ZeroNox

ZeroNox

Growth Stage

Electrification partner for commercial and industrial vehicles

Electrification partner for commercial and industrial vehicles

Overview

Raised to Date: Raised: $171,925

Total Commitments ($USD)

Platform

Republic

Start Date

02/28/2024

Close Date

04/25/2024

Min. Goal
$50,000
Max. Goal
$5,000,000
Min. Investment

$250

Security Type

SAFE

Series

Seed

SEC Filing Type

RegCF    Open SEC Filing

Early Bird Val. Cap

$165,000,000

Valuation Cap

$180,000,000

Discount

0%

Rolling Commitments ($USD)

Status

Active

Reporting Date

04/15/2024

Days Remaining

10

% of Min. Goal

344%

% of Max. Goal

3%

Likelihood of Max
unlikely
Avg. Daily Raise

$3,658

# of Investors

47

Momentum
cold.svg
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Year Founded

2017

Industry

Transportation, Automotive, Aviation, & Aerospace

Tech Sector

Hardwaretech

Distribution Model

B2B

Margin

Low

Capital Intensity

Low

Location

Porterville, California

Business Type

Growth

ZeroNox, with a valuation of $180 million, is raising funds on Republic. The company has developed an advanced battery technology that works as the electrification partner for commercial and industrial vehicles. ZeroNox also partners with OEMs and fleets to electrify their vehicles with their proprietary electric powertrain platform, the ZEPP, and has a network of dealership locations for EV distribution. The company has signed a $140 million contract for 1,000 refuse trucks with Jospong Group in Ghana and has confidential electrification projects underway with Kubota and LS Tractor. Vonn Christenson and Robert Cruess founded ZeroNox in October 2017. The current crowdfunding campaign has a minimum target of $50,000 and a maximum target of $5 million. The campaign proceeds will be used for research and development, accounts payable, sales and marketing, inventory, and general working capital.

Summary Profit and Loss Statement

FY 2023 FY 2022

Revenue

$9,679,651

$5,997,937

COGS

$7,036,559

$4,671,872

Tax

$0

$0

 

 

Net Income

$-7,552,070

$-4,153,160

Summary Balance Sheet

FY 2023 FY 2022

Cash

$493,176

$792,066

Accounts Receivable

$2,051,178

$574,718

Total Assets

$6,753,945

$5,804,869

Short-Term Debt

$12,048,364

$6,052,252

Long-Term Debt

$1,004,371

$1,015,100

Total Liabilities

$13,052,735

$7,067,352

Financials as of: 02/28/2024
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Analyst Report

Synopsis

The transportation sector is at a crucial turning point, with environmental concerns driving a significant shift towards electrification. This transition is not just limited to personal vehicles. Still, it extends into commercial and industrial vehicles, which are integral to global supply chains and local economies but have historically been significant contributors to pollution and carbon emissions. ZeroNox, Inc. is positioning itself as a key player in this transformative era by focusing on the electrification of commercial and industrial vehicles through its advanced battery technology and electric powertrain platform, the ZeroNox Electric Powertrain Platform (ZEPP).

ZeroNox's innovative approach involves partnering with Original Equipment Manufacturers (OEMs) and fleets to replace traditional internal combustion engines with their proprietary ZEPP, aiming to achieve the same, if not better, level of performance while significantly reducing emissions. This solution is both environmentally beneficial and economically viable, addressing two of the major barriers to adopting electric vehicles (EVs) in the commercial sector: cost and efficiency.

The company has made notable strides in the market, securing a $140 million contract for 1,000 refuse trucks with the Jospong Group in Ghana. This contract demonstrates the practical applicability and demand for ZeroNox's technology and showcases its global market potential. Additionally, ZeroNox has undisclosed electrification projects underway with notable industry players like Kubota and LS Tractor, further solidifying its position in the market.

