Q2 2021 Ageagle Aerial Systems Inc Earnings Call

Previously submitted via email by analysts and investors.

Before I introduce Brandon I remind you that during today's call, including the question and answer session statements that are not historical facts, including any projections statements regarding future events or future financial performance or statements of intent or belief are forward looking statements and our.

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Covered by the Safe Harbor disclaimers contained in the Companys public filings with the SEC.

Actual outcomes and results may differ materially from what is expressed in or implied by these forward looking statements.

With that said I'll turn the call over to AG Eagles CEO Brandon. Please go ahead.

Thank you Tom.

Pleasure to be joining you all on my first formal quarterly update as the CEO of egg Eagle.

My appointment by the board in May I've been working closely with the leadership team completed a top to bottom review of the company.

The primary objective with refine our strategic direction for the remainder of 2021 and more importantly put us in an even stronger position to achieve success in 2022 and beyond.

I traveled the country visiting key team members and facilities in Florida, Texas, Kansas, Washington.

Through this process my team and I evaluated every aspect of the business from people to product to process.

Ran a competitive analysis of our current products, we spoke with our customers took stock of our assets and identified the unique skill sets of our team.

Let me be clear, we intend to grow our business and preserve our leadership position by developing new drug sensors and software and capturing a significant share of the global drone market. In addition, we expect to accelerate our growth and expansion through strategic acquisitions. When it comes to our people we made key additions to our leadership team, including our new SVP.

Of sales and business development, Scott Lewis and our new director of marketing, Andrew I think Mars.

Scott is a seasoned senior executive with over 20 years of sales experience in enterprise software.

<unk> in the drone industry, formerly VP of business development at drone deploy and most recently CEO of Hanger technology, which was acquired by air math on.

Andrea has led marketing teams for the past 15 years, developing and implementing innovative strategies to drive revenue move.

Moving forward, we intend to nearly double the size of our team bringing in proven talent, we expect aggregate to be comprised of vibrant and most importantly diverse individuals that are passionate about developing new drones sensors and software.

Our product portfolio is strong and micro sense, we intend to continue to drive sensor sales through new product launches, which you should begin to see this year you should also see new Micah.

<unk> is targeted at the energy and construction verticals with bundled software from measure that should further enhance the value proposition of these unique products.

Measure is rapidly developing new capabilities like the integration of ground control with the parent and not be drawn platform. Our customers can also expect to see the accelerated deployment of new software features.

Measure recently gained third party validation of our software platform by achieving Sox compliance the team learned extensive six months audit of our code team and procedures with our audit partner Lynford and company.

This designation affirms that our practices and procedures to meet the rigorous soft two standards for security availability processing integrity privacy and confidentiality.

It is a pivotal acknowledgment that confirms we have a secured product and at the age of cyber attacks is an increasingly important recognition for enterprises and government agencies using drones to collect sensitive data.

I am incredibly proud of the work our team did to ensure we met and will continuously meet these standards, providing a high level of security for our customers.

While we have the utmost confidence in our standalone growth potential with both Microsoft and measure we believe the largest growth driver in the near term will come from the tight integration of Microsoft and measure products to ensure efficient high quality data capture for our customers.

Our decision to further integrate our mckesson sensor and measure soft for products is partly driven by the knowledge and experience. Our measure team gained when we owned and operated when the largest drone service providers in the nation completing tens of thousands of commercial flights for a broad range of iconic enterprise customers.

We know how important it is to capture data right. The first time and why that is easier when you have a complete solution available.

Ground control enabled mission planning fleet management compliance enables autonomous flight and we expect it to work seamlessly with our Microsoft sensor products, creating the most efficient turnkey drone data solution available.

Finally in Q2, we team with investment banking firms Stifel and Raymond James to implemented at the market offering which has proven very successful. Thus far we believe our strong cash position will enable us to execute on our strategy to provide the full stack drone sensor and software solution across the energy construction.

