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Why the DroneShield share price went ballistic this December

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While the chaos at Gatwick Airport after a mysterious drone sighting ruined the Christmas travel plans of some 140,000 travellers the headline-making news meant Christmas came early for one ASX company.

The DroneShield Ltd (ASX: DRO) share price climbed from 11 cents to 18 cents per share between December 20 and December 24 as the company claims it has the solution to stop drones entering the airspace in and around commercial airports or any other restricted zone.

The company sells DroneGuns and related detection equipment that allows a police or military force to shoot down a drone that enters restricted airspace above a sports event, airport, or public parade for example.

Source: Droneshield presentation

According to its most recent accounts for the 9 months ending September 30 2018 the company took in $762,914 in revenue, but posted an operating cash loss of $3.33 million.

In November 2018 it raised $1.7 million from investors in a capital raising at 14 cents per share, although it had just $885,000 in cash on hand as at September 30 2018. It also reports it has established a $1.855 million credit facility with a US investor and shareholder.

According to a 3B statement lodged with the ASX on November 8 it has just over 182 million shares on issue which gives it a market value of $33 million at 18.5 cents per share today.

The company’s equipment has been trialled by both the US and UK militaries and it reports that the technology is patented as competition is clearly a risk in this space.

There’s also presumably the possibility for example that the US military or others just decide to develop their own drone defence technology given their immense level of funding and research.

Still it seems DroneShield is making solid progress and in September 2018 it reported that it received a $3.2 million order for 70 DroneGuns from a Middle Eastern ministry of defence.

It also claims to have a sales pipeline full of more million dollar plus orders, with the travel chaos headlines out of the UK this Christmas certain to be fuelling further interest in the technology.

Droneshield’s balance sheet probably needs some bulking up, but at a market value of just $33 million it’s worth further investigation by the small-cap enthusiasts.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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