They were released just a few days ago, so i’ve gone through compiled a couple of thoughts, and i want to share that with you. But first i will let you know that i currently own shares and warrants in this company i actually bought in at 65 cents, and i made a video about it. The day that i bought in, i also reviewed their year end financials just a few months ago. So this is sort of a follow up video, but i am in the stock as well as the warrants currently up 87 and 51 i’m. Also in another drone company called dragonfly currently doing well there, as well now, just as a disclaimer there’s a lot of passionate shareholders in this company. So this video is just my opinion. Do your own due diligence? I am just sharing with you my thoughts. In my opinion, this is not a sponsored video, and all i am focusing on in this video is the quarter. One report there’s a lot of different news. A lot of press releases a lot of different things happening with this company for this video i’m just focused on the quarter, one report, the management discussion and the financial statements. But if you get any value out of this video remember to click that like and subscribe button, i sincerely appreciate it and let’s jump into the balance sheet. So here we can see as dated march 31st of 2021 and the total assets right here, you can see actually increased from 29.
3 million dollars to 41.1 million dollars largely attributed to the cash balance right here, that’s because they raised some money recently. So that is definitely nice to see now. What’S also really nice to see about this balance sheet is that they have very low liabilities. They only have 1.46 million dollars worth of liabilities. When you compare that to the total assets of 41 million dollars, that’s a current ratio of like 20 or 30 x, which is extremely healthy, that means the company has lots of cash in the bank. They’Re very well funded they’re, not going anywhere anytime soon. They have no big debt, no big liabilities to worry about, and this is a very, very clean balance sheet. It was like that back last year and it is still like that now the balance sheet looks extremely clean. Now, when you look at the income statement, it’s a slightly different story, when you look at this income statement, you can see that the revenue was 194 000. Now it looks really good when you compare it to the three months ended last year, but we’re going to break it down and compare it to last quarter here in just a second. But i want to point out a couple things here. First number one 194k in revenue and then about 4.6 million dollars in operating expenses. There were a couple of big expenses in here, starting with advertising and promotional at 1.2 million, and then you have personal expenses at 1 million, and then you also have 624 000 of share based compensation.
So the company is basically paying some of its employees and shares and then one thing that i notice is that there’s no cost of goods sold here. I assume that’s, mostly because it’s kind of a contract basis that’s how they bring in their revenue. So there’s no real cost of goods sold revenue here, which we can’t compare to other companies and then last thing i want to point out: is net loss and comprehensive loss of 4.4 million dollars they do have like. We saw 35 million dollars of cash in the bank, so really not a concern here. The burn rate is not a concern at this point. Now it just comes down to building up that revenue number getting these regulatory approvals and proving out the operations. So when we look at revenue, this is what i mentioned just kind of a minute ago. The revenue in the last quarter did decline just slightly only like a two or three percent decline, so nothing drastic. But it is a little disappointing because we saw just a beautiful amazing growth rate from twenty five hundred dollars to twenty four thousand to thirty. Six thousand. To two hundred and two thousand dollars, and then we declined just slightly to 194 000.. If you could have kept this going, it would have been really really nice to see, but it was just a slight decline in the uh in the quarter. Now maybe you could say that this has some seasonality.
I would kind of argue with that, because i don’t think these guys are delivering very many christmas orders right now: that’s, not really the business that they are in right now. So i don’t know if it was seasonality. I don’t know if one contract just didn’t happen, maybe it was just timing and number of days it could have been a variety of different factors. So i’d love to know a little bit more about that and then over here on the right side, you can see that their total assets drastically increased. I think a lot of this was due to uh raising money more so than anything else now. Cash flows. This is another important statement, because this just kind of helps you understand where, where the company is spending money and some of the off income statement transactions so, for instance, depreciation interest amortization. All of those things were on the income statement, but realistically they didn’t really affect the cash flows, and so this statement helps you understand those type of things and when you look at the operating activities, one of the big numbers in here was the stock based compensation. So obviously, that wasn’t a cash flow item that wasn’t actually coming out of the cash because the company was issuing stock so that wasn’t, a cash flow item that’s why it comes out of here and then, when you go down, you can see the financing activities here And you can see proceeds from exercise of options at 10.
