DroneShield Put On Trading Halt Due To Pending Capital Raising Announcement

DroneShield Limited (ASX: DRO) provides drone detection technology. The Company offers analysis, identification, and alerts solutions. DroneShield serves the detention, airport, government, commercial, and infrastructure sectors.

On 13 February 2019, the company stated through a release on the exchange that its securities will be placed in a trading halt at its own request & will remain so until the earlier of the commencement of regular trading on Friday, 15 February 2019, or when the announcement is released to the market. This is said to be owing to the announcement in relation to the material capital raising. 

As on the same date (i.e., 13 February 2019), the company has released its investor presentation in which it highlighted about FY18 activity and its outlook. As per the presentation, the drone security market is becoming significant and is fast growing, with the company estimating the size of its addressable market to be worth over US$12bn with circa 12 million drones to be operating, often in metropolitan airspaces, by the year 2020.

Since the time of its listing, the company has grown from a single acoustic detection solution to a company providing a full detection and countermeasure package utilizing the latest radiofrequency, radar and other technologies. The company is now experiencing rapidly growing revenues and is well positioned in competitive tenders, and direct non-competitive sales processes with the military, law enforcement, civil infrastructure and head of state/presidential customers with 90 potential contracts valuing up to US$45 Mn.

A snippet of the critical investment highlight is briefed below:

The firm recorded in 4Q2018 a record $500k in customer cash receipts. The month of January 2019 marked $730k in customer cash receipts, which were received in the first three weeks alone. Moreover, the firm has recently received orders from the Middle Eastern Ministry of Defence for 70 DroneGuns valued at A$3.2m. Other smaller contracts include multiple DroneGun units for major Asian and Western Government Agencies, DroneSentry and DroneGun units for a government security agency in Central America.

As per the release, the company has also executed a Teaming Agreement with Kuwait’s Zain Group, a US$7 billion leader in telecommunications in the Middle East. Zain has now placed its first order with the firm. Further, the firm has been able to consolidate market position with its DroneShield products now been used by Queensland Police at the Commonwealth Games in Queensland, Texas State Department at the NASCAR, the ADF at the ASEAN-Australia Special Summit 2018 in Sydney and by local authorities at the 2018 Olympic Games. Other users include special forces of a G7 NATO country, Asian homeland security, and the Turkish Prime Ministry.

The company is now well positioned in competitive tenders, and direct non-competitive sales processes with the military, law enforcement, civil infrastructure and head of state and presidential customers with 90 potential contracts. Also, the U.S. Government has approved DroneShield products for placement on the General Services Administration schedule, a list of products pre-approved for purchase by U.S government agencies.

DroneShield’s detection technology displays strong advantages over other competitors, including non-line-of-sight detection, night-time detection, an increase in detection ranges and effective coverage area, hence, providing a significant competitive advantage to the firm.

Now, let us have a quick look at DroneShield Limited’s stock performance and the return it has posted over the last few months. The stock last traded at a price of $0.145, with a market capitalization of ~$26.40 Million. The stock has provided a YTD return of -14.71% & also posted returns of -6.45%, and 3.57% over the past six months and three months, respectively. It had a 52-week high price of $ 0.290, with an average volume of 273,854 approximately.


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