NEW YORK–(BUSINESS WIRE)–Drone USA, Inc. (OTC Markets: DRUS) (“Drone USA” or the “Company”), a developer and manufacturer of low altitude Unmanned Aerial Vehicles (“UAV”) and related technologies, today announced that the Company has completed the acquisition of Howco Distributing Corp. (“Howco”), a leading wholesale distribution company. Drone USA had previously submitted a letter of intent to acquire Howco , and entered into a stock purchase agreement on August 4, 2016 to acquire Howco.
Acquisition includes purchase of an award-winning, profitable, premiere wholesale distribution company, facility leases and related intellectual property;Completion of the acquisition establishes the Company’s presence on the West Coast in addition to Drone USA’s New York offices;Provides direct access to new supplier and vendor relationships expanding Drone USA’s network into vertical industries and strengthening of the Company’s market position;Provides an opportunity for Drone USA to expand Howco’s business, increasing the Company’s profitability over the long-term; andAdds an experienced management team that has successfully established a leading supply company known for its operational excellence within the Federal Government sector.
The Company’s investment in Howco is a continuation of Drone USA’s targeted acquisition strategy that involves the acquisition of profitable businesses led by experienced management teams that have well-established operating plans. As a part of the transaction, former owners Paul and Kathy Joy have entered into employment agreements with Drone USA to continue to oversee Howco’s day-to-day operations. For 2015, Howco reported annual sales of $23.4 million and earnings before interest, taxes, depreciation and amortization of approximately $1.78 million.
Winner of the 2012 United States’ Department of Defense Logistics Agency’s Bronze Supplier Award, Howco is a premier supplier of spare and replacement parts to a wide variety of Federal Government agencies, US military prime contractors and commercial customers worldwide. Founded in 1990 and located in Vancouver, Washington, Howco is known for its operational excellence that encompasses bid solicitation, contract management, packaging and logistics. The Company expects that the Howco acquisition will further Drone USA’s business plan by assisting it in capturing additional opportunities for growth and the development of additional strategic relationships within the UAV supply chain.
Michael Bannon, Chief Executive Officer of Drone USA, stated: “Howco is a leading supplier that continues to deliver on its strong track record of operational excellence and solid relationships with OEMs and suppliers. We believe the acquisition will increase our global footprint and market share as we build Drone USA’s geographic presence on the West Coast. We look forward to working with Mr. and Ms. Joy, their knowledge and expertise has shaped Howco into the leading supplier it is today and we are confident they will contribute greatly to the Company’s overall growth.”
The Company purchased Howco for $3.5 million using a combination of $2.6 million in cash, a promissory note for $900,000 and the issuance of five year Warrants to the Howco shareholders to purchase 500,000 shares of Drone USA’s common stock at an exercise price of $0.01 per share.
Wellington Shields & Co. LLC acted as lead placement agent for the transaction.
About Howco Distributing Corp.
Howco Distributing Corp. was established in 1990 with the mission of being a leading and respected provider of construction, transportation, mining and heavy equipment spare and replacement parts to customers worldwide. Through a wide variety of supply chain solutions, Howco Distributing Corp. is dedicated to execution excellence and support in contract administration, military and commercial packaging services and customer service. Focused on exceeding Government and Commercial customer’s expectations of operational integrity, quality and ethics.
Certain statements in this press release may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections of matters that affect revenue, operating expenses or net earnings; projections of growth; and assumptions relating to the foregoing. Such forward-looking statements are generally qualified by terms such as: “plans, “anticipates,” “expects,” “believes” or similar words of like kind. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or qualified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking information. These factors are discussed in greater detail in the company’s business plan and filings with the OTC Markets Group.