The Droneshield Ltd (ASX: DRO) share price soared 25% higher today after the 'drone gun' business reported the benefits of a busy quarter of sales today.
Droneshield sells tactical guns to detect or shoot down unwanted drones flying over sensitive public or private areas such as airports, sports events, parades, military installations, or any other place deemed sensitive.
For the quarter ending March 31 2019 the company reported cash inflows 28x higher than the prior corresponding quarter and more than triple the prior quarter ending December 31 2018.
Unfortunately the operating sales of $1.01 million for the quarter still produced an operating cash loss of $525,000 to leave the company with just $1.73 million cash on hand.
This largely explains why the company's share price has actually gone backwards over the last 3 months despite a powerful tailwind of ever-increasing nefarious drone usage supporting the business model.
For example in the UK just before Christmas 2018 major international airport Gatwick was shut down for 3 days and the flight plans of 140,000 travellers ruined after illegal drones reportedly entered its airspace. Elsewhere, criminal gangs are reportedly using drones to fly over sporting events to get an edge on bookmakers, while ordinary members of the public commonly get up to no good with their drones.
So while it appears Droneshield is in a growth space it will need to demonstrate to the market it has a route to profitability, while the net cash position suggests it will have to undertake some sort of capital management soon enough.
It's also in a competitive space, which means I'd suggest speculators do some more research before potentially taking a punt.
