DroneShield wins $280,000 security contract with US Air Force

The US Air Force has awarded Australian security firm DroneShield (ASX: DRO) a $280,000 contract to deploy its DroneSentry detect-and-defeat technology at the Grand Forks airbase in North Dakota.

DroneSentry features DroneShield’s passive RfOne radiofrequency direction-finding sensors, and boasts a world-leading detection range for small Class one drones.

It combines with DroneCannon fixed-site electronic countermeasure systems and the DroneShieldComplete user interface, which is an intuitive and feature-rich alerting, tracking and reporting software.

DroneSentry will receive regular firmware updates, including DroneShield’s artificial intelligence-based roll-out planned for release this year.

Under the contract terms, the USAF retains the option to acquire additional systems following initial deployment.

Minimal impact

Chief executive officer Olek Vornik said DroneShield’s solution was selected for its ability to leverage AI and tracking/defeat automation with little-to-no impact on manning.

“We are immensely proud that one of the most demanding customers in the world has chosen to deploy our flagship, fixed-site detect-and-defeat system, incorporating our new RfOne MKII sensors,” he said.

“The USAF has a substantial requirement for the protection of its bases and we look forward to continuing to support the service members and the expanded roll-out of our solutions for their protection.”

Key market

The US military and government sector is a key market for DroneShield and it is expected that the need for counter-drone solutions will grow rapidly as global tensions increase and drone threats proliferate.

“At the macro level, international tensions continue to rise, driving increases in security and national defence budgets,” Mr Vornik said.

“This has continued to drive demand for our products from Western countries and their regional allies, which collectively represent the majority of the world’s defence and security budgets.”

Quarterly results

The USAF contract adds to Droneshield’s record operating cash receipts of approximately $2.1 million posted for the three months to June.

In its latest quarterly report, the company said it had recorded its first quarter in which operating cash flows were “approximately break-even” despite business disruptions caused by the coronavirus pandemic.

It also received $600,000 in non-dilutive funding against an upcoming 2020 Research & Development Tax Incentive payment from the Australian Government, and approximately $150,000 from the US Government Paycheck Protection Program, bringing total cash in-flows to around $2.9 million for the quarter.

“The break-even operating cash flows, together with this non-dilutive funding, resulted in [Droneshield] being cash flow positive for the quarter, without an equity fund-raising, for the first time in its history,” the company said.

“This cash flow positive quarter was achieved despite a higher spend relating to a build-up of additional inventory in order to make rapid deliveries for future sales and compares positively to the previous quarter which saw a $1.9 million net cash outflow.”

Droneshield reported that its order book stands at approximately $3.4 million, with a “high conviction pipeline” estimated at over $85 million.