Draganfly Inc.: A Flying Data-Gathering Robot

Oct. 20, 2020 12:45 PM ETDraganfly Inc. (DPRO)TAKOF, FLT:CA4 Comments
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Ari Zoldan
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Summary

  • Current estimated U.S. Domestic Drone Market: $600 million. Potential global drone market $1 trillion.
  • The company has five revenue channels.
  • The National Police of Dubai recently contracted Draganfly to provide security monitoring.

Draganfly, Inc. (OTC: DFLYF) was founded as a pioneer in the remote-controlled drones industry. While the company still designs and manufactures unmanned aerial vehicles (UAVS), its real focus is using drones as robotic platforms for data collection and analysis for a range of important uses and industries. Moreover, Draganfly is also the first company to install fixed vital-sign sensor stations for detecting potential COVID-19 infection in large groupings of people.

CEO Cameron Chell describes the company as a "technology company." Indeed, in the aerospace industry, DFLYF is the creator of quality, cutting-edge smaller unmanned vehicle systems (UVS), robotics, and software that revolutionize how data is captured and analyzed. Draganfly is 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.

(Source: Google Images)

What makes Draganfly an exciting company?

The $600 million U.S. drone market was-up until recently- dominated by the Chinese drone maker, DJI. However, the U.S. government became concerned with the Chinese policy of Forced Technology Transfer (FTT), similar to the publicized problem with the Chinese communications equipment maker, Huawei. As a result of the security considerations that drones now present as the most efficient data gathering platform, drones manufactured by Chinese companies are no longer allowed to operate in the U.S. While DFLYF is filling much of that void, there is so much more to the company and its potential to meld important data collection and analysis.

Five Revenue Channels

The first revenue stream is an OEM of sensors and drone platforms for small commercial, military, and public healthcare use.

The second line of income is providing contract aerial services such as LiDAR, or light detection and ranging that is used for building 3D maps, which provide important real-time data for infrastructure, mining, and agriculture industries.

The third is Managed Services. Data collected by drones is converted into actionable data for making rapid decisions.

Fourth is Data Acquisition and Analysis. Any industry may have the need to gather information that requires a large scale or from a three-dimensional view. For example, the military may need to identify minefields or individual explosive devices (IED) in a local area.

The fifth is supporting the enormous agricultural industry, particularly in the era of climate change. Likewise, insurance companies can assess damages and claims estimates for natural disasters to allow more rapid claim processing.

According to CEO Cameron Chell, a veteran in the industry for over 20years, the company expects to more than triple its revenues for the next few years and reach about $50 million in sales by 2024. According to Chell, this projection is based on the number of large companies and government agencies lining up for quotes. Indeed, within the last few months, the company has landed some key new contracts, domestic and foreign.

Draganfly COVID-19 Thermal Testing station at Alabama State University

(Source: Attachment)

The Draganfly Vital sensor platform assesses vital signs for the rapid detection of potential infection and advises the University Administration if there are any positive indications.

Company overview

DFLYF, currently priced at $0.49 per share on the OTC market, is considered a microcap stock. Like so many others in this category, Draganfly tapped the OTC markets as a less expensive means to acquire public funding and to raise its profile among investors. Shares of microcap companies can be volatile and tend to carry higher risk than larger capitalized companies, but the reward can at times be significant as well.

Market Cap: 34.2M

Price Range 2020 52 weeks

OTC (US) Over the Counter: $0.257- $1 .460

Average Daily Volume: 134,609

Price to Book Ratio: 18.44 Tech development stocks are valued on their potential future revenue and are thus not financially measurable compared to an ongoing business enterprise.

Current Ratio: 3.2

Reserves: $2.9M

Financing Ability: Good

Niche Competitors: DJI Drone Delivery Canada Corp (OTCQX:TAKOF), Cloud MD Software (OTCQX:DOCRF); Imagine AR (OTCQB:IPNFF); KULR Tech Group (KULR)

Disclaimer: Microcap stocks are risky, and investors can lose their entire investment capital.

The Big Picture Opportunity

A huge market of multiple opportunities!

  • Currently, the company has installed volume COVID-19 detection system at the University of Alabama. The company has set up over 18 fixed detection sites that monitor certain vital signs that can identify potential infection in a large crowd of students as they pass through points of high congestion. The data is instantaneously analyzed and sends a warning to the administration if certain parameters are hit. Imagine the potential use of these fixed monitoring systems installed in schools, office buildings, and airports across the nation.

  • Draganfly was recently awarded a contract to provide social distancing monitoring for a movie production company.

  • The National Police of Dubai recently contracted Draganfly to provide security monitoring.

  • Mining companies contract the company to search large swaths of land to detect a wide range of mineral deposits.

  • Power companies use drones to monitor the power grid infrastructure.

  • Agriculture uses drone-based sensors to monitor the status of crops.

  • The U.S. is considering a large national infrastructure rebuild, and there are over 10,000 bridges that will use drones to inspect and analyze for areas of weakness as well as rust buildup.

  • The global military-industrial complex is implementing aggressive drone programs for both large drones, such as the predator, as well as small drones for a variety of tactical situations.

