Hi everybody. Welcome to our Q2 2026 earnings call.

We'll just give this a minute, we just started it, but just letting people file in the room and then we'll get started. Thank you.

All right, I think to be respectful of everyone's time, I think we will get started, just as people are still starting to file in. As always, welcome and greetings to all the shareholders and stakeholders who always tend to join us on this call.

This time it's the Draganfly 2026 Q2 earnings call. My name is Rolly Bustos.

I am the internal investor relations rep here at Draganfly. We appreciate you all joining us as always.

We'll start with our CEO and President Cameron Chell. Chell be talking about and recapping the second quarter.

Next up will be a detailed financial review with our CFO Paul Sun. We'll then conclude by addressing the pre-submitted questions we've received.

As always, you're welcome to reach out to me directly, [email protected], if we didn't get to your question today. I remind everyone this presentation may include forward-looking information and statements.

These statements are not guarantees of future performance or financial results, and undue reliance should not be placed on them. Any future events or financial results may differ from what might be discussed here.

The company's results and statements are accurate as of today, August the 10th, 2026. We are under no obligation to update or renew these statements outside of material press release disclosure going forward.

The full forward-looking disclaimer can be found on page two of this presentation and on the screen right now. Cam, if you're ready, please go ahead.

Sounds great. Thanks, Rolly, sure appreciate it, and appreciate everybody taking the time to afford us the opportunity to update on our earnings call for this last quarter.

The net net here is that Draganfly, we had a record quarter in our second quarter and really very pleased with the progress that we are moving forward with. It's super pragmatic.

I understand that it's a very pragmatic approach compared to maybe, say, a number of other comps out in the industry, but we're super pleased with with where we've ended up and and what the pipeline looks like going forward. Our revenue was $2.664 million, that's a year-over-year increase of 26%.

We had gross profit of $533,000-plus, we have a current cash balance of $131 million, and we did just over $2.5 million of product sales. Some of the highlights from the last quarter included IACLEA, which is the International Association of Campus Law Enforcement Association, or officials, professionals.

This is a 3,000-strong campus association, and they signed an exclusive deal with Draganfly to provide their association members, the 3,000 campuses that are a part of this, with the training for drones and counter-drones on their campuses. It also includes product, and and they went through what I would call a pretty exhaustive series of tests and litmus tests and interviews and all the rest of it to determine who they were going to go with, who they were going to endorse, and what program they were going to put in place.

I would say that this was, 50% based on product and 50% based on subject matter expertise and the quality of the training program that was being put forward that campuses will go through. It's a tremendous market win for us.

We have an immediate pipeline of over 50 campuses that signed up. We are, in you know typical fashion of what we do, which I know is frustrating at times, taking a very pragmatic approach to how we do this.

We're we're moving, we did some pilots previous to launching the whole program, which helped us establish what that training protocol would be, what were the use case scenarios and and concepts of operations that we were going to have to be planning for. We had to make some key hires in campus security, counter-drone, and a number of other tactical positions in order to really develop that right programming.

We're rolling out the first three campuses that have signed up with us in the next quarter. We'll assess those three campuses, we'll probably run them, sure we'll sign up another three of the of the 50 that are indicative in the pipe, and and we'll run them for a quarter, then run the next ones for a quarter, and get all that operational expertise, make the adjustments necessary, and then we'll open up the the the spigot to it in in probably the second quarter of of next year, which works well in terms of mostly the budget timing and actually mostly the decision timing that it takes for things to move forward.

We really want to make sure that we've got a a great reference base in this regard, because it's a bit of a captured market for us. Really hats off to to our public safety organization, how they organized this.

I will mention as a subsequent event we also did sign the Small and Rural Association. A very, very important association for us to sign as well.

Part of our whole strategy here is is not necessarily to go after the urban centers. Those urban centers are really well-serviced by organizations like Skydio, Axon, BRINC, who are very, very targeted in those areas, have obviously very strong balance sheets, competent management teams, and we didn't want to be going head-to-head with those folks.

