DRONE AVIATION HOLDI (OTCMKTS:DRNE) Suffers Another Correction
The stock of Drone Aviation Holdi (OTCMKTS:DRNE) suffered a sizable drop during the last hours of Friday’s trading and as a result closed with a loss of nearly 7% at $0.299. With over a million traded shares interest in the company was above the 30-day average of 817 thousand shares. The ticker is currently forming a downtrend logging 3 red sessions out of the last 4.
At the start of the month DRNE shot up the chart thanks to the announcement of a $1 million stock offering. The company sold 4 million preferred G shares priced at $0.25 each. Dr. Phillip Frost once again showed his support for the company and through Frost Gamma Investments Trust invested $250 thousand in the offering.
Although DNRE are backed by Dr. Frost there still are a couple of red flags that investors must take into consideration. The latest quarterly report showed that the resources of the company are dwindling and a new cash infusion was definitely needed. At the end of March the company reported the following financials:
• $793 thousand cash
• $917 thousand total current assets
• $238 thousand total current liabilities
• $15 thousand revenues
• $934 thousand net loss
DRNE have a positive working capital but that doesn’t offset the underwhelming revenues and the massive net loss. The net loss for the entire 2014 stood at $2.1 million while just for the first quarter of 2015 DRNE incurred a net loss of over $900 thousand.
The number of outstanding shares has also been increasing thanks to the continued conversion of preferred shares. At the start of June 2014 DRNE had around 12 million outstanding shares but by the end of the year that number had reached 37 million. 19.8 million of the newly issued shares came through the conversion of preferred A shares and in 2015 the conversions haven’t slowed down with another 12.4 million common shares being issued. As of May 15 DRNE should have around 260 thousand preferred A shares still outstanding. In addition on June 2 DRNE had to issue 2.7 million preferred E shares and 2.2 million preferred F shares.
Recently the company made some changes to its Board of Directors appointing Mr. Jay H. Nussbaum as its new Chairman while Mr. Reginald L. Brown, Jr. has been appointed to the newly created position of Government Affairs Liaison.
DRNE lack some of the more glaring problems associated with pennystocks while being supported by Opko Health (NYSE:OPK)’s CEO is a huge positive sign. Still, the volatility of the stock shouldn’t be underestimated and any trades should be adjusted accordingly.
