Volatus Releases 2023 Financial Results and Provides General Corporate Update
*2023 Revenue of $34.87M and Gross Profit of $11.14M*
*TORONTO, ON / ACCESSWIRE / May 12, 2024 / *Volatus Aerospace Corp. (TSXV:VOL)(OTCQB:VLTTF) ("Volatus" or "the Company"), a leader in the drone industry, is pleased to announce its financial results for the year ended Dec 31, 2023.
The Company generated revenues of $34,872,815 for the year ended Dec 31, 2023, with a 32% gross margin, and adjusted EBITDA improvement of $1,981,972 from ($5,616,940) in 2022 to ($3,634,968) in 2023.
The Company announces that it has restated its financial results for the financial years ended December 31, 2022 and 2021. The identification of the need for the restatements arose in the course of the Company's new auditors review of the financials statements for the years ended December 31, 2022 and 2021. The restatements reflect changes in recognition of contingent consideration, recognition of acquired intangible assets, amortization of intangible assets, creation of deferred tax liability due to acquisition, and recognition of additional goodwill and bargain purchase gain. A summary of the restatements is set forth below. Management is of the view that the restatements do not have a material impact on the Company's revenue, gross profit, adjusted EBITDA and the reported net cash provided by operating activities and does not result in a change to the cash balance for any restated periods.
*Annual (2023) Performance Highlights:*
· Revenue increased to $34,872,815 from $24,414,418 in 2022, a 43% improvement on a comparative and normalized basis.
· Gross profit was $11,135,842, an increase of $4,578,391 compared to 2022 on an adjusted basis after excluding charter services.
· Gross margins increased to 32%, an increase of 4% compared to 2022.
· Available cash on hand on December 31, 2023 was $1,682,402.
· Comprehensive loss of ($9,693,626) in 2023 compared to ($5,449,917) restated for 2022. This 2022 restatement includes a bargain purchase gain of $2,112,19. If excluded, the 2022 losses would have been ($7,562,113).
· Adjusted EBITDA improved by 35% to ($3,634,968) from ($5,616,940) in 2022. Efficiency measures implemented in late Q3 2023 will continue to be realised over the next few quarters. Management feels that adjusted EBITDA is an efficient measure of the performance of the Company.
*Quarterly (Q4 2023) Performance Highlights:*
· Revenue increased to $10,500,995 from $7,213,129 in Q3 2022, a 46% improvement.
· Gross Profit increased by $777,964, to $2,800,114 from $2,022,150 in Q4 2022.
· Adjusted EBITDA improved by 80% to ($769,943) from ($3,768,238) in Q4 2022.
*Notable Operational Accomplishments During the Year:*
· Continued expansion in the US with the strategic acquisition of Empire Drones of New York and Skyscape Industries of New Jersey.
· Signed a 3-year Master Service Agreement to provide pipeline right-of-way asset and environmental monitoring throughout Ontario.
· Signed a multi-year Master Service Agreement worth up to $60 million with a US based power utility.
· Entered a strategic partnership to automate airborne gas leak detection.
· Expanding its Scientific Experiential Aerial Research (SEAR) Program in the US.
· Received regulatory approvals to expand operations in wildfire suppression and to operate heavy spray drones for precision agriculture.
· Was issued a Canadian Transportation Agency (CTA) License for cargo deliveries using drones.