Now, the campuses is a terrific set of organizations for us to go and work with, including the the release of our Drone-in-a-Box solution to them. However, the the rural, which makes up about 80% of police forces in the country, but they're smaller.

They're a little bit more expensive to work with, but they're, they're not quite as fussy, you've kind of got a balance there to work with. There are a couple of other associations that we're close to signing, but again, we're just, we're trying to roll it out in a measured way.

We also completed the acquisition of ScipDynamics. Now, this is a really strategic acquisition for us.

ScipDynamics is the the two founders involved here are former Navy guys. They're actually the individuals that designed the original FPVs for the Marines.

Over 15 years ago trained Marines and built protocol around FPVs. Now, not a lot of people know this, but FPVs weren't invented in Ukraine.

They were introduced to Ukraine by the US Marines as a bit of a Hail Mary to like, "You guys are in a tough spot, try this." Lo and behold, it it worked.

The amount of experience that these two individuals brought to the organization, not just in terms of their engineering prowess, capability, operational prowess, but also their contacts and the existing work that they do within the government was really important. Now, this particular product that you see in the picture there, that is initially designed as a one-way attributable fixed-wing drone.

Part of the strategy here is twofold, and we see it, unfolding exactly as as these guys had predicted. There's two reasons that fixed wings will become much, much more prevalent over the coming couple of years.

If there's engagement in Taiwan or the South Pacific, you're dealing with the surface area, an ocean that's five times the size of of the Atlantic. Distance matters, and you're not going to be using quadcopters in those types of engagements, and it will basically be a naval or a marine or a beachfront-type engagement.

You need a different type of piece of equipment, and this is positioning us for that spend that's coming up in that regard. It is our estimation that the 100-nautical-mile LUCAS program, this is exactly what this is targeted toward, and and we're down to the the final few contestants or selections for that, and and and we feel pretty good about it.

Now, interestingly enough, this particular plane is also an excellent ISR. It can be hand thrown.

It can be be from a ship or from the shore, it's kind of like an anywhere, anytime, very easily man-packable. A piece of the, interesting piece of the construction around this product is the fact that it's not composite, it's actually a thermoform.

We can mass produce this thing today. Today, we can push out tens of thousands of these things in a month and at at very, very low costs, like four-figure costs.

That's really important. They're completely customizable inside.

Depending on the type of radio that you want to run or the, the type of payload that you want to have or ordnance or such, it's very, very modular as well. Really fits our our our philosophy of modular drones.

Draganfly was very proud to be awarded by DEVCOM a counter-drone, development of a counter-drone system. This is an ultralight, ultra-mobile counter-drone system, has all kinds of different use cases.

The primary use case was forward operating bases, or even squads that have to go maybe spend time overnight and and need to protect personnel. It does include a tethered drone, it includes an effector that could be either kinetic or RF, and some pretty sophisticated software on on the tracking side.

We're really excited about what's happening there and how that's, I mean we've got strong experience in the counter-drone space, but winning this DEVCOM contract is is significant, and I believe, translates into hundreds of millions of dollars of revenue not just within the US DoD, but in the international markets as well over the coming years. We launched a brand-new line of cameras in a partnership with a company called Blitz.

You can see by the picture of that camera there, this is not a typical consumer dual-use type camera. It is a hybrid of a military camera and a dual-use commercial camera, but packed in a case and container that is much more durable, and the optics on it are incredible compared to what you would get in a prosumer or in a dual-use type drone.

This is a bit of a trend that we see in the defense side of the business where you see the quality of the product, even if it's dual-use, moving up the food chain. I would suggest this is also a reason that we continue to see a slight, a slight, a meaningful delay in our revenue ramp because the specifications and qualifications that are being asked for are being refined on the fly.

We may have a large order, and then as the order gets there, like, "Hey, can you make this tweak?" and then you've got to, redesign some cameras.

