Draganfly Inc (DPRO) 2022 Q1 法說會逐字稿

Okay. We have still some folks [starting], but to respect everybody's time, I think we will get started. So greetings, and welcome to the Draganfly Q1 2022 earnings call. Though our last call seems to be so recent, much has happened within our company and around the world even in the past few months.

My name is Rolly Bustos. As most of you know, I'm the Head of Internal Investor Relations here at Draganfly. I personally welcome each and every one of you and thank you for joining us today.

Today's call will follow the same format as previous ones, which means it will start with our CEO and now our President, Cameron Chell, discussing first-quarter operational highlights. From there, CFO Paul Sun will jump in and discuss the financials as were reported earlier today. We will then end with our Lead Director, Scott Larson, facilitating the Q&A portion.

While we'll try to address them all, I apologize in advance if time doesn't allow us to do so. I've already talked to so many of you, but remember, you're always welcome to reach out to me anytime, investor.relations@draganfly.com.

So without further hesitation, Cam, please go ahead.

Hi everyone, and thanks very much for taking the time to be with us today. We appreciate the consideration and your graciousness in terms of looking at Draganfly as an investment. And hopefully, as we expect -- and we'll work toward being the number one or number two player in the North American drone space in the coming years. I'm just going to do a share screen here and take us through the presentation.

So this will be a review for some of you, and certainly, for some of our new shareholders, hopefully give you an orientation point of who Draganfly is and what we are endeavoring to do. So Draganfly is a leading and rapidly growing drone manufacturer. In fact, certainly within the industry, we're known as the oldest commercial drone manufacturer in the world.

We've been manufacturing drones since 1998. We got a start in the drone industry really focusing on the public safety and services business by attaching thermal cameras to drones and providing them to search-and-rescue teams in order to look for heat signatures. And in fact, a Draganfly drone was the first drone that was ever credited with saving a human life.

And today, that drone sits on permanent display in the Smithsonian. And in fact, even recently this week, I got -- some pictures in the text from a shareholder who was in North Carolina at a police museum, and they actually had all Draganfly drone controllers in the police museum as the first drones that were used in public safety and public service. So we have a rich history and an incredible bench.

And I think what's really important to note there is that in our 24-year history, we've only had two employees that have left. One of them retired, and one of them was stolen by Google a number of years ago.

And so that, the culmination of the expertise that we are able to bring to the table, not just from an engineering perspective but from an industry and a relationship perspective, is something that's really propelling us forward in the market today as it opens up.

We also have a very strong artificial intelligence bench and software bench. Many companies today are producing some great hardware. But we were producing hardware in the 90s and 2000s, and really producing software in the 2000s and really focusing on AI and autonomy in this last decade. And those are the spaces that you have to be in if you're going to win in industry today.

So we have a strong IP asset base as well. We have 24 patents. Basically, we have 24 patents because we're 24 years old, and each year, we bring out one more patent. We have hundreds of pieces of IP, but it's a bit more of a cultural thing for us when we put our engineers' names on the patents that they deservedly should be there.

And we bring out something that is used within the industry. But basically, when you bring up those patents, everybody else is copying them or doing iterations of them right away. So we really rely on that as a credibility piece with our customers and demonstration piece for our culture, but it's really all the other hundreds of pieces of IP that we keep as trade secrets that really help us have a competitive advantage with our customers.

We are really strong in new product development, and we'll talk a bit about that on today's call. But our new product development is driven by customer demand. So we're not a shop that's building things necessarily on spec. We have a very good idea of what's going to be happening in the next few years in the industry.

So we know what we need to be prepping for, but if we don't see customer demand really pushing in that direction, if we don't see our relationships on a regulatory basis pushing in that direction, we won't invest in technology just because we think it's cool.

We're data-driven, and we're really focused on what our customers want. The underlying premise of the drone industry today as opposed to the last 20 years that we've been in it is that it is finally scaling. One of the reasons that we have been a small company up until this point is that the industry just wasn't scaling.

And so, when we think about all the fantastic companies that were in this industry, the 3DRs and the Air Lilys and the Airwares, and the list goes on, all of which those companies at one point have tried to buy us. But the reality is none of them are in the drone business or even in business today because they were trying to scale into an industry that didn't yet exist.

But in the last two years, two major things have happened in the drone industry. First of all, the FAA came out with clear guidance around, in particular, beyond visual line of sight.

