All right, I think to respect everybody's time, I think we will get started here. Again, greetings and welcome to all the shareholders and stakeholders who are joining us on today's Draganfly 2026 Q1 earnings call.

My name is Rolly Bustos, and I am the internal investor relations rep here at Draganfly. We appreciate you, as always, joining us.

We will start with our CEO and President, Cameron Chell, recapping the first quarter. Next will be more detailed financial review with our CFO, Paul Sun.

We will then conclude, as always, by addressing the pre-submitted questions that we have received. Though I know many of you, as always, anybody is welcome to reach out to me directly at [email protected], and I'd be happy to have a conversation.

I remind everyone that 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, May the 11th, 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 2 of this presentation and on the screen right now.

Cam, if you're ready, please go ahead.

Right. Thanks, Rolly, and really appreciate everybody's time and consideration in joining us on today's Q1 earnings call.

We'll start off with the financial highlights for Q1 2026. Our revenue in Q1 2026 was $2.3 million plus, which represents a 49% plus year-over-year increase, and about $2.2 million in product sale.

That's $347,761 of gross profit, and currently as of March 31, 2026, we have a cash balance of just over $147 million. Overall, we're very pleased with the quarter in terms of the year-over-year growth and sales, and we continue to take a very pragmatic approach on how we're scaling in to very particular customers that we're targeting to be our base over the next decade.

To talk a little bit more specifically about the sales highlights for Q1, we had a number of significant sales, primarily into our military vertical. We did announce at the beginning of the quarter an order of FPV drones from the US Army.

This was from an existing customer of ours, which we are continuing to build a very strong relationship with, and we'll talk a little bit more about that later. We also secured strategic international military orders for our Commander 3XLs.

We also announced a project and a sale along with Palantir AI, who is on an Air Force contract right now regarding swarming technologies incorporating the use of Draganfly drones. We announced a Fortune 50 telecom company purchasing Draganfly heavy lift drones for disaster response, and this is actually for lifting cell towers up either for doing repairs or when systems are down or in emergency response situations.

In fact, they're switching over their entire fleet from a Chinese fleet now actually into a Draganfly fleet, in particular because of our heavy lift capability. We also announced Draganfly Outrider sales along with Cochise County and a number of other counties along the southern border, where we provided what we call our Outrider drone, which is a long-range, heavy lift drone for doing patrols, search and rescue, personnel support, surveillance, and communication networking.

Overall, a really important quarter for us in terms of delivering really important strategic imperatives to very, very select and specific customers that we've been targeting for quite some time. That's going to continue to be our strategy.

We have the opportunity to be selective right now about who we're targeting into, and the reason that we're targeting those specific customers does lend into a larger strategy around how we're building out our capability and how eventually that beachhead then leads to further and further advancements into our particular markets, which are designated somewhat differently from some of our comparables out there. Also, in terms of a financial highlight from Q1 was we did close a $50 million US financing, and we're really pleased with the actual investors that came in to that fund.

They were by far, I would say 90% were long-only, very well-known Tier 1 funds that came into that. It really elevated us from that kind of micro-cap market up into the small, even beginning of the mid-cap market.

We also had new initiation of research on us from some great banks. We appreciate their support, and we look to continue to build those relationships.

As we move forward, while we're really well-cashed up now, we do believe that in the far future, we will have the opportunity to finance at much higher levels as sales will demand that additional growth again. For the remainder of this year, though, we're not expecting that.

Strategically, a number of things also unfolded for us in Q1. We did bolster our military and defense capabilities by bringing on two gentlemen who now head up all of our military sales partnerships and initiatives in that regard, and business development.

Larry Q-Line is now heading all of our military sales, and he's working along with Vic and Keith, who are both former Tier 1 operators, both come out of Deutsche Bank after their Tier 1 careers, and have done just an incredible job in terms of helping us continue to scale our business development, sales operations, align that with our production capabilities, our R&D and our research capabilities. I can definitely say that we're operating at new levels with individuals that we're very pleased to work with across many militaries throughout the world, in particular the Department of War right now.

Draganfly is uniquely positioned in that regard to support Canada's new $2 billion military commitment to Ukraine. Now, that's actually, since this slide was made, that's actually gone up to $3 billion.

