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Draganfly loses $5.53-million in Q3

2023-11-09 17:07 ET - News Release

Ms. Arian Hopkins reports

DRAGANFLY ANNOUNCES RECORD THIRD QUARTER RESULTS OF 2023

Draganfly Inc. has released its third quarter financial results.

Key financial and operational highlights for Q3 2023:

  • Revenue for Q3 of 2023 was $2,138,017, up 14.0 per cent from the same period last year, and consists of product sales of $1,653,111 and drone services of $484,906. This is compared with Q3 revenue in 2022 of $1,876,221, made up of $1,359,986 of product sales and $516,235 from drone services.
  • Gross profit for Q3 2023 was $894,683, up 42.7 per cent from the same period last year, primarily driven by higher product sales. Gross margin percentage for Q3 2023 was 41.8 per cent, compared with 33.4 per cent in Q3 2022. The increase in gross margin was primarily due to sales of inventory that had previously been written off. Gross profit would have been $903,283, up 44.1 per cent year over year, and gross margin would have been 42.2 per cent, not including a one-time non-cash writedown of inventory of $8,600.
  • The company recorded a comprehensive loss of $5,530,248 in the third quarter of 2023, compared with $4,992,533 in the same period of 2022. The comprehensive loss for the period includes a non-cash change comprised of a writedown of inventory of $8,600 and an impairment of notes receivable of $104,780, and would otherwise have been a loss of $5,416,868. The third quarter of 2022 comprehensive loss for the three months ended Sept. 30, 2022, include a gain in fair value of derivative liability of $305,094 and would otherwise be a loss of $5,297,627. Contributors to the year-over-year increase in loss is last year had the benefit of a large foreign exchange gain otherwise operating expenses were down year over year.
  • The cash balance on Sept. 30, 2023, was $2,457,084, compared with $7,894,781 on Dec. 31, 2022.
  • Subsequent to Q3, Draganfly closed a financing of $3.5-million (U.S.), the majority of the proceeds of which will be used for working capital.
  • Draganfly secured its first defence orders for its Commander 3 XL with the U.S. Military. The Commander 3 XL is being utilized to enhance mission success by enabling confident and accurate navigation through unfamiliar terrain and GPS (global positioning system) denied environments. Securing these first orders is a substantial milestone for the company and the Commander 3 XL platform.
  • A leading energy research association chose Draganfly's Commander 3XL platform for inspection standards operations. United States-based energy organizations require NDAA-compliant (National Defense Authorization Act) drones primarily for security and regulatory protocols. The NDAA compliance ensures that these drones are not equipped with components or manufactured by entities deemed to pose a national security risk. Being recognized as an NDAA-compliant, North American-developed drone provider is a significant distinction for Draganfly. This designation underscores the company's commitment to adhering to the stringent security and regulatory standards set forth by the National Defense Authorization Act. It signifies that Draganfly's drones are sourced, manufactured and equipped with components that meet the criteria deemed crucial for national security.
  • A state geological survey selected Draganfly's Commander 3 XL platform to enhance exploration and data collection during geological research and surveying efforts. The state geological survey offers geologic data to improve public understanding of geology, hazards and mineral resources. Draganfly's UAV (unmanned aerial vehicle) platform will aid in research and investigations for not only general geology but also geologic resources, environmental geology and hazards, with results shared among governmental agencies, private industry and the general public. The Commander 3 XL can maximize the state geological survey payload capacity and allow for longer flight times while also meeting the National Defense Authorization Act requirements.
  • Draganfly is providing its drone pilot crews and drone technology to a Canadian provincial government to assist with firefighting mitigation, preparedness, response and recovery efforts. Draganfly is helping conduct night-time missions, identify fire line breaches and detect hidden hot spots using thermal imaging technology. Draganfly's services will enhance the firefighting operations, which protect critical infrastructure, towns, valuable natural resources and help mitigate air quality hazards from the devastating impact of these wildfires.
  • Draganfly officially opened its new manufacturing and production facility in Saskatoon. The opening of this new facility positions Draganfly to meet its commitments of meet the increasing market potential and order book for its products and solutions. The Saskatoon facility has been designed to meet the rising demand for Draganfly's UAV systems and components, such as the Heavy Lift, Commander 3 XL, Commander XL Hybrid and its new Precision Delivery system. This facility will help advance manufacturing capabilities, streamline assembly processes, deepen R&D (research and development) capabilities and optimize integration procedures. Draganfly's newly expanded manufacturing and production facility signifies a significant step in the company's continuous dedication to contributing to the advancement of Saskatchewan's technology sector.
  • Draganfly unveiled its newest product, the Commander 3 XL Hybrid. This drone leverages the North American built highly modular and highly adaptable Commander 3 XL airframe. This cutting-edge system significantly extends flight duration, allowing operators to achieve more in a single flight than ever before Like the Commander 3 XL, the Commander 3 XL Hybrid maintains the Swiss army like versatility, accommodating a wide range of payloads, including Draganfly's Precision Delivery system. The liquid-cooled powertrain efficiently drives all UAV systems, resulting in an increase in flight endurance with the ability to fly a payload of up to four kilograms (kg) or 8.8 pounds (lb) for up to three hours, making this the ideal system to support almost any operation.
  • Draganfly hosted the first Draganflyer Xperience: First Responder User Conference at Draganfly's Joint A.I.R Center in Spring Branch, Tex. The Draganflyer Xperience: First Responder User Conference embodied Draganfly's commitment to innovation in the service of public safety. By working with influential agencies, forward-thinking customers and industry experts in one location, Draganfly facilitated a dynamic exchange of ideas, experiences and expertise to accelerate the adoption and utilization of drones in emergency response. The event not only illuminated the exploration of cutting-edge drone technology but also provided an immersive journey into the future of first responder operations. With its live demonstrations, hands-on sessions, partner presentations and use case workshops, the Draganflyer Xperience: First Responder User Conference helped to shape the trajectory of drone-assisted emergency response for years.
  • Draganfly's president and chief executive officer, Cameron Chell, presented at a webinar on "Disaster Risk Reduction in the Digital Transformation Age: Leveraging emerging technologies." Mr. Chell shared his expertise and insights on how Draganfly's drone technology has played a role in improving disaster management efforts, particularly in response to floods and wildfires. Draganfly's UAV platforms have bolstered disaster risk reduction by swiftly conducting aerial assessments, aiding in survivor search and rescue operations, mapping and surveying tasks, and offering wildfire services, especially during hot and dry seasons.
  • Draganfly was awarded a contract to provide its Vital Intelligence technology to a state corrections agency to its facilities enhance security and efficiency for the benefit of the community, the staff and the inmates. The partnering state agency, responsible for corrections across the region, oversees 21 correctional facilities that house approximately 16,000 individuals. With a dedicated work force of around 4,500 employees, the agency has maintained the lowest recidivism rate in the nation since 2021.