And that guidance is now given a reference point for the commercial industry to build ROI models and have a clear direction as to how the drone industry is going to work and how commercial drones will work within the infrastructure, within our society, and within the aerospace.

That then is now opening up budgets for companies to look toward how they're going to use commercial drones. Literally, within weeks of that announcement coming out from the FAA a couple of years ago, I went from spending my days dialing for dollars, quite basically grinding it out for customers, to really being overwhelmed with inbound orders.

Now one of the reasons that we were overwhelmed with those orders is simply because we had so many years of customers that have been looking toward these rulings, of this guidance coming out. And as soon as it came out, the phones were ringing because they wanted to get going on their projects.

It's taken us about a year -- maybe a year and a half -- to tool up, to build our capacity, to meet that customer demand, which is why we did that public offering we did. And we're finally at that point now where we're starting to see that scale come to fruition.

The other thing that happened, both from a sentiment and a policy basis, is really the advent of a recognition that nothing collects data better than a drone. And because of that, security is paramount. So there's great concern over the foreign manufacturers and the possibility of their data collection or the use of the data they do collect.

And so, North American manufacturing, security protocols, clearances are all incredibly important, and with our rich history and 24 years of service to the public safety and our military contracting community, we have those credentials. And that's another reason that we're starting to see scale, and it's a strategic differentiator for us.

A lot of the new drone startups, or even if they're not new startups but companies have been around for four, five, or six years, they're just -- they're still building hardware, and all credit to them. And they're still figuring out how to get those clearances and build those relationships, and they're doing a fine job of it. We just have the advantage of having 20 years having done that.

So our business model and growth strategy is pretty simple. We like to keep it basic. At a base level, we do contract engineering for military contractors. And it's great business. It's high margin, it's low volume. But what's really important about that is that it helps us really build our engineering bench.

It helps us attract the best talent in the industry, and it's one of the reasons that we've been able to keep our talent for so long. We get to work on really incredible projects: blood delivery on the battlefield or counter-drone technology, autonomous and AI type of technologies that have -- we've been now working with, or in some cases, a decade, which are now only starting to become prevalent in the commercial market.

We have a full product development and sales arm. We have a full contingent of products: multi rotor, fixed wing, heavy lift, LiDAR, controllers, ground robotics, sensors, software, AI. We can provide an end-to-end solution for those all-important Fortune 5,000 customers and government agencies that are really important to us in where the business is scaling.

We have full flight services. We have some of the most experienced pilots in the world, and we recruit heavily out of the military for our pilots as well. We do mapping, we do survey, we do data collection, we do delivery. We have experience in all of these areas, and all of these are incredibly important from a service perspective and from an infrastructure build and from the utilization of the products that we provide.

But long term, and probably most important, is our data solutions. So when we go to work for companies, most companies today are already not caring about if your drone flies 10 minutes longer or 1,000 feet higher. What they really care about is, is just the job getting done? Is the data being collected?

And when we deliver terabytes of data, whether it's LiDAR data, mapping data, environmental data, whatever the case is to customers, the more and more they're asking us to house that data. They're asking us to analyze that data. They're asking us to manage the security permissions around that data.

So we have an AWS type of infrastructure that is growing for that data acquisition. And I would suggest that in coming years in some industries, we'll be one of the largest data repositories for those particular industries in the world. And that is the power of where Draganfly is going.

In terms of our product and services as I mentioned before, we've got fixed wing, we've got medical-response drones. Our whole DFR drones, the first-responder aspect of our business, is growing immensely right now. We do view ourselves as world leaders in that space, and we'll touch a little bit on that in terms of what we're doing in Ukraine, in particular, and other parts of the world.

We have full fixed wings, and we have vertical-takeoff and horizontal-flight drones as well. In terms of flight services, we're very specialized in mining, agriculture, forestry, and powerlines for long-form infrastructure, which could be powerlines or pipelines, for example.

In each of these areas, we do have a strategic differentiator, usually based on our software or AI or in our analysis, so we can provide information back to these companies that other flight service organizations can't. And those are the types of things that we will continue to do in order to build moats or strategic differentiators around our particular flight services.

We have a full AI-solutions bench and software, so we're able to build and do things with drones that simply a lot of other companies just can't. Most notably, our drones can read things like heart rate, respiratory rate, blood pressure, blood oxygen levels, all critical components when you think about drones that are working in humanitarian aspect or search and rescue.