With a network of dealership locations for EV distribution, ZeroNox is also ensuring that its technological advancements are accessible to a broad audience, thereby accelerating the transition to electric vehicles in the commercial and industrial sectors. The company's ongoing research and development efforts, funded by its crowdfunding campaigns, aim to innovate and improve upon its technologies continuously, ensuring they remain at the forefront of the clean and efficient electric powertrain market.

Next Section: Price

Price

ZeroNox is engaging in a crowdfunding campaign with a valuation cap of $180 million, offering securities via a SAFE (Simple Agreement for Future Equity). The company, specializing in advanced battery technology and electric powertrain platforms for commercial and industrial vehicles, has demonstrated significant growth potential through its strategic partnerships and sales achievements. With an annual revenue of $9.7 million and an impressive annual revenue growth rate of 61.38%, ZeroNox is positioning itself as a strong player in the electrification of the transportation sector.

While appearing high, the valuation cap of $180 million reflects the company's potential in a rapidly expanding market. The electric vehicle (EV) and electrification market is projected to grow significantly in the coming years, driven by global efforts to reduce carbon emissions. ZeroNox's proprietary technology, strategic OEM partnerships, and a $140 million contract for refuse trucks with Jospong Group in Ghana underscores the company's potential for scaling and capturing a substantial market share.

However, investors should consider the company's pre-profit status and the valuation cap in their investment decisions. The valuation cap sets the maximum valuation at which your investment will convert into equity in the future, and a $180 million cap for a company with $9.7 million in annual revenue represents a revenue multiple of approximately 18.6x. This multiple is on the higher end but could be justified by the company's growth trajectory, proprietary technology, and the large addressable market for EVs and electrification solutions.

For investors seeking exposure to the burgeoning EV and electrification market, ZeroNox presents an intriguing opportunity. The potential for a 10X return hinges on the company's ability to continue its rapid growth, expand its market presence, and successfully execute its strategic partnerships and contracts. As the EV market continues to evolve, ZeroNox's innovations and solutions could position it well for a lucrative exit via acquisition or public offering, providing significant returns to early investors. However, this potential comes with the risk inherent in the early stages of growth and market adoption of new technologies.

Next Section: Market

Market

The market for automotive retrofit electric powertrain systems is a burgeoning sector within the broader transportation, automotive, aviation, and aerospace industries. With a current valuation of approximately $29.69 billion, it is projected to grow at % compound annual growth rate (CAGR) of 9.0%. This growth is attributed to the increasing global emphasis on reducing carbon emissions, improving air quality, and transitioning towards more sustainable modes of transportation. ZeroNox, Inc. has positioned itself as a pivotal player by developing an advanced battery technology and electric powertrain platform, the ZEPP, designed for commercial and industrial vehicles.

Both regulatory pressures and economic incentives drive the demand for retrofitting internal combustion engine vehicles with electric powertrains. Governments worldwide are implementing stricter emission standards and providing subsidies for adopting electric vehicles (EVs). This regulatory environment, combined with the dropping costs of EV technologies and increasing consumer and corporate demand for sustainable solutions, creates a fertile market for ZeroNox's offerings.

However, the market is not without its challenges. High market approval or license regulations are a significant barrier, as products must meet rigorous safety, performance, and environmental standards. ZeroNox also faces competition from established companies such as Zero Labs, REvV Mobilities, and BisonEV, which specialize in vehicle electrification solutions. Despite this, ZeroNox's strategic partnerships with OEMs, fleets, and its network of dealership locations for EV distribution, alongside its $140 million contract for 1,000 refuse trucks with Jospong Group in Ghana, position it well for growth.

Given the high market potential and relatively low capital intensity level, ZeroNox is well-placed to capitalize on the growing demand for electric vehicle retrofitting. Its innovative approach to developing clean and efficient electric powertrains could see it capturing a significant market share, provided it effectively navigates the competitive landscape and regulatory hurdles.

