ParaZero Technologies Ltd 6-K, filed Sep 21, 2023
ParaZero Technologies Ltd. (PRZO)
About this 6-K
ParaZero Technologies Ltd filed this 6-K on September 21, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of September
Commission file number:
(Translation of registrant’s name into English)
30 Dov Hoz
Kiryat Ono, 5555626, Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of (i) the Registrant’s Condensed Interim Financial Statements as of June 30, 2023, which is attached hereto as Exhibit 99.1; and (ii) the Registrant’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2023, which is attached hereto as Exhibit 99.2.
1
EXHIBIT INDEX
| Exhibit No. | ||
| 99.1 | ParaZero Technologies Ltd.’s Interim Condensed Financial Statements as of June 30, 2023. | |
| 99.2 | ParaZero Technologies Ltd.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2023. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ParaZero Technologies Ltd. | |||
| Date: September 21, 2023 | By: | /s/ Boaz Shetzer | |
| Name: | Boaz Shetzer | ||
| Title: | Chief Executive Officer | ||
3
Exhibit 99.1
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2023
(UNAUDITED)
INDEX
- - - - - - - - - - - -
PARAZERO TECHNOLOGIES LTD.
| CONDENSED INTERIM BALANCE SHEETS (Unaudited) |
U.S. dollars
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | ||||||||
| Trade receivables | ||||||||
| Other accounts receivable | ||||||||
| Deferred prospective initial public offering cost | ||||||||
| Inventories | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Right-of use asset | ||||||||
| Property and equipment, net | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
2
PARAZERO TECHNOLOGIES LTD.
| CONDENSED INTERIM BALANCE SHEETS (Unaudited) |
U.S. dollars
| June 30, | December 31, | |||||||||
| Note | 2023 | 2022 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Trade payables | ||||||||||
| Lease liabilities | ||||||||||
| Other accounts payable | ||||||||||
| Loan from related party | 7 | |||||||||
| SAFEs | 6 | |||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||
| NON-CURRENT LIABILITIES: | ||||||||||
| Lease liabilities | ||||||||||
| Loan from related party | 7 | |||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||||
| COMMITMENTS AND CONTINGENCIES | 4 | |||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||||
| Ordinary shares, NIS | ||||||||||
| Additional paid-in capital | ||||||||||
| Accumulated losses | ( | ) | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
3
PARAZERO TECHNOLOGIES LTD.
| CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) |
U.S. dollars
| Six
months ended June 30, | Six months ended June 30, | |||||||
| 2023 | 2022 | |||||||
| U.S. dollars | ||||||||
| Sales | ||||||||
| Cost of Sales | ||||||||
| GROSS PROFIT | ||||||||
| Research and development expenses | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Prospective initial public offering expenses | ||||||||
| OPERATING LOSS | ||||||||
| Financing Expenses (Income), net | ( | ) | ||||||
| COMPREHENSIVE AND NET LOSS | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
4
PARAZERO TECHNOLOGIES LTD.
| CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT (Unaudited) |
U.S. dollars (except for share numbers)
| Ordinary shares | Additional | |||||||||||||||||||
| Number of shares | Amount | paid-in capital | Accumulated losses | Total | ||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2021 | ( | ) | ( | ) | ||||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2022: | ||||||||||||||||||||
| Conversion of Former Parent Company’s debt into ordinary shares and warrants | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| BALANCE AS OF JUNE 30, 2022 | ( | ) | ( | ) | ||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2022 | ( | ) | ( | ) | ||||||||||||||||
| CHANGES DURING SIX MONTHS ENDED JUNE 30, 2023: | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Transactions with related party | - | |||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| BALANCE AS OF JUNE 30, 2023 | ( | ) | ( | ) | ||||||||||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
5
PARAZERO TECHNOLOGIES LTD.
| CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) |
U.S. dollars
| Six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments required to reconcile net loss to net cash used in operating activities - | ||||||||
| Depreciation | ||||||||
| Stock based compensation expenses | ||||||||
| Interest expenses with respect to funding from Parent Company | ||||||||
| Currency exchange differences with respect to amount due to the Former Parent Company | ( | ) | ||||||
| Finance expenses | ( | ) | ||||||
| Changes in operating assets and liabilities items: | ||||||||
| Decrease (increase) in trade receivables | ( | ) | ||||||
| Decrease (increase) in other accounts receivable | ( | ) | ||||||
| Increase in deferred prospective initial public offering cost | ( | ) | ( | ) | ||||
| Increase in inventory | ( | ) | ( | ) | ||||
| Decrease in right-of use asset | ||||||||
| Increase in trade payables | ||||||||
| Decrease in lease liabilities | ( | ) | ( | ) | ||||
| Increase (decrease) in other payables | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Loan from related party | ||||||||
| Cost associated with the conversion of the Former Parent Company’s debt | ( | ) | ||||||
| Loans from the Former Parent Company | ||||||||
| Proceeds from issuance of SAFEs | ||||||||
| NET INCREASE (DECREASE) IN CASH | ( | ) | ||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | ||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Benefit to the Company by an equity holder with respect to funding transactions | ||||||||
| Right-of use asset recognized against lease liability, net | ||||||||
| Conversion to equity of the Former Parent Company’s debt | ||||||||
| Deferred prospective initial public offering cost | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
6
PARAZERO TECHNOLOGIES LTD.
Note 1 - General
| 1. | PARAZERO TECHNOLOGIES LTD. - (the “Company”) was incorporated in Israel on June 30, 2013. The Company’s address is 30 Dov Hoz, Kiriyat Ono, 5555626, Israel. The Company specializes in the design, development, manufacturing, distribution, and sales of safety systems for commercial drones. The Company’s technology enables real-time identification of critical failures of drones, and upon detection of an emergency, a parachute is autonomously deployed in fractions of a second, thus ensuring safe landings at all times. |
The Company sells its products internationally.
| 2. | On January 28, 2022, Delta Drone International Limited (ASX: DLTI) (the “Former Parent company”), sold its shares in the Company to a consortium of investors led by Medigus Ltd. (“Medigus”) and facilitated by Israeli venture capital firm L.I.A. Pure Capital Ltd. |
| 3. | On July 31, 2023, the Company closed an initial public offering (“IPO”). In connection with the IPO, the Company issued
and sold |
| 4. | The Company is in its commercialization stage and has not generated significant revenues at this stage. The Company has incurred recurring
losses and negative cash flows from operating activities since inception, such that as of June 30, 2023, the Company had accumulated losses
of $ |
Note 2 - Basis for preparation
The Company’s accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements.
The condensed interim financial statements reflect all adjustments considered necessary for a fair presentation of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature.
These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2022 and December 31, 2021 and notes thereto that are included in the Company’s final Prospectus dated July 26, 2023 and filed with the SEC on July 27, 2023. The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2023.
Note 3 - Critical Accounting Policies, Accounting Pronouncements Adopted and Recently Issued Accounting Standards
During the six months ended June 30, 2023,
7
PARAZERO TECHNOLOGIES LTD.
Note 4 - Commitments and Contingencies
| A. | Israel Innovation Authority |
The Company has received royalty-bearing
grants from the Israel Innovation Authority (“the IIA”), for approved research and development projects. The programs include
grants for: wages, materials, subcontractors and miscellaneous. The Company is required to pay royalties at the rate of
As of December 31, 2019, IIA program was completed.
The total amount of the IIA grant received was $
As of June 30, 2023, the maximum
obligation with respect to the grants received from the IIA, including accrued interest, contingent upon entitled future sales,
is $
| B. | Former Parent Company |
On January 28, 2022, the Former
Parent Company announced it had entered into a binding agreement with a consortium of investors led by Medigus and facilitated by Israeli
venture capital firm L.I.A. Pure Capital Ltd (“Pure Capital”), for the sale of
On February 2, 2022 (the
“Issue Date”), the Company issued to the Former Parent Company a warrant to purchase
| C. | Consultant agreements |
On March 1, 2022,
Total share-based compensation expenses
for the six months period ended June 30, 2023 and June 30, 2022 was $
| D. | Agreement with underwriter |
On February 8, 2022, the Company signed a letter of engagement with Aegis Capital Corp. (“Aegis”), which expired pursuant to written notice from the Company on May 5, 2023, and reengaged on June 26, 2023, pursuant to which Aegis will act as an underwriter on a “firm commitment” basis (“Offering”).
8
PARAZERO TECHNOLOGIES LTD.