8 million proceeds of exercise of warrants at 4.8 million and proceeds from exercise of broker warrants at 745 000. So this is what i want to focus on here in the next slide, because this kind of dives in to a topic that i just want to cover now this is insider sales, and so i pulled this screenshot from canadianinsiders.com and it’s. Basically, a breakdown of all of the transactions that are happening within the company from management or any insiders, and what they have to do is they have to disclose those transactions to any of the shareholders and to the public so that everybody else can see what’s happening And so on the left here you can see the date of the filing. So when they actually filed and revealed this transaction, you can see the actual transaction date. Usually they line up pretty close, or at least within a few days here and then one column over. You can see the insider name now. This represents who the insider was and who is actually either buying or selling, and so there’s three names on here, michael zara, he’s, the ceo. I actually interviewed him on this channel and then you can also see michael della fortuna and kevin david shurkin. Now these people are actually pretty important to the company, because michael zara, like i said, is the ceo but michael della fortuna is actually the board chair and david shurkin is a director. So both of these guys are on the board of directors, so is michael zara.
So that means three directors are the transactions that we’re looking at here and when you go through the transactions it doesn’t look very good because pretty much everybody is selling them, and so right here you can see that michael zara converted his options. 733 000 options. So he got rid of the options and he gained 733 000 stock and then instantly and right away he turned around and he sold off almost all of them. So definitely not a good sign. That was the ceo, basically cashing in a bunch of shares, and then you can also go to the board chair here, michael della fortuna. He basically exercised his options for 400 000 and then sold them right away in the public market and then almost the exact same transaction here for kevin david shurkin. He uh exercised 133 000 in options gained 133 000 shares and then sold them in the market right away, and these guys got out at really good prices at two dollars and fifteen cents: a dollar, ninety nine and two dollars and twenty cents for the ceo. So these guys got out right at the top because, as of right now, the stock’s trading around a dollar ten, a dollar twenty. Now, just for some further information on this here, the actual filing details for each of the transactions where these gentlemen sold their shares and here’s the remaining number of shares that they own. So, as you can see, michael zara owns about twenty thousand.
Thirty three shares. Twenty thousand shares from michael della fortuna and fifteen thousand shares for david shurkin. Now the concerning part here is that michael zara owns twenty thousand shares, but in this filing here you can see that he actually sold 357 000 shares and i think he actually made that transaction twice and you can see almost the exact same thing with these other Guys and so they sold off the majority of their positions and that’s a little concerning because it’s, the ceo, the board chair and the director that have all sold off from what i can tell – and this is just my opinion from research that i can find. Please correct me if i’m wrong, and do it nicely in the comments, but from what i can tell all three of these people that are leading the company have sold off most of their positions, which is not a nice thing to see or look at, especially as Somebody that is holding shares in the company now with that topic aside. The next thing i want to talk about is the management, discussion and analysis. This is basically a report that comes out with the financials and each quarterly report, and so i went through this and one of the charts that stood out to me was this chart here, because this is the budgeted versus actual spend for 2020 and then 2021, and So what’s nice here is that if we can see a budget and they are planning to spend 1.
6 million dollars and we’re through the first quarter, then they should have roughly spent about 400 000 of that that’s. Some just easy and simple math. And so when we go through this it’s really nice to see because they’ve actually used over half of the commercial testing budget. So when you look at this right here, here’s, oh well, just under half of the commercial testing budget, it’s 1.3 million dollars and in the first quarter or at least to date when this was filed, they had already spent 625 000. And what that shows to me is that they are pushing very, very hard for commercial testing and getting their products ready to go ready to service and ready to use. So i actually like that, i think that’s, a good sign that they’ve spent um more than half of the budget and we’re not halfway into the year. I do think that’s an actual good sign. One thing that i don’t like about this chart, though, and that kind of threw me by surprise – is that most of the 2022 budgets, so what they’re planning to spend next year is less than what they’re planning to spend this year. So if you look at the 2022 budget for scaling and management, it comes down to 550 000 compared to 1.6 million. If you looked at product development, it’s 1.75 million compared to 2.3 million, so definitely some drastic declines there and then commercial testing, it’s, almost cut in half international and domestic marketing remains almost level and then again, international market penetration is pretty much cut in half and for Me i still look at drone delivery, canada as a growth company that obviously isn’t, making a ton of pro isn’t, making any profit right now, probably won’t be making earnings for a few years.