Next Section: Team

Team

ZeroNox, Inc., a pioneer in electrifying commercial and industrial vehicles, is led by a team of passionate and visionary founders. CEO and Co-Founder Vonn Christenson, alongside President and Co-Founder Robert Cruess, established ZeroNox in 2017 with a mission to advance green-energy technology in the San Joaquin Valley and beyond. Both founders are deeply committed to their local community in Porterville, CA, and have leveraged their passion to make a positive impact through their work at ZeroNox.

Christenson and Cruess, both first-time founders, bring approximately seven years of relevant industry experience. While they may not have high-level managerial skills traditionally seen in more seasoned executives, their dedication and vision have been crucial in guiding ZeroNox through its early stages and into significant growth.

The team is further strengthened by Jacob Gotberg, the Chief Technology Officer, who leads the development of ZeroNox's electric powertrain platform and green technology R&D. Gotberg's background is particularly notable, with experience at prestigious organizations such as SpaceX, GE, academia, and the Department of Energy. His expertise is a valuable asset in the innovative and technical aspects of ZeroNox's product development.

The executive team comprises Karna Patel, the chief financial officer, who brings over 17 years of experience in finance, operations, and business analytics across multinational public companies. Patel's seasoned leadership and financial acumen are instrumental in steering ZeroNox's financial strategy and ensuring the company's sustainable and scalable growth.

Next Section: Differentiation

Differentiation

ZeroNox distinguishes itself within the transportation, automotive, aviation, and aerospace sectors through its innovative approach to electrification, particularly in commercial and industrial vehicle markets. The company's development of the ZeroNox Electric Powertrain Platform (ZEPP) positions it as a leading solution for businesses transitioning from internal combustion engines to electric powertrains without sacrificing performance. This focus on heavy-duty and off-highway vehicles, including refuse trucks, transit buses, and agricultural equipment, taps into a niche yet significant market segment increasingly looking towards electrification for economic and environmental reasons.

One of ZeroNox's most compelling differentiators is its significant traction within the market, highlighted by a $140 million contract for 1,000 refuse trucks with the Jospong Group in Ghana. This contract demonstrates the commercial viability of ZeroNox's technology and its appeal in international markets, particularly in regions identified as underserved, like Africa. The company's engagement in confidential electrification projects with notable names such as Kubota and LS Tractor further underscores its credibility and potential for growth in the sector.

ZeroNox's intellectual property portfolio, including 11 patents pending and one patent granted, alongside its trademarks, provides a competitive edge by protecting its innovations and reinforcing its market position. The company's strategy to partner with OEMs and leverage a network of dealership locations for EV distribution indicates a scalable business model that can expand its footprint rapidly from approximately 50 to 1,500 locations nationwide.

While competitors like Zero Labs, REvV Mobilities, and BisonEV also operate within the electric powertrain space, ZeroNox's specific focus on heavy-duty and off-highway vehicles and its successful contracts and partnerships set it apart. Its ability to identify and penetrate underserved markets, such as Africa, further differentiates ZeroNox from competitors primarily focused on more saturated markets.

Next Section: Performance

Performance

ZeroNox has demonstrated significant progress in electrifying commercial and industrial vehicles, positioning itself as a notable player in the transportation, automotive, aviation, and aerospace industries. The company's achievements are underscored by a $140 million contract with the Jospong Group in Ghana to supply 1,000 refuse trucks, highlighting its capacity to secure large-scale international contracts. ZeroNox's involvement in confidential electrification projects with Kubota and LS Tractor further validates its technological prowess and the trust it has garnered from established industry players.

With a portfolio of 11 patents pending and one patent granted, with three pending and seven trademarks granted, ZeroNox has established a solid foundation of intellectual property. This protects its innovations and enhances its competitive edge in the market. The company's strategic OEM partnerships are set to expand its reach from approximately 50 to 1,500 locations nationwide, significantly increasing its market penetration and distribution capabilities.

