Foresight Autonomous Holdings Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter report; quarterly results are not provided here. Financial statements are audited and prepared under U.S. GAAP. The auditor issued an unqualified opinion on the consolidated financial statements.
Business context
Foresight is an Israeli development-stage technology company. Its businesses develop multispectral 3D vision solutions for automotive, defense, agriculture and industrial applications, and Eye-Net’s cellular-based collision-alert software. Products remained predominantly in development, prototype evaluation and paid proof-of-concept (POC) stages; the company reported no significant recurring product revenue.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $120,000 | None reported |
| Cost of revenue / gross profit | $67,000 / $53,000 | None reported |
| Research and development, net | $10.170 million | $8.563 million |
| Marketing and sales | $1.848 million | $1.268 million |
| General and administrative | $3.980 million | $3.005 million |
| Operating loss | $15.945 million | $12.836 million |
| Net loss | $15.036 million | $15.375 million |
| Basic and diluted loss per ordinary share | $0.05 | $0.07 |
| Cash used in operating activities | $12.125 million | $11.495 million |
Gross margin was approximately 44% on the small amount of reported revenue. No meaningful recurring-revenue margin trend can be inferred from this limited base.
- Liquidity: At year-end, cash and cash equivalents were $28.073 million, restricted cash $115,000 and short-term deposits $17.513 million. The company cited approximately $45.7 million in cash, cash equivalents and short-term deposits, including restricted cash.
- Balance sheet and debt: Total assets were $53.481 million, total liabilities $4.848 million and shareholders’ equity $48.633 million. The filing reports operating lease liabilities, but no borrowings or other interest-bearing debt are shown in the balance sheet. Lease liabilities totaled $2.730 million.
- Cash flows and funding: Investing activities used $12.582 million, largely reflecting a $12.347 million increase in short-term deposits and $235,000 of capital expenditures. Financing activities provided $14.160 million, including $13.508 million net share-issuance proceeds and $652,000 from option and warrant exercises.
- Shares: 322,652,016 ordinary shares were outstanding at December 31, 2021, up from 312,760,305 a year earlier.
Changes versus FY2020
- Revenue of $120,000 and gross profit of $53,000 were reported for the first time in the comparative period; FY2020 revenue was zero.
- Operating loss widened by $3.109 million, or 24%, as R&D, sales and marketing, and administrative expenses increased. R&D rose 19%, sales and marketing 46%, and general and administrative expenses 32%.
- Net loss narrowed by $339,000, despite the higher operating loss. FY2020 included a $2.718 million equity-method loss from an affiliate; no such loss was reported in FY2021. Net financial income increased to $909,000 from $179,000, primarily due to bank interest income.
- Operating cash use increased by $630,000. Financing proceeds fell substantially from $45.280 million in FY2020 to $14.160 million in FY2021.
Outlook, commentary and risks
- Management said year-end liquidity was expected to fund current operations through the second quarter of 2024. It expects revenue to increase in coming years but gave no quantified revenue or earnings guidance and cautioned that commercialization is not assured.
- Management expects R&D expenses to rise as product development and commercialization advance. Additional capital may be required; financing may be unavailable or dilutive, and failure to secure funds could force reductions or delays in development and commercialization.
- Commercial progress included POCs and prototype sales, including a completed 2021 POC with a stated total value of $120,000. The company described a 2022 focus on expanding POCs and pursuing co-development and commercial agreements. Such projects and agreements do not establish future production volumes or recurring revenue.
- In 2021 the company recorded a $351,000 reduction in R&D expense from the EU Horizon 2020 program; it reported a total award of approximately $721,000, with $340,000 recorded as grant payables at year-end. Separately, earlier IIA grants carry potential royalties of 3%–5% on qualifying product sales and restrictions on transferring supported know-how or manufacturing outside Israel.
- Principal risks include continued losses and dependence on external financing; unproven commercialization and customer adoption; competition and rapid technology change; automotive qualification, cost and safety requirements; supplier and manufacturing dependencies; product liability (the company said it did not then maintain product liability insurance); cybersecurity; COVID-19-related disruption; foreign-exchange exposure; and political and security conditions in Israel. The company does not hedge currency risk.
- Management concluded disclosure controls and internal control over financial reporting were effective as of year-end. The company, as an emerging growth company, did not include an auditor attestation on internal controls.
Important facts for investors to verify
- Confirm the composition and availability of the reported $45.7 million liquidity balance, and assess whether management’s stated runway through Q2 2024 remains current.
- Track cash burn, operating expense growth, share issuance and dilution, and the need and terms of future financing.
- Verify conversion of POCs and prototype evaluations into binding commercial production agreements, recurring revenue and customer orders.
- Review the terms, recognition and remaining balance of Horizon 2020 support, IIA royalty obligations, and restrictions on transferring funded technology or manufacturing.
- Assess the effect of lease commitments, related-party R&D services with Magna, and the company’s exposure to product liability and currency fluctuations.