Israeli electric car cybersecurity company GuardKnox is mired in debt and a cash flow crisis and earlier this week filed an urgent request with the court for a stay of proceedings and temporary relief. According to the request from Advs. Dr. Shlomo Nass, and Inbal Rahamim- Avital and Itay Michaeli from the Firon law firm, it appears that despite the impressive list of customers the company servies including Porsche, Mercedes-Benz, Dacca, and the US Army, GuardKnox is coping with a cash flow crisis, has been forced to lay off employees and has ongoing liabilities of NIS 11 million that it will struggle to repay without legal arrangements.
According to the application filed with the Central District Court, over the past year the Ramla-based company has been forced to close a product line and cut the number of employees from 80 to 27 today, and cut employee salaries by 80% in order to reduce the rate of cash burn. In recent days, the employees hired the services of Adv. Alon Hornstein to fight legally to obtain their rights, but according to GuardKnox, the campaign will be suspended if the company enters a recovery process.
GuardKnox, which has raised about $60 million since it was founded, has only NIS 4.6 million in cash. It has provided several examples of the difficulties it has encountered in recent years. According to the company, the Corona pandemic affected the motivation to purchase electric vehicles due to the fall in oil prices while the war in Ukraine has led to an increase in the prices of inputs for the production of electric vehicles. The judicial overhaul in Israel has "led many investors to withdraw their money and investments," while the crisis in raising funds by tech companies has led an investor to reduce an investment of $13 million to only $6 million. Finally the war has resulted in "foreign investors giving up on investing in Israeli high-tech."
According to the application filed with the court, "Investors who were supposed to land the week of October 8, 2023, to conclude an investment of $30 million canceled their arrival due to the situation prevailing in the country and even withdrew due to the geopolitical situation."
Another investor who was ready to invest $5 million, died unexpectedly. In addition, GuardKnox explains, a major customer of the company, Germany's eGo Mobile, which was engaged in the production of electric vehicles and mobile systems, also fell into crisis with a debt of €900,000 to GuardKnox. On the other hand, the company has active transactions with Israeli security agencies, with the US military, with a potential revenue of $165 million over the next seven years, and with Polaris, worth $242 million by 2030.
GuardKnox was founded in 2016 by three Israel Air Force veterans Moshe Shlisel, Dionis Teshler, and Idan Nadav. The company has developed technology for preventing breaches of electric vehicle systems and has raised capital from Allied Group, the owner of Yitzhak Suarez's Champion Motors, Shay Livnat's Cyphetech, Kardan Group, and foreign investors from China including SAIC and French company Faurecia, and US auto tech investor Chase Fraser's Fraser McCombs Capital, which led the company's most recent financing round in 2019, according to IVC Research.
Published by Globes, Israel business news - en.globes.co.il - on January 30, 2025.
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