Foresight Autonomous Holdings Ltd. — FY2019 Form 20-F
Reporting period: Fiscal year ended December 31, 2019. This is an annual report; it does not provide separate Q4 results. Figures below are U.S. dollars unless stated otherwise. Financial statements are prepared under U.S. GAAP.
Business context
Foresight develops automotive safety technology through wholly owned subsidiaries Foresight Automotive and Eye-Net Mobile. Its products include QuadSight, a four-camera vision system for obstacle detection, and Eye-Net Protect, a cellular-based vehicle-to-everything collision-alert solution. The company remained development-stage and reported no significant product revenue.
Financial results and liquidity
| Metric | FY2019 / Dec. 31, 2019 | FY2018 / Dec. 31, 2018 |
|---|---|---|
| Revenue | No significant product revenue | No significant product revenue |
| Research and development expense | $10.210 million | $8.638 million |
| Marketing and sales expense | $1.350 million | $0.987 million |
| General and administrative expense | $3.469 million | $3.696 million |
| Operating loss | $15.029 million | $13.321 million |
| Net loss | $15.439 million | $14.657 million |
| Basic and diluted loss per share | $0.10 | $0.12 |
| Operating cash used | $11.861 million | $11.473 million |
| Cash and cash equivalents | $4.827 million | $3.158 million |
| Short-term deposits | $5.233 million | $12.506 million |
| Total assets | $19.334 million | $24.858 million |
| Total liabilities | $3.046 million | $1.291 million |
| Shareholders’ equity | $16.288 million | $23.567 million |
Revenue and gross margin are not meaningfully reported for this development-stage business. There was no reported conventional funded debt; liabilities included operating lease obligations of $1.418 million. Current assets were $10.696 million and current liabilities $2.039 million at year-end. Cash, equivalents and deposits totaled approximately $10.060 million.
Investing activities provided $7.191 million, mainly from withdrawals of short-term deposits; financing activities provided $6.521 million in net proceeds from share issuance. Cash and equivalents increased by $1.669 million during the year. The company reported 154,649,602 shares outstanding at year-end, up from 131,935,404.
Material changes versus FY2018
- Net loss increased by $0.782 million, or about 5.3%, while operating loss rose by $1.708 million, or 12.8%.
- R&D expense increased 18.2%, primarily from subcontracted development work; marketing and sales expense increased 36.8%, principally from payroll.
- Net financial income declined to $0.429 million from $1.569 million. FY2018 benefited from a $2.071 million warrant-liability revaluation gain; FY2019 included a $0.324 million loss on Rail Vision warrant investments.
- Cash and deposits together decreased by approximately $5.604 million year over year, despite the year’s equity financing and cash-flow movements.
Outlook, risks and unusual items
- Management said year-end cash and deposits were expected to fund current operations only until November 2020. The auditor’s report included an explanatory paragraph on substantial doubt about the company’s ability to continue as a going concern. Management planned to seek external funding and potentially monetize some or all of its Rail Vision investment; funding availability and terms were uncertain.
- Management did not expect product-sale revenue in the next few years and anticipated continued losses until successful commercialization. It expected R&D expense to increase as development and commercialization progressed.
- Commercial progress included eight QuadSight prototype sales, a Japan distribution agreement, a defense-market marketing agreement with Elbit, and technical or strategic cooperation arrangements. Eye-Net completed an SDK configuration and large-scale trial; these milestones do not establish material recurring revenue or production-scale adoption.
- Foresight held 24.12% of Rail Vision at year-end. Rail Vision reported no revenue, a $10.032 million net loss and an $8.204 million operating cash outflow in 2019. Foresight recorded $0.839 million of net equity-method loss related to its affiliate, after accounting for a gain from dilution.
- COVID-19 was identified as a subsequent-event and operating risk after year-end. The company said it had taken short-term expense-reduction measures but could not yet assess the overall impact.
- Other key risks include dependence on future financing and successful commercialization; automotive qualification, safety and product-liability exposure; competition, supplier concentration, and execution of development plans; foreign-exchange exposure (not hedged); Israeli operating and geopolitical risks; and restrictions or royalties associated with Israel Innovation Authority-supported technology. IIA grants require royalties of 3%–5% of relevant future sales up to the grant amount and may constrain technology or manufacturing transfers.
- The filing reports no material legal proceedings. Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2019; the auditor did not provide an internal-control attestation because of the emerging-growth-company exemption.
Most important facts for investors to verify
- Current cash runway, subsequent financing, and whether the going-concern uncertainty has been resolved.
- Whether prototype evaluations, commercial agreements and Eye-Net trials convert into paid deployments, recurring revenue or production design wins.
- Potential dilution: shares issued during 2019 and outstanding warrants and options, including their terms and expiry status.
- Rail Vision’s financing, commercial prospects and effect on Foresight’s carrying value and liquidity plans.
- COVID-19’s actual effect on operations, costs, counterparties and funding needs, as well as any IIA approvals or payments required for future commercialization or technology transfers.