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 EBIDTA 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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