Draganfly Reports its 2023 Results
- Total revenue for 2023 was $6,554,842, with product sales decreasing by $263,339 compared to 2022.
- Gross Profit increased by 161.1% to $2,064,114 in 2023, with a gross margin of 31.5%.
- Comprehensive loss for 2023 was $23,709,851, including non-cash items like a gain in fair value of derivative liability and an expense for impairment of notes receivable.
- Cash used in operating activities decreased by $1,304,184 year over year.
- Revenue for Q4 2023 was $916,299, with a gross profit of $258,879 representing a 23.1% increase year over year.
- The Company received a Transport Canada Special Flight Operations Certificate for its Heavy Lift Drone and participated in events focusing on disaster risk reduction and military applications.
- Draganfly announced the closing of a US$3.5 million underwritten offering, with plans to allocate the net proceeds towards general corporate purposes.
- The Company will hold a shareholder update call on March 27, 2024, at 2:30 p.m. PDT / 5:30 p.m. EDT.
- Product sales and services revenue decreased in 2023 compared to 2022.
- Gross profit decreased by $371,404 year over year when excluding one-time adjustments.
- The Company recorded a comprehensive loss of $23,709,851 for 2023.
- Cash balance on December 31, 2023, was $3,093,612.
- The Company received a notification from Nasdaq regarding noncompliance with listing rules, potentially leading to delisting.
Insights
The recent financial results from Draganfly Inc. indicate a mixed performance, with a notable decrease in total revenue year-over-year but an impressive increase in gross profit margin, from 10.4% to 31.5%. Despite the growth in gross profit, the company experienced a comprehensive loss, albeit an improvement from the previous year. The reduction in cash used in operating activities is a positive sign, reflecting potentially improved operational efficiency.
Investors should consider the implications of the revenue decline, which could signal market challenges or the impact of the strategic shift towards new product lines. The increase in gross margin suggests improved cost management or a move towards higher-margin products, which could be favorable if sustained. However, the comprehensive loss underscores the importance of monitoring Draganfly's path to profitability, especially in light of the capital raised through an underwritten offering intended for corporate purposes.
The company's non-compliance with Nasdaq's minimum bid price requirement raises concerns about investor confidence and market perception, which could affect the stock's liquidity and the company's ability to raise further capital. The request for a hearing with the Nasdaq Panel to regain compliance is a critical juncture for Draganfly and the outcome will be closely watched by stakeholders.
Draganfly's shift in production capacity and the commercialization of its new drone platforms, Commander 3XL and Heavy Lift Drone, reflect strategic moves to capture emerging market opportunities in specialized drone applications. The enhanced production capabilities aim to meet the demands of advanced delivery, industrial and defense applications, areas with significant growth potential.
The company's involvement in events like Modern Warfare Week and its engagement with the United Nations on emerging technologies for disaster risk reduction demonstrate efforts to position itself at the forefront of technological innovation in its field. These initiatives could improve brand recognition and open new business avenues, particularly in specialized sectors like defense and disaster management where technological advancements are critical.
However, the transition to new product lines and customer integration requirements that led to decreased sales in the short term must be carefully managed to ensure long-term market position and financial stability. The company's ability to successfully market and deliver its new products will be a key factor in determining its future revenue growth and market share.
The regulatory compliance aspect, particularly the Nasdaq Listing Rule 5550(a)(2) related to minimum bid price, is a significant concern for Draganfly. The failure to maintain a minimum bid price and the subsequent noncompliance with the $5 million minimum stockholders’ equity requirement could lead to delisting, which would have serious implications for the company's ability to access capital markets and maintain shareholder confidence.
The upcoming hearing with the Nasdaq Panel is a pivotal event for the company, as it will determine whether Draganfly can maintain its listing on the exchange. The company's plan to regain compliance will need to be robust and convincing to the Panel. The outcome of this hearing will be a key determinant of Draganfly's ability to continue as a publicly traded entity on a major exchange and it may have a material impact on the company's operational and strategic decisions going forward.