So in my mind, this company needs to be 100 focused on growth and when i look at international market penetration, i feel like this should be increasing by two instead of decreasing by half. So i have i don’t know. Maybe, like you, you call it a concern or questions or like: why is international market penetration um the budget towards it going down? I have that question as a shareholder, because in my mind it feels like that should actually be going up. So these are all just questions that i’m raising other notes that i want to talk about is that these are just financial statements. I don’t have all of the information. This is just my opinion, but there are lots of other recent news: there’s patents, there’s certificates and drone delivery. Canada just got put onto an advisory committee, so there’s a lot of other news and a lot of other positive things going on. I am only focusing on the q1 financials and the management discussion and analysis in this video so definitely take a look at everything else. That’S going on because there’s a lot of other news with the company and there’s also been a couple of other regulatory announcements and some process made in that area. So definitely look into that now when we look at the stock chart itself and we look at the technicals for this stock, it’s really easy to see some key levels of support and resistance. So the first one here is right: around a dollar ten.
You can see. We tested it at the end of january right here and we tested it again at kind of the middle of april. We are now coming back down to that dollar. Ten level and we’ll have to see what happens if we’re going to triple bottom here or, if we’re, actually gon na break through a dollar ten. If we break through a dollar ten, i might cut my position. I might lock in my profit and just call it a day, buy back in when it changes direction again, and it turns around because i’m a little bit concerned about it right now, especially if it falls below a dollar ten or a dollar that’s. Where i’m going to be looking at locking in my position, i also think the price has some resistance around a dollar fifty here you can see we got rejected at a dollar fifty here in january and again at the end of april right here. So what i would like to see – and what would make me add more to my position, is if we see a couple green days, we break through our two moving averages, our 20 and 50 day moving averages here and we break through a dollar fifty. That would give me some confidence and i’d also like to see a lot of volume. Come back in. You can see right here that the price was driven up by volume, it wasn’t necessarily driven up by the news releases and the things going on with this company.
This price was driven up by volume and people getting into the stock and hearing about it and wanting exposure to it. And since then, the volume the highest day right here had the highest volume. And since then the volume has declined and so has the price of the shares. So this is definitely a volume based stock and you need to watch that very closely, at least in my opinion now here is my final opinion is that i personally think it was an okay quarter. I don’t think they blew it out of the water. I don’t think they did anything that drastically impressed me. They kind of kept their revenue. It declined by like two or three percent, so pretty much, even they didn’t blow it out of the water, and i don’t like that management sold, shares that’s sort of an internal issue. For me, i haven’t talked about it yet i’ve kind of waited and let the air settle, but it is definitely something that’s kind of stuck. In the back of my mind, i don’t like that. The revenue declined. I would have liked to see it increase. Obviously, as an investor but we’ll give it another quarter and kind of see what happens there, and i also do like some of the progress that is happening in the news releases that have come out. There’S a lot going on with patents with different areas of their business with different opportunities, so don’t just make your decisions based off this video.
You have to do a lot more research, because this was just the q1 financials and the management discussion and analysis. But if you did like this video and you get any value out of this video – remember to click that like and subscribe button. And if you want to see more about what i’m doing on an almost daily basis. Consider signing up for my discord chat because that’s, where i’m trying to build a community of traders to share their analysis, share their research share their due diligence so that you’re not stuck at home, doing it all by yourself. I share my weekly watch list in there. Every single saturday, i also post all of my technical analysis in there and it’s a place where people can share their work and their due diligence to hopefully help everybody else make more money. If you’d like to join it’s five dollars per month, the link is in the description to this video and i would love to have you there now. Let me remind you, i’m still, holding shares i’m, not making this video to bash the company or or do anything like that i’m. Just making this video to honestly share my opinion. I don’t want to sugarcoat anything and, like i’m, a big fan boy of this company. I i’ve talked about it a lot, so i don’t want this video to come across the wrong way, but do take in mind that i’m just trying to share my opinion and, if i’m wrong about anything leave me a comment.
Let me know i will correct the video and i would love to address it and learn more about it so like and subscribe, and i will see you guys in the next video.