Culture and government verticals.

It means we should have the ability to invest in research and development higher new team members and pursue strategic acquisitions.

The drone industry today remains fragmented with unique and viable technology across a broad spectrum of use cases that can be highly beneficial to our overall strategic vision for agriculture.

Not in a position to speak of.

The acquisition targets. We are currently evaluating there are several potential opportunities that we believe will round out our full stack solution and accelerate growth.

We will adopt the same disciplined approach we have in the past.

Any opportunity we consider has immediate near term benefits based on our business fundamentals and aligns with our overall strategic vision of providing a full stack solution.

As we ensure all areas of our organization are functioning together cohesively and efficiently to drive growth. It is crucial that we properly utilize our assets to their maximum potential.

We are looking at several products and services that we have historically offered to ensure it makes sense to continue dedicating resources to those areas of the business in.

In addition, we are currently in parts of evaluating consolidation opportunities within our footprint of facilities and office space across United States to drive operational cost savings.

Before I hand, the call review, our company's Q2 financial highlights for you one other key accomplish a note accomplishment of note during the quarter was having aggregate named to the Russell 2000 index.

The Russell 2000 is widely recognized as a bellwether of the U S economy, because it shines a light on smaller high growth U S. Companies. We are very proud to be among the number of small cap companies that are earned this important distinction distinction.

Our second quarter results embolden, our resolve to building enduring long term shareholder value by remaining focused on research and development building internal talent and collaboration across brands and driving the implementation of growth strategies in the bring innovated innovative new solutions to global enterprises.

Delivering high performance full stack drilling solutions to a broad range of industries, including energy construction agriculture and government. It is our firm belief that AGL can positively disrupt and help transform how businesses within these verticals operator.

Now I'd like to turn it over to our CFO Nicole.

The webcast will answer questions that have been submitted over the past several weeks the call over to you.

Thanks, Brandon and thank you all for joining US. This morning. This afternoon, we will file our 10-Q with the SEC, which will be accessible on the SEC dot Gov and on the Investor Relations section of the <unk> website. Additionally, this morning, we announced some key highlights from the report, which I'd like to recap here.

For the three months ended June 32021 revenue increased significantly to approximately $1.9 million from approximately 16000 in the prior year period.

This significant increase was largely due to new revenue contributions from Microsoft and measure, which we acquired in January and April of this year respectively.

Drilling deeper into the revenue results sales of micro sense centers totaled approximately one $7 million John manufacturing revenue totaled approximately 60000 and software subscriptions accounted for approximately $173000 of our total sales.

Our net loss totaled $4.7 million or 777.

Loss per share for the three months ended June 32021, compared to a net loss of $10.3 million or <unk> 31 loss per share for the same three months in the previous year.

It is important to note that the net loss for the three months ended June 32020 were negatively impacted by noncash charges of approximately $9.1 million associated with the company's financing activities in that quarter.

Now looking at the results for the six months ended June 32021 revenues increased nearly 800% to 364 million when compared to 408000 in the prior year's first six months period.

This significant sales growth was largely due to new revenue contribution from micro sense and measure acquisition. Our revenues were also positively impacted by new and expanding revenue stemming from the licensing of our hemp overview software solution by state departments of agriculture in Iowa and Florida.

Selling deeper into the six month revenue results sales of microphone sensors totaled 338 million drone and custom manufacturing revenue totaled 60000 and software subscriptions accounted for approximately 195000 of our total sales.

Now moving to the bottom line, despite higher costs and expenses related to the acquisition and integration of the micro sense and measure.

Businesses.

Net loss declined to seven 6 million.

<unk> 21 loss per share for the six months ended June 32021, as compared to a net loss of $10.7.7 million or <unk> 44 loss per share for the same six month period in 2020.

Our cash position as of June 32021 was $39.2 million up from approximately 20, $23.9 million as of the end of 2020.