Note 4 - Commitments and Contingencies (cont.)
| D. | Agreement with underwriter (cont.) |
The underwriting compensation includes the following:
As additional compensation for Aegis’
services, the Company will issue to Aegis or its designees at the closing of the Offering (the “Closing”) warrants (the “Underwriter’s
Warrants”) to purchase that number of Ordinary Share equal to
Note 5 - Significant events during the reporting period
On June 26, 2023, the Company amended the Credit
Facility Agreement with Medigus to increase the amount of the Credit Facility to up to $
9
PARAZERO TECHNOLOGIES LTD.
Note 6 - SAFEs
In February, March and May 2022, the company
entered into certain equity investment agreements, titled Simple Agreements for Future Equity (“SAFE”), with certain investors
including Medigus, officers, and directors, for aggregate proceeds of up to $
| 1. | Upon the occurrence of an IPO event-immediately prior to the
closing of an IPO, the investment amount will automatically convert into such number of Ordinary Shares and warrants, as applicable,
issued in the IPO equal to the IPO price discounted by |
| 2. | Optional conversion following a written notice made at investor’s
sole discretion equal to the purchase amount discounted by |
| 3. | In the event of a liquidity event and dissolution event, as defined in the investment agreements. |
| 4. | Mandatory conversion upon drop date - If the investment
amount has not been converted prior to July 31, 2023 (the “Drop Date”) (see Note 8A), then on such Drop Date, the SAFE
will be automatically converted into such number of the most senior class of equity shares of the Company then outstanding, equal to,
the investment amount, divided by the lowest price per share actually paid to the Company for such most senior class of equity shares
of the Company then outstanding in an investment transaction by a third party on or after January 1, 2022, discounted by |
As the conversation rate is not solely indexed
to the Company’s share price, the Company accounts for the SAFEs as a liability measured at fair value. The change in fair value
amount as of June 30, 2023 and December 31, 2022 respectively, was valued at
Note 7 - Related party transactions
The Company had outstanding loans to a related
party of $
Additionally, on October 30, 2022, the Company
entered into a consulting agreement, with Medigus, pursuant to which Medigus shall serve as the Company’s independent consultant
for a monthly fee of $
10
PARAZERO TECHNOLOGIES LTD.
Note 8 - Subsequent Events and Related Party Transactions
| A. | On July 31, 2023, the Company’s Board of Directors and shareholders,
approved an amendment to the terms of the SAFE to extend the automatic conversion date by three months to October 31, 2023. In
connection with the IPO, all of the SAFEs representing an aggregate amount of $ |
| B. | On July 31, 2023, the Company issued and sold in connection with the closing of the IPO |
In connection with the IPO, the Company
received gross proceeds of approximately $
In addition, in connection with the
closing of the IPO, the Company issued to the underwriters of the IPO warrants to purchase up to an aggregate of
| C. | On July 31, 2023, , the Company entered into a service agreement with Maris Tech Ltd., a related party company (“Maris”), pursuant to which, Maris will provide the Company business development services. |
In consideration for the Business Development
Services, the Company shall pay Maris $
| D. | On August 1, 2023, the Company repaid the outstanding Credit Facility to Medigus in a total amount of $ |
11
PARAZERO TECHNOLOGIES LTD.
Note 8 - Subsequent Events and Related Party Transactions (cont.):
| E. | On August 9, 2023, the Company granted two consultants warrants to purchase
up to an aggregate |
| F. | On September 20, 2023, the Company’s Board of Directors granted an aggregate of |
Out of the
| G. | On September 20, 2023, the Company’s Board of Directors granted a consultant
warrants to purchase up to an aggregate |
12
Exhibit 99.2
PARAZERO TECHNOLOGIES LTD.’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2023
Forward Looking Statements
The following discussion contains “forward-looking statements,” including statements regarding expectations, beliefs, intentions or strategies for the future. These statements may identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:
| ● | our lack of operating history; |
| ● | our current and future capital requirements and our belief that our existing cash will be sufficient to fund our operations for more than one year from the date that the financial statements are issued; |
| ● | our ability to obtain necessary regulatory approvals from the U.S. Federal Aviation Administration or other governmental agencies, or limitations put on the use of small unmanned aerial systems (“UASs”) in response to public privacy concerns; |
| ● | our ability to manufacture, market and sell our products and to generate revenues; |
| ● | our ability to maintain our relationships with key partners and grow relationships with new partners; |
| ● | our ability to maintain or protect the validity of our U.S. and other patents and other intellectual property; |
| ● | our ability to launch and penetrate markets in new locations and new market segments; |
| ● | our ability to retain key executive members and hire additional personnel; |
| ● | our ability to maintain and expand intellectual property rights; |
| ● | interpretations of current laws and the passages of future laws; |
| ● | our ability to achieve greater regulatory compliance needed in existing and new markets; |
| ● | the overall demand for drone safety systems; |
| ● | our ability to achieve key performance milestones in our planned operational testing; |
| ● | our ability to establish adequate sales, marketing and distribution channels; |
| ● | acceptance of our business model by investors; and |
| ● | other risks and uncertainties, including those listed in the section titled “Risk Factors” in the Company’s final prospectus filed with the SEC on July 27, 2023 (the “Final Prospectus”). |
The preceding list is not intended to be an exhaustive list of any forward-looking statements and are based on our beliefs, assumptions and expectations of future performance, taking into account the information available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results to differ materially from the results expressed or implied by the forward-looking statements.