*SUMMARY OF RESTATEMENTS*
*Consolidated Statement of Financial Position*
*December 31, 2022*
*Previously reported*
*Adjustments*
*December 31, 2022*
*As restated*
Intangible assets 8,815,125
(4,686,451)
4,128,674
Goodwill 689,835
273,769
963,604
*Total Assets* *33,609,987*
*(4,412,682)*
*29,197,305*
Other short-term liabilities 373,163
3,165,943
3,539,106
*Total current liabilities* *6,165,334*
3,165,943
*9,331,277*
Deferred tax liability -
619,511
619,511
Long-term borrowings 10,063,911
(3,165,942)
6,897,969
Contingent consideration 2,356,850
(1,252,307)
1,104,543
*Total non-current liabilities* *13,246,800*
(3,798,739)
*9,448,061*
*Total Liabilities* *19,412,133*
(632,795)
*18,779,338*
Deficit (8,971,689)
1,844,287
(7,127,402)
Contributed Surplus 2,989,819
(2,777,988)
211,830
Non controlling interest 1,066,963
(2,846,185)
(1,779,222)
*Total Shareholders Equity* *14,197,852*
(3,779,886)
*10,417,966*
*January 1, 2022*
*Previously reported*
*Adjustments*
*January 1, 2022*
*As restated*
Intangible assets 5,811,929
(4,204,325)
1,607,604
Goodwill 583,188
273,769
856,957
*Total Assets* *22,668,821*
(3,930,556)
*18,738,264*
Deferred tax liability -
260,319
260,319
*Total non-current liabilities* *3,788,122*
260,319
*4,048,441*
*Total Liabilities*
Non controlling interest 288,768
(1,254,379)
(965,611)
Deficit (2,345,515)
(158,509)
(2,504,024)
Contributed Surplus 2,989,819
(2,777,988)
211,831
*Total Shareholders Equity* 15,260,042
(4,190,876)
11,069,166
*Consolidated Statement of Loss and Comprehensive Loss*
*For the year ended December 31, 2022*
*Previously reported*
*Adjustments*
*For the year ended December 31,*
*2022*
*As restated*
Depreciation and amortization -
(482,126)
(482,126)
Bargain purchase gain -
2,112,197
2,112,197
Fair value changes in contingent consideration (33,846)
(33,846)
Deferred tax expense -
(71,311)
(71,311)
*Net Loss and comprehensive loss* *6,974,830*
*(1,524,914)*
*5,449,916*
*Owners of Volatus Aerospace* *(6,626,174)*
*2,002,796*
*(4,623,378)*
*Non-controlling interest* *(348,656)*
*(477,882)*
*(826,538)*
*EPS - basic and diluted* *($0.06)*
*$0.02*
*($0.04)*
*Consolidated Statement of Changes in Equity*
*January 1, 2022*
*Previously reported* *Adjustments* *January 1, 2022*
*As restated*
Non-controlling interest 288,768
(1,254,379)
(965,611)
Deficit (2,345,515)
(158,509)
(2,504,024)
Contributed Surplus $2,989,819
(2,777,988)
211,831
*December 31, 2022*
*Previously reported*
*Adjustments*
*December 31, 2022*
*As restated*
Non-controlling interest $1,066,963
(2,846,185)
(1,779,222)
Deficit ($8,971,689)
1,844,287
(7,127,402)
Contributed Surplus $2,989,819
(2,777,989)
211,831
*Consolidated Statement of Cash Flows*
*For the year ended December 31, 2022*
*Previously reported*
*Adjustments*
*For the year ended December 31,*
*2022*
*As restated*
Net loss (6,974,830)
1,524,914
(5,449,916)
Depreciation and amortization 1,367,503
482,126
1,849,630
Deferred income taxes -
71,311
71,311
Bargain purchase gain -
(2,112,197)
(2,112,197)
Fair value changes on contingent consideration -
33,846
33,846
*Total cash outflows from operating activities* *(7,112,174)*
*-*
*(7,112,174)*
*SUMMARY OF RESULTS*
*Twelve months ended Dec 31* *2023* *2022* *2021*
Product and Services Revenue
34,872,815 24,414,418 9,913,953
Aircraft Sale
- 5,356,721 -
Direct Cost
23,736,973 21,425,786 7,385,243
*Gross Profit*
*11,135,842* *8,345,353* *2,528,710*
32 % 28 % 26 %
*OPERATING EXPENSES*
Advertising & marketing
1,856,220 2,225,224 521,250
IT & tech
669,096 512,056 169,571
Personnel
6,984,713 5,660,069 2,080,871
R&D
1,341,377 541,023 -
Office cost
2,830,861 1,513,960 425,355
Travel
479,163 419,823 196,998
External partner cost
1,281,121 1,556,278 318,844
Depreciation
4,033,731 1,866,791 637,203
Share based Payments
723,804 1,244,858 459,152 *20,200,086* *15,540,082* *4,809,244*
*(Loss) from Operations*
(9,064,243 ) (7,194,729 ) (2,280,534 )
*OTHER ITEMS - INCOME/(EXPENSE)*
Finance cost
(1,775,236 ) (526,238 ) (438,954 )
Goodwill Impairment
- - (1,399,029 )
Bargain Purchase Gain
221,808 2,112,197 -
FV changes in Contingent Consideration
386,731 (33,846 )
Other income (expense)
15,405 411,502 192,963
Gain (Loss) on disposal of drones
92,782 9,969 37,006
Foreign exchange translation
(35,089 ) (157,460 ) (25,958 )
*Net loss and comprehensive loss before tax*
(10,157,842 ) (5,378,605 ) (3,914,506 )
Deferred Tax Income/ (Expense)
464,216 (71,311 )
*Net loss and comprehensive loss after tax*
(9,693,626 ) (5,449,916 ) (3,914,506 )
*Total comprehensive loss for the period attributable to:*
Owners of Volatus Aerospace Corp.