At this point, what I'd like to do before we get on and talk about some of our customer highlights from this last quarter is I'd like to turn it over to our CFO, Paul Sun, to talk about our financial results.

Thanks very much, Cam. So looking at this slide here, if you look at the left table, that's basically an income statement. So for a quick snapshot of Q1 2022, you'll see that revenue for the first quarter was up 32.8% to just over $2 million, up from $1.53 million in the first quarter of 2021.

First-quarter revenue comprised of $1.64 million from product sales, with $406,000 coming from drone services with the balance coming from engineering services.

You'll see that gross profit increased by $301,000 or 58.5% this quarter over the same period last year. And gross margin as a percentage of revenue was 39.93% this quarter versus 33.4% in Q1 of last year. And this was just primarily a result of more sales coming from higher-margin products versus those sold in Q1 of last year.

Total comprehensive loss for the quarter was $6.29 million compared to a loss of $44.919 in the same quarter last year. But for some of our investors that have been with us for a while, they'll recall that there's an accounting treatment where a non-cash change in fair value from derivatives are included in these numbers.

So in this quarter, there's a non-cash expense of $1.2 million from the derivative liability along with a non-cash recovery of $771,000 from the receivable. So the comprehensive loss would have been $5.83 million.

And if you ex out the non-cash change in fair value of derivative liability of $41 million from Q1 of last year, the comprehensive loss would have been $3.9 million. So the year-over-year increase and loss was mainly attributed to an increase in office and miscellaneous expenses, professional expenses. Following that loss, per share would have been $0.18 versus the reported $0.19

Now looking at the middle table, our balance sheet, you'll see that total assets decreased by from $42 million to $37.59 million from the year end, which is largely due to the deployment of cash. It's offset by the recovery of a receivable.

The working capital surplus as of March 31 of this year was $21.4 million and what have been a surplus of $28.2 million with shareholders' equity would have been $36.2 million versus the $29 million shown here if we ex out that non-cash fair value of derivative liability of $6.8 million.

And you can see that we continue to have minimal debt. Our cash balance as of the end of March was $19.6 million compared to $23 million as of the end of December.

And now, focusing on the right table, we just spoke about the year-over-year changes. So here, we'll talk about the quarter-over changes between Q1 of this year and Q4 of last year. So Q1, again, we did $2.04 million, increased by 25%, compared to $1.64 million for Q4 of last year. And that's just basically due to stronger product sales for this period.

You'll see the gross margin percentage was increased slightly to 39.9% compared to 38.8%. Again, that's due to sales mix, but pretty much steady.

Operating expenses for Q1 increased 7.7% from Q4 of last year, in part, due to higher marketing and investor relations costs, and total comprehensive cost loss for Q1 of 2022 was $6.29 million compared to a comprehensive income of $12.64 million in Q4 of last year.

Then again, you'll know that that includes a non-cash change in fair value of derivative liability of $1.23 million, and that recovery of a no-receivable of $771,000 versus what we saw in Q4 of $23.4 million. So again, if we ex those out Q1 would have been a comprehensive loss of $5.83 million compared to a loss of $10.8 million in Q4 of last year.

And with that, I'll pass it back to you, Cam.

Thanks, Paul. Paul, I know it's a really challenging environment to ensure all these numbers get in, and we just had a new ERP implemented in this last quarter in a bit. And so, great job to you and your team, and thanks again for all your efforts. You guys are amazing.

I appreciate it. Thank you.

I think the highlights here for me, which are really exciting, which might not be obvious, but I think is worth mentioning is that first of all, this is organic growth. All of this revenue is organic. This isn't -- we didn't go and buy some company and add the acquisition numbers in and such. We have an integrated company.

We're growing it annually and quarterly. We're up 25%, again, over Q4, which was a record quarter, which I think we're up about 20% on that quarter as well. We're up over 30% year-over-year, organic growth based. The constraints right now are all about just increasing our capacity to meeting the demand, picking the right customers. And what's most important is I think that we've got really credible customers.

We've got an incredibly strong pipeline. And certainly, I don't see any insight in ongoing growth in this measured fashion. And I think we're well on our way to hitting our objectives of being the number-one or number-two player in the space.

I also really like to see what's going on with the margins right now. They're maintaining and in fact going up a little bit. And we think that that's going to be a continued trend for the next quarter or two. So great job, everybody, and thanks in particular to the engineers for the incredible work they put together and the sales folks, customer service, and our financial teams.

