20-F: Fusion Fuel Green PLC Files 2023 Annual Report on Form 20-F

Fusion Fuel Green PLC reports its financial results and operational activities for the fiscal year ended December 31, 2023, in its annual report on Form 20-F.

Summary

• Fusion Fuel Green PLC filed its annual report on Form 20-F for the year ended December 31, 2023.
• As of December 31, 2023, the company had 17,371,968 Class A Ordinary Shares issued and outstanding.
• The company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS).
• The company is exposed to risks including limited operating history, the emerging nature of the green hydrogen industry, competition, and reliance on a few customers.
• The company's future capital requirements depend on research, development, sales, and marketing activities.
• The company's sales cycle is typically 12 to 24 months.
• The company faces competition from other electric power providers and hydrogen solutions.
• The company depends on a few customers for the majority of its revenues.
• The company's future success depends on its ability to increase production capacity.
• The company's products create flammable gases, posing inherent risks.
• The company relies on a limited number of third-party suppliers for raw materials and components.
• The company's business plan leverages Portugal's Hydrogen Strategy and investment in a green hydrogen economy.
• The company is subject to environmental laws and regulations.
• The company may become subject to product liability claims.
• The company's failure to protect its intellectual property rights may undermine its competitive position.
• The company is required to maintain effective internal control over financial reporting.
• The company's financial condition and operating results may fluctuate on a quarterly basis.
• The company's ability to generate revenues is substantially dependent upon it entering into technology sale agreements with third parties.
• The company's activities are subject to development risks, operational hazards, regulatory approvals and other risks which may not be fully covered by insurance.
• The company may experience significant delays in the design, manufacture, launch, and financing of its technology.
• The company is a holding company and is dependent upon distributions from its subsidiaries to pay taxes and cover its corporate and other overhead expenses.
• The company's growth strategy is aggressive and includes operating in more territories.
• The company is subject to complex U.S. and foreign laws and regulations.
• The company is subject to an increasing sustainability focus.
• The company's business and territories that it operates in are subject to changes of regulations, laws and policies.
• A transfer of Class A Ordinary Shares or Warrants, other than one effected by means of the transfer of book-entry interests in the Depositary Trust Company, may be subject to Irish stamp duty.
• An investment in the Class A Ordinary Shares may result in uncertain U.S. federal income tax consequences.
• In certain limited circumstances, dividends paid by the company may be subject to Irish dividend withholding tax.
• Class A Ordinary Shares or Warrants received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.
• Attempted takeovers of the company will be subject to the Irish Takeover Rules and will be under the supervisory jurisdiction of the Irish Takeover Panel.
• Investors may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. federal courts may be limited, because the company is formed under Irish law.
• The company may be classified as a passive foreign investment company for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. investors in the company's securities.
• Resales of the company's Class A Ordinary Shares or Warrants, or the perception that such resales might occur, may cause the market price of the Class A Ordinary Shares or Warrants to drop significantly, even if the company's business is doing well.
• A substantial number of the company's Class A Ordinary Shares may be issued upon the exercise of Warrants and options which could adversely affect the price of the company's Class A Ordinary Shares.
• The company may issue additional Class A Ordinary Shares or other equity securities without seeking shareholder approval, which would dilute your ownership interests and may depress the market price of the Class A Ordinary Shares.
• If the company's Class A Ordinary Shares or Warrants are de-listed from Nasdaq, the company could face significant material adverse consequences.
• The trading price of the company's Class A Ordinary Shares or Warrants may be volatile, and holders of the Class A Ordinary Shares or Warrants could incur substantial losses.
• Because the company currently does not have plans to pay cash dividends on the Class A Ordinary Shares, shareholders may not receive any return on investment unless they sell your Class A Ordinary Shares for a price greater than that they you paid.
• As a foreign private issuer, the company is exempt from a number of rules under the Exchange Act, the company is permitted to file less information with the SEC than domestic companies, and the company is permitted to follow home country practice in lieu of the listing requirements of Nasdaq, subject to certain exceptions.
• The company incurs significant costs and devote substantial management time as a result of being subject to reporting requirements in the United States, which may adversely affect the operating results of the company in the future.
• The company's business may be materially adversely affected by current global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company recorded its first revenues and secured significant grant funding, it also reported substantial losses, impairments, and material weaknesses in internal control. The company's future success depends on its ability to secure additional funding and execute its business plan.

