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Foresight Announces Third Quarter 2017 Financial Results

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Foresight Autonomous Holdings Ltd., a leading developer of Advanced
Driver Assistance Systems (NASDAQ and TASE: FRSX)
, today reported
financial results for the third quarter ended September 30, 2017.
Foresight ended the third quarter of 2017 with $21.5 million in cash and
short-term deposits, with GAAP net loss for the nine months ended
September 30, 2017 of $22.4 million and with non-GAAP net loss of $4.3
million.

Commenting on the results, Foresight's Chief Executive Officer Haim
Siboni said, "This quarter, we completed two additional pilot tests with
leading Chinese car manufacturers where we successfully demonstrated our
potentially life-saving technology. We plan to broaden our outreach to
additional manufacturers, and to sign commercial agreements, in our
efforts to expand globally. Furthermore, our successful system
demonstration and anticipated commercial agreement with Uniti Sweden
proves that our competitive technology aligns with our long-term
corporate development strategy to become a leader in the automated
transportation industry."

Third Quarter 2017 Financial Results

  • Research and development (R&D) expenses for the three months ended
    September 30, 2017 were $1,144,000, compared to $277,000 in the three
    months ended September 30, 2016. General and administrative (G&A)
    expenses for the three months ended September 30, 2017 were $684,000,
    compared to $498,000 in the three months ended September 30, 2016.
    These increases are attributed mainly to employee recruitment and are
    comprised primarily of payroll and related expenses, stock-based
    compensation expenses and subcontracted services expenses.
  • GAAP net profit for the three months ended September 30, 2017 was
    $4,466,000 compared to a GAAP net profit of $523,000 in the three
    months ended September 30, 2016. The increase is attributed mainly to
    the revaluation of derivative warrant liability.

    Non-GAAP
    net loss for the three months ended September 30, 2017 was $2,086,000
    compared to a non-GAAP net loss of $879,000 in the three months ended
    September 30, 2016.

Nine Months Ended September 30, 2017 Financial
Results

  • R&D expenses for the nine months ended September 30, 2017 were
    $2,419,000, compared to $596,000 in the nine months ended September
    30, 2016. The increase is attributed to acceleration in R&D efforts
    and employees' recruitment, and is comprised primarily of payroll and
    related expenses, stock-based compensation expenses and subcontracted
    services expenses.
  • G&A expenses for the nine months ended September 30, 2017 were
    $3,021,000, compared to $1,982,000 in the nine months ended September
    30, 2016. The increase is attributed primarily to stock-based
    compensation expenses and to expenses associated with listing on
    NASDAQ.
  • GAAP net loss for the nine months ended September 30, 2017 was
    $22,436,000 compared to a GAAP net loss of $894,000 in the nine months
    ended September 30, 2016. The increase is attributed mainly to the
    increase in R&D expenses, the increase in stock-based compensation
    expenses, and the increase in revaluation of derivative warrant
    liability.

    Non-GAAP net loss for the nine months ended
    September 30, 2017 was $4,299,000 compared to a non-GAAP net loss of
    $2,323,000 in the nine months ended September 30, 2016.
  Nine months ended
September 30,
  Three months ended
September 30,
(thousands of U.S. dollars) 2017   2016   2017   2016
GAAP Results    
Net (loss) profit $(22,436) $(894) $4,466 $523
Non-GAAP Results
Net loss $(4,299) $(2,323) $(2,086) $(879)

A reconciliation between GAAP operating results and non-GAAP operating
results is provided in the following financial statements that are part
of this release. Non-GAAP results exclude stock-based compensation
expenses and revaluation of derivative warrant liability.

Balance Sheet Highlights

  • Cash and short-term deposits totaled $21.5 million as of September 30,
    2017, compared to $3.8 million on December 31, 2016. The increase
    compared to December 31, 2016 is mainly due to the proceeds received
    from private placements that occurred in the first half of 2017,
    totaling $11.6 million gross ($10.7 net proceeds), from warrants
    exercised by shareholders equal to $10.7 million, less the cash used
    during the period.
  • GAAP shareholders' equity totaled $15.6 million as of September 30,
    2017, compared to $4.7 million as of December 31, 2016.

    Non-GAAP
    shareholders' equity totaled $21.9 million as of September 30, 2017,
    compared to $4.8 million as of December 31, 2016.
  As of   As of
September 30, December 31,
(thousands of U.S. dollars) 2017   2016
GAAP Results
Shareholders' equity $ 15,598 $ 4,669
Non-GAAP Results
Shareholders' equity $ 21,890 $ 4,800

A reconciliation between GAAP shareholders' equity results and non-GAAP
shareholders' equity results is provided in the following financial
statements that are part of this release. Non-GAAP results exclude
derivative warrant liability.

