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Draganfly Inc – Exploiting the new $600 million supply gap in the US drone market (CSE:DFLY | OTCQB:DFLYF | FSE: 3U8)

Draganfly Inc

From radar to satellite navigation, the jet engine to digital photography, and the internet to cellular phone networks.

What often starts life as a military invention goes on to transform the world.

The same has happened with drone technology.

Created in the 1980s for armed forces, by the 2000s these unmanned aerial vehicles were smaller, lighter and cheaper to produce.

The retail market took off with a bang in the early 2010s, followed shortly after by the commercial drone sector.

There are signs that growth is accelerating, with Markets & Markets predicting the market could be worth $63.6bn by 2025.

With the right company, this could be a truly incredible investment opportunity.

Just at the point increasing numbers of commercial drones are taking to the skies, Chinese dominance of the industry has hit the skids.

Deep-rooted national security concerns about data safety are creating a regulatory environment, in which Chinese manufacturers are increasingly being left out in the cold.

This leaves the market wide open for U.S. manufacturers and Draganfly Inc. (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8), which has carved itself out a lucrative niche.

How the Global Trade War has created a $600 million opening for Draganfly (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8)

Over the years, Draganfly’s (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8) model has evolved. As the oldest commercial drone manufacturer in the world, the company sees the opportunity ahead in being a data solutions business that makes drones.

Leveraging its core expertise in drone technology, Draganfly has put together a unique, innovative offering that few can match.

Challengers have tried, but have been unable to close the gap.

Silicon Valley drone startups came and went. Years behind in R&D, they blew hundreds of millions trying to emulate what Draganfly has.

As CEO Cameron Chell puts it:

Draganfly has the experience, patents, tools, products and customer relationships that would cost any new entrant a huge upfront investment to develop. We have these because we were so early in the space and have established market-leading technology.”

From foldable wings and GPS-driven and machine driven auto follow kit, to removable propellers Draganfly has a formidable and growing Intellectual Property (IP) portfolio, which the company believes is on the cusp of delivering outsize returns.

The opportunity has opened up thanks to the Global Trade War.

DJI is the Chinese darling of the drone industry. This $15bn oriental unicorn is the world’s largest consumer drone company, with an estimated 70% market share.

However, despite being the sector’s 800lb gorilla, DJI faces a major regulatory roadblock.

It all centres on mounting U.S. concerns about China’s role in ‘Forced Technology Transfer’ (FTT).

If you aren’t aware of it, FTT has been happening for years.

It’s not conjecture, nor prejudice.

It is Chinese ACTUAL POLICY enshrined in law, where China demands that foreign companies “share” technology in order to gain access to the Mainland market.

This thorny issue has been one of the main catalysts behind the trade war between the world’s two major superpowers.

Oxford University’s Law School, second only to Harvard, explains how companies have been forced to hand over “excessive amounts of trade secrets” to Chinese regulators to get pharmaceutical drugs developed.

Other firms have been forced to form joint ventures with Chinese companies to get business licenses granted or access to state funding.

While some reform is working its way through Communist Party-led courts, the practice is widespread.

However, FTT will likely be DJI’s downfall in the United States.

Most recently, US lawmakers on the House Judiciary Committee stepped in to put an emergency halt on DJI’s attempted expansion into the US public safety market.

Bloomberg reported on May 14 how the lawmakers expressed extreme concern that DJI ‘giving away’ drones to more than 40 local governments in 22 states could mean the devices would be used to spy on US critical infrastructure and the population at large.

The Department of the Interior has already grounded its fleet of DJI drones over national security concerns.

Clearly, with regulatory opposition this strong, DJI cannot expand in the United States.

It could even struggle to maintain its current market share.

For companies like Draganfly (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8) this presents an incredible opportunity. Chell goes on to explain:

“Chinese drone products in the United States at a government level represent up to an estimated $600 million of business per year. This is spread across drones, data and services. With changes to the legal environment, this has created a vacuum and there are only a few companies to help fill that demand.

This $600m vacuum, which we saw potentially coming, is now here. There’s an opportunity for North American manufacturers to fill it and we are well positioned to become a leader. “

So that’s the competition.

But enough about them and how they will fail.

Just how big is the market and how might Draganfly profit?

How to play the drone tech boom – Draganfly (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8)

The growth of the drone market has taken many by surprise over recent years.

Just in 2018, the Wall Street Journal reported that the Federal Aviation Authority predicted commercial drone usage would QUADRUPLE to see 452,000 UAVs in the sky by 2022.

There would be so many certificated remote drone pilots that they would outnumber private and commercial pilots combined!

Sounds like a lot, huh?

But even that ambitious forecast drastically underestimated the market’s potential.

By early 2020 that number of 452,000 drones had already been surpassed!

This led to the FAA doubling its prediction to 835,000 active drones by 2023, “given the accelerated registration over the last year”.

With all the signs pointing towards this trend continuing, Draganfly (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8) is perfectly positioned to take full advantage.

The company has five diversified revenue streams that have seen sales growth shoot up 235% in the last 12 months.

The first revenue stream is through contract engineering. Military contracts provide stable, multi-year revenue and Draganfly has large deals already in place with the likes of tactical unmanned aircraft defence contractor Aerovironment.

The second line of business is as an original equipment manufacturer. Remember what we said about DJI? Governments don’t want ‘Made In China’ any more. Draganfly is breaking new ground using its equipment and expertise for exciting new applications to help the world reopen after Covid-19.

The third is Aerial Services like LiDAR, or light detection and ranging. This remote sensing laser tech added to a drone can build 3D maps in the blink of an eye. It has massive applications for the infrastructure and mining industries. It’s already worth millions a year to Draganfly and is growing so fast it’s expected to double in short order

The fourth is in managed services. It could be a huge agri tech company seeking to improve its crop yield or an insurance giant in need of surveying the scene of a natural disaster to calculate pay-outs. Need a drone division? Draganfly will custom build a fleet for you and manage all the mission-critical data feeds and analysis.

The fifth is Data Acquisition & AnalyticsDraganfly builds tailored data management systems, with analytic capabilities. This provides clients with valuable strategic and operational insights into mission-critical aspects of their organizations, in a secure software architecture.

A recent example of this was when Draganfly inserted its health measurement technology into a product called ‘Smart Set Solutions’, which Hollywood is now adopting.

This technology provides health measurement and pre-screening of infectious disease symptoms common in Covid-19. The Draganfly system provides critical daily health data of the crews on production sets. The data provides best practice integration to help ensure the infection curve on a production set stays flat.

Another example is Draganfly’s Minning solution, where the company flies magnetometer missions over resource exploration targets.

Not only will this product deliver the data, but it will also apply an AI engine (announced in a recent partnership press release) to provide live drill target comparisons.

With five clearly defined and growing revenue streams and the $600 million supply gap opened up U.S. regulators, the future looks very bright for Draganfly Inc. (CSE:DFLY|OTCQB:DFLYF|FSE: 3U8).


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