Quarterly Update and Appendix 4C
DroneShield made significant progress in the quarter to June 30, 2017. The key developments included the following.
- The Company launched DroneSentinel, a multi-sensor detection product, and DroneSentry, an integrated multi-sensor detect-and-defeat product.
o The introduction of DroneSentinel and DroneSentry has streamlined the Company's offerings into three key product lines - DroneSentinel, DroneSentry and DroneGun.
o DroneSentinel and DroneSentry consist of the following components - RadarOne (radar based drone detection), RFOne (radiofrequency based drone detection), DroneOpt and DroneHeat (optical and thermal cameras), WideAlert and FarAlert (the Company's legacy acoustic detection), DroneBeam (optical range extender and optical disruptor) and DroneCannon (fixed site jammer).
o Customers are able to select these detection and countermeasure modules as appropriate for their specifications and budget. By way of example, a customer may elect to include all six detection methods in its DroneSentinel product, or choose only two detection technologies (eg radar and acoustics) if they have a limited budget.
o The above components are also available as standalone products.
- The inclusion of these multiple detection methods makes DroneSentinel and DroneSentry the most comprehensive and diverse drone detection and mitigation solution globally. The Company is not aware of any other product which includes all of the detection methods described above.
- The Company made several sales in the quarter totalling $115,000, including a sale of its DroneGun tactical drone jammer product to the military of a G7 country through the Company's distributor. It is understood that this DroneGun will be deployed for testing in the Middle East. While the fact that the sale involved only one test unit means that the revenue from the sale is not material, the sale is important in that this is the first sale of DroneGun to the military of a G7 country. The sale illustrated the increased need for drone security systems globally and the increased acceptance of DroneShield as a leader in the industry, capable of delivering an immediate working and cost-effective solution to its end users, without the need for further development.
- The French military and other French government agencies continued their evaluation process for DroneGun, and certified DroneGun as compliant under the French military's Dangers des Rayonnements Electromagnetiques sur les Personnels ("DREP") test, which measures electromagnetic emission levels on human users. The test is part of the French defence procurement processes. It is also accepted by other European countries.
- DroneShield continued to conduct a number of demonstrations to various militaries globally, including a scheduled demonstration for the United States Department of Defense in September.
- The company exhibited at IFSEC, the largest security trade show in Europe, in June 2017. The conference attracts a number of high caliber distributors globally, which closely ties into DroneShield's distributor strategy. DroneShield has also attended the Counter UAS 2017 conference in London, alongside a number of international militaries focused on acquiring counterdrone solutions.
- The Company appointed Cassidy & Associates, Inc. ("Cassidy"), a pre-eminent Washington, DC government relations firm, whereby Cassidy will advise the Company on contracting with U.S. government agencies, contracts in connection with U.S. federal government budgetary allocations, as well as on other U.S. federal government relations matters.
o Cassidy is a leading bipartisan government relations firm with a particular focus on defence, and expertise in budgetary appropriations, federal procurement processes, and warfighter modernization programs.
o Cassidy's DroneShield advisory effort is headed by Cassidy's head of Defense practice Terry Paul, a retired U.S. Marine Corps General, who is best known in Washington for his experience as the Marine Corps liaison officer in the U.S. Senate, a post he held for an unprecedented ten years.
- The press continued its extensive coverage of DroneShield. Among many press reports on DroneShield were the following:
o DroneShield Unveils Security System for Detecting and Disabling Invasive Drones (Seeker, 10 July) (see link 1 below)
o Got a drone problem? DroneShield open orders for DroneSentry and DroneSentinel (NewsShooter, 5 July) (see link 2 below)
o DroneSentry jamming system open for orders (New Atlas, 5 July) (see link 3 below)
o DroneShield Opens Orders for DroneSentry and DroneSentinel (sUAS News, 5 July) (see link 4 below)
o DroneShield New Device Detects and Jams Rogue Drones (dronelife, 4 July) (see link 5 below)
o DroneGun Passes French Military DREP Standards (American Security Today, 16 June) (see link 6 below)
- The Company's U.S. subsidiary DroneShield, LLC employed Ryan M. Vervack as its Chief Technology Officer. Mr. Vervack has held management positions within multiple defense contractors. Prior DroneShield, he was the CTO for National Programs at CACI International Inc. (NYSE:CACI), a New York Stock Exchange-listed defence contractor with multi-billion dollar revenue and approximately US$3bn in market capitalisation. The National Programs division is CACI's government services group with annual revenues of approximately US$400m, and was acquired by CACI from L-3 Technologies in 2016 for approximately US$500m, with Mr. Vervack joining CACI as part of the acquisition. Mr. Vervack previous roles included senior positions with Lockheed Martin and Leica Geosystems. Mr. Vervack has a BS in Applied and Discrete Mathematics from irginia Tech, and an MS in Management of Information Technology from the University of Virginia.
