Q1 2021 Ageagle Aerial Systems Inc Earnings Call

We've made two strategic acquisitions that have transformed our business and has propelled AGGY go to new Heights.

As we discussed on our January call, we acquired Microsensor and parrot.

Microsoft brings us and amazing talented team of industry professionals as well as the industry's premier high quality sensor technologies.

Old and over 70 countries worldwide and integrate into over 150 different drones.

Okay.

And then in April we announced the acquisition of measure.

And aerial intelligence company that build software to automate drone operations workflows.

With end to end program management user friendly flight control and and platform data analysis measures comprehensive software solution ground control helps businesses save thousands of hazardous man hours increased millions of dollars and operational benefits.

Ground control is a leading SaaS solution offer and the industry's most advanced features and and unbeatable price point.

We acquired Mike or measure because the software is essential to enable our comprehensive drone solution platform.

Moreover, they bring us and established and growing customer base comprised largely of fortune 500 companies.

In addition measure brings AG Eagle a world class team of engineers developers.

And by the way a tech tightened.

Branded towards the club measures co founder and CEO was again recently named by Washington, and the magazine as an industry Tech tightened and 2021.

After already being recognized as such and 2018 and 2019.

In addition to his long list of notional accomplishments and industry acclaimed brand and also has a seat at the FAA table, having been appointed to the drone Advisory Committee by the U S Secretary of transportation.

This is the guiding group for developing the regulatory framework to integrate drones into the U S aerospace.

With Brian and now service and <unk>, Chief operating officer, and as a member of our board of Directors. We look forward to benefiting from his leadership experience industry influence and passion for all things drones.

With these strategic acquisitions, coupled with our ongoing recruiting efforts AG Eagle has grown our work force from a small dedicated team of approximately a dozen professionals at the end of 2020.

Two and industry force to be reckoned with that is fast approaching 50 incredibly talented team members.

I could not be more proud of the tightened net.

Results focused team that we're building as well as the nuclear opportunities we are creating for Likeminded high achievers.

Yeah.

Looking at our AG solution businesses.

Earlier this year, we announced the state of Iowa became the second state Department of agriculture to adopt our hemp overview platform.

The agreement allows <unk> to leverage our platform to manage online registration.

Payment processing data collection and compliance oversight of the hemp fields for three years.

In addition, we continue to work with the state of Florida to expand its use of hemp overview to manage oversight attempt and other high value crops and the state.

We are also continuing discussions with other state departments of agriculture, and expect that we will have additional new customer wins to announce in the near future.

As we look ahead to the rest of 2021, we believe the three primary themes will guide us and influence our decision making processes.

First is precision.

Leveraging advanced technology, and drone innovation to deliver the industry's most reliable safe and effective solutions on the market.

Okay.

<unk> is quality.

Establishing the industry's first quality standards for U S based drone contract manufacturing and assembly.

And third is vision remaining focused on executing strategies that allow us to define entirely new standards of excellence and scalability for the enterprise drone industry.

As always I want to thank our shareholders. All 152000 of you for your continued support of AG Eagle and for the confidence you have placed and our team.

We greatly appreciate your enthusiasm for AG Eagle and our phenomenal team Youre appreciation for the role of the drones will play and almost every industry.

And for sharing our vision for the future of the drone age.

Now I would like to turn over the floor to AG Youll CFO Nicole to provide some key highlights relating to our company's first quarter financial performance and Nicole.

Thank you Michael and thanks to all of you and for joining us on this afternoon's call.

Finally, we filed on <unk> with the SEC, which can be accessed on the SEC dotcom and <unk>.

This morning, we announced on key highlights from the reported for.

For the three months ended March 31, 2021 revenue climbed to approximately $1 7 million compared to approximately 391000 reported for the same three month period from 2020.

The increase was primarily due to revenue generated by the sales of microphones sensors to its global customer base.

Coupled with licensing fees and revenue share received from the state of Iowa, and the state of Florida for fun and over.

Yes.

And it's also not worthy to mention that Microsoft has outperformed its internal projections for the first quarter of this year and.

