Business Context and Reporting Period
This Form 6-K filing by Foresight Autonomous Holdings Ltd. is dated January 22, 2019. The report serves as a clarification regarding a Proxy Statement for an Extraordinary General Meeting of Shareholders scheduled for January 28, 2019. The clarifications were issued in response to comments from Entropy Financial Research Services Ltd. concerning specific agenda items.
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on corporate governance and contractual terms.
- Development Services Cap: The monthly consideration payable to the controlling shareholder, Magna B.S.P Ltd., is capped at NIS 235,000 plus VAT (increased from NIS 200,000 plus VAT).
- Profit Margin: Services provided by Magna are at cost with no profit margin.
- Equity Dilution: The maximum aggregate dilution for options awarded to officers and employees shall not exceed 15% of the outstanding share capital on a fully diluted basis.
Material Changes
The filing details specific changes to proposed agreements and policies compared to previous understandings or the current development agreement:
- Service Scope Increase: The monthly cap for Magna's services increased due to an expected rise in employee work time devoted to the Company from 50% to 75%.
- Exculpation Restrictions: The Company clarified that it will not exculpate CEO Haim Siboni or VP Human Resources Sivan Siboni Scherf regarding decisions where the controlling shareholder or any office holder has a personal interest. The Company intends to amend its articles of association to apply this restriction to all directors and officers.
Outlook, Risks, and Management Commentary
Management Commentary: Management emphasizes that the Company is dependent on Magna for the development of its core technology. Magna possesses unique knowledge and expertise, and replacing them would require a lengthy recruitment and training process.
Risks and Contingencies:
- Operational Dependency: The Company faces significant risk if Magna's engagement is not extended, as the costs of recruitment and training to replace Magna would be substantially higher than the proposed service costs.
- Related Party Transactions: The filing highlights the need for strict oversight of transactions involving the controlling shareholder, including quarterly audits by an independent internal auditor and review by the Audit and Compensation Committee.
Investor Verification Checklist
- Verify the outcome of the Extraordinary General Meeting scheduled for January 28, 2019, regarding the approval of the Amended Compensation Policy and CEO extension.
- Confirm the implementation of the new exculpation restrictions for directors and officers in the amended articles of association.
- Review the quarterly audit reports regarding the "at cost" nature of payments to Magna B.S.P Ltd.
- Assess the Company's contingency plans for technology development in the event the agreement with Magna is not renewed.