Candidly, this is why we worked in partnership to develop this entire camera system. It's very unique to Draganfly.

It will fit on any of our models. It will also fit on to other drone models as well, and really launches us into the into the optics business.

Draganfly, the FLEX, the FPV drone, was selected by two additional US Department of War units. I can tell you that these are all special forces units, and we're really proud of the fact and pleased with the fact that these particular special forces units are selecting the FLEX drone.

There's a couple of primary reasons, a couple we can't really talk about, but a couple of them that are disclosable is, in particular, that you've got arms and blades that you can switch out. What what that means is that you've got variability in your mission profile without having to carry a whole bunch more equipment.

The unintended consequence of that design was that you can fit between three and four times as many drones in the same space, whether that's a backpack or or the back of a truck, than you can because of the way they pull apart, and it takes seconds to pull apart or put together, but the way they do, then they they just pack nice, neat into very contained spaces. Again, that wasn't part of the original design concept in terms of what the benefit was, but it's actually turning out to be an incredible benefit.

Now, the performance of it, the difference between FPVs out there is in terms of, speed and maneuverability is is marginal between any of them. Because you can put some bigger blades on this even with shorter arms, you you actually can do some bigger payloads, some more sophisticated radios.

Some of these are actually being used in live situations right now even as ISR drones. Some great lessons that have come out of that, and we see a great future for this particular one.

ACSL and Draganfly have partnered to bring NDAA-compliant Japanese drones into the Canadian and and actually into the US market as well, but into the Canadian market it's exclusive. Into both of these markets, it's important to note that these are not just typical ACSL Japanese-made drones.

This is originally a drone that was originally designed by Hitachi, but the drone, the ACSL drones that are in our lineup are in our lineup because we've integrated them with our other drones. You'll see on the front of the ACSL drone a camera system that pops off, and then another camera that can pop on, whether it be a thermal or a higher res or hyperspectral, or whatever the case may be, there's four different cameras.

Those those cameras now also pop off and are are being fitted on to the APEX drone and eventually onto all of the drones. We'll have an interchangeable camera system that will be included in the ASL line.

Not only Draganfly will have that interchangeable capability with ASL. We're building strategic differentiators into this particular product line.

Now, the reason that we didn't build this product ourselves is that everybody builds this product, and it's typically a low-margin product. It's kind of something that you've got to have in your product mix because it's a very convenient and popular size drone.

It works great for ISR, whether that be in military, public safety, or industrial. It's that that particular drone model, in our opinion, is racing to the bottom.

We wanted to come up with a strategy that would still allow us to scale, still build some unique capabilities within our product line, but also not have us utilize valuable resources, to develop a me-too-type product. I'm not suggesting ACSL is a me-too, or that company is a me-too.

They've done some really, really cool things here. This is all they do.

You really have to just be focused in that particular product line if you're going to be even somewhat successful. Of course, our product line tends to to be, one, first of all, interchangeable, modular.

Arguably, we're still the only folks out there that have a fully integrated product line across six different drone sets. If you're a squad, a company, a battalion, a brigade, you've got all the different drone sections, that you can pick from from one supplier.

We supply everybody from a squad right up to brigade. We don't go up to command level because those are typically drones that are Category 3 drones.

Interestingly enough, the biggest demand signal that we see over the next couple of years is going to be in medium and long-range strike drones. Hence, that's exactly why we bought the expertise and technology behind ScipDynamics.

You will see us entering into at least the medium strike, and likely the long strike area over the next number of years as well. I had the great pleasure of, man, that that picture's, I got to talk to our PR department.

That was a long time ago. Anyway, I had the great pleasure of providing testimony to the Canadian Senate specifically talking about how to speed up the procurement cycles and, one, to help industrialize the military complex in Canada, but two, to help ensure that they are able to get the equipment they need in the timeframe they need because everything is sped up.

Now, it's interesting because Canada has also, in many respects, become a leading voice and a leading industrial nation even within the European Pact. Much of that testimony was applied over in to NATO.