The forward-looking statements contained herein are based upon information available to our management as of the date hereof and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. Except as required by law, we undertake no obligation to update publicly any forward- looking statements after the date hereof to conform these statements to actual results or to changes in our expectations.
Operating Results.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and the related notes included in our Final Prospectus, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2023, included elsewhere in this Report on Form 6-K. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties.
The following financial data in this narrative are expressed in U.S. dollars, except as otherwise noted.
Overview
Parazero Technologies Ltd. (the “Company”), is an aerospace company that is focused on drone safety systems and engaged in the business of designing, developing, and providing what we believe are best-in-class autonomous parachute safety systems for commercial drones, also known as UASs. Our company was founded by a group of aviation professionals, together with veteran drone operators, to address the drone industry’s safety challenges. Our goal is to enable the drone industry to realize its greatest potential through increasing safety and mitigating operational risk.
Operating Expenses
Our current operating expenses consist of three components — research and development expenses, sales and marketing expenses, general and administrative expenses and prospectus initial public offering expenses. To date, we have not generated significant revenues.
Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022
Results of Operations
| Six months ended June 30, | ||||||||
| (in USD) | 2023 | 2022 | ||||||
| Sales | 344,819 | 145,093 | ||||||
| Cost of sales | 194,104 | 128,435 | ||||||
| Gross profit | 150,714 | 16,658 | ||||||
| Research and development expenses | 216,181 | 307,396 | ||||||
| Selling and marketing expenses | 94,339 | 135,585 | ||||||
| General and administrative expenses | 101,877 | 327,415 | ||||||
| Prospective initial public offering expenses | 106,754 | 405,777 | ||||||
| Operating Loss | 368,436 | 1,159,515 | ||||||
| Financial expenses (income), net | 64,888 | (211,139 | ) | |||||
| Total Comprehensive and net Loss | 433,324 | 948,376 | ||||||
2
Sales
Sales increased by $199,726, or 137.7%, to $344,819 for the six months ended June 30, 2023, compared to $145,093 for the six months ended June 30, 2022. This increase was mainly attributed to that fact, that we faced higher demand to aftermarket products due to new markets and regulatory advancements and also due to OEM orders from 2022 that materialized during H1 2023 and recognized accordingly.
Cost of sales
Cost of sales increased by $65,669, or 51%, to $194,104 for the six months ended June 30, 2023, compared to $128,435 for the six months ended June 30, 2022. This increase was mainly attributed to the increase in sales.
Research and Development Expenses
Our research and development expenses for the six months ended June 30, 2023, amounted to $216,181 a decrease of $91,125 or 30%, compared to $307,396 for the six months ended June 30, 2022. The decrease was primarily attributable to a decrease of $55,000 in patents renewal costs that were due in the compared period in 2022 and a decrease of $45,000 in subcontractor costs. due to completion of development of new products.
Selling and marketing expenses
Our selling and marketing expenses totaled $94,339 for the six months ended June 30, 2023, a decrease of $41,246 or 30%, compared to $135,585 for the six months ended June 30, 2022. The decrease was primarily attributable to lower subcontractors’ expenses required to manage the available cash of the Company.
General and administrative expenses
Our general and administrative expenses totaled $101,877 for the six months ended June 30, 2023, a decrease of $225,538 or 69%, compared to $327,415 for the six months ended June 30, 2022. The decrease was primarily attributable to a decrease of $77,000 and $66,000 in payroll and related expenses and professional services, respectively, due mainly to adjustment in salary and professional services required to manage the available cash of the Company.
