Knox Henderson delves into how Draganfly’s cutting-edge technology is making it possible for universities and other organizations to operate safely during the pandemic.
For a company known for its drone technology, Draganfly Inc. (DFLY:CSE; DFLYF:OTCQB) knows a lot about cameras–and then there’s the data! So, when health screening technology targeting the masses comes into play, it falls right into its wheelhouse. The best part about the well-connected Draganflyófor real, the oldest commercial drone company in the worldóis that all this drone work has led to high levels of acceptance at government and military levels. The “eye-in-the-sky” has touched down to ground level to help a more health-enlightened population battle a pandemic. For investors of DFLY these kinds of contracts are on a next-level scale. Recent wins for on-site health and social distancing technology could put Draganfly into the stratosphere. As these large, high-profile contracts continue to accumulate so will the trajectory of its share price.
“One or two of these health security deals dwarf our current revenues,” says CEO Cameron Chell whose company’s sales run rate is at about $5 million and boasts an impressive gross margin of 50%. Profitability is a non-issue at this stage as the company is focused rapid growth, organically and by acquisition.
“We could be profitable today if we weren’t continually pursuing an aggressive expansion strategy,” says Chell. “Our objective is to be at a $50 million run rate by 2023. It is not responsible to our shareholders to be satisfied in having a $5 million business, when we have the potential of a $500 million business.”
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Chell says the revenue boost will be both incremental and exponential. “It will be a big, big boost for us. We’re working on multiple contracts right now that are looking to potentially be anywhere from $10ñ30 million at a time; it seems inevitable that we are going to close a couple of them and they would dwarf our entire revenue stream with one or two contracts.”
Draganfly is world-renown technical “wiz-kid” of unmanned vehicle systems (UVS), robotics, Artificial Intelligence (AI) and software that has innovated new means capturing and analyzing date. Its an award-winning, industry-leading manufacturer within the commercial UAV, RPAS, and UVS space, serving the public safety, agriculture, industrial inspections, security, and mapping and surveying large areas.
Its development in these area makes it a natural fit for pandemic related screening along data collection and analysis for the all-critical preemptive strategies for a stressed-out pubic. “It just demonstrates the fact that we’re just going to continue to build out AI and sensors and equipment. We do the manufacturing and assembly, the software development, the AI. We’ve got all that capability and this data is more important than any other data out there; security is paramount. The fact that we’re the end-to-end provider, building the hardware, through to the software, right through to the AI, is quite frankly why we’re able to be working on the government, military and public safety contracts.
What is hot right now is Draganfly’s Vital Intelligence Smart Thermal Assessment Station and Vital Sign Screening technology. It provides a quick, non-invasive (contactless) and anonymous measurement of an elevated body temperature andówith voluntary consentóheart rate, respiratory rate and O2 saturation, all from a camera that takes seconds to capture. The Social Distancing Awareness unit ensures compliance with social distancing guidelines.
Draganfly Vitals Screening Kiosk
Alabama State University has purchased and installed five Smart Thermal and Vital Sign Assessment units and five Social Distancing Awareness units to be stationed across the campus and accessible by its staff, faculty and 4,000-plus students. Individuals who appear to have an elevated temperature and vital signs could then be screened by a medical professional to confirm the presence of an infectious condition.
Early September, the company also announced that “Super-Bowl level” film producers Richard Goldstein and Ron Cicero selected Draganfly as its sole provider of Smart Vital Sign and Social Distancing equipment for television and commercial production, and the company has a host of other announcements in this area around the corner. Draganfly’s Vital Intelligence Safe Set Solution, which provides vital sign and social distancing measurement software plus hardware for the television and commercial production industry, will be the cornerstone of this new initiative. This commercial production provider is taking immediate delivery of the first four units (US$70,000) of an eventual fleet of units to supply the annualized $6-billion commercial spot production industry.
When I first covered DFLY back in March, the company was capitalizing on a U.S. military ban on Chinese-made drones. “The move against Chinese technology started last October 2019 when the U.S. Department of the Interior grounded its 800+ dronesóall made in China or with Chinese partsópending review of their data security. Since then, more divisions of the U.S. military and government are actively considering to further bar Chinese made drones. The market is now taking notice of Draganfly given its “pole position” to replace much of the up to $1 billion void left by the now-banned Chinese drone technology.
“Since then the DOD has grounded their entire Chinese fleet and now they’re Americanizing it,” says Chell. “The defense initiative department recently announced that five new drones that are pre-approved for purchase by the DOD none Chinese, one French and the rest are all U.S.” So, including Draganfly, there are now still only six manufacturers that can produce for the DOD right now and we’re one of them.”
Granted, since March the market capitalization of DFLY under was just US$50 million with a $0.70 price and has since traded slightly downward, now trading nearer to $0.55 range, with a market cap of $37 million. So, with all this excitement and potential, why is the stock trading sideways?
“I think a couple of things are at play. First, the market has a lot of variables in it currently and second the tech we are commercializing is almost to good to be true,” suggests Chell. “I see a large audience poised to see how this next quarter does. If we remain on our current growth path (last quarter we were up over 200% year over year), I think you will see the share price looking for a new level, fueled by retail, institutional and strategic investors.”
The strategic differentiator for Dragonflyóor one of themóhas always been its sensor and data work. “An air-frame is an air-frame but what’s really important to the customer is the data they can get and how they can use it and manage it. Our ability to do this type of engineering work is what wins us these opportunities.”
He says Draganfly has been deploying its screening system in schools and workplaces and has been inundated with interest and orders that it’s fulfilling right now.
Draganfly is a full service company with revenue streams in contract engineering, product development, product integration, management services and data services. Other recent wins include the National Police of Dubai recently selected Draganfly to test and develop health security monitoring. Mining companies have contracted the company to search large swaths of land to detect a wide range of mineral deposits. More opportunities are abound with power companies using drones to monitor the power grid infrastructure and agriculture uses drone-based sensors to monitor the status of crops. One can only imagine the global potential to meet urgent need to get a pandemic under control.
It’s the kind of technology that has a societal impact. While screening and monitory technology strives to strike the balance between privacy and security, it’s something we can all benefit from, especially DFLY shareholders.
Knox Henderson is a journalist and capital markets communications consultant. He has advised for a broad range of small cap companies in the resource, life sciences and technology sectors for more than 25 years.
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