Draganfly, Inc. Q4 FY2024 earnings call

• Partnerships and programs: Selected by Mass Brigham General to start medical delivery program, completed Phase 1 and in Phase 2, received FAA waivers to operate over moving cars in Boston airspace. Also announced with Massachusetts Department of Transportation for medical delivery in Boston. - Product launches: Unveiled NDAA-compliant FlexForce FPV system, which is in theater and operation. - Capacity and revenue: Q4 revenue up 76% year-over-year due to increased capacity from upgraded and new plants. - Leadership changes: Honorable Andy Card joined Advisory Board, Kim Moody became audit Chair. - Product modularity: Draganfly's product line is modular, integrated with dozens of partners' payloads. - Government and defense progress: First DoD purchases in special ops, engaged in multiple certification protocols. - International and vertical services: Signed Australian distributor, participated in demos and pilot programs, specialized services in search and rescue, wildfire, etc.

In 2024, Draganfly's total revenue was $6.56 million. Gross profit was $1.39 million. Cash balance at the end of the year was $6.25 million. Gross margin was 21.3%, with adjusted margin being just under 31%. Q4 revenue was up 76% year-over-year. Full-year revenue was relatively flat due to being at capacity at the end of Q3, but capacity was increased with an upgraded and new plant, leading to the Q4 growth. Product sales for the full year were $5.37 million and drone services were $1.1 million. In Q4, product sales were $1.4 million and drone services were $198,000.

• Management is feeling good about Q1 but can't provide detailed guidance. - Believes that if demand can be filled, the company could be profitable, but visibility on profitability will be through 2026.

• Tariffs: Only about 15% of product build typically subject to tariffs, but international relations and geopolitical factors could have indirect impacts. - Certification: Complex certification processes for drones, supply chain, cybersecurity, etc., can be time-consuming and uncertain. - Geopolitical changes: Dynamic geopolitics can affect operations and market demand. - Order acquisition: Uncertainty in the time it takes to secure large contracts and get them to program of record status.

Q: How will tariffs affect our business? And does the feud between Canada and the U.S. affect our ability to get work in the U.S.?

A: Tariffs are benefiting Draganfly as most of its large order capacity is met in the U.S. and tariff-exempt. About 15% of build is subject to tariffs, but demand is strong. In Canada, there's increased demand from government and law enforcement due to mandates and security needs.

Q: Any updates on potential for meaningful contracts?

A: Draganfly is part of programs of record with other vendors and payload providers. Built capacity to handle large orders and is working on significant orders, with hopeful announcements in next quarter or 2.

Q: If the war in Ukraine ends, do you think we can benefit?

A: Ukraine has provided lessons incorporated into Draganfly's designs. The need for drones won't end with Ukraine war, and there are other conflict areas with more demand. Draganfly is uniquely positioned for land mine survey market.

Q: Would management be able to provide details regarding the current progress of getting Draganfly drones added to the green and blue UAS lists?

A: Waiting on word back on 3XL for blue list, tests and trials went well. FPV product sold into DoD, APEX going through green list, but DIU announcements slow due to reorganization.

Q: Does the company currently see a pathway to profitability in 2025?

A: Don't give forward guidance, but believes enough demand could lead to profitability, though visibility on profitability is through 2026