Saskatoon, SK., March 27, 2024 (GLOBE NEWSWIRE) -- Draganfly Inc. (NASDAQ: DPRO) (CSE: DPRO) (FSE: 3U8) (“Draganfly” or the “Company”), an award-winning, industry-leading drone solutions and systems developer, is pleased to announce its fourth quarter and fiscal 2023 financial results. Revenue for the fourth quarter and the year was dictated by the shift to larger in-house capacity and drone production capabilities.
The financial year 2023 was a transition year for Draganfly as 2023 marked new production capacity coming online along with the commercialization of its flagship Commander 3XL and Heavy Lift Drone platforms.
Key Financial Highlights for 2023:
- Total revenue for the year ended December 31, 2023, was
$6,554,842. Product sales decreased$263,339 in 2023 as compared to 2022, while services revenue decreased$786,878. T his is largely due to product line transition and a focus on building new and increased production capabilities - Gross Profit was
$2,064,114 , an increase of$1,273,439 or up161.1% from the prior year. As a percentage of sales, gross margin increased from10.4% in 2022 to31.5% in 2023. This year’s gross profit included a one-time non-cash write-down of inventory of$331,671 while last year’s gross profit included a non-cash downward adjustment of$1,976,514. Excluding these adjustments, gross profit decreased by$371,404 year over year. As a percentage of sales, adjusted gross margin increased from36.4% in 2022 to36.5% in 2023. - The Company recorded a comprehensive loss including all non-cash items of
$23,709,851 compared to a comprehensive loss of$27,305,305 in 2022. The comprehensive loss for the year ended December 31, 2023, includes non-cash changes comprised of a gain in fair value of derivative liability from warrants of$211,110 , an expense for impairment of notes receivable of$101,351 , a write-down of inventory of$331,671 , and an expense for goodwill and intangibles impairment of$87,415 and would otherwise have been a comprehensive loss of$23,400,524 compared to a comprehensive loss of$24,067,180 excluding non-cash items in the same period last year. Cash used in operating activities decreased by$1,304,184 year over year. - The Company’s cash balance on December 31, 2023, was
$3,093,612.
Key Financial and Operational Highlights for Q4 2023 and Early 2024:
- Revenue for Q4 2023 was
$916,299 compared to$1,314,162 for Q4 2022 largely due to a decrease in Q4 product sales relating to product line transition and new customer category integration requirements along with slightly lower services sales. - Gross Profit was
$258,879 for Q4 2023 compared to -$1,665,971 in Q4 2022 representing an increase of$1,924,850 year over year. Gross profit for Q4 2023 would have been$382,303 if it wasn’t for a one time non-cash write down of inventory of$123,424 while Q4 2022 would have been$310,543 not including a one-time non-cash write down of inventory for$1,976,514. Hence, gross profit on an adjusted basis was up23.1% year over year. Gross profit as a percentage of sales for Q4 2023 was28.3% but on an adjusted basis was41.7% . - The Company recorded a comprehensive loss including non-cash items for Q4 2023 of
$4,191,796 compared to a comprehensive loss of$16,660,602 for the same period in 2022. A69.3% improvement over 2022. The comprehensive loss for the fourth quarter of 2023 includes non-cash changes comprised of a gain in fair value derivative liability of$153,798 as well as a one time write down of inventory of$123,424 , and would otherwise be a comprehensive loss of$4,222,170 compared to a comprehensive loss of$7,482,545 excluding non-cash items in the same period last year. The decrease in loss was primarily due to lower professional fees, wages, and share based compensation charges.
- The Company received a Transport Canada Special Flight Operations Certificate (SFOC) for its Heavy Lift Drone to support advanced flight testing above 55lbs/25KG MTOW. This will allow the highly specialized development of advanced delivery, industrial, and defense applications. The Heavy Lift Flight Testing SFOC allows Draganfly to conduct these specialized and advanced operations utilizing the Heavy Lift within an approved flight test area. This development also enables the Company to initiate direct application and use-case testing. Draganfly can enhance and optimize highly specialized operational and maintenance manuals and Standard Operating Procedures for various conditions and scenarios.