Just really want to touch on a couple of customer highlights for the quarter. In particular, Revived Soldiers Ukraine, which is a prominent NGO working in Ukraine, they ordered 10 of our medical response drones.

This is a drone that is very unique to Draganfly that you'll see the box or the payload that's on that drone, that's a temperature-managed box so that we're able to deliver 35 pounds of things like pharmaceuticals, blood, insulin, EpiPen, temperature-sensitive medical supplies.

We -- that set up can also be designed to be a bottom-load quick-release drop. This particular drone has about a 20-kilometer capability, effectively about 10 kilometers end to end when you're running these things. We have now deployed these into Ukraine. The first units arrived late last week, and to my knowledge are on medical missions today.

So we're really excited about this product getting into market. It's the first of its type in the world to be doing what it's doing. This came particularly out of the work that we are doing with Texas Emergency Medical services over the last year for setting up a drone first-responder program there, where we've got actual medical delivery.

They can get to accident sites or victims or emergency situations quicker than trucks or personnel can. This was in conjunction with drones that also get there and provide optical or situational awareness -- reconnaissance, if you will -- to first responders that are yet to arrive on scene. This is a really important market for, I think, all of society, but in particular for Draganfly.

As we go forward, we are demonstrating ourselves and being leaders in this case. But getting these drones over into Ukraine with this credible organization isn't just a feat of engineering. It isn't just a great product, but it's also the logistics and the training and such.

And even just in the first few days of test flights and such, what we have learned in terms of being in that theater and being able to supply more equipment in there has been fascinating.

We are going to be supplying not just these medical-response drones, what we refer to as the MRDs, but we'll also be supplying search-and-rescue drones, which is a smaller drone version, primarily equipped with a thermal camera to look for heat signatures. It's a much smaller unit, much faster unit.

We'll also be providing situational-awareness drones, which are effectively a reconnaissance drone to help to provide situational awareness for search-and-rescue teams that are on the ground to ensure that they remain safe or there aren't potential threats coming into their area. So we are really excited about this.

This has led to an incredible inbound of traffic from many -- not just NGOs but governments in the region and from around the world, looking for this type of capability. Again, what we are finding with customers is it's great to have a product that's out there, but what customers really care about is do you have a product just deployed, and do you have experience and training capability to provide the end-to-end solution?

And this has been a great example for us to do this. Since this initial 13-unit order, we've got another five orders that have come in on this. These are $30,000-plus drones out of the box. We do have somewhat of an expectation to be delivering up to 200 of these by the end of the summer. And again, very robust inbound inquiries from around the world on this.

The other thing that's really happened because of this particular customer is the inbound inquiries around other types of drones. So those drones could be drones used for environmental monitoring in the region or other regions around the world, things like mine detection, again, more search-and-rescue payload delivery.

It's really this unfortunate conflict that just really opened up the world's eyes to the capability of drones and to Draganfly. We are pleased to be able to be providing the type of support that we are providing.

This is Irina, who heads up the organization. This is her actually deploying with the first drone last week in the Ukraine. And like I say, we -- just hats off to the entire team that have pulled this off, everybody from logistics to engineering and such. And we're really excited about where this product line is going. We're even more excited about the work that we get to do with these incredible people and the lives that they're saving.

Now the other really exciting thing that just happened recently is that Mr. John Mitnik, who has been a member of our Board since 2020, has agreed to become our Chairman. John is one of the most experienced people in this particular space. He's the former head GC for all of Homeland Security. He's a former GC with Raytheon.

He's had over 240,000 employees at Homeland Security that ultimately were responsible and reporting up to part of his executive team. And the experience that he brings to the table and the access that he brings to this organization is just second to none. So I really am looking forward to -- glad that John has accepted this position. I'm really looking forward to him taking this on.

As part of this, I'm taking over the -- not just the CEO but the President's position of the company as Scott Larson, who's been our interim President for almost two years now, will remain a Lead Director with the company and will continue to work very closely with myself on a lot of the M&A and the larger business development initiatives that we have going on.

And I can't thank Scott enough for his absolutely invaluable leadership and his ongoing commitment and work with us here at Draganfly. So thank you very much, Scott. And thanks, John, for taking on this leadership position.

Also worth noting is that Paul Mullen, who was our VP of Vital Intelligence and really has led that team and that product into full commercialization, has now accepted the position of the Chief Operating Officer of Draganfly. I've been twisting on Paul and holding out for him to become the COO for quite some time. And it's really been a matter of the company maturing to this position where we're at today.

