Business context and reporting period
UAS Drone Corp. (the registrant; its subsidiary Duke Robotics, Inc. is wholly owned) filed this unaudited Form 10-Q for the quarter ended March 31, 2022. The company is developing the TIKAD robotic system for remote, precision firing of small arms and light weapons. Management says the company has generated limited revenue and has not begun meaningful commercialization. Elbit Systems Land Ltd. is responsible for TIKAD research and development under a collaboration agreement.
Financial results and position
Unless stated otherwise, amounts are USD thousands. The statements are unaudited.
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $0 | $500 |
| Gross profit | $0 | $500 |
| Research and development | $6 | $0 |
| General and administrative | $331 | $161 |
| Operating loss / income | $(337) | $471 |
| Net loss / income | $(369) | $251 |
| Basic and diluted loss / earnings per share | $(0.01) | $0.00 |
| Operating cash flow | $(133) | $353 |
| Cash and cash equivalents, quarter-end | $3,415 | $452 at March 31, 2021 |
No revenue was recorded in Q1 2022, so a gross margin is not meaningful; the prior-year gross margin was 100%. At March 31, 2022, total assets were $3,464, current assets $3,443, current liabilities $253, total liabilities $552, and stockholders’ equity was $2,912 on the balance sheet. Cash exceeded total liabilities. Stockholder loans were $299; the filing reports no financing cash flows in the quarter and describes prior convertible loans and debentures as repaid or converted. No clear total debt maturity schedule is provided.
Changes versus the prior comparable period
- Revenue fell from $500 to zero, and the company moved from $251 net income to a $369 net loss.
- G&A increased by $170, primarily due to higher stock-based compensation; R&D spending began at $6.
- Net financial expense declined to $32 from $220, mainly because interest expense on previously outstanding convertible loans decreased after repayment or conversion.
- Operating cash flow changed from $353 provided to $133 used. Cash declined $145 during Q1 2022, compared with an increase of $347 in Q1 2021.
- Cash at March 31, 2022 was substantially higher than a year earlier, which management attributes mainly to approximately $5 million of gross proceeds from a May 2021 private placement.
Outlook, risks and notable items
- Management expects cash to fund operations through the end of 2023. It may seek additional capital; if financing is unavailable on acceptable terms, the company may reduce development, change strategy, or cease operations. New equity financing could dilute shareholders.
- The May 2021 placement included warrants for up to 12.5 million shares at $0.40 per share. On April 5, 2022, after quarter-end, the company extended the warrants’ expiration to November 11, 2023.
- On April 4, 2022, the company signed a three-year office lease in Israel, with monthly payments of approximately $5,200 for the first two years and $5,400 for the third year, plus an extension option.
- COVID-19 had not materially affected financial results or liquidity to date, according to management, but potential effects on operations, suppliers, manufacturing, and government spending remain uncertain.
- The company reported no off-balance-sheet arrangements. Management concluded disclosure controls were effective at a reasonable assurance level and reported no material change in internal control over financial reporting during the quarter.
- The filing’s forward-looking statements are subject to substantial uncertainty, including commercialization, demand, manufacturing capability, partnerships, regulatory approvals, and capital needs.
Most important facts to verify
- Whether the company can commercialize its products and generate revenue; Q1 2022 revenue was zero.
- The assumptions behind management’s estimated cash runway through 2023, including expected spending and any need for new financing.
- Potential dilution from the outstanding warrants and other equity awards; the company reported 54,118,813 common shares outstanding as of May 4, 2022.
- Reported equity figures: the balance sheet shows positive equity of $2,912, while the statement of stockholders’ equity labels the ending total as a deficit of $(2,912); this apparent inconsistency should be checked against the filed statements.
- The filing identifies the registrant as UAS Drone Corp., while the request metadata names DUKE Robotics Corp.; confirm the intended issuer and filing identity.