ZeroNox's product offering, particularly its proprietary electric powertrain platform, the ZEPP, has already seen success with just under 1,000 units sold across various applications, including UTVs, forklifts, and battery upgrades. The company's focus on retrofitting vehicles in sectors such as agriculture and on-road commercial vehicles demonstrates a strategic approach to tapping into niche markets with high growth potential. Notably, ZeroNox has identified significant opportunities in underserved markets like Africa and is leveraging California's regulatory and environmental push toward electrification.

Despite these achievements, ZeroNox is in a pre-profit stage with an annual revenue of $7.1 million, which represents a 26% decrease in revenue growth. This suggests challenges in scaling operations or market adoption rates that must be addressed. The company's monthly burn rate of approximately $629,339.17 further emphasizes the urgency for ZeroNox to streamline its operations and achieve profitability.

Next Section: Risk

Risk

ZeroNox operates in the highly competitive and rapidly evolving electric vehicle (EV) and powertrain technology sector, which brings specific risks that potential investors should consider. Firstly, while ZeroNox has established itself with a proprietary electric powertrain platform (ZEPP) and has secured significant contracts, such as the $140 million deal with Jospong Group in Ghana, its ability to fulfill these contracts depends on its production capabilities. Scaling production to meet such large orders poses a risk, especially given the company's reported need for more time to scale production.

The company's financials reveal a concerning short-term debt position of $12,048,364 and a net income loss of $7,552,070. These figures suggest that ZeroNox is operating at a significant loss, raising questions about its sustainability and the need for additional capital infusions to continue operations. The reliance on future revenue to offset current financial difficulties adds a layer of risk for investors, as any delays or failures in contract fulfillment could exacerbate these financial challenges.

Additionally, ZeroNox operates in a sector subject to high market approval and licensing regulations. The EV and powertrain technology market is competitive and heavily regulated, requiring adherence to stringent safety and environmental standards. This regulatory landscape can impact the speed at which ZeroNox can bring new technologies to market and potentially limit its operational flexibility.

While noted as slightly competitive, the competitive landscape should not be underestimated. Direct competitors such as Zero Labs, REvV Mobilities, and BisonEV, along with potential new entrants drawn by the lucrative nature of the EV market, could intensify competition. High barriers to entry may protect ZeroNox to some extent, but the company must continuously innovate and maintain its technological edge to stay ahead.

Finally, the high valuation of $180 million, with a revenue multiple of 18.60, suggests that ZeroNox may be overvalued. This valuation, combined with the company’s current financial health and the risks associated with scaling production and fulfilling large contracts, could impact the investment’s potential return. Investors should carefully consider these factors when evaluating the investment opportunity in ZeroNox.

Next Section: Bullish Outlook

Bullish Outlook

ZeroNox's innovative approach to electrification within the commercial and industrial vehicle sector positions it as a key player in a rapidly evolving market. The ZeroNox Electric Powertrain Platform (ZEPP) development offers a compelling solution for OEMs and fleets seeking to transition away from internal combustion engines without sacrificing performance. This aligns with global sustainability goals and addresses the increasing demand for electric vehicles (EVs) in heavy equipment markets.

The company's ability to secure a $140 million contract with the Jospong Group in Ghana for 1,000 refuse trucks exemplifies ZeroNox's market potential and operational capabilities. Such significant deals provide substantial revenue streams and testament to the trust and confidence that large clients have in ZeroNox's technology and delivery capacity. Furthermore, ongoing confidential electrification projects with industry giants like Kubota and LS Tractor underscore the company's competitive edge and potential for growth within the sector.

ZeroNox's strategic partnership model, focusing on collaboration with OEMs and leveraging a network of dealership locations for EV distribution, advantageously positions the company within the supply chain. This model facilitates wider adoption of ZeroNox's technology, potentially leading to an increase in market share and brand recognition in the electrified commercial and industrial vehicle space.

Despite facing a highly competitive landscape, ZeroNox has managed to carve out a niche through its proprietary technology and strategic partnerships. The company's patent portfolio further solidifies its market position, protecting its innovations and providing a barrier to entry for potential competitors. Intellectual property rights are invaluable in the technology-driven EV market, potentially leading to licensing opportunities or strategic alliances.