- The Company addressed United Nations Experts speaking on emerging technologies for disaster risk reduction organized by the World Meteorological Organization (WMO), the International Telecommunication Union (ITU), and the United Nations Convention to Combat Desertification (UNCCD) as part of ITU’s webinar series on digital transformation. It focused on the transformative ability of cutting-edge technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), Unmanned Aerial Vehicles (UAVs), digital twin, and the Metaverse and their use in disaster management. This event explored how these technological innovations can effectively mitigate and respond to natural hazards and disasters.
- The Company showcased the Commander 3XL and new military special-purpose capabilities at Modern Warfare Week in Fayetteville, NC. The event is a premier gathering for the Special Operations Forces (SOF) community, providing a platform for education and collaboration on the evolving landscape of warfare. 800 select military and government representatives are anticipated to attend. The Global Special Operations Foundation (GSOF) and the United States Army Special Operations Command (USASOC) jointly sponsor the event.
- Draganfly announced the closing of a US
$3.5 million underwritten offering, with the Company planning to allocate the net proceeds towards general corporate purposes. These purposes included funding its capabilities to meet the demand for its new products, supporting growth initiatives, covering working capital requirements, continuing the development and marketing of the Company's core product, potential acquisitions, and research and development efforts.
- Draganfly announced record third-quarter results for 2023, recording revenue of
$2,138,017 , which marked a14.0% increase from the same period the previous year. The revenue for Q3 of 2023 comprised product sales amounting to$1,653,111 and drone services totalling$484,906. T his performance was compared to the Q3 revenue in 2022, which stood at$1,876,221 , consisting of$1,359,986 from product sales and$516,235 from drone services, highlighting the Company's growth and expansion in its market segments.
Draganfly will hold a shareholder update call on March 27, 2024, at 2:30 p.m. PDT / 5:30 p.m. EDT. 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 December 31, 2023 and associated management discussion and analysis, which will be available under the Company's profile on SEDAR+ at www.sedarplus.ca and filed on EDGAR.
| For the year ended December 31, | 2023 | 2022 | 2021 | ||||||
| Total revenues | $ | 6,554,842 | $ | 7,605,059 | $ | 7,053,965 | |||
| Gross Profit (as a % of revenues) (1) | 31.5 | % | 10.4 | % | 37.5 | % | |||
| Net (loss) income | (23,611,810 | ) | (27,654,364 | ) | (16,202,972 | ) | |||
| Net (loss) income per share ($) | |||||||||
| (0.56 | ) | (0.82 | ) | (0.58 | ) | |||
| (0.56 | ) | (0.82 | ) | (0.58 | ) | |||
| Comprehensive (loss) income | (23,709,851 | ) | (27,305,305 | ) | (16,399,137 | ) | |||
| Comprehensive (loss) income per share ($) | |||||||||
| (0.56 | ) | (0.81 | ) | (0.59 | ) | |||
| (0.56 | ) | (0.81 | ) | (0.59 | ) | |||
| Change in cash and cash equivalents | $ | (4,801,169 | ) | $ | (15,180,932 | ) | $ | 21,093,297 | |
(1) Gross Profit (as a % of revenues) would have been
| As at | December 31, 2023 | December 31, 2022 | |||||||
| Total assets | $ | 8,330,292 | $ | 14,638,533 | |||||
| Working capital | (717,017 | ) | 10,168,800 | ||||||
| Total non-current liabilities | 523,584 | 249,740 | |||||||
| Shareholders’ equity | $ | 407,716 | $ | 11,040,881 | |||||
| Number of shares outstanding | 49,229,563 | 34,270,579 | |||||||
Shareholders’ equity and working capital as at December 31, 2023, includes a fair value of derivative liability of
| 2023 Q4 | 2023 Q3 | 2022 Q4 | |||||||
| Revenue | $ | 916,299 | $ | 2,138,018 | $ | 1,314,162 | |||
| Cost of goods sold(2)(4) | $ | (657,420 | ) | $ | (1,243,334 | ) | $ | (2,980,133 | ) |
| Gross profit(3)(5) | $ | 258,879 | $ | 894,683 | $ | (1,665,971 | ) | ||
| Gross margin – percentage | 28.3 | % | 41.8 | % | -126.8 | % | |||
| Operating expenses | $ | (3,482,141 | ) | $ | (6,356,138 | ) | $ | (7,342,669 | ) |
