20-F: Brenmiller Energy Files 20-F, Details Thermal Energy Storage Developments and Financial Strategy

Sentiment:

Annual Results 18 March 2024 4:29 PM

Brenmiller Energy's 20-F filing highlights their focus on thermal energy storage, recent projects, and financial strategies amidst going concern uncertainties.

Capital raiseThe company expects that it will need to raise substantial additional funding, which may not be available on acceptable terms, or at all.The company is evaluating alternative means of financing, including the extension of the the availability date of the second tranche of the EIB credit facility.The company may seek additional capital if market conditions are favorable or if it has specific strategic considerations.

Worse than expectedThe company's management has concluded that conditions raise substantial doubt about its ability to continue as a going concern.The company has incurred operating losses and expects to need substantial additional funding.The company's cash and cash equivalents have decreased from $6,508 thousand as of December 31, 2022 to $3,183 thousand as of December 31, 2023.

Summary

Brenmiller Energy, an Israeli corporation, develops, produces, markets, and sells thermal energy storage (TES) systems based on its patented bGen technology.
The company aims to decarbonize the industrial sector and integrate renewable energy sources.
Brenmiller's bGen technology stores heat using crushed rocks at temperatures up to 1400 degrees Fahrenheit.
The company's business strategy involves direct equipment sales and an Energy as a Service (EaaS) model.
Brenmiller faces risks related to its financial condition, including substantial doubt about its ability to continue as a going concern.
The company has incurred operating losses and expects to need substantial additional funding.
Brenmiller is also subject to risks related to its intellectual property, volatility in commodity prices, and political instability in Israel.
The company transitioned from IFRS to U.S. GAAP in December 2023.
As of December 31, 2023, Brenmiller's cash and cash equivalents were $3,183 thousand.
The company is pursuing commercial projects and pilot projects in various locations, including Israel, Italy, and Brazil.
Brenmiller is exploring potential joint ventures and collaborations to expand its market reach.
The company's management has concluded that conditions raise substantial doubt about its ability to continue as a going concern.
The company is required to pay royalties on government grants and other agreements, which may impact its profitability.
The company is subject to various risks related to its business, financial condition, intellectual property, and operations in Israel.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While there are positive aspects such as the company's technology and market opportunities, the financial risks and going concern uncertainty weigh heavily on the overall outlook.

Positives

The bGen technology uses environmentally friendly materials and low-cost, natural resources.
The TES systems are passive systems that require minimal operations and maintenance.
The TES systems are built using modules, allowing for flexible capacity scaling.
The TES systems are compatible with thermal and electric sources for charging.
The company is pursuing commercial projects and pilot projects in various locations.
Brenmiller is exploring potential joint ventures and collaborations to expand its market reach.

Negatives

The company's management has concluded that conditions raise substantial doubt about its ability to continue as a going concern.
Brenmiller has incurred operating losses and expects to need substantial additional funding.
The company is required to pay royalties on government grants and other agreements, which may impact its profitability.
The company is subject to various risks related to its business, financial condition, intellectual property, and operations in Israel.

Risks

The company is highly dependent on the successful development, marketing, and sale of its proprietary technology.
Brenmiller is exposed to risk relating to volatility in the commodity price of fossil fuels and electricity prices.
The company is dependent upon third-party manufacturers and suppliers, making it vulnerable to supply shortages and problems.
Brenmiller needs to obtain and uphold permits, certifications, and authorization in various jurisdictions.
The company's management has concluded that there are conditions that raise substantial doubt about its ability to continue as a going concern.
Brenmiller may be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes.
Political, economic, and military instability in Israel may adversely affect the company's results of operations.

Future Outlook

The company plans to continue commercializing its products and services, raising capital through private placements, public offerings, and government grants. Management is also planning to find additional cash sources through additional equity and/or debt financing.