And Paul's done a fantastic job of VI. He's had such a huge impact on the organization already. So thank you, Paul, for that. We look forward to building up an incredible enterprise with you.

So in summary, before we get into Q&A, Draganfly is experiencing rapid growth. And I would say our constraint right now is just continuing to build out our capacity. We've done a great job, in my opinion, of populating our sales teams, our management infrastructure, and our capability to deliver incredible products and services to our customer, who is really what we focus on.

And we're providing these advanced drone solutions. We're demonstrating to the market today that we have got the ability to do this. And before you scale, you've got to demonstrate to highly credible customers that you can do that, and that's exactly what we've done.

And I think we're starting to see -- [not starting, now I've got to thinking]. We're not starting, actually, we are definitely in the midst of seeing that scaling start to happen. We're also in a regulatory environment that's got a very friendly environment for drones right now.

So if it wasn't already friendly enough in terms of what the FAA was doing in the delivery market and in the beyond-visual-line-of-sight space, now what the world is seeing -- and regulators are seeing around what's happening in Ukraine and the uses of drones and how effective they can be -- we're seeing a lot of incredible international exposure for Draganfly and inbound inquiries there.

And then, finally, I think it's really important know note the seasoned executive team that we have. When you start considering people like Paul Mullen and John Mitnik and Andy Card and Julie, it's just -- we are hitting way over our weight class, in my opinion, in terms of the type of talent that we've been very fortunate to attract.

So if we think about team, I think we're at the top of our game. If we think about traction, we've got demonstrated q-over-q and year-over-year growth as fast as our capacity will allow us to grow. And that capacity is now only increasing.

And we've got traction -- I mean, technology -- excuse me. We've got a demonstrated IP portfolio. We've got hundreds of pieces of IP. We've got new product that's hitting the market that's in front of our competitors. That's exactly what our customers want to have, and we're delivering on time for them.

So on that note, what I'd like to do, with great pleasure, is I'd like to ask Scott, who is our Lead Director -- Scott Larson-- first of all, again, to thank him for his service and his leadership, his friendship, and his mentorship to the company and to myself over the last two years. And I'd like to continue with our tradition of having him run our Q&A. Scott?

Yeah, thanks, Cam. And thanks, Paul Sun, for walking through those financial numbers and the results and so forth. So as we've done in the past, a number of people have e-mailed in questions beforehand, some of which were worked into the presentation.

We had questions come in regarding Ukraine and a few other things that I think Cam has probably addressed. We've had questions that have come in just during this; that some have been addressed, some haven't. And we're just going to make our way through the -- through here as best as we can. I'll answer a few, a few I'll send back to Cam.

Cam, why don't I start off -- start this one with you. Are there any concerns in relation to cost of materials, inflation driving up costs and so forth, supply chain issues? What does that mean cost of goods and so forth, and pricing, perhaps?

Well, I'm not particularly concerned about it because the same thing that we face, every single one of our competitors faces. And so, some customer expectations are in line with what's happening with inflation and with what's happening with supply chain challenges.

So where before, I would even say pre-COVID, people had an expectation that you had next-day delivery and/or three-week turnaround time. Now 12 to 18 weeks isn't out of question. To give you an example, when we had the Ukraine opportunity come into us, we turned that entire thing around in less than four weeks. So we did some big inventory purchases.

I think we've done what we can to make sure that we're in a good position to be able to meet the demand. We have good visibility on what demand it's coming. And ultimately, I have a concern around it, but only because we want to do the best job for our customers.

And as it relates to the entire industry, I think we're delivering as quickly, and certainly with as much passion and vigor as anybody can expect us to, and certainly not more than what any other competitor could do. I don't have big concerns around it just because our expectations are in line with what real.

Yeah, fair enough. Another one that's come in, is this a good time for consolidation within the drone sector, or are you guys looking at acquisitions? Maybe I'll quickly take that one myself.

We've talked about acquisitions before. We've talked about growing organically as well as growing through acquisitions and large partnership deals with -- I don't want to step over any disclosure lines here, but certainly this has been something that Draganfly has mentioned previously. We've talked quite openly about it.

I think the best way to probably put this is that we are always looking at acquisitions. We are obviously quite frugal in terms of how we do this. Acquisitions are a big thing we've done too in the past few years. And so, it's not outside of what we do, but we looked at them at a case-by-case basis.