And Brandon briefly mentioned in late May of this year, we entered into a sales agreement to sell up to $100 million in common stock through our investment banking partners Stifel and Raymond James.

During the three months ended 2021 capital raised in aftermarket transaction with Stifel and Raymond James totaled $28.6 million at stock prices ranging from five <unk> to $6.30 per share.

I am pleased to share that our strengthened balance sheet and increased flexibility financial flexibility aggregate was well positioned to drive growth for our business and value for our shareholders in the quarters ahead.

With that let's move to questions that we've received from investors kicking it off with our first question.

This is a question we have received many times over the past two years, but can you provide any update on the E Commerce client our go forward plans with the contract Brandon.

Thanks Nicole.

Certainly understand this question remains top of mind for investors.

Yes, we worked with a high profile e-commerce customer while I'm not at.

Liberty to disclose the details of our work I would like to provide our views on this relationship going forward.

As an important contract with aggregate when the company's early days as a public entity bolstering revenue and serving as an important proof of concept. However, the regulatory environment here and abroad simply does not support this particular application at scale.

It was a proof of concept, we no longer view it as material to our business.

Moving forward, we are focused on those applications and industry verticals to generate revenue at scale we.

We are diligently focused on driving revenue growth through offering a full stack drone solution applicable for a variety of industries across the globe and we are dedicating our resources towards that strategic plan accordingly.

Great next question can you provide an update on your relationship with Valkyrie.

Sure.

As part of our strategic evaluation of AGGY go I was able to reassess all the companys relationships and determine which ones are aligned with our near term and midterm growth strategies.

We were pleased with the contract manufacturing services, we provide we decided to terminate this relationship as we determined it was not accretive to our growth strategy and that our resources would be better allocated elsewhere.

Okay.

Next question what is the status of the shareholder lawsuits that you've been dealing with over the past few weeks.

As you may have seen in the press release, we put out last week, we're proud to announce that all of the lawsuits have been dismissed as we've communicated from day. One the claims from these short sellers were frivolous inaccurate and misleading and we're clearly a blatant attempt to manipulate aggregate stock price.

Really happy about this outcome and look forward to putting this matter to rest and don't expect further lawsuit on any of these matters.

Wonderful any update on hemp overview and progress with additional states organization.

We are eager to continue to grow the hemp over your platform and the service for our existing customers.

There has been industry will continue to grow globally and our software platform is going to take advantage of this growth, Florida and Iowa in my opinion not only to start.

A part of agricultural consumer services, expanding and placement of <unk> enables them to leverage the full breadth of power of the hemp a re platform to manage hemp form registration real time, best management practices oversight and enforcement and reporting functions. In addition, the Florida Department of Agriculture, and consumer and consumer services contracted ideal development.

Custom registration software platform to enhance communications licensing and general compliance relating to the oversight and protection of more than 500 endangered and commercially exploited wild plant made it to the state of Florida.

So this is our last question for the day is aggregate currently working on new drone models that you can provide any details on.

Great question Nicole in the near mid term, we are focused on providing our customers with a full stack, including drone sensor and software across a number of verticals I mentioned earlier, including energy agriculture, construction and government a launch of a new drone airframe they come through our work of our talented team or from an acquisition.

So this concludes our Q&A session before I turn the call and webcast back over to the operator I want to reiterate how excited I am Hello, VAG Eagle as we have ample growth opportunities in front of us and a strong leadership position within the drone industry to build from.

Additionally, I'd like to thank all of the employees customers partners and shareholders shareholders that I've gotten to know what my first couple of months as CEO and I look forward to sharing our success with all of you.

I have the utmost confidence in this company and I believe we now have the necessary plan in place to capitalize on both the near and long term opportunities within the global drone industry.

As always we will continue to provide all pertinent and material update via press release to the market to share our wins and progress along the way we have a strong foundation in place and this is only just the beginning.

Let's go thanks again for joining our webcast today, operator back to you.

Thank you, Sir and ladies and gentlemen. This does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.

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