AgEagle Aerial Systems, Inc.

Good afternoon, everyone, and welcome to AgEagle Aerial Systems 2023 Second Quarter Results Webcast. Presenting on today's webcast are AgEagle's Chairman and CEO, Barrett Mooney, and Nicole Fernandez-McGovern, the company's Chief Financial Officer and Executive Vice President of Operations. Before I turn the floor over to them, I remind you that during today's call, statements that are not historical facts including any projections, statements regarding future events or future financial performance, or statements of intent or belief are forward-looking statements and are covered by the safe harbor disclaimers contained in the company's public filings with the SEC. Actual outcomes and results may differ materially from what is expressed in or implied by these forward-looking statements. At this time, I'd now like to introduce the company's chairman and CEO, Barrett Mooney. Barrett.

Thank you, Morgan, and good afternoon, everyone. It's a great pleasure to be hosting today's webcast, and we thank you for joining us and for your support of AgEagle. Today, I'll be focusing my comments on two primary themes. The first is our progress on the integration of our business and operating units and the impact it's having on cost reduction and a relentless march towards positive cash flow. And second, our focus on product innovation and industry leadership and the role we expect these to play in our future financial performance. Let's start by having Nicole take us through the Q2 results in detail, and then I'll continue with my remarks after that. Nicole, why don't you get us started?

Thank you, Barrett, and good afternoon to all who have joined us for this live webcast. Yesterday afternoon, after the market closed, we filed our 2023 second quarter report on Form 10Q with the SEC. If you have not had a chance to review it, you may access it on the sec.gov or via AgEagle's investor relations section website on our website under SEC filings. I encourage everyone to read our 10Qs and other filings with the SEC to ensure you have a full understanding of our business, financial results, and other important information disclosed. I'll begin by first reviewing the highlights reflected in our income statements. Revenues for the first three months ended June 30th, 2023 totaled 3.28 million, which compared to 5.29 million reported for the same three months in 2022. The 38% decrease in total revenues was largely attributable to lower sales of our EV line of drones during the quarter, which contributed 1.27 million in revenues to total revenues compared to 3.04 million for the second quarter of 2022. Overall, the decrease in EV sales were expected ahead of the launch of our new EV Vision. Many customers have indicated that they are delaying their drone procurements as our next generation EV Vision unmanned aerial system releases this September. The EV Vision, which is winning rave reviews by early adopters across the globe, is currently in the final stages of commercial production and expected to be rolled out next month. Drone sales were also impacted in Q2 of this year due to a strategic price reduction we implemented for our legacy EV drone products to more effectively compete with imported drone products. We believe that this price reduction will attract additional customers to the brand and help fuel the value proposition offered by our value-added resellers worldwide, which we believe will start to gain traction over the next two quarters as it aligns with our marketing efforts. Sales of our multispectral sensors, mainly the Altum PT, RedEdge P, and newly released RedEdge P dual cameras, were also slightly decreasing 10% to $1.88 million from the $2.09 million for the three months ended June 30, 2023 and 2022, respectively. This small reduction was fueled by constraints on our fulfillment of orders due to supply chain constraints that affected our sales pipelines. Subscriptions of our software solutions, Measure Ground Control and Hemp Over You, were also soft, declining to approximately $126,000 from $158,000 on a comparable quarter-over-quarter basis. For the six months ended June 30, 2023, total revenues decreased 20% to $7.34 million, which compared to $9.13 million for the first half of 2023. For the reasons I have already mentioned, sales of our EV drones declined to $3.23 million for the six months ended June 30, 2023, which compared to $5.78 million for the same six-month reporting period in 2022. And software sales also declined to approximately $246,000 compared to roughly $328,000 for the first half of 2022. Offsetting the decrease in drone and software sales during the six months ended June 30th, 2023 was growth in our sensor business, which saw revenues climb 27% to $3.8 million compared to $3.02 million for the six months ended June 30th, 2022. Moving down the income statement, due to ongoing integration and consolidation of our sales team and manufacturing operations, we succeeded in reducing our operating expenses 26% to $5.9 million from $7.4 million on a comparable quarter-over-quarter basis, a huge achievement for AgEagle. Likewise, operating expenses for the six-month reporting period ended June 30, 2023, also drinking, falling 28% to $12.04 million as compared to $16.7 million reported for the six-month end of June 30, 2022. More specifically, our integration efforts have resulted in notable discrepancies in spend for general administrative costs, introducing lower legal and consulting fees, a decline in expenses associated with the consolidation of our offices and workforce, reductions in payroll-related costs due to integration of roles, less ERP consulting integration costs, a reduction in R&D consulting fees, and lower stock compensation costs. Our income statement also reflects other expense not related to accounting for our promissory note original issue discount of 4% and interest at 8% per annum issued to an investor in December 2022, along with net foreign currency transaction losses incurred by our drone hardware business. Collectively, this amounted to $419,000 and $857,000 for the three and six months ended. June 30, 2023, respectively, which compared to other expense net of approximately $213,000 and $328,000 for the first half of 2022, respectively. As a result of everything I've covered, we incurred a net loss of $5.29 million, or $0.05 loss per share, for the three months June 30th of this year compared to a net loss of $5.6 million or $0.07 per loss per share for the comparable three-month period in the prior year. This represented a 6% improvement on a comparable quarter-over-quarter basis. We are also very proud of the fact that we achieved a significant improvement in our net loss for the six months of 2023. For the six months ended June 30th, 2023, our net loss totaled $9.89 million, or $0.11 loss per share, which was reduced 25% from a net loss of $13.20 million, or $0.17 loss per share reported for the first half of 2022. Now turning your attention to our balance sheet. As of June 30th, 2023, our cash position was $4.2 million, which compared to $4.35 million as of December 31, 2022. Cash used in our operations during the first six months of 2023 totaled $6.78 million, a decrease of $4.8 million, or 42%, as compared to cash used of $11.63 million for the six months ended June 30, 2023. As of June 3rd, 2023, we had working capital of $7.54 million and total stockholders' equity of $41.18 million. This compared to working capital of $9.08 million and total stockholders' equity of $43.22 million as of December 31, 2022. This now concludes my overview of the financial highlights, and I will turn the call back over to Barrett. Barrett?