Positives

• The company recorded its first revenues in 2023, totaling 4.1 million.
• The company has been contracted to provide its electrolyzer technology for five green hydrogen projects in Iberia.
• The company has a 650 million, 630 MW project in Sines, Portugal, approved under the IPCEI Hy2Infra program.
• The company received approval for a 1 million grant from the European Commission's Horizon Europe Programme.
• The company received provisional approval from the Portuguese government for an estimated 5 million in grant funding to support the development of a 25 MW green hydrogen project located in Aveiro, Portugal.

Negatives

• The company has incurred operating losses since inception and had an accumulated deficit of 222.8 million as of December 31, 2023.
• The company recorded a net increase of 13.9 million to the inventory impairment charge and an impairment of 3.3 million relating to one of its development projects during the fourth quarter of 2023.
• The company's disclosure controls and procedures were not effective as of December 31, 2023, due to material weaknesses in internal control over financial reporting.

Risks

• The company has a limited operating history.
• The green hydrogen production industry is an emerging market.
• The company faces significant competition.
• The company depends on a few customers for the majority of its revenues.
• The company's future success depends on its ability to increase production capacity.
• The company's products create flammable gases, posing inherent risks.
• The company relies on a limited number of third-party suppliers for raw materials and components.
• The company's business plan leverages Portugal's Hydrogen Strategy and investment in a green hydrogen economy.
• The company is subject to environmental laws and regulations.
• The company may become subject to product liability claims.
• The company's failure to protect its intellectual property rights may undermine its competitive position.
• The company is required to maintain effective internal control over financial reporting.
• The company's financial condition and operating results may fluctuate on a quarterly basis.
• The company's ability to generate revenues is substantially dependent upon it entering into technology sale agreements with third parties.
• The company's activities are subject to development risks, operational hazards, regulatory approvals and other risks which may not be fully covered by insurance.
• The company may experience significant delays in the design, manufacture, launch, and financing of its technology.
• The company is a holding company and is dependent upon distributions from its subsidiaries to pay taxes and cover its corporate and other overhead expenses.
• The company's growth strategy is aggressive and includes operating in more territories.
• The company is subject to complex U.S. and foreign laws and regulations.
• The company is subject to an increasing sustainability focus.
• The company's business and territories that it operates in are subject to changes of regulations, laws and policies.
• A transfer of Class A Ordinary Shares or Warrants, other than one effected by means of the transfer of book-entry interests in the Depositary Trust Company, may be subject to Irish stamp duty.
• An investment in the Class A Ordinary Shares may result in uncertain U.S. federal income tax consequences.
• In certain limited circumstances, dividends paid by the company may be subject to Irish dividend withholding tax.
• Class A Ordinary Shares or Warrants received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.
• Attempted takeovers of the company will be subject to the Irish Takeover Rules and will be under the supervisory jurisdiction of the Irish Takeover Panel.
• Investors may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. federal courts may be limited, because the company is formed under Irish law.
• The company may be classified as a passive foreign investment company for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. investors in the company's securities.
• Resales of the company's Class A Ordinary Shares or Warrants, or the perception that such resales might occur, may cause the market price of the Class A Ordinary Shares or Warrants to drop significantly, even if the company's business is doing well.
• A substantial number of the company's Class A Ordinary Shares may be issued upon the exercise of Warrants and options which could adversely affect the price of the company's Class A Ordinary Shares.
• The company may issue additional Class A Ordinary Shares or other equity securities without seeking shareholder approval, which would dilute your ownership interests and may depress the market price of the Class A Ordinary Shares.
• If the company's Class A Ordinary Shares or Warrants are de-listed from Nasdaq, the company could face significant material adverse consequences.
• The trading price of the company's Class A Ordinary Shares or Warrants may be volatile, and holders of the Class A Ordinary Shares or Warrants could incur substantial losses.
• Because the company currently does not have plans to pay cash dividends on the Class A Ordinary Shares, shareholders may not receive any return on investment unless they sell your Class A Ordinary Shares for a price greater than that they you paid.
• As a foreign private issuer, the company is exempt from a number of rules under the Exchange Act, the company is permitted to file less information with the SEC than domestic companies, and the company is permitted to follow home country practice in lieu of the listing requirements of Nasdaq, subject to certain exceptions.
• The company incurs significant costs and devote substantial management time as a result of being subject to reporting requirements in the United States, which may adversely affect the operating results of the company in the future.
• The company's business may be materially adversely affected by current global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict.