As many of you will know, is that Canada has actually committed 5% over the next number of years of its GDP to rearm its military. Now that's a big number, it's certainly not a big number compared to the DOW and what they spend, but in terms of a mid-market country and what its spending, it's now amongst the top military spenders in the world.

A massive function of what they're doing is on autonomy and, in particular, aerial and drone autonomy. There's a very, very select few companies, maybe one, maybe two in Canada that can meet this demand.

We're highly engaged at, I would say, probably every level of CAF, what they call Canadian Armed Forces, and DND at this time, and working extremely hard in order to progress the contracts that we've been working on with them over the last couple of years. Their requirements are coming out.

They have an equivalent of what's known in the United States as Drone Dominance, the million drone program, but it'll be many more than a million drones that are produced down in the States as part of that and subsequent programs. There's an equivalent program up in Canada, which we're deeply embedded in as well.

We also announced our strategic defense partnership with Prime Global Ordnance. Global Ordnance is, as an example, the largest supplier of ordnance into the Ukraine.

They have a strategic view that much of the drone market, at least the drone market they're dealing with, they view drones as an ordnance or as a munition. As such, they are really building a strategic focus in drones, and we're super pleased that they've chosen us as their prime supplier into this market.

We've got a couple of dozen major initiatives ongoing with them as well. We've a very large presence, well, large presence for us anyway, at SOF Week coming up in addition to a very large presence with Global Ordnance.

It should be noted that Global Ordnance was just one of five companies that was selected for the Drone Dominance munition program as well. We also announced a strategic defense partnership in the Asia-Pacific region.

This is with Babcock. Babcock is a large British prime who's very strong in the Indo-Pacific region, and so we are building very similar to what we're building with Global Ordnance as a strategic relationship, as a prime drone supplier, well, for a number of reasons, but primarily because of our capabilities across multiple drone platforms.

A lot of departments, units, etc., are still defining what they are looking for in terms of their drone capability. What that means is that these primes need to be able to work with an organization that doesn't have necessarily, 'Hey, this is our drone that we sell, it does ISR work,' or 'This is our drone that we sell, and it does logistics work.'

They're really looking for an organization that has a capability across all these drone systems that is interoperable. That's turning out to be one of our major strategic advantages.

It takes a little bit longer to implement that across many of these units because they're looking at it strategically rather than tactically what can we get happening right now. We're finding the benefit of it is gaining momentum quickly.

Then a subsequent event, which is worth noting, is that we were selected by two additional units within the Department of War. All I could really say is that these are Special Operations units, but what's really important is that they're Special Operations types units, and these are the types of units that are selecting the Draganfly product.

They're selecting it for many reasons, not just because of the company's capability, but also the product performance and our flexibility across that entire product line. We were thrilled on this, and that will have heavy bearing on exactly what our numbers will pan out for this year.

On that note, and I'm going to come back to talk a little bit about our strategy in a bit, I'm going to throw it over to Paul to actually talk about our results from Q1. Paul?

Thanks, Cam. Thanks, everyone, for joining.

I'll just take you through year-over-year comparisons for the first quarter of '26. Revenue for the first quarter, as Cam mentioned at the outset, was up 49.8% to $2.3 million from $1.5 million in the first quarter of '25.

First quarter revenue did comprise of $2.2 million of product sales, with the balance coming from drone services. Gross profit, $347.7 thousand compared to $310.1 thousand in Q1 of last year.

Q1 did have a one-time non-cash writedown of inventory of $105.8 thousand, and otherwise would have been $453.6 thousand, compared to the same period last year where there was a one-time inventory writedown recovery of $38.7 thousand, making the adjusted gross profit of $271.4 thousand last year. Taking all those things into account, adjusted gross margin for Q1 this year was 19.6% 19.6% compared to last year's adjusted 17.5%.

Again, this was a result of product and service mix comparing the two quarters, but they were quite similar. Total comprehensive loss for the quarter was $5.7 million compared to a loss of $3.4 million in the same period last year.

This quarter includes the non-cash change comprised of a fair value derivative liability gain of $1 million, and that one-time inventory writedown that I mentioned of $105.8 thousand. It also included a share issuance cost of $2.4 million related to a derivative liability from the February financing and its treatment on the income statement versus it normally being treated on the balance sheet.

