Draganfly Inc. (NASDAQ: DPRO) (CSE: DPRO) (FSE: 3U8)
(“
Draganfly” or the “
Company”),
an award-winning, industry-leading drone solution developer and
operator, is pleased to announce its third quarter financial
results.
Key Financial and Operational Highlights for Q3
2021:
- Revenue for the third quarter
increased 30.5% to $1,896,992 up from $1,453,905 in the third
quarter of 2020. Third quarter revenue was made up of $1,351,517
from product sales while $411,756 was from drone services with the
balance coming from engineering services.
- Gross profit increased by $212,586
or 37.9% for the third quarter over the same period last year.
Gross margin percentage for Q3 2021 was 40.8% compared to 38.5% in
Q3 2020. This was attributed to a larger contribution of
engineering services this quarter versus the same period last year,
as these services tend to have higher gross margins than the other
categories.
- Total comprehensive income for Q3
2021 was $24.0 million compared to a loss of $2.5 million in Q3
2020. The large increase is from the accounting treatment of a
$30.6 million non-cash liability from USD warrants that were issued
during the Company’s Reg A offering. The year over year
comprehensive income increased as Q3 2020 did not have the
treatment of the USD warrants from the Company’s Reg A offering.
The increase year over year was somewhat offset by an increase in
office and miscellaneous expenses and professional expenses.
- Cash balance on September 30, 2021
of $28.0 million compared to $2.0 million on December 31,
2020.
- Draganfly signed a minimum $9
million manufacturing agreement with Digital Dream Labs, Inc.
(“DDL”) to design and develop an AI consumer companion robot drone
(the “Drone”). As per the terms of the announced agreement,
Draganfly will be the exclusive manufacturer and assembler. DDL
will order at least 50,000 units annually with delivery starting in
2022. The Drone will be integrated into DDL’s existing product
family, including support, sales, and distribution channels used
for their other consumer robots. Draganfly has also been granted a
right of first refusal to become the exclusive manufacturer and
assembler of subsequent drone or UAV-based robots to be added to
DDL’s product portfolio. The parties have entered into a binding
letter agreement reflecting the above terms and will use
commercially reasonable efforts to enter into a definitive
agreement. The binding letter agreement will govern the
relationship between DDL and Draganfly and there can be no
assurance that a definitive agreement will be completed or entered
into amongst the parties.
- Draganfly entered into an exclusive
manufacturing agreement with Valqari LLC (“Valqari”) to produce its
Drone Delivery Stations. The Valqari Delivery Station is a patented
universal drone receptacle for package delivery and pick-up. It
will allow Valqari to revolutionize drone deliveries for industries
including pharmaceuticals, meal delivery, grocery services,
governments, and residential e-commerce. As per the
manufacturing agreement, Draganfly will be the exclusive
manufacturer of Valqari’s Drone Delivery Stations. Valqari will be
ordering at least $400,000 of manufacturing services during the
initial phase of the agreement.
- Draganfly successfully completed
over 300 daytime drone delivery test flights with EMS personnel in
Texas. 100 of the successful flights were completed with the
Company’s innovative temperature managed payload box, which can
transport up to 15 pounds of medical supplies including vaccines
and testing kits. The payload box is uniquely top mounted to make
deliveries safer and more accessible. Initial night flight training
and testing is being scheduled to commence. The data collected from
Draganfly’s daytime and night flight tests will be submitted to the
Federal Aviation Administration (FAA) for approval to enter Phase 2
of its five-phase agreement with Coldchain Technology Services,
LLC. Feedback from EMS personnel is also being used to improve
Draganfly’s training module and develop industry standards.
- The Drone Racing League (“DRL”)
announced a multi-year partnership with Draganfly. The companies
will launch DRL Labs, an innovation hub, to research and develop
next generation drone technology that will advance the sport of
drone racing and other industries undergoing significant
transformations through drones, including humanitarian aid and
mobility. DRL will incorporate Draganfly’s groundbreaking AI Vital
Intelligence platform into its 2021-22 DRL World Championship
Season, which will be used to monitor pilots’ in-race heart and
respiratory-rates. DRL will also release a “Why I Fly” Series
Presented by Draganfly, spotlighting pilots’ personal journeys into
drone flying during the 2021-22 Season.
- Draganfly’s Drone Pilot Training
program is now being offered at Alabama State University (“ASU”) in
Montgomery, Alabama. The nine-week course includes an FAA Part
107 drone preparation course. To fly drones under
the FAA’s Small Unmanned Aircraft Systems (UAS) Rule
(Part 107), a Remote Pilot Certificate must be obtained. The
certificate demonstrates that pilots understand the regulations,
operating requirements, and procedures for safely flying drones. It
is also inclusive of specific skills for sensors, software, and
missions as it relates to varied specific high demand drone
operations like emergency response, delivery, and security.
Following the end of the pilot project in the winter, ASU is
expected to add the course to its continuing education program.
Draganfly’s Drone Pilot Training program will also be
commercialized next year.