I was invited also by the Prime Minister's office to attend the NATO summit in Turkey along with six other Canadian defense executives. Probably one of the most productive, insightful trips that I've ever had the pleasure of being on with direct contact with multiple world leaders talking specifically about procurement cycles, where we're at in the drone space, what are the things that we need to do to be effective long-term, not next quarter, but what do we need to do to build a a successful long-term industrial base.

It's premature to say right now, but you will see massive procurement coming out of the Canadian market even by the end of this year, which is another reason that that our procurement and and revenue cycle will see a significant bulge in it because we've had to remain measured in order to meet that demand on a timeline that's going to be required of us. Again, we've worked ourselves into a very privileged situation to be able to serve the people that serve, and and hopefully going to be able to do the job that's being asked of us.

At this point, I'm going to turn it over to our CFO Paul Sun to run through the financial highlights. Paul?

Thanks Cam. Thanks, everyone, for joining.

This first slide here, we'll look at a snapshot of second quarter, comparing it to the year-over-year quarter last year. Revenue, as Cam mentioned, 26% up to $2.7 million from $2.1 million in the second quarter of '25.

Second quarter revenue comprised of $2.6 million in product sales with $100,000, or the balance, coming from drone services. Gross profit, $533.1 thousand compared to $504 thousand in Q2 of last year.

We did have a one-time non-cash write-down of inventory of $43.7 thousand, and otherwise would have been $576.8 thousand compared to the same period last year where there was a one-time inventory write-down of $10.4 thousand, making the adjusted gross profit of $515,000 last year. Adjusted gross margin for Q2 was 21.7% compared to last year's adjusted number of 24.3%.

This was a result of products and services mix comparing the two quarters as some products have different margin profiles than others. Total comprehensive loss for the quarter was $1.8 million compared to a loss of $4.7 million in the same period last year.

This quarter does include that non-cash write-down of inventory of the $43.7 thousand and a small fair value of derivative liability loss of $8.9 thousand. You'll recall that's from a February '24 financing that we did where it's just the way we report functionally in Canadian, we have to account for that as a derivative.

Loss otherwise would have been a comprehensive loss of $1.7 million versus an adjusted loss of $4.6 million in the same quarter of 2025. Increase is primarily due to higher office and admin cost, R&D, share-based comp, professional fees, travel, and wages.

We can go to the next slide, please, to do a quarter-over-quarter change. Looks good.

Revenue for Q2 was up 15.2% to $2.7 million again, compared to the $2.3 million for Q1 of this year in '26, mainly due to higher product sales. Gross margin for Q2 was 20% compared to 15% in Q1 of '26.

However, if we back out that one-time inventory write-down that I mentioned before, gross margin for Q2 would have been 21.7% compared to 19.6%, adjusting for non-cash items in the previous quarter. Total comprehensive loss for Q2, again, $1.8 million compared to a comprehensive loss of $5.7 million for Q1 of '26.

Of course, you'll recall we had that loss in fair value of derivative liability of $8.9 thousand and the write-down of inventory of $43.7 thousand. Q2 would have been $1.7 million compared to a loss of $6.6 million excluding non-cash adjustments in Q1 of this year.

Again, increase in quarter-over-quarter was primarily due to the same factors being high office and admin costs, R&D, share issuance cost, professional fees, travel, and wages as the company continues to scale, as per Cam's earlier comments. Moving to the last financial slide here, I think we've got snapshot of the balance sheet.

You can see total assets increased from $101.3 million to $154 million from the end of the year, largely due to the increase in cash. You'll recall we did do a relatively large financing in February of this year.

The working capital surplus as at June 30th was $144 million versus $95.2 million from the end of 2025. Shareholder equity was $148.9 million at quarter end compared to $96.6 million at the end of last year.

However, both working capital and shareholder's equity would have been a little bit higher if we x'd out those non-cash fair value of derivative liability that I mentioned earlier for the quarter as well as at year end. You can see we continue to have minimal debt, and our cash balance at the end of this quarter was $131.9 million compared to $90.2 million at the end of '25, as again we did have February financing.