Prospective initial public offering expenses
Our prospective initial public offering expenses totaled $106,754 for the six months ended June 30, 2023 a decrease of $299,023 or 74% compared to $405,777 for the six months ended June 30, 2022. Prospective initial public offering expenses include the portion of IPO (defined below) expenses related to selling shareholders and includes specifically identifiable incremental expenses directly related to the preparation and filing of the registration statement on Form F-1, such as legal, advisors and printing expenses.
Finance expenses (income), net
Finance expenses, net for the six months ended June 30, 2023, was $64,888, out of which $96,883 was interest expenses with respect to funding from related party, that was offset partially by exchange rate differences, compared to finance income, net of $211,139 for the six months ended June 30, 2022 attributable mainly to income from exchange rate differences related to a Parent Company.
Comprehensive and net loss
Comprehensive and net loss decreased by $515,052, or 54%, to $433,324 for the six months ended June 30, 2023, compared to a net loss of $948,376 for the six months ended June 30, 2022. The decrease was mainly the result of increase in Company’s sales and decrease in operating expenses (including a decrease of $299,023 in prospective initial public offering expenses) that was offset partially by an increase in the finance expenses, net.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s). A comprehensive discussion of our critical accounting policies is disclosed in our final Prospectus dated July 26, 2023 and filed with the SEC on July 27, 2023, as well as our unaudited condensed financial statements and the related notes thereto for the six months ended June 30, 2023, included elsewhere in this Report Form 6-K.
3
Liquidity and Capital Resources.
Overview
Since our inception through June 30, 2023, we have funded our operations principally with approximately $12.8 million (net of issuance expenses) from the issuance of our equity securities, funds received pursuant certain Simple Agreements for Future Equity (“SAFEs”) entered between the company and certain investors in an aggregate amount of $1.5 million, a loan received from a related party in a total amount of $0.75 million and $0.8 million with grants from the Israeli Innovative Authority and loans from our shareholders. As of June 30, 2023, we had approximately $84,945 in cash and cash equivalents.
The table below presents our cash flows for the periods indicated:
| Six months ended June 30, | ||||||||
| (in USD) | 2023 | 2022 | ||||||
| Operating activities | (249,184 | ) | (1,401,402 | ) | ||||
| Investing activities | (677 | ) | (8,447 | ) | ||||
| Financing activities | 245,000 | 1,538,142 | ||||||
| Net increase (decrease) in cash and cash equivalents | (4,861 | ) | 128,293 | |||||
Operating Activities
Net cash used in operating activities of $249,184 during the six months ended June 30, 2023.
Net cash used in operating activities during the six months ended June 30, 2022 was $1,401,402.
The decrease in the negative cash flow is mainly due to a decrease in current losses during the period.
Investing Activities
Net cash used in investing activities decreased by $7,770 to $677 for the six months ended June 30, 2023, compared to $8,447 for six months ended June 30, 2022, which was used to purchase computers and office equipment.
4
Financing Activities
Net cash provided by financing activities of $245,000 during the six months ended June 30, 2023, consisted of a loan received from a related party.
Net cash provided by financing activities of $1,538,142 during the six months ended June 30, 2022, consisted of the entry into certain Simple Agreements for Future Equity (“SAFEs”) in amount of $1,514,928.
Current Outlook
We have financed our operations to date primarily through revenues from sale of our products, proceeds from issuance of our Ordinary Shares and grants from the Israel Innovation Authority . We have incurred losses and generated negative cash flows from operations since inception in June 2013.
As of June 30, 2023, our cash and cash equivalents were $84,945. In addition, On July 31, 2023, we closed an initial public offering (“IPO”) in which we received gross proceeds of approximately $7.8 million before deducting underwriting discounts and commissions and before offering expenses ($6.0 million net proceeds after deducting approximately $0.8 million of underwriting discounts and commissions and approximately $1.0 million of other offering costs).We expect that we will require additional capital to develop our next generation flight computer including algorithm optimization, AI (artificial intelligence) layer development and optical sensors input integration, as well as to commercialize our new product. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | our ability to market and sell our products and to generate revenues; |
| ● | the progress and costs of our research and development activities; |
| ● | the costs of manufacturing our products; |
| ● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
| ● | the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and |
| ● | the magnitude of our general and administrative expenses. |
Until we can generate significant recurring revenues and profit, we expect to satisfy our future cash needs through debt or equity financings, through the utilization of our current financial resources and sales of our products. We cannot be certain that additional funding will be available to us when needed, on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for commercialization efforts with respect to our products.
5