(9,464,043 ) (4,623,378 ) (2,953,117 )
Non-controlling interest
(229,583 ) (826,538 ) (961,389 ) (9,693,626 ) (5,449,916 ) (3,914,506 )
*Loss per share*
Basic and Diluted
(0.08 ) (0.04 ) (0.03 )
*Weighted average number of common shares outstanding*
Basic and Diluted
117,887,327 104,932,598 84,447,725
*SUMMARY OF QUARTERLY RESULTS*
*Q4 2023* *Q3 2023* *Q2 2023* *Q1 2023* *Q4 2022* *Q3 2022* *Q2 2022* *Q1 2022*
Revenue
10,500,995 8,274,349 8,684,991 7,412,480 7,213,129 11,120,589 6,629,593 4,807,829
Direct Cost
7,700,881 5,265,775 5,724,516 5,045,802 5,190,979 7791145 4728672.918 3714988.951
*Gross Profit*
*2,800,114* *3,008,574* *2,960,475* *2,366,678* *2,022,150* *3,329,444* *1,900,920* *1,092,840* 26.67 % 36.36 % 34.09 % 31.93 % 28.03 % 29.94 % 28.67 % 22.73 %
*OPERATING EXPENSES*
Advertising & marketing
278,781 541,635 629,686 406,118 575,539 599,285 591,365 459,035
IT & tech
28,439 243,602 211,960 185,095 164,260 140,392 110,775 96,629
Personnel
1,312,983 1,727,086 1,788,347 2,156,297 1,552,913 1,393,606 1,565,456 1,148,094
R&D
771,861 104,832 364,263 100,420 541,023 - - -
Office cost
605,396 722,276 610,650 892,539 490,740 378,474 416,589 228,157
Travel
126,710 90,804 167,364 94,285 144,372 140,622 54,456 80,373
External partner cost
436,686 243,443 326,979 274,013 602,171 403,238 168,371 382,497
Depreciation
1,647,364 843,744 797,487 745,136 604,849 270,081 300,511 209,224
Share based Payments
173,671 195,372 178,361 176,401 340,761 330,918 290,103 283,076 *5,381,891* *4,712,793* *5,075,097* *5,030,304* *5,016,628* *3,656,616* *3,497,626* *2,887,086*
*(Loss) from Operations*
(2,581,777 ) (1,704,219 ) (2,114,622 ) (2,663,626 ) (2,994,477 ) (327,172 ) (1,596,707 ) (1,794,246 )
*OTHER ITEMS - INCOME/(EXPENSE)*
-
Finance cost
(667,949 ) (425,671 ) (368,635 ) (312,982 ) (249,798 ) (121,672 ) (81,239 ) (73,528 )
Bargain Purchase Gain
221,808 2,112,197 - - -
Changes in Fair Value of Contingent Consideration
386,731 (33,846 ) - - -
Other income (expense)
14,955 (39,229 ) 41,237 (1,558 ) 192,498 79,640 31,576 107,788
Gain (Loss) on disposal of equipment
(125,476 ) 228,769 (0 ) (10,511 ) 414 10,566 (1,011 ) -
Foreign exchange translation
(24,156 ) 19,946 (16,191 ) (14,688 ) (195,277 ) 6,430 20,484 (14,412 )
*Net loss and comprehensive loss before tax*
*(2,775,864* *)* *(1,920,403* *)* *(2,458,211* *)* *(3,003,365* *)* *(1,168,290* *)* *(352,208* *)* *(1,626,897* *)* *(1,774,398* *)*
Deferred Tax Income/ (Expense)
464,216 (71,311 )
*Net Loss and comprehensive loss after tax*
*(2,311,647* *)* *(1,920,403* *)* *(2,458,211* *)* *(3,003,365* *)* *(1,239,601* *)* *(352,208* *)* *(1,626,897* *)* *(1,774,398* *)*
*Loss per share*
Basic and Diluted
(0.02 ) (0.02 ) (0.03 ) (0.02 ) (0.01 ) (0.01 ) (0.02 ) (0.02 )
*RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS* *Three months ended Dec 31* *For the year ended Dec 31*
*2023* *2022* *2023* *2022*
*Adjusted EBITDA (loss)*
*(769,943* *)* *(3,768,238* *)* *(3,634,968* *)* *(5,616,940* *)*
Interest
667,949 249,798 1,775,236 526,238
Depreciation
1,647,364 604,849 4,033,731 1,866,791
Share-based Payments
173,671 340,761 723,804 1,244,858
Loss from LATAM Operations
- *-* 286,423 *-*
Loss from Sale of Drones
125,476 (414 ) (92,782 ) (9,969 )
Lease Termination
- *-* 405,000 *-*
Crewed Revenue
- (1,787,902 ) - (1,787,902 )
Bargain Purchase Gain
(221,808 ) (2,112,197 ) (221,808 ) (2,112,197 )
FV changes in Contingent Consideration
(386,731 ) 33,846 (386,731 ) 33,846
Deferred Tax Income
(464,216 ) 71,311 (464,216 ) 71,311
*Net Loss*
*(2,311,647* *)* *(1,168,290* *)* *(9,693,626* *)* *(5,449,916* *)*
*Other Corporate Update:*
Further to the Company's press release dated July 27, 2023, in respect of TSX Venture Exchange's extension of the non-brokered private placement of up to $250,000 of convertible debenture units of the Company, the Company has decided not to pursue this private placement and as such the private placement has been terminated.
