Drone Aviation Holding Corp. (OTCMKTS:DRNE) Takes Off Again
Drone Aviation Holding Corp. (OTCMKTS:DRNE) exploded into action once more yesterday, as it announced that the U.S. military has awarded it with a contract.
Apparently two U.S. Army-Owned WASP Systems are to be upgraded to support special DRNE optics, electronics and communications packages for upcoming Department of Defense exercises.
Suffice it to say, the enthusiasm and excitement the news caused was probably warranted. Being awarded a contract by the DOD is a big deal, especially for a small cap OTC Markets company such as DRNE. Still, investors should probably not get ahead of themselves in this case.
After all, said contract represents an opportunity for the company’s future, but until such a time that this opportunity is realized, all the company has to go on is:
- cash – $793 thousand
- total current assets – $917 thousand
- total current liabilities – $238 thousand
- revenues – $15 thousand
- net loss – $934 thousand
These numbers may not be the worst that can be found on the OTC Markets, but they aren’t all that impressive either. However, that’s not the biggest threat to investor value in DRNE‘s portfolio.
The real issue with DRNE is the threat of dilution. Suffice it to say that about a year ago, DRNE had around 12 million shares outstanding. By the time 2015 rolled along, that number had ballooned all the way to 37 million. Almost 20 million of the newly printed shares popped into existence as a result of converted preferred A shares.
Conversions haven’t really stopped in 2015 – at least 12.4 million common shares have been issued so far. As of May 15, 2015 DRNE had something like 260 thousand preferred A shares still outstanding and additionally, on June 2, 2015 DRNE issued 2.7 million preferred E shares and 2.2 million preferred F shares.
Investors would do well to consider these facts before jumping on the DRNE hype train.