In the category of “sudden, remarkable sub-penny explosions”, the action in Drone USA Inc (OTCMKTS: DRUS) on Monday has certainly claimed an early lead for the 2H18 prize. Shares of the stock went nuts to kick off the week, rising as much as 600% in a day on over 100x average 3-month trading volume. When you see a move like that, you know it has to do with a key announcement.
This case is no different: The company just announced that its subsidiary, Howco Distributing Co, was awarded a three year 1.7 million dollar contract from the US Government’s Defense Logistics Agency with an option to extend for an additional two years for trailer support components. Michael Bannon, Drone USA’s Chief Executive Officer, commented, “We are delighted to receive this contract. With their dedication and strong work ethic, our Howco team made this happen. I am proud of all of them.”
Drone USA Inc (OTCMKTS: DRUS) casts itself as a company that focuses on the research, design, development, testing, manufacture, distribution, export, and integration of advanced low altitude unmanned aerial vehicles systems, services, and products. It offers quadcopter and fixed-wing unmanned aerial vehicles to government and commercial markets.
The company, through its subsidiary, HowCo Distributing Co., also provides product procurement, distribution, and logistics services to the United States Department of Defense and Defense Logistics Agency. In addition, it provides drone operator training services; and licensed piloted services, such as search and rescue, utility inspection, real estate marketing, construction, engineering, and agriculture. Further, the company offers spare and replacement parts to various federal government agencies, the U.S. military prime contractors, and commercial customers worldwide.
Drone USA, Inc. is headquartered in West Haven, Connecticut.
According to company materials, “Headquartered at 16 Hamilton Street, West Haven CT, Drone USA is everything drone for U.S. Law Enforcement, Fire Fighters, U.S, Industry and the U.S. Government… Drone USA, Inc. (OTCQB: DRUS), headquartered in West Have, CT., is a service provider, manufacturer and reseller of drones and distributor of products to the U.S. Government. Our competitive advantage stems from offering superior service, high quality products and establishing and maintaining life-long customer friendships. Our primary markets U.S. police, firemen, U.S. industry and the U.S. Government.”
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We’ve witnessed above 440% during the past week in terms of shareholder gains in the name, a rally that has pushed up against longer standing distributive pressure in the stock. Obviously, as noted above, more than all of that came in one day to start this week, and on a massive jump in volume. With 139 million shares changing hands, we would expect that the stock’s 29M share float may have contributed to the magnitude of the rally.
Matt Wiles, Howco’s VP of Business Operations, stated, “Our ability to work as a team is what separates us from our competitors. A contract this one doesn’t just happen in our sales department; it happens because our sales department and fulfillment team are in lockstep with one another”
Lindsay Somica, Howco’s Sales Manager, stated, “This particular solicitation was a labor of love. The award was for a small local OEM. We worked closely with them to obtain fair pricing, which we secured for the length of the five-year contract in order to avoid any issues that could arise in our offer. Three rounds of strategic negotiations with the DLA over six months sealed the deal.”
Earning a current market cap value of $1.64M, DRUS has virtually no cash on the books, which compares with about $10.6M in total current liabilities. One should also note that debt has been growing over recent quarters. DRUS is pulling in trailing 12-month revenues of $21M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -18.1%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $DRUS stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $DRUS, either long or short, and we have not been compensated for this article.