Drone Volt has announced the signing of the contract with Aquiline Drone for the licensing of Hercules 2 and Altura Zenith along with its camera Pensar in the USA. We view the concretisation of the contract with Aquiline Drones as very positive and encouraging for the next steps and the implementation of the production phase.

Drone Volt announced the signing of the contract with Aquiline Drone for the licensing of Hercules 2 and Altura Zenith along with its camera Pensar in the USA.

As a reminder, this follows the signing of a Letter of Intent with Aquiline Drones in order to produce the Hercules 2, the Altura Zenith, and its Pensar camera before the end of 2020, at a rate of 1,000 units per month in the early life of the contract. Thereafter, the company targets ambitious volumes and should increase its production line by 3,000 units monthly, to reach a steady 10,000 units per month in total.

Under the revised terms announced with the signing of the contract, Drone Volt would be granted a 10% cut in the revenue from the commercialisation of its drones and cameras over a five-year licensing period. Drone Volt would be entitled to receive a minimum of $100k per month, to start in October 2020. On an annual basis, this would grant Drone Volt $1.2m per year, to be revised by +10% annually, which is well above the terms of the LOI that stated $400k annually (of which $250k for Altura Zenith and $150k for the Hercules 2). In addition, Drone Volt should receive an upfront payment of $450k by the end of this year to compensate for the transfer of know-how.

Furthermore, Drone Volt will have access to Aquiline Drones’ facilities in order to produce its own drones for international markets. We see this as a positive addition to the already full production capacity of the company, especially considering the fact that no capex will be spent on it.

While at this stage, this signature has little impact on our model, except for +$300k for 2020, we view the concretisation of the contract with Aquiline Drones as very positive and encouraging for the next steps and the implementation of the production phase.

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