And our belief that as a result of becoming a part of the legals portfolio markets on <unk> value proposition to its customers and prospective customers continues to strengthen and this survey to accelerate the company's growth trajectory.

Our gross margin also significantly improve rising to 63 per cent for the first three months of 2021 compared to 55 per cent and the first quarter of last year.

The increase was a result of aggregate strategy to expand our product and service offerings to include higher margin drag on sales.

And on sensor sales on SaaS and software solutions.

Looking at our balance sheet, our cash position remains strong with $24 2 million.

March 31, 2021 and.

And that was after providing the use of approximately $13 million and cash for our $23 million acquisition of Microstat.

We also invested $206000 and ongoing product development of our sensor and software solutions and the first quarter.

Subsequent to the end of the quarter in April we completed the acquisition of measure for total cash and stock consideration of $45 million.

The purchase price was comprised of $15 million and cash and approximately five 3 million shares of common stock valued at $30 million.

As a reminder, we filed an initial registration statement with the SEC and February providing for up to $200 million can be raised through the issuance of registered shares from time to time and indeterminate amount and then indeterminate time.

The registration statement has been cleared by the SEC.

The purpose of the registration statement is to ensure that I eagle can opportunistically raise capital when necessary to support our future growth strategy. These strategies may include pristine and pursuing additional strategic acquisitions, and making investments and new product development and redoubling, our sales and marketing efforts to enterprise customers.

Now I have the pleasure of introducing to you on your new CLO and member of our board of directors Brandon towards the cloud.

Randy will provide you with details and perspective on new recent development and Bobby and the integration of Microsoft and measure and to aggregate as well as his thoughts on our collective for future growth strategies for Brandon over to you.

Yeah.

Good afternoon, Thank you, Michael and Nicole and incredibly excited to be part of the AG book team and to participate on today's call.

And so on and measuring 2014, the commercial drone industry is seeing tremendous technology and regulatory and breakthroughs, leading many large enterprises move quickly for demos and proof of concepts to large scale drone technology deployments and mainstream adoption of drone technology is here to stay.

To service those customers, especially those looking to scale aggregate was working towards becoming the preferred one stop shop for and and drawing solutions, we're going to listen to our customers and provide the best solution for their specific industry applications, whether they are and energy company with thousands of wind turbines or a construction company.

And to monitor progress around the World. This will include hardware sensors software and most importantly, the means to create actionable aerial intelligence. It is bad data that will drive future growth for the industry and aggregate and the ability to leverage the data created by drone technology to many valuable assets and people and.

The real world and real time and.

Tire ideal team, including measure is heads down and making investments and laying out new development roadmap by talking to our customers and incorporating their feedback some of the questions. We're asking how do we make sure. We provide you the solutions you bought and how do we make sure that everything we produce helps and define the standard for excellent reliability.

Safety and efficiency and of course, how do we make sure that we're able to scale with you our customer and.

In aggregate, we are proud to say, we have and knowledge and experience and we will continue to build trust with our customers and our business partners and is one of a handful of public companies trade on a national exchange.

Access the capital necessary to fuel our growth and industry leadership.

While it's been less and amongst this measure was acquired by aggregate and just a few months more since the micros and the deal was completed we wasted no time, and bringing our team and our technology stacks together.

Measures flight control.

These measures are quite software ground control now supports Microsoft sensor payload, enabling Mike since users to benefit from measures mobile and web based flight planning tools, including features such as terrain following.

Measures data processing support multispectral imagery captured by Microsoft sensors, providing an and and workflow for planning.

Capture data processing and data visualization.

And the near future our technology development roadmap, maybe expand it to provide for advanced data analytics and deeper sensor integration and artificial intelligence machine learning capabilities.

We are enjoying tremendous success integrating the efforts of our sales team to be more cross functional and we've already have common customers and cross selling opportunities, which were actively engaged and pursue them.

The consolidation and enhancement of our collective marketing assets and personnel are well underway to best support the sales of Ivy Hill, and the and solutions as well as to nurture existing customer and reseller relationships at the individual brand level.

