Eco Wave Power Global AB (publ) — FY 2023 Form 20-F
Period: Fiscal year ended December 31, 2023; this is an annual report, not a standalone Q4 filing. Financial statements are prepared under IFRS in U.S. dollars. The auditor issued an unqualified opinion on the financial statements.
Business context
Eco Wave Power develops onshore and nearshore wave energy conversion technology and related services. Its 2023 revenue came from feasibility studies and project-planning services; it had not generated revenue from WEC product sales or electricity sales. The company reported a worldwide project pipeline of up to 404.7 MW, most of which was subject to preliminary agreements or further approvals.
Financial performance and position
| USD thousands, except percentages | 2023 | 2022 |
|---|---|---|
| Revenue | 306 | 26 |
| Gross profit | 247 | 4 |
| Gross margin | 80.7% | 15.4% |
| Operating loss | (2,413) | (3,607) |
| Net loss | (1,866) | (2,901) |
| Net cash used in operating activities | (2,601) | (2,462) |
- Revenue increased by $280,000, or 1,076%, from four feasibility studies in the United States, Israel, Morocco and Greece. Cost of sales was $59,000, leaving $247,000 of gross profit.
- Operating expenses included research and development of $519,000, sales and marketing of $375,000, and general and administrative expenses of $1.764 million. Research and development costs are expensed; no development costs were capitalized.
- Net financial income was $547,000, mainly including $405,000 of interest income on short-term deposits and $197,000 of foreign-exchange gains, partly offset by financial expenses. Net loss attributable to parent shareholders was $1.710 million; total net loss was $1.866 million.
- Cash and cash equivalents were $4.281 million and short-term bank deposits were $4.102 million at year-end; $63,000 of deposits were restricted. Cash and cash equivalents fell from $5.295 million. Total assets were $10.009 million and equity was $7.801 million.
- Borrowings included $974,000 owed to a shareholder and director, classified as current and payable upon demand, and a $140,000 PortXL loan. Lease liabilities were $87,000. The liquidity schedule shows $1.134 million of contractual liabilities due in 2024, including loans and lease payments.
- Management expects year-end cash and cash equivalents to fund operations for at least 12 months from the report date, but states that substantial additional financing will be needed to execute future plans. The filing warns that unavailable financing could force delays or reductions and raise substantial doubt about the company’s ability to continue as a going concern.
Changes versus 2022
- Revenue rose from $26,000 to $306,000, while gross margin improved from 15.4% to 80.7% (calculated from reported revenue and gross profit).
- Net loss narrowed by $1.035 million, or 36%, and operating loss narrowed by $1.194 million, or 33%. Lower R&D, sales and marketing, and general and administrative costs drove much of the improvement.
- 2022 R&D expense included a one-time $278,000 loss on abandoned Gibraltar equipment; this did not recur in 2023. Lower D&O insurance, legal, investor-relations and other service costs also reduced G&A.
- Operating cash use increased by $139,000 to $2.601 million, despite the smaller net loss, reflecting lower non-cash expense adjustments and higher working-capital use. Investing activities provided $1.223 million in 2023, versus $5.301 million used in 2022, primarily due to short-term deposit movements.
Outlook, risks and notable items
- Management’s stated priorities include advancing the Jaffa project, developing a Port of Los Angeles pilot, and progressing the first 1 MW Portugal project. The filing does not provide financial guidance or a forecast for future revenue or profitability.
- After year-end, APDL signed the Portuguese water-use license for the first 1 MW project on March 5, 2024; the company had provided a €150,000 bank guarantee. In January 2024, the company and Shell signed a pilot-test agreement for the Port of Los Angeles project. Los Angeles permits remained pending in the filing.
- The Jaffa project was connected to Israel’s national grid in August 2023 and began supplying electricity under a power purchase agreement. The company reported a total project cost of approximately $1 million, shared equally with EDF Renewables IL.
- Key risks include the unproven commercial-scale economics and reliability of wave energy, permitting and grid-connection delays, dependence on grants and subsidies, need for additional financing, competition from larger renewable-energy providers, and reliance on third-party suppliers and project partners. Most pipeline capacity is not yet construction-ready.
- The Israel-Hamas war had not materially affected the 2023 financial statements, according to management, but could disrupt personnel, subcontractors, trade and operations. Commercial insurance does not cover war and terrorism losses.
- Disclosure controls and internal control over financial reporting were ineffective at December 31, 2023. The company reported an unremediated material weakness stemming from insufficient finance staff for effective period-end reporting controls. The auditor did not provide an internal-control attestation, citing the company’s emerging-growth-company exemption.
- The company does not pay dividends and does not expect to do so in the foreseeable future. It also reported that it did not expect to be a PFIC for 2023, while noting that this determination is made annually and is uncertain.
Important facts for investors to verify
- Whether the Portugal project obtains remaining approvals and moves into construction on the stated timetable, and what total installed and grid-connection costs will be.
- Whether the Port of Los Angeles project receives the required permits and proceeds under the Shell pilot-test agreement.
- How quickly cash is being consumed, whether management’s stated 12-month funding runway remains valid, and the terms and dilution impact of any new financing.
- The demand, repayment timing and any agreed extensions or other changes to the $974,000 related-party loan payable upon demand.
- Progress in remediating the material weakness and whether internal reporting controls become effective.
- How much of the 404.7 MW pipeline is supported by definitive, funded agreements, rather than letters of intent or other preliminary arrangements.