DUKE Robotics Corp. quarterly report, Q2 FY2023

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Business context and reporting period

This is UAS Drone Corp.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2023, filed August 7, 2023. The request identifies Duke Robotics Corp., but the filing’s registrant is UAS Drone Corp. (OTCQB: USDR). The company develops the TIKAD robotic weapons platform and drone-based infrastructure-maintenance applications, including work under an agreement with Israel Electric Corporation (IEC).

Financial results and position

All amounts below are in U.S. dollars; financial statement amounts are in thousands unless stated otherwise.

  • Revenue: None in the three- or six-month periods ended June 30, 2023 or 2022.
  • Net loss: $183,000 for Q2 2023 versus $287,000 in Q2 2022; $362,000 for the first half of 2023 versus $656,000 in the first half of 2022. Basic and diluted loss per share was $0.00 for Q2 2023 and $0.01 for the first half.
  • Expenses and income: Q2 operating loss was $206,000, with $23,000 of net financing income. First-half operating loss was $408,000, with $46,000 of net financing income. R&D expense was zero in 2023; the company says its own R&D activity is paused.
  • Cash flow: First-half operating cash use was $410,000 versus $376,000 in 2022; investing cash use was $16,000 versus $30,000. Cash decreased $430,000 during the first half to $2.419 million at June 30, 2023.
  • Liquidity and debt: Current assets were $2.677 million and current liabilities $358,000, implying working capital of approximately $2.319 million. Cash was $2.419 million. Related-party loans were $309,000. Lease liabilities totaled $118,000 in the lease note, including $51,000 current and $67,000 non-current.
  • Equity and margins: Stockholders’ equity was $2.137 million, down from $2.426 million at December 31, 2022. With no revenue, gross margin and operating margin are not meaningful for the period.

Material changes versus prior comparable periods

  • First-half net loss narrowed by $294,000 year over year, primarily as general and administrative expense fell from $658,000 to $408,000; management attributes the decrease mainly to lower share-based compensation.
  • Q2 general and administrative expense declined from $327,000 to $206,000, also mainly due to lower share-based compensation.
  • Net financing income increased for the first half, from $11,000 to $46,000, mainly due to higher interest income on bank deposits. Q2 financing income decreased from $43,000 to $23,000.
  • Operating cash use increased by $34,000 year over year, which management attributes mainly to deferred expenses under the IEC collaboration and development agreement.
  • The company recognized an operating lease right-of-use asset and lease liability during 2023; the lease note reports total lease liabilities of $118,000 at June 30.

Outlook, risks, and other items

  • Management believes available cash is sufficient to fund operations for at least the next 12 months, but cautions that resources could be consumed faster than anticipated and additional financing may be needed. Funding may not be available on acceptable terms or at all.
  • The company reports no revenue and has paused its own R&D while evaluating other applications, including civilian uses. TIKAD development is carried out by Elbit under a collaboration agreement; IEC-related development costs are recorded as deferred expenses.
  • Management identifies commercialization, manufacturing expansion, sales and marketing, regulatory approvals, export permissions, partnerships, and access to capital as forward-looking matters subject to significant uncertainty. The filing gives no specific revenue or earnings guidance.
  • The company had 54,218,813 common shares outstanding at June 30 and August 7, 2023. Warrants from the 2021 financing were extended to expire November 11, 2023.
  • Disclosure controls and procedures were assessed as not effective as of June 30, 2023. The company reported no material changes in internal control over financial reporting during the quarter.
  • No off-balance-sheet arrangements were reported. The interim financial statements are unaudited.

Key facts investors should verify

  1. Confirm the registrant identity and ticker: the supplied request names Duke Robotics Corp., while this filing is for UAS Drone Corp. (USDR).
  2. Track whether the company converts its TIKAD and IEC-related work into commercial sales; the filing reports no revenue in either comparable period.
  3. Assess cash burn, deferred IEC project spending, and whether management’s stated 12-month funding runway remains supportable.
  4. Review related-party loan terms and repayment expectations, and the near-term warrant expiry and potential effects on capital structure.
  5. Follow remediation of ineffective disclosure controls and any subsequent updates on commercialization, regulatory approvals, and financing needs.