Drone Aviation Holding Corp. (OTCMKTS:DRNE) Slides to a Six-Month Low
After a few turbulent months and a number of volatile price swings, Wednesday trading sent the share price of Drone Aviation Holding Corp. (OTCMKTS:DRNE) to a new six-month low. The stock sank 10% on near-average volume and DRNE found itself sitting at $0.25 per share by the closing bell before Thanksgiving.
The company is engaged in the business of developing unmanned drones but of a kind different to what people may imagine. As opposed to the UAVs dropping Hellfire missiles in military operations, DRNE produces tethered drones and aerostats. The company published its latest quarterly report three weeks ago. This is what DRNE had to show as of September 2014:
- $1.89 million in cash
- $346 thousand in total liabilities
- $328 thousand in Q3 revenues
- $1 million in Q3 net loss
Even though DRNE has a tiny outstanding share number by OTC standards, the company did suffer from severe dilution over the last reported quarter. The Q2 report listed outstanding shares of 17.7 million and by November the number had gone up to 32.2 million. Dilution of 90% over a mere three months is never good and the price slip could have been the corresponding reaction to this.
The majority of the newly issued shares originated from the conversion of Series A preferred stock at a ratio of 100 common shares for 1 preferred share. Our previous article traced the origin of those Series A shares and tracked them down as having originated from the conversion of $781 thousand worth of convertible debt and accrued interest into Series C preferred stock, which later became the Series A.
The unpleasant part of the equation is that each Series A share that got converted into 100 shares of common stock was worth $1.31. This means the newly issued common stock that diluted DRNE so much was virtually priced at just over one cent apiece.