Industry Context

The document positions Brenmiller Energy within the thermal energy storage market, highlighting the increasing importance of alternative energies and the need for energy storage solutions to support renewable energy integration.

Comparison to Industry Standards

The document mentions competitors in the TES space such as Energy Nest, KraftBlock, Kyoto, and Rondo.
It states that Brenmiller believes it has several advantages over other technologies due to continuous energy supply, modularity, lower pricing, and a mature stage of Technology Readiness Level (TRL).

Related Party Transactions

Mr. Avraham Brenmiller, our Chief Executive Officer, Chairman of the board of directors and our largest shareholder, is the father of Doron Brenmiller, our Chief Business Officer and director, and Nir Brenmiller, our Chief Operating Officer and director.
On November 29, 2022, we entered into a definitive securities purchase agreements with certain investors, part of whom are existing shareholders, including Mr. Avraham Brenmiller, our controlling shareholder, Chief Executive Officer and the Chairman of our board of directors in connection with the 2022 Private Placement.
As of December 31, 2022, Mr. Avraham Brenmiller had an unpaid salary balance (in respect of prior years) in the amount of NIS 790 thousand (approximately $225 thousand).
We also hold a 45% economic interest in Rani Zim Sustainable Energy Ltd., an Israeli company incorporated on January 4, 2022, with the intention to engage in promoting and marketing energy solutions in Israel which partially will be based on our energy storage solution, which is coupled with a 45% voting and control interest and the right to nominate two out of the five total directors.

Stakeholder Impact

Shareholders face risks related to the company's financial condition and potential dilution from future capital raises.
Employees may be affected by potential cost-cutting measures or changes in the company's operations.
Customers may be impacted by the company's ability to deliver and support its products and services.
Suppliers and creditors face risks related to the company's ability to meet its financial obligations.

Next Steps

Continue commercialization of products and services.
Raise capital through private placements, public offerings, and government grants.
Find additional cash sources through additional equity and/or debt financing.
Ramp-up the production line and increase its production capacity in order to reach its full production capacity target of 4 GWh annually.

