DroneShield Ltd (ASX:DRO) Annual Report

The 2017 financial year continued the strong momentum for DroneShield Limited (ASX:DRO) (OTCMKTS:DRSHF) ("DroneShield" or "the Company"), following its listing on the ASX in June 2016.

The Company continued to build out its world leading suite of cutting-edge counter-drone products. In response to end-user requirements, in the second half of the year, DroneShield launched DroneGun MKII and, subsequent to year end, DroneGun Tactical. Both are innovative portable rifle-shape jammers, covering a broad range of tactical environments and uses. The Company also launched DroneSentinel and DroneSentry in the second half of the year. DroneSentinel is a unique modular drone detection system incorporating radar, radiofrequency, and thermal and optical camera sensors, as well as the patented acoustic detection technology that is at the genesis of DroneShield. All of the detection components of DroneSentinel are also available as standalone products. DroneSentry is a detect-and-defeat product, which incorporates all of these detection capabilities and pairs them up with a jamming capability.

DroneShield also made significant sale and marketing progress during the year. Its sales, installations and test deployments during, or shortly after the end of, the year included those to/with the Boston Marathon (for a third straight year), the Hawaii IRONMAN, the World Economic Forum, NATO militaries, and a competitive Paraguay government tender. DroneShield has a significant sales pipeline. It is participating in a number of trials and procurement processes across military, law enforcement and critical infrastructure customers in the United States, Australia, NATO countries and elsewhere. Its pipeline includes active engagement with dozens of potential end-users, with the size of each potential order ranging between hundreds of thousands of dollars and tens of millions of dollars (see Note below). Most recently, the Company announced its participation in the 2018 Urban 5th Generation Marine Exploration and Experimentation Exercise ('U5G') and the U.S. Special Operations Command SOFWERX ThunderDrone. During the year, DroneGun was certified by the French military as safe for human use as part of their procurement process, and compliant for human exposure under Australian and New Zealand Communications and Media Authority requirements, as part of an Australian procurement process.

The Company continued its active engagement with the Australian and the United States governments, and recently applied for several high-value R&D grants in both countries. It recently received its first R&D Tax Incentive Grant from the Australian Government. DroneShield was also selected to be a part of Team Defence Australia ('TDA') for the high profile DSEI (London) and AUSA (Washington DC) military exhibitions. TDA is a joint effort with the Australian Department of Defence and Austrade.

The Company continues to work with its third-party partners across its sales partner network in approximately 50 countries, as well as its R&D and manufacturing partners to complement its in-house team, optimising its capital expenditure. The Company successfully completed two rounds of funding during the year, as well receiving additional capital through exercise of its listed options.

DroneShield's developments come against the rapidly increasing backdrop of terrorist organisations increasing the sophistication and frequency of use of consumer and commercial grade drones for nefarious purposes. The military market is expected to continue to be an important market segment for the Company going forward, and the Company is well positioned for the military markets as it is participating in a number of tenders, and its products are undergoing a number of evaluations at present.

DroneShield continues to attract a significant amount of media interest globally, including coverage by Channel 7 and Commsec TV, ABC and 2GB radio in Australia; and CBS, NBC and Fox News in the US.

In October 2017, DroneShield engaged Mesirow Financial, a 600-person U.S. investment bank with a specialty in aerospace and defence, in order to explore strategic options, in response to large defence companies expressing interest in a partnership with the Company. Several parties have now signed confidentiality agreements and proceeded into subsequent rounds of discussions.

Note: Not all (and there can be no assurance that any) of these sales opportunities will result in sales.

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About DroneShield Ltd

DroneShield Ltd (ASX:DRO) (OTCMKTS:DRSHF) is an Australian publicly listed company with its head office in Sydney and teams in the US and UK. We specialise in RF sensing, Artificial Intelligence and Machine Learning, Sensor Fusion, Electronic Warfare, Rapid Prototyping and MIL-SPEC manufacturing.

Our capabilities are used to protect Military, Government, Law Enforcement, Critical Infrastructure, Commercial and VIPs throughout the world.

Through our team of primarily Australian based engineers - we offer customers bespoke solutions and off-the-shelf products designed to suit a variety of terrestrial, maritime or airborne platforms.

DroneShield is proudly exporting Australian capability to customers throughout the world and supporting Australia's defence, national security and other organisations protect people, critical infrastructure and vital assets.

     

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