FREMONT, Calif. - Actelis Networks, Inc. (NASDAQ: ASNS), a provider of cyber-hardened networking solutions, has announced its intention to acquire a significant majority stake in Quality Industrial Corporation (OTC: QIND), a company specializing in solutions for the industrial and energy sectors based in Dubai, United Arab Emirates.
The binding term sheet outlines the acquisition of 61% to 75% of QIND's issued and outstanding shares, subject to customary closing conditions.
QIND, with a presence across the UAE, reported $11 million in revenue and $1.8 million in net income for the year 2023. The first quarter of 2024 saw revenues of approximately $3.1 million and a net income of around $0.76 million. The company operates seven facilities and maintains a fleet of vehicles to serve nearly 40,000 customers, including prominent entities like Emirates Airlines and the Government of Dubai.
Tuvia Barlev, Chairman and CEO of Actelis, expressed optimism about the acquisition, emphasizing the strategic expansion into new geographies and verticals such as energy, utilities, and public safety. He highlighted that Actelis' technology can bolster QIND's operations by enhancing networking, cybersecurity, and smart IoT applications, potentially leading to smarter and more efficient operations.
John-Paul Backwell, CEO of Quality Industrial Corp., also remarked on the benefits of the merger, noting that Actelis' solutions could reduce operational costs and improve business competitiveness.
Upon closing the transaction, Actelis will issue 19.99% of its common stock and preferred non-voting shares to the sellers. The precise number of shares will be determined by valuations of both companies. The deal is expected to close within 60 days, pending regulatory approval and due diligence.
The acquisition, as proposed, would create a combined entity with a proforma revenue of $17 million in 2023, with significant growth anticipated for 2024.
Actelis Networks, headquartered in Fremont, California, is recognized for its rapid-deployment networking solutions for IoT applications, while Quality Industrial Corp., headquartered in San Francisco, California, provides services to the industrial, oil and gas, and utility sectors.
This news is based on a press release statement.
InvestingPro Insights
As Actelis Networks (ASNS) moves forward with its plans to acquire a majority stake in Quality Industrial Corporation, the financial health of Actelis is a crucial factor for investors to consider. According to InvestingPro data, Actelis Networks has a market capitalization of $1.57 million and is currently operating with substantial challenges. The company's revenue for the last twelve months as of Q1 2024 stands at $4.48 million, reflecting a significant decline of 49.11%. Additionally, the gross profit margin during the same period was 31.94%, which, while positive, is overshadowed by an operating income margin of -164.38%, indicating substantial operational losses.
InvestingPro Tips for Actelis Networks reveal that the company is grappling with a significant debt burden and is rapidly burning through cash. Moreover, its short-term obligations exceed its liquid assets, which raises concerns about the company's ability to meet its immediate financial obligations. Over the past month, the stock has performed poorly, with a price total return of -32.94%, and the trend has been negative over longer periods as well, with a -55.93% return over the last three months and a staggering -84.29% over the past year. These metrics are crucial for investors to consider, as they may impact the company's ability to successfully integrate and leverage QIND's operations post-acquisition.
For investors seeking a deeper analysis of Actelis Networks, there are additional InvestingPro Tips available that could provide further insights into the company's financial health and stock performance. These tips are an essential resource for making informed investment decisions, especially in light of the proposed acquisition's potential impact on the company's future. Investors can access these tips by visiting InvestingPro's dedicated page for Actelis Networks at https://www.investing.com/pro/ASNS. To gain more comprehensive insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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