- Draganfly’s Vital Intelligence
Smart Vital system has been integrated into Fobi AI Inc.'s (“Fobi”)
(TSXV: FOBI) Venue Management System for Conferences & Events.
The venue management platform will now consist of Draganfly’s Smart
Vital assessment system, Fobi’s Passcreator mobile Wallet passes,
proprietary Smart Tap Devices, Smart Scan Pass Validation App, and
Insight Portal for event analytics.
- Draganfly launched its Draganflyer
Commander2 drone system. Exclusively designed, developed and
manufactured in Canada, the system fully complies with
“Built-in-North America'' requirements. It takes maximum advantage
of federal regulatory requirements concerning the origin and
security of drone systems and devices. The Draganflyer Commander2
is a small Unmanned Aerial System (sUAS) and replaces the highly
respected Commander platform that launched in 2015. The new model
improves operational capabilities and payload options, as well as
offering new North American built and sourced flight controllers,
sensors, communications, and utilises Mav-Link based mission
planning software. Draganfly’s latest class leading drone is ready
to answer the needs of the commercial, farming, geological,
military, and emergency services sectors.
Cameron Chell, CEO of Draganfly, said:
“Maintaining our positive momentum, we successfully executed more
operational milestones than any previous quarter and look for this
to translate into ongoing strong financial performance. The Q3
revenues are a testament to the entire team’s dedication to meet
the unique demands of the rapidly growing drone space. We remain
focused on becoming the leading commercial drone manufacturer and
solutions provider in North America within the next few years.”
Draganfly will hold a shareholder update and
earnings call on November 9, 2021 at 2:30PM MST / 4:30PM EST.
Registration for the call can be
done here.
Selected financial information is outlined below
and should be read with Draganfly’s consolidated financial
statements for the quarter ended September 30, 2021, and associated
management discussion and analysis, which will be available under
the Company's profile on SEDAR at www.sedar.com.
|
Three
months ended September 30, |
Nine months
endedSeptember 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Total revenues |
$ |
1,896,992 |
$ |
1,453,905 |
$ |
5,418,600 |
$ |
2,877,502 |
Gross Profit (as a % of revenues) |
|
40.8% |
|
38.5% |
|
37.2% |
|
49.7% |
Net income (loss) |
|
23,840,499(1) |
|
(2,450,311) |
|
(29,105,655)(1) |
|
(4,522,938) |
Net income (loss) per share ($) |
|
|
|
|
|
|
|
|
-
Basic |
|
0.79 |
|
(0.16) |
|
(1.18) |
|
(0.31) |
-
Diluted |
|
0.74 |
|
(0.16) |
|
(1.18) |
|
(0.31) |
Comprehensive income (loss) |
|
23,975,400(1) |
|
(2,451,543) |
|
(29,034,603)(1) |
|
(4,524,069) |
Comprehensive income (loss) per share ($) |
|
|
|
|
|
|
|
|
-
Basic |
|
0.79 |
|
(0.16) |
|
(1.18) |
|
(0.31) |
-
Diluted |
|
0.75 |
|
(0.16) |
|
(1.18) |
|
(0.31) |
Change in cash and cash equivalents |
$ |
8,802,746 |
$ |
(844,909) |
$ |
25,833,262 |
$ |
(1,779,056) |
As at |
|
September 30, 2021 |
|
December 31, 2020 |
Total
assets |
$ |
60,240,843 |
$ |
7,100,567 |
Working
capital |
|
20,510,097(2) |
|
1,214,371 |
Total
non-current liabilities |
|
253,527 |
|
104,885 |
Shareholders’ equity |
$ |
41,289,675(2) |
$ |
3,848,205 |
|
|
|
|
|
Number of
shares outstanding (post-consolidation) |
|
32,156,950 |
|
17,218,672 |
Notes:
(1) The net income (loss) and comprehensive
income (loss) for the three and nine months ended September 30,
2021 include a change in fair value of derivative liability for USD
warrants of a gain of $30,562,044 and a loss of $15,278,305,
respectively, and would otherwise be losses of $6,721,545 and
$13,827,350 for the net loss, and $6,586,644 and $13,756,298 for
the comprehensive loss, respectively.
(2) Shareholders’ equity and working capital as
at September 30, 2021 includes a fair value of derivative liability
for USD warrants of $16,890,998 and would otherwise be
shareholders’ equity of $58,180,673 and working capital of
$37,401,095.
