Sky-Watch A/S

Management's reviewOperating reviewPrincipal activitiesThe purpose of Sky-Watch A/S is to develop and commercialize market leading mini UAS (Unmanned Aerial Systems) for professional users, primarily in the Defence & Security segment. The Company collaborates with world leading corporations to develop leading edge system components and solutions and serves a growing international customer base.Development in activities and financial mattersBusiness reviewThe Russian invasion in Ukraine in February 2022 has directly and indirectly caused an increase in demand for Sky-Watch solutions. The extent of confirmed sales contracts for delivery in 2023 is strong and both significant growth and a positive result for 2023 is expected.Supporting the increased activity level and projected growth an expansion of both facilities and organization has been initiated from the beginning of 2023.Throughout 2022, and into 2023, the Sky-Watch product and technology platform has continued to improve, and an increased spectrum of Defence & Security features and value propositions have been added to the Company’s offerings.In March 2022, the Company was acquired by US based AIRO Group Holdings, Inc. The AIRO Group business model is to consolidate ownership of several companies in the aerospace segment. AIRO Group Holdings, Inc. is in process to go public on Nasdaq (New York) through a merger with blank-check (SPAC) Company Kernel Group Holdings. The merged company, to be known as AIRO Group, will have businesses aligned with avionics, advanced air mobility, uncrewed air systems (UAS) and training.

Financial reviewSky-Watch A/S incurred a profit after tax of DKK 5,503 thousand in the fiscal year 2022. This represents a significant improvement from DKK 23,528 thousand in losses in fiscal year 2021.Financial position and going concernAs of 31 December 2022, the total cash position was DKK -11,103 thousand (comprising cash, bank debt and other credit institutions), the loss before tax in 2022 was DKK -8,982 thousand and the balance sheet shows equity of DKK 2,377 thousand.In 2022, the Company entered a finance contract with Dangroup ApS ensuring a loan facility of DKK 33,000 thousand until 30 June 2023, of which DKK 11,250 thousand was utilized as of 31 December 2022.Management expects a material positive result according to forecast for 2023 based on the above-mentioned orders already placed for delivery in the remainder of 2023 and, according to forecasts, a restraining of these earnings in 2024 and 2025.The Company believe its cash position and the liquidity from its planned activities and operations in 2023, external borrowings and other current sources are sufficient to satisfy its working capital requirements at least until 31 December 2023.Based on these assumptions, the Executive Board and Board of Directors have prepared the Financial Statements based on a going concern assumption.Deferred taxThe Company has a deferred tax asset of approximately DKK 13.8 million as of 31 December 2022, which primarily relates to open-ended carry-forward tax losses. Based on the forecast for 2023 and forecasts for 2024-2025, management has chosen to fully recognize the tax asset in the balance sheet as of 31 December 2022. As of 31 December 2021, no tax asset was recognised in the balance sheet. The recognition of the tax asset therefore results in an income of approximately DKK 13.8 million under tax on the profit for the year in the income statement.