WISeKey International Holding AG — FY2021 Form 20-F
Business context and reporting period. This is an annual report for the fiscal year ended December 31, 2021, not a standalone Q4 filing; the filing text does not provide clear Q4-only financial results. WISeKey is a Swiss cybersecurity company spanning secure IoT chips, managed PKI services and, following its February 2021 acquisition of a 51% stake in arago GmbH, AI-based knowledge automation. Financial statements are prepared under U.S. GAAP and reported in U.S. dollars.
Financial performance and position
- Revenue: $22.258 million, up 51% from $14.779 million in 2020. IoT revenue rose 18% to $16.867 million; mPKI revenue was $0.779 million, up 69%; AI contributed $4.612 million after the arago acquisition.
- Profitability: Gross profit was $9.088 million versus $5.465 million; gross margin improved to about 41% from 37%. Operating loss widened to $26.688 million from $18.532 million. Net loss from continuing operations narrowed to $24.094 million from $28.907 million; loss attributable to WISeKey shareholders was $20.340 million. Basic and diluted loss per share was $0.28, versus $0.67.
- Cash flow: Operating cash outflow increased to $21.791 million from $12.550 million. Investing cash outflow was $2.525 million; financing provided $36.975 million, primarily through convertible financing. Ending cash and restricted cash totaled $34.359 million, compared with $21.763 million a year earlier; $34.249 million was unrestricted cash and cash equivalents.
- Liquidity and debt: Working capital was positive at $17.8 million. Current liabilities were $24.752 million and current assets $42.510 million. Balance-sheet notes payable included $6.249 million current and $0.458 million long-term; convertible notes payable were $9.049 million noncurrent. Total liabilities were $47.426 million and total equity $41.379 million. The $4.030 million ExWorks loan was past due and accruing interest at 10%; management said repayment was expected in connection with a potential Tarmin investment sale.
- Other metrics: Adjusted EBITDA, a non-GAAP measure, was a loss of $20.8 million versus a loss of $15.8 million. Accumulated deficit reached $238.160 million. Stock-based compensation rose to $3.783 million from $0.393 million.
Material changes versus the prior comparable period
- Revenue growth reflected the consolidation of arago from February 1, 2021, contributing $4.6 million, and recovering IoT demand. Semiconductor supply shortages and long lead times continued to defer some deliveries.
- Operating expenses rose 49% to $35.776 million. Management attributed the increase to higher R&D and selling costs, acquisition-related arago costs, and increased stock-based compensation. Arago generated a reported $7.1 million net loss during its included period.
- Net loss improved partly because 2021 included $5.553 million of non-operating income from fair-value accounting related to the arago acquisition, while 2020 included a $7.0 million impairment charge on the Tarmin warrant. The improvement in net loss therefore did not reflect better operating performance.
- Convertible financing supported liquidity but drove substantial share issuance: L1 conversions resulted in 11.86 million Class B shares and Anson conversions in 8.23 million. Year-end outstanding Class B shares were 80.92 million, versus 42.84 million in 2020.
Outlook, risks and unusual items
- Management stated that cash projections indicated sufficient liquidity to fund operations and commitments for the 12 months through April 30, 2023, and said it anticipated profitability in the near future, while acknowledging that this outcome was uncertain. No quantified revenue or earnings guidance was provided.
- On March 14, 2022, the company agreed to sell its 51% arago stake and affiliates, with completion expected in Q2 2022 subject to transfer of consideration and shares. The filing does not provide a clear sale price.
- Key business risks include semiconductor shortages and supplier capacity, customer order variability, competition and technology changes, cybersecurity incidents, and the cost and execution risk of integrating acquisitions. The company also disclosed foreign-exchange exposure and said it does not hedge currency fluctuations.
- Financing and dilution are significant risks. Convertible facilities with L1 and Anson each had up to $22 million commitments; year-end unconverted notes and undrawn commitments remained. The Yorkville equity line had CHF 45.644 million available, at a discount to market pricing. These instruments and related warrants may result in substantial additional share issuance.
- The company had a $238.160 million accumulated deficit and ongoing operating cash burn. The filing identifies reliance on external financing; liquidity depends in part on financing facilities and access to capital markets. The ExWorks loan was past due, with no formal recovery proceeding reported as of the filing date.
- Other notable matters: the company said it was likely to be a passive foreign investment company (PFIC) for U.S. tax purposes in 2022, depending on the arago sale proceeds, use of cash and market capitalization. Management assessed disclosure controls and internal control over financial reporting as effective; the auditor did not issue an opinion on internal controls. No material legal proceedings were reported.
Most important facts for investors to verify
- Standalone Q4 results, which are not clearly provided in this annual filing, and the underlying audited statements and notes.
- Cash burn, liquidity runway and the assumptions supporting management’s forecast through April 2023.
- Status, terms and repayment or conversion treatment of the past-due ExWorks loan and outstanding L1 and Anson notes.
- Actual and potential dilution from convertible notes, warrants, the Yorkville facility, employee options and other authorized share issuances.
- Completion, proceeds and financial impact of the announced arago divestiture, including any effect on 2022 revenue, cash and PFIC status.
- Whether IoT demand and semiconductor supply availability improve, and whether arago integration or separation affects costs and operating performance.