Cameron, good morning. Happy Monday. How you doing, boss?
Doing great, thanks. How are you, sir?
I'm doing really good. Look, I won three bets in a row from Saturday night into Sunday on sports, which means that my weekend is always going swimmingly. And then I woke up to some pretty big news here this morning. Looks like we're going to have a pretty crazy market day. But your company no stranger to some crazy market days as you announced a huge contract last week. So for those of you that might not know, this is Dragonfly, that's ticker DPRO on the NASDAQ. This is CEO Cameron Chell. Dragonfly is an unmanned aerial vehicle company that is I think headquartered in Canada but operates in Canada and the US as well
Okay, there we go. Last Tuesday you announced a big contract here. Dragonfly announced its selection by the US Army to provide Flex FPV drone systems. So I'm going to start right there. Can you tell us about this? Can you tell us any more about the contract itself?
Important about this contract is two aspects. First of all, we were selected. So this was well over a year-long process plus years getting to that point, having the US Army select our FPV drone for their particular missions. Now, one, selection and the quality and the criteria that you have to go through to be selected by this type of a client is extensive and I think speaks to our team and our potential. The other really big thing here is this is the pointy end of the stick. This is the leading edge of what the US Army and the Department of War is doing. We're not just providing drones, but we're actually working with them to embed our manufacturing into their facilities on base so that they can be doing assembly, modification, maintenance, mission profiling of the drones real time. So typically and in the past, say pre-Trump era or pre-DoD era, the procurement cycles were years long. But what theaters like Ukraine have taught the Department of War is that you now need to iterate in hours not years. And so this is the leading edge model where they're embedding us into their supply chain, into their manufacturing process, into the concept of operations so that we're actually designing drones, delivering drones, providing drones, doing manufacturing with them in real time so that within hours we're making mission changes.
Okay, that type of flexibility. Absolutely important. That's really good stuff. I guess you kind of touched on this here with that answer a little bit, but more specifically, what makes Dragonfly stand out in the drone defense space against its competitors? We look at drone stocks here all of the time. What makes DPRO different?
Deep into our actual verticals. So, we've been in Ukraine with boots on the ground since 2022. We were delivering insulin into besieged cities in 2022. We've been doing demining work since 2022. Our Flex FPV drone and other parts of our product line were actually designed in those theaters of action in Ukraine with people that are war fighting protecting our freedom right now. Now, we bring that experience back to our DoD partners. And so, we're able to comment and think through not just the quality of the drone, but what is the concept of operations? What is it that we need to accomplish? So when we design a drone, not only does it have to perform, but hey, what is the design characteristic such that we can get seven of these in a backpack rather than three? How do we design the backpack so that if you're in a war situation, you're able to still execute on that plan and be able to manipulate and move and do the things that you need to do to be the most effective war fighter or the most effective logistics technician in that command cycle. So that's what makes Dragonfly different. Now we've been in business for 27 years. Every single drone manufacturer that has been in North America in the last 27 years has gone out of business other than the last four or five, maybe six years where we've seen this new drone cycle. Now the reason is that we have been providing contract engineering to the DoD primes, the AeroVironments, the General Atomics, etc., that entire time and also serving our public safety. We've been doing what's called NDAA compliance. So, secure drone manufacturing supply chain logistics that entire time before NDAA, which is the requirement for all drones now to be secure, non-Chinese, non-foreign made. We've been doing that, so we helped coach this whole system through and have designed it that way. And those are our really big differentiators. We have engineers that have been doing this for 27 years which is very unique in the business.
Okay. So it seems like you absolutely have a head start there on some of the experience with some of the engineers at the business. That is really awesome. Let me ask you, how do you plan to deploy the recent financing proceeds and what type of return on investment should investors expect?
So right now about $60 million, we're burning right around about a million dollars a month. We're going to continue to invest that into our product line and into business development. We will do a limited amount of not even merger but acquisition or investment type work that needs to be extremely accretive to us. We're really solid on the technology side and on the commercialization and deployment side. Definitely scaling our people right now and getting great talent. So, acqui-hires is important to us. There's a plethora of talent out there that wants to be in the drone business or that are new startups in the drone business. Sometimes their technology is much less interesting to us, but their people are very interesting to us. So, we're driving sales. We spent the last three years previous to this building out our capacity. We can organically build a hundred million worth of product a year, which is what we've got the demand out there for right now. In fact, we had to build that capacity first before we could get this Army order or presumably or hopefully the other DoD orders that we're working on as well. So that investment's been made. So now it's all about scaling.
Okay. And I'm going to actually ask you about that scaling. But before I do, I have to ask this. I ask every guest of one of these companies that I bring on here. How are you managing risks around dilution and warrants from capital raises?
We've not done very large financings. We have really piecemealed our financings along the way only to be able to have the capital that we need. So we've kind of run a real-time capital scenario that's helped protect our dilution. Now we did just do a $25 million raise but it was when our stock was doing well and we will only be raising capital if it's absolutely accretive. So if there is an acquisition that's very accretive or if there is a large order coming down the pipe where the equity balance to the ROI on that investment as opposed to maybe industry capital or government-backed capital or something like that where it makes sense. So we're going to remain very selective about how we do that. We definitely, compared to the comps out there in the market, we've raised less money. We've been more conservative. I'm not saying that their strategy is wrong. It's not. There's some really fine companies out there. They're doing some great work. But we've been around for 27 years because we didn't overstep.