And as they come in, we do a decent job of vetting them both initially and then a technical review and then a financial review and then tie it into strategy and so forth. So quick answer to that question is yes, this is a decent time for consolidation, acquisitions within the industry. And Draganfly, along with probably a number of other companies, are looking at them as they see fit.

And I think we'll expect to make some prudent decisions. But it certainly is part of our strategy.

[Yes, I quite agree].

Yeah, go ahead, Cam, if you want to add to that.

No, no. Well said. Listen, our organic growth is as much as we can take on right now, and we're going to keep pushing that. And that's probably the best use of our capital. There are, as Scott said, specific situations where it really does make sense for us.

The reality is our valuation is down too, so it's not like we have an incredibly rich currency in or to go out and make these acquisitions. It's only been recently that the private company acquisitions have started to come down, where the public ones have been down for quite some time.

But there are a couple of real gems out there that Scott's cranking. So I'm pretty confident that we'll have some that will be very accretive.

Fair enough. Any more color that we can add or any update on the Vital Intelligence? Some of the things we are looking at, we've talked about it before, of course. Any things that we'll continue to chase without getting too far ahead of ourselves here?

Yeah, we're finding a very robust market in the travel industry space, particularly the cruise line industry. We had a fantastic show down Seatrade, where we partnered with Lufthansa, and they took us around the industry. They're big players in that space, and they put us through a pretty rigorous diligence process to utilize our products or to endorse it for that matter.

And we had some great success there, so we are really looking forward to what's happening in that regard as well as the other travel industry.

The other areas that are really big are corrections. So we seem to have some great inroads into corrections and into sheriff's departments. And basically, anywhere they are looking to intake populations or have to register populations and manage their health security, events are proving to be an important aspect for us.

And then, ultimately, on drones doing search and rescue and humanitarian work, that's where a lot of this technology is going to lead. But we do have significant business development happening just on the pure software side of this. So if we think about things like telemedicine and how this technology could be used in that regard.

We think this is a really, really big piece of business for us over time. And post pandemic is really when we're getting the serious inquiries. So during the pandemic, there is everybody was thinking about how to use this in the pandemic, which is really a very small piece of where this technology applies.

Now that that kind of seems to be fading, we are actually talking about the real scalable businesses out there, and that's a pretty exciting time for us.

Yes. Okay, good. Maybe we'll just take a couple more questions. They keep coming in, and just as a quick note here, if we don't have time to get to all the questions, feel free to follow up with us afterwards. You can acquire contact Rolly at the IR. E-mail it in, and we'll try to make away through as many of these as we can here.

Quick, another question here. Looking at the most recent filing -- Cam, I'll send this back to you -- it seems cash burn is less, which is obviously positive. With generating cash from operations being so important in the markets, can you speak to some of the things that Draganfly is doing to increase capacity, conserve cash, grow cash, maybe just a slight comment or two there?

Yeah, so I mean, overall, we needed to get our capacity in place based on what we saw in our pipeline. So again, we are data driven. We're really looking at what's happening in the pipeline, what products need to be produced, what (technical difficulty) machining and tooling we have to put in place for the orders that we have or orders we have sent out, and then building the capacity to meet those.

So we have done a number of things, I think very creatively, in order to -- in our product line, standardizing some of our base platforms, much more product stock will be coming out in this next quarter that we'll be talking through in order to not have to overbuild capacity or build two types of machining things or [tool too many things] overall.

So I think, [with Paul] in particular, the engineering teams have done a fantastic job there. We're very conscientious of cash in particular in this market. I think we've been prudent with what we've had. And we've got sufficient cash burn, so hopefully not have to be thinking about doing any financings in the near-term, unless it is acquisition based.

So we're just going to keep driving revenue. We're going to focus on products that have margin in them. And so, to the extent that that is hardware, it's hardware that always leads to a bigger solution, that always leads to a software or a reoccurring revenue base.

And that's what we'll continue to focus on. So we're very fortunate to be in a strong cash position. We're very fortunate to have a governance organization that's focused on making sure that we are doing things that [builds and generates] cash and shareholder value.

Okay. So maybe just one last one here. Maybe I'll take a start with this with just -- someone's asking for updates on some of the services that we've talked about in the past with regards to joint deliveries and surveillance services and are making the transition from being a hardware-focused company to more of an integration-service type company.