Key Dates

Date	Description
2012	Brenmiller Energy Consulting Ltd. was incorporated in Israel.
July 2, 2013	Filed a name change certificate to change name to Brenmiller Energy Ltd.
August 2017	Became a public company in Israel and Ordinary Shares were listed for trade on the TASE.
January 11, 2018	Entered into a pilot and cooperation agreement with Power Authority of the State of New York (NYPA).
February 1, 2018	Cooperation and Project Funding Agreement with NYPA and the BIRD Foundation became effective.
June 2019	Received a Notice of Allowance from the European Patent Office stating that application for a patent in Europe had been approved.
June 5, 2019	Registered the patent in the following countries: Belgium, Switzerland, Germany, Denmark, Spain, France, Great Britain, Italy, Luxembourg and Norway.
June 2019	Nava Swersky Sofer has served on our board of directors as an external director.
December 27, 2019	The granting of the patent, which is called: Integrated Thermal Storage, Heat Exchanger, and Steam Generation was done.
April 21, 2020	Entered into a supply agreement with Enel Produzione S.p.A.
June 1, 2020	Finished installing the project and handed over control to the Israeli Ministry of Defense.
January 11, 2020	Entered into an agreement with Fortlev pursuant to which we granted Fortlev an exclusive license for a period of 25 years.
April 5, 2023	Announced that we received approval from the Israeli Ministry of Environmental Protection for a NIS 2.2 million (approximately $595,000) grant to build and install our bGen system at a beverage plant owned and operated by Tempo.
March 31, 2021	Signed a credit facility agreement with EIB.
May 25, 2022	Ordinary Shares were listed and began trading on Nasdaq.
August 25, 2022	Chen Franco-Yehuda has served on our board of directors as an external director.
September 2022	Signed a Memorandum of Understanding with Green Enesys Deutschland GmbH, or Green Enesys, and Viridi Energias Renovables Espana, S.L., or Viridi RE, two European based developers of green energy projects, to perform engineering studies for incorporating our bGen TES for Green Enesys and Viridi REs proposed green hydrogen production facilities throughout Spain.
November 29, 2022	Entered into definitive securities purchase agreements with certain investors, part of whom are existing shareholders, including Mr. Avraham Brenmiller, our controlling shareholder, Chief Executive Officer and the Chairman of our board of directors, for the issuance in a private placement of units consisting of one Ordinary Share and one non-registrable and non-tradeable warrant.
April 27, 2023	Received a notice of termination from Philip Morris Romania with respect to the Local Service Agreement.
May 2, 2023	Inaugurated our TES gigafactory in Dimona, Israel.
June 9, 2023	Entered into a Sales Agreement with A.G.P./Alliance Global Partners, or the Sales Agent, pursuant to which we may offer and sell, from time to time, to or through the Sales Agent as agent or principal Ordinary Shares in an at-the-market offering.
June 12, 2023	Entered into a definitive securities purchase agreement with Snowdrop Holding SA for the issuance and sale in a private placement offering of 248,778 units.
July 17, 2023	The our board of directors approved the liquidation of Brenmiller Energy (Rotem) Ltd. and the sale of the hydroelectric microturbine from Brenmiller (Rotem) Ltd. to Brenmiller Energy Ltd. in accordance with its fair value as shown in its consolidated financial statements.
August 9, 2023	Unveiled the next generation of our market-leading, high-performance TES system, the bGen ZERO as part of our strategic focus to deliver cost-efficient, zero-carbon emissions heat.
August 23, 2023	Signed a term sheet with European renewable energy developers Green Enesys and Viridi to establish a joint venture in Spain.
September 11, 2023	Delisted our ordinary shares from trading on the TASE.
October 11, 2023	Signed a contract with Tempo to replace the heavy fuel oil boilers at its plant in Netanya, Israel, with our bGen ZERO TES system.
December 10, 2023	Signed a non-binding memorandum of understanding with SolWinHy Cdiz S.L, a special purpose company jointly owned by Green Enesys Group and Viridi RE, to develop new build hydrogen and e-methanol projects and that our bGen was selected as the preferred solution for the SolWinHy Cdiz S.L project in Arcos de la Frontera, Spain, or the Cadiz Project.
December 31, 2023	Transitioned from IFRS to U.S. GAAP.
January 11, 2024	Signed a non-binding memorandum of understanding with RSP Systems outlining the terms of a distribution agreement for RSP Systems to be the exclusive distributor of our bGen units in the northeast region of the United States.
January 22, 2024	Entered into a securities purchase agreement with a U.S. based institutional investor for the sale of 240,000 Ordinary Shares, warrants to purchase up to 888,890 Ordinary Shares, and pre-funded warrants to purchase up to 648,890 Ordinary Shares, at a price of $4.50 per Ordinary Share and accompanying warrant, less $0.0001 per pre-funded warrant, for aggregate gross proceeds of approximately $4.0 million before deducting placement agent fees and other offering expenses, or the January 2024 Offering.
January 25, 2024	The offering closed.
January 29, 2024	Signed an agreement with the Wolfson Medical Center (Hospital) in the city of Holon, Israel for the construction of a TES System pursuant to which the Company will build and install on the Hospital premises a TES System that will provide industrial steam and other services to the Hospital.
February 6, 2024	A provisional application for a new patent has been submitted to the United State Patent office. The application name is Dual HTF high temperature Sensible Energy Storage. Application number 63/550,061.
February 2024	The project was completed in February 2024 and serves as a demonstration facility for our technology for a minimum period of five years and is expected to assist us in optimizing the operation and performance of our technology and in our marketing efforts in the United States and Canada.

Keywords

thermal energy storage, bGen technology, renewable energy, energy storage, decarbonization, industrial heat, pilot projects, financial condition, risk factors, royalties

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