UAS Drone Corp. (10-Q) — Quarter ended March 31, 2023
Entity note: The supplied filing is for UAS Drone Corp., not a registrant named DUKE Robotics Corp. Duke Robotics is a wholly owned subsidiary. Financial amounts below are in U.S. dollars; statements report amounts in thousands unless noted otherwise.
Business context and reporting period
The company develops a robotics stabilization system for remote, accurate firing of small arms and light weapons, marketed as TIKAD, and pursues civilian infrastructure-maintenance applications. TIKAD development is carried out by Elbit Systems under a collaboration agreement; the company’s IEC collaboration concerns drone-enabled cleaning of electric utility insulators. The unaudited quarter covers the three months ended March 31, 2023.
Financial results and position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $0 | $6 thousand |
| General and administrative expense | $202 thousand | $331 thousand |
| Operating loss | $202 thousand | $337 thousand |
| Net financing income (expense) | $23 thousand | $(32) thousand |
| Net loss | $179 thousand | $369 thousand |
| Basic and diluted loss per share | $0.00 loss | $0.01 loss |
| Cash used in operating activities | $209 thousand | $133 thousand used, per cash flow statement |
| Cash used in investing activities | $16 thousand | $12 thousand |
Revenue and gross margin are not applicable because the company had no revenue. Management attributes lower G&A mainly to reduced share-based compensation. Financing results improved primarily because of lower expense related to changes in fair value of warrants and interest income on bank deposits.
At March 31, 2023, cash and cash equivalents were $2.621 million, versus $2.849 million at December 31, 2022. Total current assets were $2.788 million and current liabilities $323 thousand. Total assets were $2.996 million, total liabilities $710 thousand, and stockholders’ equity $2.286 million. Loans were $307 thousand; operating lease liabilities totaled $132 thousand, of which $52 thousand was current. The balance sheet reports 54,218,813 common shares outstanding.
Cash decreased by $228 thousand during the quarter. There was no financing cash flow. The company recorded $39 thousand of share-based compensation and recognized a new operating lease right-of-use asset and liability of $146 thousand each.
Changes versus the prior comparable period
- Net loss narrowed to $179 thousand from $369 thousand, reflecting lower G&A and improved financing results.
- R&D expense fell to zero from approximately $6 thousand. Management says it paused its own R&D while evaluating applications, while TIKAD development is conducted by Elbit and IEC project costs are recorded as deferred expenses.
- Operating cash use increased versus the prior-year quarter. The cash flow statement reports $133 thousand used in Q1 2022; MD&A instead describes $133 thousand as cash provided, an inconsistency in the filing.
- Cash at quarter-end was $2.621 million, compared with $3.415 million at March 31, 2022, according to MD&A. A new three-year Israeli office lease commenced when the premises became available in February 2023.
Outlook, risks and unusual items
- Management believes existing cash is sufficient to fund operations for at least the next 12 months, but warns that resources could be used faster than expected and additional capital may be needed. Financing may not be available on acceptable terms or at all; failure to obtain funding could adversely affect the business or its viability.
- No quantified revenue or earnings guidance is provided. Management describes the business as startup-stage and gives no assurance that forward-looking plans will be achieved.
- Management has paused internal R&D pending evaluation of other applications, including civilian uses. IEC collaboration and development costs are recorded as deferred expenses; the filing does not state a clear total for those costs.
- The company reported no off-balance-sheet arrangements. Its officers concluded disclosure controls and procedures were not effective as of March 31, 2023; no material change in internal control over financial reporting during the quarter was reported.
- The company’s 12.5 million warrants from its May 2021 offering were extended to expire November 11, 2023. The filing does not report Q1 warrant exercises.
Important facts for investors to verify
- Confirm the issuer identity: the filing is by UAS Drone Corp.; Duke Robotics is described as its subsidiary.
- Resolve the operating-cash-flow inconsistency: the cash flow statement reports $133 thousand used in Q1 2022, while MD&A says it was provided.
- Track the pace and classification of IEC collaboration spending, including deferred expenses, and whether it converts to revenue or requires further funding.
- Assess the company’s cash runway against its stated 12-month estimate, ongoing losses, and potential need for external capital.
- Monitor commercialization progress and applicable regulatory approvals for TIKAD and civilian products, along with the implications of ineffective disclosure controls.