ZOOZ Power Ltd. Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2023. The filing is an annual report, not a standalone fourth-quarter filing; quarterly results are not separately provided in the supplied text. The filing identifies the registrant as ZOOZ Power Ltd., although the request metadata refers to “ZOOZ Strategy Ltd.” Financial statements are prepared in U.S. GAAP and presented in U.S. dollars.
Business Context
ZOOZ develops and sells flywheel-based kinetic energy storage systems used as power boosters for ultra-fast electric-vehicle charging in locations with constrained grid capacity. Its principal product is the ZOOZTER-100, designed to provide up to 100 kW of supplemental power for approximately 15 minutes. During 2023, the company moved from product development toward early commercial deployments in Israel, Germany and the United States, while pursuing expansion into the United Kingdom.
Key Financial Metrics
| U.S. dollars in thousands, except per-share data | 2023 | 2022 | Change |
|---|---|---|---|
| Sales | 764 | 0 | New commercial revenue |
| Cost of sales | 1,869 | 178 | Increased |
| Gross loss | (1,105) | (178) | Greater loss |
| Research and development | 5,215 | 4,163 | +25% |
| Sales and marketing | 3,041 | 1,672 | +82% |
| General and administrative | 2,850 | 2,189 | +30% |
| Operating loss | (12,211) | (8,202) | Greater loss |
| Net loss | (11,755) | (7,825) | Greater loss |
| Net loss per share | (1.99) | (1.51) | Worsened |
| Net cash used in operations | (12,232) | (10,547) | Greater use |
| Net cash used in investing | (1,339) | (500) | Greater use |
| Net cash from financing | 0 | 27,870 | No financing in 2023 |
| Cash and cash equivalents at year-end | 6,672 | 20,569 | Down 68% |
| Inventory | 2,848 | 1,767 | Up 61% |
| Accumulated deficit | (47,181) | (35,426) | Greater deficit |
The reported gross margin was approximately negative 145%, reflecting cost of sales substantially above revenue. Net loss margin was approximately negative 1,539%, based on reported sales. The filing does not provide a meaningful positive profitability margin because the company remains in an early commercialization phase.
Total assets were $13.5 million and total liabilities were $4.3 million at December 31, 2023. The filing reports no conventional borrowings at year-end; liabilities primarily consisted of operating lease liabilities, payables, employee benefits and share-based payment liabilities. Operating lease obligations totaled $1.5 million, including $415 thousand due in 2024.
Material Changes Versus 2022
- Revenue began in 2023, with $764 thousand from two ZOOZTER-100 systems delivered and accepted by a customer in Germany.
- Cost of sales included the cost of the German systems and approximately $1.1 million of inventory write-offs, compared with a $178 thousand inventory write-off in 2022.
- Research and development increased primarily because of U.S. certification testing, product engineering, certification, new-product introduction and customized component development.
- Sales and marketing increased because of pilot projects, the U.S. Scotchman site, market-entry activities and additional personnel.
- Capital expenditures increased to $1.4 million from $0.5 million, including three ZOOZTER-100 systems classified as fixed assets for pilot deployments.
- Operating cash use increased to $12.2 million from $10.5 million, while 2023 had no financing inflows compared with $27.9 million of financing inflows in 2022.
- Cash declined by approximately $13.9 million during 2023, and the accumulated deficit increased to approximately $47.2 million.
Liquidity, Going Concern and Financing
Management and the independent auditor reported substantial doubt about the company’s ability to continue as a going concern. The company had an accumulated deficit of approximately $47.2 million, negative operating cash flow of approximately $12.2 million in 2023 and year-end cash of approximately $6.7 million. Management stated that year-end cash was insufficient to fund operations for at least 12 months from approval of the financial statements and that additional financing is required.
The business combination with Keyarch closed on April 4, 2024. The company reported receiving approximately $10 million net from the transaction and approximately $14 million of unaudited, unreviewed cash and cash equivalents as of April 30, 2024. These post-period proceeds do not eliminate the company’s dependence on future financing, revenue growth and cost controls.
Guidance, Outlook and Management Commentary
- The company expects continued operating losses and does not expect a significant improvement in cash flow or operating results during 2024 and 2025 while it pursues early market penetration and product introduction.
- Management expects future spending to increase for research and development, cost reduction, production outsourcing, service capabilities, sales and marketing, and U.S. public-company compliance.
- Commercialization plans focus on scaling ZOOZTER-100 deployments, outsourcing manufacturing and final testing, expanding supplier capacity, building local market partnerships and developing next-generation flywheel and software products.
- Two German sites were commercially operational, while additional German sites, U.K. deployments, LaGuardia Airport pilots and the NYPA demonstration were expected to become operational or progress during 2024.
- Potential purchases by Dor-Alon and Osprey were contingent on successful pilot or evaluation periods and were not unconditional firm orders based on the filing text.
Risks, Contingencies and Unusual Items
- Going concern: Continued operations depend on additional financing, increased revenue and cost reductions.
- Internal controls: Material weaknesses remain in segregation of duties and personnel expertise in U.S. GAAP and SEC reporting. Management’s disclosure controls were deemed ineffective as of December 31, 2023, although management concluded the financial statements were fairly presented after additional procedures.
- Early-stage market: Customer education, long sales cycles, pilot dependence, uncertain market acceptance and competition from battery-based and other energy-storage technologies could delay growth.
- Manufacturing and supply chain: The company relies on a limited supplier base and is transitioning toward outsourced production; shortages, delays, cost inflation and geopolitical disruption could impair deliveries and margins.
- Product reliability and safety: Flywheel failures, design defects, warranty claims or inadequate insurance could lead to material costs and reputational damage.
- Israel and geopolitical exposure: The company reported no facility damage or known material supply-chain impact from the Swords of Iron war as of the filing date, but approximately 10% of employees were in reserve duty and management could not quantify the future impact.
- Government grants: Grants from the Israel Innovation Authority, BIRD, NYPA and Israeli ministries create potential royalty obligations, manufacturing restrictions and limitations on transferring or licensing funded know-how.
- Inventory: The company recorded approximately $1.1 million of inventory write-offs in 2023 and held $2.8 million of inventory at year-end.
- Foreign exchange: The company’s functional currency is the Israeli shekel, while reporting is in U.S. dollars. Management estimated that a 10% dollar depreciation against the shekel would increase annual net loss by approximately $1.4 million, while a 10% dollar appreciation would reduce it by approximately $1.1 million.
- Dilution: The business combination, warrants, options, earnout rights and potential future equity financing could substantially dilute existing shareholders.
- Tax status: The filing states there is a substantial risk that ZOOZ may be treated as a passive foreign investment company for U.S. federal income tax purposes in 2024.
Most Important Facts for Investors to Verify
- Current cash balance, monthly cash burn and the timing and terms of any required financing.
- Whether 2024 pilot deployments convert into binding system purchases and recurring maintenance revenue.
- Actual gross margins and inventory requirements as production scales and write-offs decline.
- Progress in remediating material weaknesses and establishing effective SEC reporting controls.
- Manufacturing outsourcing readiness, supplier concentration and the company’s ability to reduce ZOOZTER-100 production costs.
- Outstanding warrants, options, earnout rights and post-merger share counts, including potential dilution from the business combination.
- Royalty, repayment and know-how restrictions associated with IIA, BIRD, NYPA and other government-funded programs.
- Ongoing effects of Israel-related security conditions, reserve-duty call-ups, shipping disruptions and foreign-exchange movements.