- DroneShield has been awarded two additional patents and one allowed application (expected to be shortly converted into an additional patent) by the United States Patent and Trademark Office. The patents relate to acoustic detection of drones.
- The Company conducted its first AGM in Sydney in April 2017, with a substantial shareholder support and all resolutions passing by a significant majority.
- DroneShield launched a new website (www.droneshield.com), as part of its continued focus on effective marketing to its global customers.
- DroneShield moved into new and larger premises in Vint Hill, Virginia, consolidating two existing U.S. sites into a single location. The new site allows for effective customer demos, with a dedicated control room simulating customer experience for the demos.
- The Company successfully completed a $1.25m Share Purchase Plan and Placement capital raising in June 2017.
- DroneShield ended the quarter with approximately $2.8m in cash.
- DroneShield's in-house and distributor salesforce continued to progress a large number of opportunities, with several orders in advanced stages, including participating in a number of government procurement processes, the outcome of which is expected be determined in calendar year 2017.
The overall global demand for drone detection and mitigation products continued to rapidly rise. For more information, please see
Examples of recent relevant drone-related incidents and concerns, public statements by officials, and media coverage about relevant issues included the following (all in the last month alone).
- A high number of near misses with aircraft continue to be reported globally, with experts warning of deadly consequences in a collision. These included:
o A US Airforce F-22 Raptor pilot coming in for a landing barely avoided colliding with a drone.
o Medical helicopter at Sioux Falls (USA) reporting a near collision.
o Firefighting air tankers and helicopters being grounded twice in San Diego County due to drones flying in the fire area, with another drone operator in Arizona facing 14 felony charges over firefighting aircraft being grounded by a drone. Cal Fire (California fire department) alerted the public to the critical state of the problem with Tony Mecham (Cal Fire Chief) making a statement about drones hindering firefighting flights in California.
o Drone flying close to aircraft at Parafield Airport in in Adelaide.
o Dubai airport shutting down in several separate incidents, with reported cost of US$100,000/minute, and shutdowns lasting 30min to over an hour each.
o Gatwick Airport closing runway due to a drone. The UK's Airprox Board, which investigates air incidents, says there have been 33 reported cases of drones flying near aircraft in 2017 already.
o Airliner coming within 200ft of crashing into drone above County Durham (UK).
o Drone flying within meters of a Westpac Life Saver Rescue helicopter in Clovelly, Sydney.
- Ongoing multiple reports of drones delivering contraband into prisons continue, including reports at Erlestoke and Warrington in UK, South Carolina, with UK Police setting up a dedicated investigative squad for drone crime. According to a statement from the UK Ministry of Justice, there have been 35 arrests and 11 convictions to date of criminals "involved in drone activity".
- Australian drug cartel was reported to be using a drone to spy on the AFP.
- Royal Canadian Mounted Police warned the public about drones flying at Cavendish Beach Music Festival, following drone sightings recorded.
- ISIS continued to develop weaponised drones on significant scale and deploy them against the Iraqi and Western troops. A number of ISIS drone factories have been discovered, including the images below.
US and other militaries continue to express substantial concern over the use of drones both in the military zones and at home, with Gen. James Holmes, commander of Air Combat Command stating [in relation to a drone coming close to an immediate collision with an F-22 Raptor]: "Imagine a world where somebody flies a couple hundred of those [drones], and flies one down the intake of one of my F-22s with just a small weapon."
As at 30 June 2017 45,000,000 Performance Shares are on issue. No performance share vesting or conversion milestones were met during the period, and no performance shares were redeemed during the period.
As at 30 June 2017, DroneShield had a combined cash balance of $2.8m as outlined in the accompanying Appendix 4C (see the link below).
To view the report with Appendix 4C, please visit:
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.
CACI International Inc