Further to the Company's press release dated January 9, 2024, the Company announced that it had completed the acquisition of Aerial Motion Pictures Ltd., dba UAVHub and Open Sky Consulting International Ltd., dba The Drone Mentor by issuing 1,680,000 common equity shares instead of 1,575,000 common equity shares of the Company as previously mentioned.
*About Volatus Aerospace:*
Volatus Aerospace Corp. is a leading provider of integrated drone solutions throughout North America and growing into Latin America and globally. Volatus serves civil, public safety, and defense markets with imaging and inspection, security and surveillance, equipment sales and support, training, as well as R&D, design, and manufacturing. Through our subsidiary, Volatus Aviation, we are introducing green and innovative drone solutions to supplement and replace traditional aircraft and helicopters for long-linear inspections such as pipeline, energy, rail, and cargo services. Volatus is committed to carbon neutrality; the fostering of a safe, equitable and inclusive workplace; and responsible governance.
*Note Regarding Non-GAAP Measures*
In this press release we describe certain income and expense items that are unusual or non-recurring. There are terms not defined by International Financial Reporting Standards (IFRS). Our usage of these terms may vary from the usage adopted by other companies. Specifically, gross profit, gross margin, and Adjusted EBITDA are undefined terms by IFRS that may be referenced herein. We provide this detail so that readers have a better understanding of the significant events and transactions that have had an impact on our results.
Throughout this release, reference is made to "gross profit," "gross margin," and "Adjusted EBITDA" which are non-IFRS measures. Management believes that gross profit, defined as revenue less operating expenses, is a useful supplemental measure of operations. Gross profit helps provide an understanding on the level of costs needed to create revenue. Gross margin illustrates the gross profit as a percentage of revenue. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). The Company defines Adjusted EBITDA as IFRS comprehensive loss excluding interest expense, depreciation and amortization expense, share-based payments, income tax expense, integration and due diligence costs, one time profit or loss (non-recurring), and impairment of goodwill, property, plant, and equipment and right-of-use assets (ROU). The Company believes that Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives. Readers are cautioned that these non-IFRS measures may not be comparable to similar measures used by other companies. Readers are also cautioned not to view these non-IFRS financial measures as an alternative to financial measures calculated in accordance with International Financial Reporting Standards ("IFRS"). Adjusted EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers and should not be construed as alternatives to comprehensive loss or income determined in accordance with IFRS. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the "Non-GAAP Measures and Additional GAAP Measures" section of the Company's most recent MD&A which is available on SEDAR.
*Forward-Looking Statement*
This news release contains statements that constitute "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs, and current expectations of the Company with respect to future business activities and operating performance. Often, but not always, forward-looking information and forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results "may", "could", "would", "might" or "will" (or other variations of the foregoing) be taken, occur, be achieved, or come to pass. Forward-looking information includes information regarding: (i) the business plans and expectations of the Company; and (ii) expectations for other economic, business, and/or competitive factors. Forward-looking information is based on currently available competitive, financial, and economic data and operating plans, strategies, or beliefs as of the date of this news release, but involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors may be based on information currently available to the Company, including information obtained from third-party industry analysts and other third-party sources, and are based on management's current expectations or beliefs. Any and all forward-looking information contained in this news release is expressly qualified by this cautionary statement. Investors are cautioned that forward-looking information is not based on historical facts but instead reflects expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Forward-looking information and forward-looking statements reflect the Company's current beliefs and is based on information currently available to it and on assumptions it believes to be not unreasonable in light of all of the circumstances. In some instances, material factors or assumptions are discussed in this news release in connection with statements containing forward-looking information. Such material factors and assumptions include, but are not limited to: the commercialization of drone flights beyond visual line of sight and potential benefits to the Company; and meeting the continued listing requirements of the TSXV. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. The forward-looking information contained herein is made as of the date of this news release and, other than as required by law, the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.
TSXV: VOL
OTCQB: VLTTF
*CONTACT DETAILS*
Abhinav Singhvi
Chief Financial officer
+1 833-865-2887
abhinav.singhvi@volatusaerospace.com
*COMPANY WEBSITE*
https://volatusaerospace.com
*SOURCE:* Volatus Aerospace Corp.
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