So this is something that Draganfly has talked about for the last 12, 16 months probably. With regards to FAA regulations opening up, Cam mentioned this already. It's easy for us to operate. It allows us to get into things like drone deliveries. I was a conference just last week in Orlando, one of the largest drone-focused conferences.

And virtually, every session was about deliveries and expansion of services, particularly drones' overpopulation and being able to fly to two by drones beyond the visual line of sight, as Cam mentioned earlier. And so, I would say -- and I'll let Cam give a little more color on this as well -- Draganfly is looking hard at this.

We've mentioned that in the past about different island nations that we've been talking to, opening up networks that are focused on drone deliveries from island to island in multiple different parts of the world. We have had inbound calls related to this coming in from Asia, Europe, and the Middle East and Africa as well.

So these were all long-lead items. These are things that take a long time to work their way through the system with regard to the proposal on the operations and setting this up.

But I think the overall Draganfly strategy is to keep working on technology, keep making sure that we come out with technology that's relevant to the market, as Cam mentioned, but then also looking through services and ways that we can scale this, not only here in North America but globally. And I don't know, Cam, if you want to add another comment or two on that?

Yeah, no. I think I think you covered it off pretty well, Scott. It is interesting to us, the international work that's coming in where the regulations are quite as onerous as they are in North America. That said, we're really focused on being experts here in North America.

I think that lends credibility to doing the work in other areas, but the international inbound has really been much more than I would have expected, not that we didn't have some expectation around it.

A lot of really big projects, big thinking projects -- some longer lead time but multiyear integrations -- that's what we see happening in the drone industry. So I think you summed it up well, Scott. And like you said, we'll just keep meeting demand and keep hitting numbers.

[I have a final] question here, maybe, and then we'll look to wrap it up. Questions about the share price, the stock price, how do you guys explain the decline in the stock price despite the recent growth? And do you see any link between operations and share price?

It's a tricky conversation, of course, because we're not giving guidance here, but, Cam, just a word or two about how we try to focus on operations perhaps and look to do the right things in the share price as well.

Yeah, so I think the saving grace that we've got here is if you look at every other drone company out there, the charts are pretty much the same. And on top of it, we're in a pretty tough market right now, in particular, for micro-caps.

So again, for us, we're in a fortunate position. We've got a strong balance sheet. We have an excellent management team, and we're growing revenue organically. That's what we're going to focus on: incredible products for incredible customers and keep driving that revenue.

We've got a solid plan. We've got our capacity built out. We've got our infrastructure in place. We've got our ERPs done -- we're in a spot where we're going to be able to produce the results.

The downturn in the stock, or maybe just -- I think people are just getting out or looking for other opportunities or exiting the market or they don't like the micro-cap. Whatever the case may be, I view it as a buying opportunity, and I feel really, really confident about where this company is going to go, how we're doing it, where the industry is going to end up.

I think that's what we're focused on. We're focused on the fundamentals, we've been super consistent, we've hit all our numbers. Everything we've committed to doing, we've got done. And I see no reason why we're not going to continue to do that. The market may be what the market's going to be, but we're going to be the winner at the end of the day.

That's very well said. Okay. So listen, it's 45 minutes after we started. I know it's late, particularly for folks on the East Coast. And so, I think with that last question, we'll look to wrap this up. I just want to say thank you to everyone who joined us for this. I appreciate you guys joining in. We appreciate the interest. We appreciate the conversation.

We appreciate the questions that come in in between times and comments and ideas. And so, we like this kind of dialogue, back and forth for shareholders, and frankly, doing all that we can to update and just do this as best we can. So, Cam, I'll let you close it off, and then we'll say goodbye.

Well, first and foremost, to our employees, I really want to thank everybody for the commitment that you've done -- you've shown in the last quarter for the incredible growth. I know how passionate everybody is, in particular around our humanitarian work and the work in Ukraine, and I know you all know what this means for the company and where we're going and how this is scaling for us.

So for that commitment and the crazy weekends and long hours, I thank you. You inspire me, and I know you inspire the leadership team.

To our customers, thank you for your trust and your belief and just going with us. We love working hard for you. We appreciate the opportunity. We're going to continue to work hard for you.

And to our shareholders, it's a grind out there. So we can't thank you enough for your consideration and for sticking with us and being part of what I think is going to be the next multibillion-dollar drone company. So thanks very much. Hope you all have a great day.