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Draganfly Inc
Symbol DFLY
Shares Issued 69,670,613
Close 2020-01-16 C$ 0.61
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Draganfly to acquire Dronelogics for $2-million

2020-01-16 12:23 ET - News Release

Mr. Paul Sun reports


Draganfly Inc. has entered into an arm's-length definitive share purchase agreement dated Jan. 15, 2020, with the shareholders of Dronelogics Systems Inc., whereby Draganfly has agreed to acquire all of the shares of Dronelogics for cash and common shares of Draganfly.

Transaction highlights:

  • The transaction continues to establish Draganfly as a leading, diversified drone organization. Dronelogics has been growing steadily with revenues in excess of $3-million and expected 2019 year-over-year growth of 20 per cent. Draganfly management believes the transaction will generate combined pro forma revenue of between $6-million to $7-million for the fiscal year 2020, representing an increase in Draganfly's revenue of between 23 per cent and 43 per cent.
  • Strategically positioned to leverage Draganfly's brand: Dronelogics is a complementary business to Draganfly and the acquisition of Dronelogics will expand the product offering of Draganfly in the integration and engineering segments. This will expand Draganfly's total addressable market and enhance its position as a leader in the UAV (unmanned aerial vehicle) and UVS (unmanned vehicle systems) industry.
  • Expanded customer base: Draganfly and Dronelogics have limited overlap in customer base, representing an opportunity to cross sell the expanded product offerings and further customized solutions to existing clients.
  • Established history of providing drone services: Dronelogics has been in business for 10 years, working closely with Fortune 500 companies to provide insights into inventory metrics, asset management, volume-metric calculation and digitizing assets, among many other applications.
  • Enhanced management expertise: The acquisition will add a team of nine employees. Postclosing, Justin Hannewyk will be president of the operating subsidiary and will also be appointed to Draganfly's board of directors. The Dronelogics employee base brings a wealth of industry experience and knowledge to Draganfly.

Cameron Chell, chairman and chief executive officer, stated: "We are excited to welcome the whole Dronelogics team as part of Draganfly. Dronelogics has established itself as a trusted drone-service provider. Its business is highly complementary to our business, and the combined entity will deliver an enhanced product and service offering to the combined client base. This transaction further establishes Draganfly as a leading, publicly traded drone company, and provides a strong platform for us to pursue continued consolidation in the industry."

Material terms of the agreement with Dronelogics:

  • On closing of the transaction, the company will pay the shareholders of Dronelogics $2-million, which will consist of the following: (i) a cash payment of $500,000, subject to a working capital adjustment, and (ii) $1.5-million in value plus certain closing adjustments to be satisfied by the issuance Draganfly shares at a deemed price of 50 cents per share.
  • The sellers will receive a nomination right to appoint one person to the board of directors of the company for a period of two years from the closing or as long as Mr. Hannewyk holds a senior executive position with the company.
  • The Draganfly shares issued under the transaction will be subject to resale restrictions in the form of pooling terms providing for release of these Draganfly shares over a period of 24 months and a right to place in favour of Draganfly during the same 24-month period.
  • Completion of the transaction is subject to a number of closing conditions customary for a transaction of this nature, including the filing of required forms with the Canadian Securities Exchange.
  • The two sellers will enter into executive employment agreements with the company.

The transaction has been approved by the board of directors of Draganfly and Dronelogics. In connection with the transaction, the company will pay fees of $160,000 to certain advisers; as to $100,000 by way of 200,000 in Draganfly shares at a deemed price of 50 cents per share and as to $60,000 in cash or Draganfly shares at a deemed price of 50 cents per share. At closing, the company will issue: certain additional Draganfly shares to the sellers at a deemed price of 50 cents per Draganfly share in satisfaction of accrued management bonuses in connection with their services to Dronelogics; (ii) grant 445,000 incentive stock options to certain employees of Dronelogics pursuant to the company's share compensation plan, exercisable at a price equal to closing price of the Draganfly shares on the CSE on Jan. 15, 2020. The options shall have a term of 10 years and vest in three equal tranches, on the first, second and third anniversaries of the date of grant; and (iii) award 375,000 restricted share units to certain directors and officers of Dronelogics. RSUs were awarded to certain directors and officers of Dronelogics pursuant to the company's share compensation plan. The RSUs shall vest in three equal tranches, on the first, second and third anniversaries of the date of award.


Scotiabank is acting as Draganfly's financial adviser and Gowling WLG (Canada) LLP is acting as Draganfly's legal adviser. Stikeman Elliott LLP is acting as Dronelogics' legal adviser.

About Draganfly Inc.

Draganfly is the creator of quality, cutting-edge, unmanned vehicle systems and software that revolutionizes the way people do business. Recognized as being at the forefront of technology for over 21 years, Draganfly is an award-winning, industry-leading manufacturer within the commercial UAV and UVS space, serving the public safety, agriculture, industrial inspections, and mapping and surveying markets.

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