An anonymous director reports

DRAGANFLY REPORTS Q4 AND 2024 RESULTS

Draganfly Inc. has released its fourth quarter and fiscal 2024 financial results. Revenue for the fourth quarter was up 76 per cent year over year. Total 2024 revenue saw a modest increase as the company's capacity to meet demand in the military and public safety sectors did not start to come on stream until late Q3.

Key financial highlights for 2024:

• Total revenue for the year ended Dec. 31, 2024, was $6,561,055, an increase of 0.1 per cent from the prior year. Product sales increased $81,383 in 2024 as compared with 2023, while services revenue decreased $75,170. The company continued its product line transition focus on preparation of public safety expansion and production capabilities.
• Gross profit was $1,398,204, a decrease of $665,910 or down 32.3 per cent from the prior year. As a percentage of sales, gross margin decreased from 31.5 per cent in 2023 to 21.3 per cent in 2024. This year's gross profit included a one-time non-cash writedown of inventory of $627,105 while last year's gross profit included a non-cash downward adjustment of $331,671. Excluding these adjustments, gross profit decreased by $370,476 year over year. As a percentage of sales, adjusted gross margin decreased from 36.5 per cent in 2023 to 30.9 per cent in 2024.
• The company recorded a comprehensive loss including all non-cash items of $14,062,534 compared with a comprehensive loss of $23,709,851 in 2023. The comprehensive loss for the year ended Dec. 31, 2024, includes non-cash changes comprised of a gain in fair value of derivative liability from warrants of $1,842,618, a recovery of impairment of notes receivable of $40,020 and a writedown of inventory of $627,105 and would otherwise have been a comprehensive loss of $15,318,067 compared with a comprehensive loss of $23,400,524 excluding non-cash items in the same period last year.
• Cash used in operating activities decreased by $6,939,383 or 37 per cent year over year.
• The company's cash balance on Dec. 31, 2024, was $6,252,409.

Key financial and operational highlights for Q4 2024

• Fourth quarter revenue was $1,613,162 compared with $916,299 for Q4 2023 largely due to a year-over-year increase in product sales slightly offset by lower services sales.
• Gross profit was $215,740 for Q4 2024 compared with $258,879 for Q4 2023 representing a decrease of $43,139 year over year. Gross profit for Q4 2024 would have been $383,255 if it was not for a non-cash writedown of inventory of $167,515 while Q4 2023 would have been $382,303 if it was not for a one time non-cash writedown of inventory of $123,424. Gross profit as a percentage of sales for Q4 2024 was 13.4 per cent but on an adjusted basis was 23.8 per cent.
• The company recorded a comprehensive loss including non-cash items for Q4 2024 of $4,715,931 compared with a comprehensive loss of Q4 2023 of $4,191,796 for the same period in 2023, an increase of 12.5 per cent over 2023. The comprehensive loss for the fourth quarter of 2024 includes non-cash changes comprising a loss in fair value derivative liability of $946,116 as well as a one time writedown of inventory of $167,515 and would otherwise be a comprehensive loss of $3,602,300 compared with a comprehensive loss of $4,222,170 excluding non-cash items in the same period last year. The decrease in loss was primarily due to lower professional fees, wages and share-based compensation charges.
• The company successfully completed its first proof-of-concept Flights in Drone Delivery research project for Mass General Brigham. The project aims to enhance home hospital care by utilizing drones for efficient medical deliveries, potentially improving service times and patient outcomes.
• The company announced closing of $3.76-million (U.S.) registered direct offering. The funds are intended to support general corporate purposes, including scaling production capabilities and advancing growth initiatives.
• The company announced its participation in the Elevate UAV (unmanned aerial vehicle) event, offering specialized training on advanced drone platforms. This initiative underscores Draganfly's commitment to empowering operators with cutting-edge skills to advance UAV applications in critical sectors.
• Draganfly showcased its latest drone innovations at multiple conferences and private demonstrations including the Wings of Saskatchewan event, aiming to foster cross-industry collaboration and highlight advancements in drone technology within the aviation industry.

The company announced updates to its board of directors and advisory board, including the appointment of former White House Chief of Staff Andy Card to the advisory board, and the appointment of Kim Moody as audit chair, reflecting Draganfly's commitment to strengthening its leadership team.

Draganfly will hold a shareholder update call on March 27, 2025, at 2:30 p.m. PT/5:30 p.m. ET. Registration for the call can be done on-line.

Selected financial information is outlined below and should be read with Draganfly's consolidated financial statements for the quarter ended Dec. 31, 2024, and associated management discussion and analysis, which will be available under the company's profile on SEDAR+ and filed on EDGAR.

Shareholders' equity and working capital as at Dec. 31, 2024, includes a fair value of derivative liability of $2,198,121 (2023 -- $4,196,125) and would otherwise be $6,819,904 (2023 -- $4,603,841) and $6,044,404 (2023 -- $3,479,108), respectively.

About Draganfly Inc.

Draganfly is the creator of quality, cutting-edge drone solutions, software and AI (artificial intelligence) systems that revolutionize how organizations can do business and service their stakeholders. Recognized as being at the forefront of technology for over 25 years, Draganfly is an award-winning industry leader serving the public safety, 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.

We seek Safe Harbor.