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Tuesday, December 1, 2020

Drone USA Inc (OTCMKTS: DRUS) Continues to Sit in the Spotlight

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We like to pay extra close attention to stocks that have recently begun to see a massive increase in trading volume and attention, a good example of which is Drone USA Inc (OTCMKTS: DRUS) right now. This is a recent government contract story in the drone space that has been all over the map since late June, but with one clear constant: a gargantuan increase in total average daily trading volume over the past 3 weeks – nearly 1,000% above its longer-run average.

Boosting that even further to kick off this week, the company just announced that its subsidiary, Howco Distributing CT, received a contract extension from the Defense Logistics Agency worth a total of $2.8 million, with $1.2 million remaining. Michael Bannon, Drone USA’s Chief Executive Officer, commented, “The Howco team is performing beyond expectations. They are truly impressive to work with.”

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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As noted above, the scent of federal government contracts has been driving the action here of late, with 74% tacked on to share pricing for the name in the past month, a bounce that has taken root amid largely bearish action over the larger time frame.

Furthermore, as we covered at the outset, the listing has registered increased average transaction volume recently, with the past month seeing just shy of 860% over the long run average.

Matt Wiles, Howco’s VP of Business Operations, stated, “Having long-term contracts allows our fulfillment team to streamline the packaging requirements which reduces cost and improves our lead times.” Lindsay Somics, Howco’s Sales Manager, stated, “We are confident they will spend the allocated $1,235,860 remaining within the next two option years.”

Now commanding a market cap of $880K, 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%. We will update the story again soon as developments transpire. 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.

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