Next Section: Bearish Outlook

Bearish Outlook

ZeroNox's ambitious valuation of $180 million, juxtaposed with its pre-profit status and revenue multiple of 25.35, raises concerns about its current valuation and growth sustainability. This high revenue multiple, especially in the competitive and capital-intensive transportation, automotive, aviation, and aerospace sectors, could deter potential investors looking for more immediate returns or signs of profitability.

While ZeroNox has heralded a significant contract with the Jospong Group and confidential projects with Kubota and LS Tractor, the company's reported annual revenue decline of -26% and a net income of -$7,552,070.00 suggest challenges in scaling its operations and achieving profitability. Such financial performance, coupled with a high monthly burn rate of $629,339.17, indicates that ZeroNox may face liquidity challenges, affecting its ability to sustain operations and fulfill its ambitious projects without securing additional funding or significantly improving its revenue streams.

Furthermore, despite having partnerships and proprietary technology, ZeroNox operates in a space with high barriers to entry and a competitive landscape that includes companies like Zero Labs, REvV Mobilities, and BisonEV. These companies, potentially with more established technologies or better market penetration, could pose significant challenges to ZeroNox's growth and market share acquisition. While strategic, the reliance on partnerships and contracts for growth also introduces dependency on third parties, which could be risky if these relationships do not yield the expected returns or face delays.

Next Section: Executive Summary

Executive Summary

ZeroNox, Inc., a pioneer in electrifying commercial and industrial vehicles, is making significant strides in the transportation, automotive, aviation, and aerospace industries. With its proprietary electric powertrain platform, the ZeroNox Electric Powertrain Platform (ZEPP), the company aims to replace internal combustion engines in heavy equipment and off-highway vehicles, offering a cleaner and more efficient alternative. ZeroNox's advanced battery technology and partnerships with original equipment manufacturers (OEMs) and fleets underscore its commitment to environmental impact and innovation in electric vehicle (EV) technology.

The company's traction is evident through its substantial $140 million contract with Jospong Group in Ghana for 1,000 refuse trucks, alongside confidential electrification projects with notable entities such as Kubota and LS Tractor. This demonstrates ZeroNox's ability to secure large-scale projects and recognition as a reliable partner in the electrification space. Additionally, the company boasts a broad patent and trademark portfolio, with 11 patents pending and one granted, three trademarks pending, and seven granted, further solidifying its position in the market.

ZeroNox operates within the US Automotive Retrofit Electric Powertrain market, an area with high growth potential, especially as global trends continue to favor sustainability and eco-friendly transportation solutions. The company has sold nearly 1,000 units across various categories, including UTVs, forklifts, and battery upgrades, indicating a proven demand for its products. Its focus on agricultural equipment and on-road commercial vehicles, such as refuse trucks and transit buses, targets sectors with significant opportunities for electrification.

Despite facing a competitive landscape with players like Zero Labs, REvV Mobilities, and BisonEV, ZeroNox's unique value proposition and strategic OEM partnerships position it for a nationwide expansion, aiming to grow its presence from approximately 50 to 1,500 locations. This expansion is supported by a diverse clientele, including high-profile names such as LAX Airport Terminal Management, Caltrans, and Bayer, showcasing the company's broad applicability and appeal.

With a pre-money valuation of $180 million, ZeroNox seeks to raise funds to fuel further research and development, expand its sales and marketing efforts, increase inventory, and bolster general working capital. Despite its pre-profit status and challenging financial performance in the recent fiscal year, ZeroNox's strategic direction, innovative technology, and significant market opportunities present a compelling case for potential investors. The company's dedication to electrification as a sustainable solution positions it as a key player in the future of transportation and manufacturing.

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ZeroNox on Republic 2024
Platform: Republic
Security Type: SAFE
Valuation: $180,000,000

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