Quarterly Update and Key Developments
DroneShield made significant progress in the quarter to December 31, 2016. The key developments included the following.
- In late November 2016, DroneShield launched DroneGun, a tactical drone jammer, which added an effective drone countermeasure to DroneShield's suite of drone detection products. This new product has positioned DroneShield as the only company in the world offering both drone detection and handheld rifle-style tactical drone countermeasures.
- The media and potential customers expressed substantial interest in DroneGun, and DroneShield achieved the first full-priced sale within days of the product release. Hundreds of media articles on DroneShield and DroneGun were published globally, and DroneShield's promotional video of the product received over 1.3 million views within the first month.
- In December 2016, the Company took the decision to refocus its marketing, sales and business development efforts on the rapidly growing government, commercial and civil infrastructure drone security markets outside of Australia, with particular attention toward the United States. This refocus saw the Sydney-based CEO and Managing Director James Walker resign and, subsequently to quarter end, the Board appointing Oleg Vornik, who had been the Chief Financial Officer of the Company for over a year, the CEO and Managing Director of the Company.
- In late December 2016, DroneShield achieved high profile, full-price sales of its detection systems including a substantial sale to the office of Prime Minister of Republic of Turkey, and a sale to a national security agency of a country in Asia.
- The overall government and civil infrastructure demand for drone detection and mitigation products continued to increase, against the backdrop of nearly daily barrage of news about drone threats.
- DroneShield continued its engagement with key decision-makers and regulators, utilizing, among other things, its high-profile advisory board.
- The calibre of DroneShield's Advisory Board was underscored by the fact that its Advisory Board member Rear Admiral Jay Cohen US Navy (Ret), the former Chief of Naval Research (Chief Technology Officer) of the United States Department of the Navy, and later United States Department of Homeland Security (DHS) Undersecretary for Science and Technology, was reported by the press as having met (in his personal capacity, unrelated to the Company) with the then President-Elect Donald Trump and his transition team at Trump Tower in New York City on 2 December 2016.
- Shortly after the quarter end, the Company entered into a partnership with a government organization headquartered in a U.S. mid-Atlantic state. Under the partnership, the U.S. government organization made a military training area available for demonstrations of DroneShield's products to U.S. government agencies at no cost, and is facilitating such demonstrations, while DroneShield made DroneGun available to the U.S. government organization for use at that military training area at no cost.
- Among hundreds of press reports on DroneShield was a report on NBC News' Today show, made the day before President Trump's inauguration, which described the danger that drones could pose to crowds and dignitaries at the inauguration, profiled DroneShield, and referenced the fact that the United States Secret Service had deployed secret drone countermeasures at the inauguration.
- The Company continued to execute on its strategy along a number of avenues. These included a number of demonstrations to potential customers at a number of venues. Consistent with the requirements of potential end-users, DroneShield continued its product development activities, commencing the development of DroneSentry, an anti-swarming product shortly after quarter end.
- DroneShield made further staff appointments in sales, marketing and technology areas. DroneShield's in-house and distributor salesforce continued to progress a large number of opportunities, with several orders in advanced stages.
The overall global demand for drone detection and mitigation products continued to increase during the quarter, against the backdrop of nearly daily barrage of news about drone threats. Dozens of high profile incidents and concerns took place during the course of the quarter and subsequent to its end.
One can read about some of these at http://www.abnnewswire.net/lnk/7EXJ6X2V
Examples of recent relevant incidents and concerns, public statements by officials, and media coverage about relevant issues included the following.
- ISIS released a video of its remote-controlled drone dropping a bomb.
- An ISIS drone strapped with a bomb (a "flying IED") exploded in Iraq, killing two Kurdish soldiers and leaving two French soldiers wounded.
- Additionally, footage of ISIS suicide bombings shot by drones from the sky (as these attacks occurred) was widely circulated on the Internet.
- It was reported that an Australian citizen was arrested in Turkey on charges of being the head of an ISIS plot to use explosive-laden drones to carry out remote attacks.
- London airports alone were reported to have had 36 drone incidents with ten Category A incidents (near misses) in 2016.
- The US Army was reported as having identified a critical gap in its ability to face swarms of drones. General Daniel B. Allen, the US Army's Chief of Staff, was reported as having stated that defeating drone swarm attacks will be essential in the future.
- Consistent with the overall direction of the Western military efforts, the Iranian military announced its own drone jamming weapon.
While several companies have announced anti-drone product launches in the recent months, DroneShield continues to maintain a substantial lead in the drone security market for the following reasons.
- Most of the purported anti-drone products remain "vaporware" - products that have not progressed beyond an idea or a prototype. DroneShield is shipping products.
- Recently announced product launches are just that - product launches. DroneShield launched its currently available products previously and has had a substantial marketing and distribution network lead in the industry.
- DroneShield is one of the very few providers of both detection and countermeasures. Most purportedly competing products, prototypes and ideas provide one but not the other. The effectiveness of detection is limited without countermeasures, and countermeasures cannot be deployed in most circumstances without drones having first been detected.
- DroneShield's products consistently beat the limited competition in head to head trials in technical and operational terms (such as range, effectiveness, low profile, convenience, deployability, failure and false alarm rates, and others).
- DroneShield's customers and potential customers favor the effectiveness of DroneShield's products. Its products are not time of day or season-dependent, do not rely on line of sight or visibility, are passive to the surrounding environment, and cover most major commercial drone models (including frequency hoppers).
- Many defence-related products developed in the United States are subject to U.S. export restrictions. DroneShield's products are not.
- DroneShield's products are materially cheaper than most competing detection products that are being marketed and are in fact capable of being delivered (particularly, systems being marketed by larger defence contractors). DroneShield's subscription pricing model further reduces a customer's capital outlay upfront and provides an additional incentive to adopt the product.
- As DroneShield is an Australian company with meaningful U.S. operations, its origin is a positive factor in the decision-making process by allied country users, especially government users.
As at 31 December 2016, DroneShield had a combined cash balance of $3,487,077 as outlined in the accompanying Appendix 4C (see the link below).
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About DroneShield Ltd
Based in Sydney, Australia and Virginia, USA, DroneShield Ltd (ASX:DRO) (OTCMKTS:DRSHF) is a worldwide leader in drone security technology. The Company has developed the pre-eminent drone security solution that protects people, organisations and critical infrastructure from intrusion from drones. Its leadership brings world-class expertise in engineering and physics, combined with deep experience in defence, intelligence, and aerospace.