On the hardware side I'm excited to say that Microsoft is currently looking at.

Using our facility and Wichita in order to manufacture their sensors, which will ultimately drive higher margin.

These are just a few of the innovation initiatives and the aggregate was advancing and I couldn't be more excited with how our teams are working together the future for <unk> looks very bright and I'm pleased to be acquired on.

And Michael Nicole I'll turn the floor back to you for Q&A.

Yeah.

Thanks, Brandon now work and then move on to our first question, Michael with companies like Pfizer utilizing <unk> technology to deliver crucial medicines and vaccines to remote and underserved communicate across the globe have you made any progress on this application for your Jones.

Yes, as an active participant and the beyond per room.

Working in collaboration with our regional pharmacy to develop a turnkey drone delivery solution for delivering medicines vaccines and other medical supplies to rural communities.

Great going on to our next question.

And the M&A remains part of your growth strategy do you have a target size of specific criteria that you were looking at when evaluating potential acquisition.

A good our cat type in terms of size for future acquisition.

Any acquisitions, we make and the future going to be focused on companies that are accretive to our end to end drone solutions Tech stack development.

We continue to evaluate a vast array of companies. However, it is important for any acquisition. We make is in line with our strategic objectives and long term vision as a company.

With measured and Microsemi now under the umbrella are you going to consolidate the branding until one name.

Measure and micro sense, both have tremendous value.

And we will continue to leverage as we work to further establish ourselves as a leader within the drone industry.

We are and the process of annualize on how best to fully integrate our brands and evaluating the best overall branding strategy to accomplish our goals and objectives.

In the meantime, and giggle and its subsidiaries will continue to operate under under their existing brands.

Great.

Additionally for measure and Microsoft and I can go fundamentally has for different businesses under its belt.

How does the organization see the synergies between this and that and how does and ensure it has a leader and each of these segments.

Yeah as we previously noted we're building one company, which is bringing together the best technologies and capabilities necessary to create end to end drone solutions capable of effectively addressing uses and agriculture and other commercial and industrial markets.

Perfect.

Suddenly you previously spoke about the micro sense acquisition and that Theyre multi spectral centers will be key for packaged strong delivery John.

And the team to elaborate on the competitive advantages to using multispectral sensors on package delivery John.

Yeah.

Yes for the purpose of clarification one of the reasons, we acquired micro sensors due to the fact that they are a leading innovator of drill and sensor technologies and they have highly specialized expertise in this area of focus.

While multi spectral central's are vital for drone applications and agriculture, and thermal centers have even broader applications and industrial markets any package delivery drones that ideal developed will include sensitive avoid sensor technologies necessary to ensure autonomous operation of the drones.

Great.

Based on proposed regulations that would effectively banned the expenditure of federal funds on Chinese major huh.

I think you'll see that impacting their business is it common for aggregate competitors to make drug delivery drums, and China and how many components of angles drones are made and the U S.

Yeah.

And.

The ban on the use of Chinese may drones has not impacted our business.

While it is common for drones to be manufactured in China and AG Eagle is focused on building quality and the Android solutions in America that serves our customers' needs.

Our final question here for today are there any updates to the shareholder lawsuits that we made.

As we stated and our last call we were able to easily refute the false inaccurate and misleading claims from the Bonita report and continue to believe the related lawsuits are equally baseless and meritless.

April 27 was the deadline for all complaints, resulting from this matter to be brought for so that will lead plaintiffs and appointment of lead counsel can be determined and the cases consolidated by the court.

To date, we are aware that three complaints have been filed with the courts.

However, we have not been served with any summit's.

Nonetheless, we believe that these complaints are without merit, and we intend to vigorously defend ourselves against each of the claims.

Yeah.

On behalf of Nicole, Brian and myself I'd like to thank everyone for listening today and.

Google is a dynamic organization that is on the move.

We look forward to sharing details on key developments over the coming weeks by way of press releases are many social media channels and on our next quarterly results webcast and August.

Until then please stay safe.

We're going to continue to work every hard to ensure that each of you remain very proud to be and aggregate shareholder have a great evening.

Yeah.

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And.