Drone Guarder Inc (OTCMKTS:DRNG) Gets Pumped

Drone Guarder Inc (OTCMKTS:DRNG), the drone solutions provider, has received a lot of attention lately, as its share price has exploded up the charts. In only five months, the share price has gone from $0.01 to $0.9 with very little news to justify the movement. In this article, we will explain the business that DRNG operates and explain the real reason behind this crazy move. We believe that this story and the investigation that we did will surprise you. Have a look astonishing returns, but do not make an investment until you read the whole article.SourceBusinessThe company was founded in May 14, 2012, and initially its business was "offering technological solutions to small to medium sized enterprises". In this first experience, DRNG suffered losses and could not obtain the financing to continue its operations. Then, the business entity changed its business plan and started commercializing a drone enhanced home security system. This is some of the information that we can get from the company's website. The company develops a smartphone application that enables users to control a drone in order to obtain real-time protection of someone's house. The system sends text or multimedia messages to the user in case of a breach detection at home, and can also "scare the intruder off, upload images to the cloud for safe-keeping, and even dial emergency numbers for back up". How does the company plans to sell this product? It has two options. Either the home security systems will be sold directly to the clients, or leasing it for a monthly flat fee. The targeted markets include the USA, Canada, Europe, South Africa and the Asia-Pacific region.We read in the latest annual report that the company plans to develop the app and the whole solution with the help of a third party. Hence, the system is not ready yet.Financial SituationWe checked the last audited financial statements and saw that the company has very little cash, and many liabilities as of January 31, 2017. Have a look first at the assets (numbers are in $):ASSETSCurrent Assets January 31, 2017 January 31, 2016 Cash and cash equivalents 2,726 5,976Total Current Assets2,7265,976Fixed Assets Furniture and Equipment1,0501,050 Accumulated Depreciation(832)(624)Total Fixed Assets218426Total Assets2,944$6,402

Source

Now, check the liabilities:LiabilitiesCurrent Liabilities January 31, 2017 January 31, 2016 Accrued expenses$16,875$3,406Accrued interest6,1802,163 Promissory notes payable 62,50037,500Advances from related party18,00018,000Due to shareholder2,208245Total Liabilities$105,76361,314SourceAdditionally, note that the company received $132,900 for the sale of 132,900,000 shares. In the annual report, it was noted that the company had different expenses, but the reasons were not clearly specified:

"We incurred operating expenses in the amount of $43,890 for the year ended January 31, 2017, as compared with $80,570 for the same period ended 2016. Our operating expenses for the year ended January 31, 2017 mainly consisted of professional fees of $32,594, consulting fees of $5,400 and general and administrative expenses of $5,668, as compared with rent of $58,500 and professional fees of $17,844 for the year ended January 31, 2016." Source

NewsThe most relevant news that we could find was the appointment of Adam Taylor (“Taylor”) to act as its Chief Operating Officer (COO).

"Effective May 3, 2017, the Company’s board of directors appointed Adam Taylor (“Taylor”) to act as its Chief Operating Officer. Effective May 3, 2017, the Company entered into an employment agreement with Taylor. Under the agreement, the Company agreed to compensate Taylor $36,000 annually and provide him with 10 million shares of common stock, if the Company’s renews after the first year." Source

Honestly, the company cannot expect that the explosion in the charts can be justified with the appointment of a new COO. Somethings else should be happening:Stock promotionDRNG's explosion up the charts made more sense when one of our editors received two emails that touted the stock. It promised triple-digit gains from the stock. This text and the following image were part of one of the emails:

"Private investors have made up to 581% returns in dronesin the past year. Until now, small time traders have been left out. Here's why Drone Guarder (DRNG) could be..."

In addition, in the other email received, the following information was disclosed about the drone solution:

"The system is based on 3 components:

• A powerful mobile app with control, monitoring, and alert systems.
• Sound and motion sensors installed at the users' home.
• The physical drone itself: DJI's Mavic Pro, a small drone equipped with high-performing 1080p cameras.

Drone Guarder gives users the ability to survey their property from anywhere. With their drone in the sky, they can watch what's happening on their property. They can fly the drone manually with the built-in mobile app controls or put the drone on patrol mode and let it fly manually."

However, the stock promoter did not disclose properly that the system is not already developed. Those that received the email should have thought that the company was selling products, while it is still at an early stage of development. Investors need to keep in mind this fact: Promoted stocks tend to rise because of the work of the stock promoter. But, later on, usually share price declines when the promo dollars dry up. Thus, buyers beware!What may happen now?The share price could keep creeping up as more emails are sent out and new market participants buy shares. Some will make money. However, in a few days, weeks or months, the stock promotion will stop or the exchange will warn the market about it, and the share price may fall sharply. So, again be careful on this name.ConclusionThe share returns obtained from DRNG have drawn the attention of the market recently. We were interested too, thus we checked the company to understand the business. Even if the company operates in a promising market, such as the drone industry, the company did not release any significant development to justify the run in 2017. Everything made sense when we found stock promoting emails that promised triple-digit returns. It was in this way that the share price was pushed up. Hence, we warn investors about this stock in this article. Buyer beware, as the the promo dollars dry up soon. We will be updating our subscribers as soon as we know more. For the latest updates on DRNG, sign up below!Disclosure: We have no position in DRNG and have not been compensated for this article.