|
|
2021 Q3 |
|
2021 Q2 |
|
2020 Q3 |
Revenue |
$ |
1,896,992 |
$ |
1,981,872 |
$ |
1,453,905 |
Cost of goods sold |
$ |
(1,123,942) |
$ |
(1,253,279) |
$ |
(893,441) |
Gross profit |
$ |
773,050 |
$ |
728,593 |
$ |
560,464 |
Gross margin – percentage |
|
40.8% |
|
36.8% |
|
38.5% |
Operating expenses |
$ |
(8,006,957) |
$ |
(3,340,952) |
$ |
(2,852,003) |
Operating loss |
$ |
(7,233,907) |
$ |
(2,612,359) |
$ |
(2,291,539) |
Operating loss per share -
basic |
$ |
(0.24) |
$ |
(0.10) |
$ |
(0.15) |
Operating loss per share -
diluted |
$ |
(0.22) |
$ |
(0.10) |
$ |
(0.15) |
Other income (expense) |
$ |
31,074,406(3) |
$ |
(5,409,861)(3) |
$ |
91,228 |
Other comprehensive income |
$ |
134,901 |
$ |
9,684 |
$ |
(1,232) |
Comprehensive income (loss) |
$ |
23,975,400 |
$ |
(8,095,356) |
$ |
(2,451,453) |
Comprehensive income (loss) per
share - basic |
$ |
0.79 |
$ |
(0.30) |
$ |
(0.14) |
Comprehensive income (loss) per
share - diluted |
$ |
0.75 |
$ |
(0.30) |
$ |
(0.14) |
Note:
(3) The other income and comprehensive income
for the third quarter of 2021 include a change in fair value of
derivative liability for USD warrants of $30,562,044 and would
otherwise be an income of $512,362 and loss of $6,586,644.
All financial information in this press release
is prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board.
Note: this press release refers to "gross
margin" which does not have any standardized meaning prescribed by
generally accepted accounting principles in Canada
("GAAP"). Gross margin is defined as gross profit
divided by revenue and is often presented as a percent. Draganfly’s
management believes that gross margin and other non-GAAP measures
provide useful information to investors as it provides them with
supplemental measures of the Company's operating performance and
liquidity and thus highlights trends in the Company's business
that may not otherwise be apparent when relying solely on GAAP
measures. Management also uses non-GAAP measures and metrics in
order to facilitate operating performance comparisons from period
to period, to prepare annual operating budgets and forecasts and
to determine components of executive compensation. For more
information with respect to financial measures which have not been
defined by GAAP, including reconciliations to the closest
comparable GAAP measure, see the "Non-GAAP Measures and Additional
GAAP Measures" section of the Company’s most recent MD&A which
is available on SEDAR.
About Draganfly
Draganfly Inc. (NASDAQ: DPRO; CSE: DPRO; FSE:
3U8) is the creator of quality, cutting-edge software, and systems
that revolutionize the way organizations can do business and
service their stakeholders. Recognized as being at the forefront of
technology for over 22 years, Draganfly is an award-winning,
industry-leading manufacturer and technology developer serving the
public safety, agriculture, industrial inspections, security, and
mapping and surveying markets. Draganfly is a company driven by
passion, ingenuity, and the need to provide efficient solutions and
first-class services to its customers around the world with the
goal of saving time, money, and lives.
For more information on Draganfly, please visit us
at www.draganfly.com. For additional investor information visit
https://www.thecse.com/en/listings/technology/draganfly-inc,
https://www.nasdaq.com/market-activity/stocks/dpro or
https://www.boerse-frankfurt.de/aktie/draganfly-inc.
Media Contact Arian
HopkinsEmail: media@draganfly.com
Company
Contact
Cameron Chell, CEOPH: 310-658-4413Email: info@draganfly.com
Forward-Looking StatementsThis
release contains certain “forward looking statements” and certain
“forward-looking information” as defined under applicable Canadian
securities laws. Forward-looking statements and information can
generally be identified by the use of forward-looking terminology
such as “may”, “will”, “expect”, “intend”, “estimate”,
“anticipate”, “believe”, “continue”, “plans” or similar
terminology. Forward-looking statements and information are based
on forecasts of future results, estimates of amounts not yet
determinable and assumptions that, while believed by management to
be reasonable, are inherently subject to significant business,
economic and competitive uncertainties and contingencies.
Forward-looking statements and information are subject to various
known and unknown risks and uncertainties, many of which are beyond
the ability of the Company to control or predict, that may cause
the Company’s actual results, performance or achievements to be
materially different from those expressed or implied thereby, and
are developed based on assumptions about such risks, uncertainties
and other factors set out here in, including but not limited to:
the potential impact of epidemics, pandemics or other public health
crises, including the current outbreak of the novel coronavirus
known as COVID-19 on the Company’s business, operations and
financial condition, the successful integration of technology, the
inherent risks involved in the general securities markets;
uncertainties relating to the availability and costs of financing
needed in the future; the inherent uncertainty of cost estimates
and the potential for unexpected costs and expenses, currency
fluctuations; regulatory restrictions, liability, competition, loss
of key employees and other related risks and uncertainties
disclosed under the heading “Risk Factors“ in the Company’s most
recent filings filed with securities regulators in Canada on the
SEDAR website at www.sedar.com. The Company undertakes no
obligation to update forward-looking information except as required
by applicable law. Such forward-looking information represents
managements’ best judgment based on information currently
available. No forward-looking statement can be guaranteed and
actual future results may vary materially. Accordingly, readers
are advised not to place undue reliance on forward-looking
statements or information.
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