With that, I'll pass it back to you, Cam.

Great. Thank you, Paul.

Appreciate it. Just a super quick review.

This is our core line here along with two additional, actually three additional products. We've got the FLEX FPV, the APEX, the Commander, the Heavy Lift drone.

That Heavy Lift also comes in a hybrid called the Outrider, which has up to seven-hour flight time with a 67-kilogram payload capacity, and the Orca, the beginning of our fixed-wing line, our medium and long-range strike. This is a currently short-range strike.

Short range we're calling 100 nautical miles. Depending on the area that you're working in, 100 nautical miles would actually be about a medium-range strike drone in the Ukrainian theater, but in the Pacific theater, that's a short range.

Then of course we've got the SOTEN, with the modifications that we've made, the integrations that we've done, that's a unique product for us. You will continue to see product rollout from us over the coming quarters as well.

I shouldn't say more than that, but pretty excited about the things that are being driven by customer demand and where we're positioning those things for both our military and in particular public safety customers. There are a number of questions that came in that Rolly provided to me, I'm just going to read them here, if that's okay, and do my best to answer them.

So: "Could you discuss Draganfly's strategy in the current UAS, counter-UAS market? Is Draganfly developing its own counter-UAS system, or do you expect these capabilities to be delivered primarily through strategic partnerships and integrations?"

Great question, and I think as one of the advantages that we have or one of the strengths that we have is the fact that we've been building drones for 27 years. We understand the vulnerabilities of them extremely well.

We were doing counter-drone work 15 years ago. It was 12 years ago we built a drone that shot nets out using airbag explosives under contract for AeroVironment, who was a big customer of ours at that time.

We've seen many, many progressions and one-offs that we've built for different programs out there. We are developing our counter-drone capabilities.

We have purposely not been tried to be first to market in this regard because it is, like the UAS space, a very fast-moving and continually changing space, more because tactics from aggressors can change so quickly, and because it's such a nascent industry, the concepts of operations and the use cases all change super quickly. We're definitely an innovative company.

We don't try to be first movers, but we definitely take the time to do the research and be very innovative so that when we are coming out with stuff, it works, and can be really well-deployed. Our counter-drone strategy is being able to have certain specific capabilities that are unique, but they can also be applied into existing product out there.

We want to be able to use the existing well-established counter-drone companies to be able to be channel partners of ours. Now, we've been very fortunate and won the DEVCOM contract in order to build an ultralight, ultra-mobile counter-drone system for the Department of War, which is a massive opportunity for us.

As I mentioned before, hundreds of millions of dollars over the coming years is the potential. It's certainly on track.

That is, there are a couple of partners in there. There's a tether company that's in there that we've partnered with in order to provide some of the unique capabilities of the system that we did propose.

For the most part, the hardcore IP underneath, the tracking system, how everything integrates together, the fact that it's modular, it can use multiple types of effectors, whether that be kinetic, soft kinetic, low collateral, RF, whatever the case is, that is entirely unique to us. The short answer is we're developing our counter-drone capabilities.

It will have proprietary aspects to it, but we're certainly not afraid of partnering or purchasing or joint venturing. What we really care about is providing the greatest amount of safety to the people that we serve.

That's the approach that we'll continue to take on that. So: "Do we think anything will come of our attending the NATO summit?"

The NATO summit was one of the most fascinating experiences. I've been to NATO summits before, not invited in at this level for sure, but and certainly not maybe in times that are as unpredictable as they are right now with the types of budgets that are going into NATO-type countries.

We will undoubtedly see more than significant results from this NATO summit and the ongoing NATO participation that we will have and the unique position that Canada presents within NATO as being a North American company, but a part of the European defense pact, and really having a leadership position there. Our international business, we're very, very fortunate that we have manufacturing in Canada and the United States, and representation in both countries, all the way up to a board level.