Draganfly will hold a shareholder update and earnings call on Nov. 9, 2023, at 2:30 p.m. PDT (5:30 p.m. EDT). Registration for the call can be done on-line.

Selected financial information is outlined in an attached table and should be read with Draganfly's consolidated financial statements for the quarter ended Sept. 30, 2023, and associated management's discussion and analysis (MD&A), which will be available under the company's profile on SEDAR+ and filed on EDGAR.

The net income (loss) and comprehensive income (loss) for the three and nine months ended Sept. 30, 2023, include non-cash changes comprising a change in fair value of derivative liability of nil and $57,314, a writedown of inventory of $8,600 and $208,247, and an impairment loss on notes receivable of $104,780 and $104,780, respectively. The net income (loss) and comprehensive income (loss) for the three-month and nine-month periods ended Sept. 30, 2023, would otherwise have been a loss of $5,333,505 for the net income (loss) and a loss of $5,416,868 for the comprehensive income (loss), and a loss of $19,167,762 for the net income (loss) and a loss of $19,262,342 for the comprehensive income (loss), respectively.

About Draganfly Inc.

Draganfly is the creator of quality, cutting-edge drone solutions, software and AI (artificial intelligence) systems that revolutionize the way organizations can do business and service their stakeholders. Recognized as being at the forefront of technology for over 24 years, Draganfly is an award-winning industry leader, serving the public safety, public health, mining, agriculture, industrial inspections, security, mapping and surveying markets. Draganfly is a company driven by passion, ingenuity, and the need to provide efficient solutions and first-class services to its customers around the world with the goal of saving time, money and lives.

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