Future Outlook

The company expects both its capital and operating expenditures to significantly increase in connection with its ongoing activities. The company expects to seek additional funding in order to continue to fund its operations through the end of 2024 and beyond.

Industry Context

The company operates in the green hydrogen industry, which is an emerging market. The company faces competition from other electric power providers and hydrogen solutions. The company believes that the demand of its hydrogen energy technologies is impacted by Portugal's and Spain's Hydrogen Strategy and other strategic plans for hydrogen production that are emerging in Europe and around the world.

Comparison to Industry Standards

• The company's HEVO-based technologies compete with centralized electrolyzer technology used by companies like Hydrogenics, ITM Power, Plug Power, NEL Hydrogen, Giner and McPhy.
• The company believes its technology is innovative, disruptive, and original.
• The company believes competition in this industry will be driven by the final price of Green Hydrogen per kilogram as an output.
• The company believes its solution produces Green Hydrogen at cost levels that are highly competitive to Brown Hydrogen and significantly less expensive than other producers of Green Hydrogen for projects under 10 MW.

Corporate Governance

Related Party Transactions

• The company has entered into several agreements and transactions with MagP Inovao, S.A. (MagP) regarding the provision of services and supply and assembly of Trackers that will be used in the company's Hydrogen Generators.
• On January 1, 2021, the Group entered into a sub-lease agreement with Negordy for space of 4,156 square meters of office, logistical, and industrial activities.
• On September 28, 2023, Key Family Holdings Investimentos e Consultoria de Gesto, Lda. (KFH) made a short-term bridge loan to Fusion Fuel Portugal of 260,000 on a non-interest-bearing basis for use as working capital.
• On October 30, 2023, KFH made a short-term bridge loan to Fusion Fuel Portugal of 245,000 on a non-interest-bearing basis for use as working capital.
• During 2023, Fusion Fuel Portugal paid certain tax liabilities relating to taxes due in Portugal on behalf of Joo Wahnon.

Stakeholder Impact

• Shareholders are exposed to risks including limited operating history, the emerging nature of the green hydrogen industry, competition, and reliance on a few customers.
• Shareholders may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. federal courts may be limited, because the company is formed under Irish law.
• Shareholders may be subject to Irish dividend withholding tax or capital acquisitions tax.
• Shareholders may not receive any return on investment unless they sell their Class A Ordinary Shares for a price greater than that which they paid.
• Employees are subject to the company's Code of Ethics and may be affected by changes in compensation policies.
• Customers may be affected by the company's ability to increase production capacity and deliver products on time.
• Suppliers may be affected by the company's reliance on a limited number of third-party suppliers for raw materials and components.

Next Steps

• The company expects to draw down the first tranche of $1.15 million from the financing agreement with Belike Nominees Pty Ltd. in the second quarter of 2024.
• The company expects to complete Phase 2 and Phase 3 of the CSIC project during the first half of 2024.
• The company expects to continue to provide offers and proposals to further projects across Italy, France and Northern Europe.
• The company expects to deliver the first project to an Italian client in 2024.
• The company expects to receive the certification of the HEVO-Chain solution for use in both the United States and Canada during 2024.
• The company expects to begin to monetize elements of its project portfolio during 2024.
• The company expects to continue to develop relationships and partnerships that allow it to grow its reach into the North American market with modest incremental costs.
• The company expects to continue to strive to reach markets beyond Portugal and Spain.

Key Dates

Keywords

green hydrogen, electrolyzer, financial report, IFRS, Form 20-F, Fusion Fuel, warrants, shares, revenue, IPCEI