  • Insurance companies use drones to assess potential losses and claims from natural disasters such as hurricanes, flooding, earthquakes, and other large-scale disasters.

  • Draganfly will also own much of the data it collects and offer industry data and consulting based on its proprietary data archives.

All told, the potential market for UAVs for data gathering and analysis is estimated to be over $ 1 trillion. As such, Draganfly sees its future in providing the platform, the sensors, and artificial intelligence (A.I.) needed to give the decision-makers rapid and relevant data to help make the best decisions.

The success of Draganfly will depend on CEO Cameron Chell's ability to close sales. With 20 years in the business, which has allowed him to develop quality management skills and a wide range of business contacts, Mr. Chell is confident he will be able to do so. Once contracts are signed, financing growth is not a problem. Further, CEO Chell forecasts future revenues to top $50 million within the next three years.

Market Overview

Draganfly Inc. occupies a unique niche in the Aerospace technologies industry. Formerly, drones were thought of as consumer products for hobbyists. However, as sensor and software development developed, drones became an obvious platform for projects that covered large areas of terrain and could use a 3D view. When most people think of drones, they think of some Hollywood thriller and Predator drones dropping in for the kill. Large weaponized drones are an important growth area for the large aerospace companies that make up the current military-industrial complex. However, there are many other uses for drone platforms that are not weaponized but focused on data gathering. Years ago, Draganfly saw the scientific application of drone-based data gathering. As a result, the company became focused on drone platform innovation and performance and the development of software and sensor systems mounted on a drone platform. Also, once the viability of data collection was demonstrated, Draganfly embarked on developing the capability to not only collect data but analyze it "on the fly." In other words, customers would receive much more than raw data but receive processed data directly downloaded, real-time from the drone, allowing for rapid decision making.

According to CEO Chell, there are few companies in this segment of the drone market. Once DJI was cut off from selling into the U.S. market, the $600 million U.S. domestic market became pretty much up for grabs. "We have seen an increase in larger fortune 500 companies reaching out to Draganfly for potential projects mainly because they understand that we hold over 19 patents in the drone market," says Chell.

Current estimated U.S. Domestic Drone Market: $600 million. Potential global drone market $1 trillion.

Competitors

As mentioned, a large part of the OEM market will be the large aerospace companies, particularly for the military and some commercial segments. Dragonfly is focused on private enterprise, public health, and scientific data gathering and analysis. Drone production is just the platform (and DFLYF is a leading patent holder for any projects that may involve a drone platform). A group of other OTC drone-related companies exits, but few with the longevity and brand name as DFLYF.

DJI (Chinese company boycotted in the USA due to security issues); TAKOF, DOCRF; IPNFF; KULR.

Company Leadership

CEO Cameron Chell has been in the industry for over 20 years. He has been part of other management teams that have taken companies from small to large, and he feels that DFLYF is on a similar track. In Chell's opinion, the only thing that is keeping the company from really taking off is the fact that the company brand has not yet received the notoriety it needs to attract institutional investors. However, that seems to be changing now that the Chinese company competitor, DJI ($15 billion market cap), has been forced out of the U.S. market. Also, there has been a recent change in U.S. sentiment to favor "buy USA."

Going Vertical

Chell has made it clear that he and his key investors want to build the company around its key markets: Public Health, Agriculture, Mining, Insurance, Infrastructure monitoring, and Data collection and analysis as a service. Chell further feels confident that in 2021 he foresees $5 million in revenues and a doubling each year, reaching around $50million in revenue by 2025 or before. When asked what will be key to achieving his goals, he thinks the ability to close contracts will be essential. Currently, the backlog is building, but given the aerospace's sales cycle, the company must continue to raise institutional awareness.

Potential Business Risk

As with all technology, innovation is the key, as well as the risk. If other competitors come up with a better, more cost-effective offering, the market can change rapidly. Another potential risk is a change in the U.S. administration's growing trade conflict with China, and the re-emergence of DJI (Chinese drone company) back into the U.S. market.

Conclusion

Draganfly Inc. is a known U.S. drone brand, but its real value is its practical use as a data gathering and analysis platform. However, the company really sees itself as a technology development company. Just being the platform is not enough, and the company is focused on converting data to actionable information on a real-time basis. Also, the company sees real opportunity as a data repository and analysis provider. Some of the largest industries in the world as well as public healthcare, require the ability to gather and analyze data from large physical domains that are most appropriate for a flying platform that can collect, analyze and contextualize data for decision making.

In an era of Big Data and Industry 4.0, gathering and processing large amounts of data "on the fly" will be a valuable tool for many global industries.

DFLYF appears poised to become a potential force in the market.

This article was written by

Ari Zoldan profile picture
515 Followers
Ari Zoldan is the CEO of Quantum Media Group, a marketing and media agency based in New York City. As an on-air TV personality, Ari can be seen regularly on FOX, CNN & CNBC covering technology, media and business trends. Ari serves as Chair of the Media & Development committee for The Zahn Center for Innovation at City College. In his journalistic capacity Ari and has been to dozens of war torn and conflicted zones such as South Sudan, Uganda, Nicaragua, Haiti, Burma, & Guinea. He holds press credentials on Capitol Hill and the United Nations and is a member of the National Press Club in Washington, DC.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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