| Operating income (loss) | $ | (3,223,262 | ) | $ | (5,461,456 | ) | $ | (9,008,640 | ) |
| Operating loss per share - basic | $ | (0.08 | ) | $ | (0.13 | ) | $ | (0.26 | ) |
| Operating loss per share - diluted | $ | (0.08 | ) | $ | (0.13 | ) | $ | (0.26 | ) |
| Other income (expense)^ | $ | (965,072 | ) | $ | 14,569 | $ | (7,575,889 | ) | |
| Change in fair value of derivative liability (1) | $ | 153,798 | $ | - | $ | 334,016 | |||
| Other comprehensive income (loss) | $ | (3,461 | ) | $ | (83,363 | ) | $ | (76,073 | ) |
| Comprehensive income (loss) | $ | (4,191,796 | ) | $ | (5,530,248 | ) | $ | (16,660,602 | ) |
| Comprehensive income (loss) per share - basic | $ | (0.10 | ) | $ | (0.13 | ) | $ | (0.49 | ) |
| Comprehensive income (loss) per share - diluted | $ | (0.10 | ) | $ | (0.13 | ) | $ | (0.49 | ) |
(1) Included in other income (expense).
(2) Cost of goods sold includes non-cash inventory write-downs of
(3) Gross profit would have been
(4) Cost of goods sold in Q4/22 would have been
(5) Gross profit would have been
^ The other income (expense) and comprehensive loss for the fourth quarter of 2023 includes non-cash changes comprised of a fair value derivative liability gain of
As previously disclosed, on September 22, 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) notifying the Company of its noncompliance with Nasdaq Listing Rule 5550(a)(2) (the “Rule”) by failing to maintain a minimum bid price for the Company’s common shares of at least
On March 21, 2024, the Company received notification that it had failed to regain compliance with the Rule and is not eligible for a second 180 day compliance period because of its failure to comply with the
About Draganfly
Draganfly Inc. (NASDAQ: DPRO; CSE: DPRO; FSE: 3U8) is the creator of quality, cutting-edge drone solutions, software, and AI systems that revolutionize how organizations can do business and service their stakeholders. Recognized as being at the forefront of technology for over 24 years, Draganfly is an award-winning industry leader serving the public safety, agriculture, industrial inspections, security, 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 Hopkins
email: media@draganfly.com
Company Contact
Email: info@draganfly.com
Note Regarding Non-GAAP Measures
In this press release, we describe certain income and expense items that are unusual or non-recurring. There are terms not defined by International Financial Reporting Standards (IFRS). Our usage of these terms may vary from the usage adopted by other companies. Specifically, gross profit and gross margin are undefined terms by IFRS that may be referenced herein. We provide this detail so that readers have a better understanding of the significant events and transactions that have had an impact on our results.
Throughout this release, reference is made to “gross profit,” and “gross margin,” which are non-IFRS measures. Management believes that gross profit, defined as revenue less operating expenses, is a useful supplemental measure of operations. Gross profit helps provide an understanding on the level of costs needed to create revenue. Gross margin illustrates the gross profit as a percentage of revenue. Readers are cautioned that these non-IFRS measures may not be comparable to similar measures used by other companies. Readers are also cautioned not to view these non-IFRS financial measures as an alternative to financial measures calculated in accordance with International Financial Reporting Standards (“IFRS”). 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.
Forward-Looking Statements
This release contains certain “forward-looking statements” and certain “forward-looking information” as defined under applicable 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. These statements include, but may not be limited to statements regarding; the impact of the Company receiving the SFOC for its Heavy Lift Drone; expected attendance and the impact of the Company showcasing the Commander 3XL at Modern Warfare Week; the expected use of proceeds in connection with the US
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