Third Quarter Corporate Highlights:

  • Completed Pilot Agreement with Two Additional Leading Chinese Car
    Manufacturers
    : The pilot tests of the Eyes-On system demonstrated
    the performance of Foresight's accident prevention system. Based on
    the results of the pilot tests, the parties have agreed to examine
    possible directions for commercial cooperation.
  • Completed a Successful System Demonstration with Uniti Sweden:
    Foresight and Uniti intend to negotiate a commercial agreement whereby
    Foresight's multispectral all-weather conditions systems will be
    incorporated into Uniti's electric vehicles as an ADAS, as well as the
    leading sensor system for the future autonomous capabilities of
    Uniti's electric cars.
  • Demonstrated Proof of Concept of its Multispectral Advanced Driver
    Assistance System:
    Foresight completed proof of concept of its
    multispectral road traffic accident prevention system, which features
    both thermal and visible light cameras. Following the successful
    results, Foresight decided to complete development of a real-time
    demonstration.
  • Ariel Dor Appointed as Head of Global Mergers and Acquisitions:
    As Foresight focuses on global operations and expanding its footprint,
    Mr. Dor will be concentrating on building new relationships with
    international partners to promote business growth. Mr. Dor previously
    served as Foresight's Chief Operating Officer.

Use of Non-GAAP Financial Results

In addition to disclosing financial results calculated in accordance
with United States generally accepted accounting principles (GAAP), the
company's earnings release contains non-GAAP financial measures of net
loss for the period that excludes the effect of stock-based compensation
expenses and revaluation of derivative warrant liability, and non-GAAP
financial measures of shareholders' equity that excludes the effect of
derivative warrant liability. The company's management believes the
non-GAAP financial information provided in this release is useful to
investors' understanding and assessment of the company's on-going
operations. Management also uses both GAAP and non-GAAP information in
evaluating and operating business internally and as such deemed it
important to provide all this information to investors. The non-GAAP
financial measures disclosed by the company should not be considered in
isolation or as a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations to those financial
statements should be carefully evaluated. Reconciliations between GAAP
measures and non-GAAP measures are provided later in this press release.

About Foresight

Foresight (NASDAQ and TASE: FRSX), founded in 2015, is a
technology company engaged in the design, development and
commercialization of Advanced Driver Assistance Systems (ADAS) based on
3D video analysis, advanced algorithms for image processing and
artificial intelligence. The company, through its wholly owned
subsidiary, develops advanced systems for accident prevention, which are
designed to provide real-time information about the vehicle's
surroundings while in motion. The systems are designed to alert drivers
to threats that might cause accidents, resulting from traffic
violations, driver fatigue or lack of concentration, etc., and to enable
highly accurate and reliable threat detection while ensuring the lowest
rates of false alerts. The company estimates that its systems will
revolutionize ADAS by providing an automotive grade, cost-effective
platform, and advanced technology.

Forward Looking Statements

This press release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 and other Federal securities laws. Words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates" and similar expressions or variations of such words
are intended to identify forward-looking statements. For example, when
Foresight describes its plans to broaden its outreach to additional
manufacturers, and to sign commercial agreements, in its efforts to
expand globally, examining possible directions for commercial
cooperation, that its products will be integrated into Uniti's vehicles,
that Mr. Dor will be concentrating on building new relationships with
international partners to promote business growth, and that it estimates
that its systems will revolutionize ADAS, it is using forward-looking
statements. Because such statements deal with future events and are
based on Foresight's current expectations, they are subject to various
risks and uncertainties and actual results, performance or achievements
of Foresight could differ materially from those described in or implied
by the statements in this press release.

The forward-looking statements contained or implied in this press
release are subject to other risks and uncertainties, including those
discussed under the heading "Risk Factors" in Foresight's registration
statement on Form 20-F filed with the Securities and Exchange Commission
("SEC") on June 1, 2017, and in any subsequent filings with the SEC.
Except as otherwise required by law, Foresight undertakes no obligation
to publicly release any revisions to these forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

FORESIGHT AUTONOMOUS HOLDINGS LTD.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

  As of
September 30, 2017
    As of
December 31, 2016

ASSETS

 
 
Current assets:
Cash and cash equivalents $ 10,182 $ 3,364
Short term deposits 11,342 390
Marketable equity securities 20 -
Other receivables   369   104
Total current assets 21,913 3,858
 
Non-current assets:
Marketable equity securities - 18
Investment in affiliate company 522 1,248
Other investments 66 66
Fixed assets, net   186   67
774 1,399
 
Total assets $ 22,687 $ 5,257
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Current liabilities:
Other accounts payable $ 797 $ 457
Total current liabilities 797 457
 
Derivative warrant liability 6,292 131
Total liabilities 7,089 588
 
Shareholders' equity:
 
Common stock of NIS 0 par value; - -
Additional paid-in capital 41,389 8,024
Accumulated deficit   (25,791)   (3,355)
Total stockholders' equity   15,598   4,669
 
Total liabilities and stockholders' equity $ 22,687 $ 5,257



SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP SHAREHOLDRES' EQUITY
U.S. dollars in thousands

  As of
September 30, 2017
      As of
December 31, 2016
GAAP Shareholders' equity 15,598   4,669
Derivative warrant liability 6,292 131
Non-GAAP Shareholders' equity 21,890 4,800



FORESIGHT AUTONOMOUS HOLDINGS LTD.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS

U.S. dollars in thousands

  Nine months ended
September 30,
  Three months ended
September 30,
2017   2016   2017   2016
Research and development expenses, net (2,419)   (596)   (1,144)   (277)
 
Marketing and sales (776) (160) (263) (55)
 
General and administrative expenses (3,021) (1,982) (684) (498)
 
Equity in net loss of an affiliated company (726)   -   (343)   -
 
Operating loss (6,942) (2,738) (2,434) (830)
 
Revaluation of derivative warrant liability (expenses) income

(16,074)

1,753

6,976

1,315

 
Financing income (expenses), net 580   91   (76)   38
 
Net (loss) profit (22,436)   (894)   4,466   523



FORESIGHT AUTONOMOUS HOLDINGS LTD.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW

U.S. dollars in thousands

  Nine months ended
September 30,
  Three months ended
September 30,
2017   2016   2017   2016
     

Net cash used in operating activities

Profit(Loss) for the Period (22,436) (894) 4,466 523
 
Adjustments to reconcile profit (loss) to net cash used in operating
activities:

18,642

(771)

(5,930)

(966)

 
Net cash used in operating activities (3,794)   (1,665)   (1,464)   (443)
 
 

Cash Flows from Investing Activities

Purchase of marketable securities - (5) - -
Purchase of short term deposits (10,952) - (7,323) -
Investment in affiliate company - (600) - (600)
Purchase of fixed assets (149)   (64)   (69)   (55)
 
Net cash used in investing activities (11,101)   (669)   (7,392)   (655)
 
 

Cash flows from Financing Activities:

Issuance of ordinary shares and warrants, net of issuance expenses

10,745

5,052

-

83

Exercise of warrants and options, net of issuance expenses

10,646

-

5,050

-

Receipts on account of shares and warrants - 762 - 762
Acquisition of a subsidiary in connection with reverse
recapitalization (See below)

-

 

1,245

 

-

 

-

 
Net cash provided by financing activities 21,391   7,059   5,050   845
 
 
Effect of exchange rate changes on cash and cash equivalents 322   80   (294)   16
             
Increase (decrease) in cash and cash equivalents 6,818 4,805 (4,100) (237)
Cash and cash equivalents at the beginning of the period

3,364

-

14,282

5,042

             
Cash and cash equivalents at the end of the period

10,182

 

4,805

 

10,182

 

4,805



FORESIGHT AUTONOMOUS HOLDINGS LTD.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW

U.S. dollars in thousands

Adjustments to reconcile profit (loss) to
net cash used in operating activities:

  Nine months ended
September 30,
  Three months ended
September 30,
2017   2016   2017   2016
Share-based payment granted to service providers 2,063   324   424   111
Depreciation 30 5 15 3
Revaluation of warrants 16,074 (1,753) (6,976) (1,315)
Equity in loss of an affiliated company 726 - 343 -
Revaluation of securities (3) 12 3 8
Realized loss of securities classified as available-for-sale, net

-

18

-

39

Issuance expenses presented in financing activities - 154 - -
exchange rate changes on cash and cash equivalents (322) (80) 294 (16)
 
Changes in assets and liabilities:
Decrease (increase) in other receivables (266) (61) (89) 136
Decrease in other current assets - 429 - -
Increase in other accounts payable 340 181 56 68
             
Adjustments to reconcile profit (loss) to net cash used in
operating activities

18,642

 

(771)

 

(5,930)

 

(966)

Supplemental information for Cash Flow:

Assets (liabilities) acquired:

  Nine months ended
September 30,
  Three months ended
September 30,
2017   2016   2017   2016
Current assets and liabilities excluding cash and cash equivalents

-

  (5)  

-

 

-

Marketable equity securities - (49) - -
Fixed assets - (5) - -
Other current assets - (429) - -
Reverse recapitalization effect on equity -   1,733   -   -
Cash acquired in connection reverse recapitalization

-

 

1,245

 

-

 

-



FORESIGHT AUTONOMOUS HOLDINGS LTD.

SUPPLEMENTAL RECONCILIATION OF GAAP TO NON-GAAP
RESULTS

U.S. dollars in thousands

 

  Nine months ended
September 30
  Three months ended
September 30,
2017   2016   2017   2016
GAAP operating loss (6,942)   (2,738)   (2,434)   (830)
Stock-based compensation in research and development

345

-

162

-

Stock-based compensation in sales and marketing 354 - 94 -
Stock-based compensation in general and administrative

1,364

 

324

 

168

 

111

Non-GAAP operating loss (4,879)   (2,414)   (2,010)   (719)
 
GAAP Revaluation of derivative warrant liability (expenses) income

(16,074)

1,753

6,976

1,315

Revaluation of derivative warrant liability 16,074   (1,753)   (6,976)   (1,315)
Non-GAAP Revaluation of derivative warrant liability (expenses)
income

-

 

-

 

-

 

-

 
GAAP net profit (loss) (22,436) (894) 4,466 523
Stock-based compensation expenses 2,063 324 424 111
Revaluation of derivative warrant liability expenses/ income

16,074

 

(1,753)

 

(6,976)

 

(1,513)

Non-GAAP net loss (4,299)   (2,323)   (2,086)   (879)

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