Drone Maker Cyberlux's Journey To Ukraine, Dodging Bureaucracy And Finally To Pentagon

Cyberlux Corp CYBL recently debuted drone production and pitched to the Pentagon for Ukraine business without luck.

Cyberlux is one of many small companies that have sought to pierce the Pentagon's bureaucracy by cutting through the U.S. military's red tape and taking its product directly to the Ukrainians, the Wall Street Journal reports.

Cyberlux tapped a U.S. drone expert who connected Cyberlux with senior officials in Kyiv. Cyberlux CEO Mark Schmidt raced to Kyiv under military escort in July with a modified movie-production drone to help Ukraine's military repel the Russian invasion.

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Eight months later, the Pentagon appears set to buy the Cyberlux K8 and deliver the machinery to Ukraine.

Cyberlux demonstrated its drone K8 to Ukrainian officials at a testing ground outside the capital, including Gen. Valeriy Zaluzhny, the commander in chief of the country's armed forces.

Following the demonstrations, Ukrainian Deputy Defense Minister Denys Sharapov requested 1,000 K8 drones from the U.S. European Command.

The Pentagon assigned Ukraine's Cyberlux request to the Naval Air Systems Command, which works with airborne weapons systems, including drones.

In November, the naval command paired Cyberlux with Huntington Ingalls Industries, Inc HII, a Virginia shipbuilder with extensive contracts with the Pentagon helping Cyberlux bypass the military-procurement bureaucracy.

However, in December, OTC Markets Group Inc designated Cyberlux's stock as caveat emptor, a buyer-beware label caused by misleading or manipulative stock promotion. Cyberlux's stock price plunged 80% to less than a fraction of a penny following the December designation. 

Since Russia invaded Ukraine last year, the U.S. has approved over $32 billion in security assistance for Kyiv, most of that money going to significant defense companies.

In February, on the first anniversary of Russia's invasion of Ukraine, the Pentagon launched $2 billion in security assistance for Ukraine. On the list of equipment were the Cyberlux K8 drones.

Cyberlux's journey from North Carolina to Kyiv reflects how desperately several small defense companies are attempting to navigate and, in some cases, dodge the Pentagon bureaucracy to get their weapons to Ukraine and how drones' increased usage in modern warfare has bred new business opportunities, the WSJ writes.

Price Action: HII shares traded lower by 2.39% at $203.37 on the last check Wednesday.

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