaction is expected to close within 60 days, pending regulatory requirements and due diligence.