About 85%-plus of our shareholders are US citizens. However, because of the domicile of Canada and what that affords us is the ability to have some really nice open doors not just within NATO, but also within many Latin American, many Asian, many Eastern bloc countries.

We see a tremendous amount of opportunity in those markets, and we see very strong support from the Canadian government in order to supply, and both for geopolitical, but also for economic reasons, we're getting some great support in that regard. We'll really start ramping up our capabilities within that regard.

It was a fantastic trip, and incredible learning for all of us. "Is Canada going to be an important revenue source for us?

Can we expect contracts to be announced?" The answer to both of those is yes.

We never planned in our original business plan that Canada would be an overwhelming, almost even material revenue source for us. It's really turning out to be quite the opposite.

One, the budgets are very significant. It's the 10th or 11th largest economy in the world that's literally deploying tens and tens of billions of dollars over very short periods of time with the best talent that they've got in order to have these capabilities.

Some very unique things about Canada is a massive coastline, marine is becoming a specialty for us. Arctic, without question, is becoming a specialty for us, and Canada really wants to position itself as an Arctic expertise.

It is geographically a big part of their responsibility, whether it be NORAD or their own sovereignty. It is.

Now, that said, I don't want to take away for one second our commitment to the United States. We have facilities in Florida.

We have additional facilities that would be very large facilities that would be stood up before the end of the year, this year, along with personnel to meet the demand that is there. I know there's that question, "Well, if the demand is there, why don't the numbers show it?"

It's intricate. The reality is we've just got to have that capacity for when the ball drops, and the ball's dropped.

It's dropping. It's just we're probably, maybe three or four quarters behind some of the other comps out there in terms of the ramp that they saw.

However, I think because of some of the international opportunities, we've certainly got as large, if not larger, total TAM to be able to provide, and also because we've got a full product suite, which we spent a lot of time building out. Again, being that first mover is not the most important thing to us.

Being a complete mover is the most important thing to us. Buyers are becoming much more discerning very quickly, and so over the last number of years of what education, something that flew could be sold.

However, that is not the case anymore. They want to have these integrated systems provide and execute on integrated missions, whether that's public safety, military, or frankly even industrial.

"Have we seen an impact from the ScipDynamics acquisition yet?" The impact certainly isn't on the revenue side, but that wasn't the objective.

The objective here was the talent, both from a pure intellect standpoint, also from an integrity standpoint, and also from a contact standpoint. It was the technology itself.

We are thrilled around the thermoplastic technology which reduces the weight and the cost and the scalability of these things. It's just like nothing else I've seen out there.

That is a really, really important aspect. We've seen a big impact, and we're going to see very sizable orders because of it.

Orders not just in the particular Orca or Dolphin product lines, but also the learnings that are being applied into the other areas of our product line. So: "What has been the feedback and initial interest in the drone programs from IACLEA?

Do we have an idea of what kind of revenue that these partnerships will bring?" The Small and also the Small Rural, [Australia?]

. Listen, that represents 80% of the police forces in the United States.

It's just that simple. We're just trying to be where other people aren't, number one, and aren't thinking are important.

Now, the use cases in some of those areas are different than pure urban areas, but they lend themselves to the type of work that we've traditionally done. Traditionally, our drones have been a bit bigger, longer distances, heavier payloads, and when you're in those rural areas, that's exactly what you've got to do.

You're going to be looking at situations where a small little Mavic 3 or ISR drone flies for 15 minutes. That's not going to get you across a farmer's field, much less across the county.

Those are the types of things that we're looking at, and we think it's going to have a very big impact. Like I say, it's 80% of the police forces out there fit into that category that, I wouldn't say we've got locked up, but we got a stranglehold on, and hopefully we'll be able to provide the right type of service to continue to earn that position.

As Rolly mentioned, we are available as much as possible and reasonable to answer any questions. We appreciate everybody's time, and thank you for the consideration that you've given us today.