The loss would have otherwise been a comprehensive loss of $4.2 million versus an adjusted loss of $3.6 million in the same quarter of '25. The increase year-over-year is primarily due to higher office and miscellaneous costs, travel, and wages.

Moving on to the next slide to look at the quarterly table. We obviously just went through the year-over-year comparison.

Here we'll just do a quarter-over-quarter comparison with Q1 of this year and Q4 of last year. Revenue for Q1 increased by 20.9% to $2.3 million compared to the $1.9 million reported for Q4.

The difference was mainly due to higher product sales. Gross margin percentage for Q1 was 15% compared to 4.5% in Q4 of last year.

However, again, if we back out that one-time inventory writedown mentioned before, gross margin for Q1 was 19.6% compared to 17.2% adjusting non-cash items for the previous quarter being Q4. Total comprehensive loss for Q1 again was $5.7 million compared to a comprehensive loss of $9.3 million for Q4 of '25.

Again, you'll recall the gain in fair value of derivative liability of $1 million and the writedown of inventory of $105,000, plus that one-time share issuance cost on the P&L versus the balance sheet of $2.4 million. Again, comprehensive loss for Q1 of this year was $4.2 million, comparing it to an adjusted loss of $8.3 million of Q4 last year.

The decrease quarter-over-quarter is primarily due to lower office and miscellaneous costs in this case comparing the two the two quarters. Then on the last page here, I think, just going through some balance sheet items.

You can see our total assets increased from $101.3 million to $161.1 million, and that's largely due to an increase in cash. Working capital surplus as at March 31 was $154.4 million versus the $95.2 million from the end of 2025.

Shareholders' equity, very healthy, $155.8 million at quarter-end compared to $96.6 million at the end of last year. However, if we look at both working capital and shareholders' equity, it would have even been higher if we X'd out those non-cash fair value of derivative liability, but again, very healthy nevertheless.

You can see we continue to have minimal debt. As mentioned, our company's cash balance at the end of the quarter being March 31 was $147 million compared to at the end of December, which was at $90.2 million, again because of the February financing that Cam touched on earlier on.

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

Great. Thanks, Paul.

Great job.

You're welcome.

I just want to talk a little bit about our products lineup, cuz it does speak greatly to a strategic differentiator that we have. Many of the questions I'll be able to address that came in that will speak to this as well.

Again, having been around for 27-plus years, what we are really good at is delivering what the customer needs. What we have seen through the last number of years that we believe will play out very strongly in the coming year, too, is that as the customer gets more and more sophisticated, and this just isn't military, this is public safety and industrial as well, but it's really emphasized in the military side of things, is that in the beginning of the cycle, they're looking to understand what drones do, how they can be used, and they've got a specific use case in mind.

As soon as you start moving to concepts of operations, how do you have integrated operations, how do you do targeting, how do you do repeater drones, how do you have communication setup, what's your targeting being done with, what is the actual strike capability, how do you rearm, resupply, how do you support personnel that are in the area, you realize quickly that you don't need a drone to pull off a concept of operations, you need a series of drones. We spent a lot of time up front because of the 27 years working with this, recognizing that the overall gain and dominance in this space is not going to be done by a drone.

It's going to be done by a platform. It's going to be done by something that can service a concept of operations.

Everything that we do is built in a modular fashion and can take on multiple types of payloads and is all interoperable. If you look at even the basic designs of the drones that we put out, they are all designed to have their own internal payloads, but they all have the capabilities for external payloads as well.

Many of the customers that we have coming to us are, and some of them even from the same units within the same units within units, if you will, trying to be as specific as I can be, they have different requirements around what their AI does, what type of sensors they want, what type of mapping they need, and so all of our systems are able to incorporate multiple types of payloads from multiple types of vendors. If we have one particular sensors that's required and we need to mix it with another type of sensor, we spend a lot of time doing those integrations with those partners.

Now, the added benefit to that is all of those partners also become channel sales partners for us in that regard. Now we are doing some vertical integration of some of those key assets, through some M&A work that we're doing, but for the most part, we're very, very partner-centric in order to build those capabilities into each one of these units.

Now, each one of these units also operate with each other and across separate and different and sometimes diverse communication platforms. Again, interoperability across the unit and different unit and different branches of the DOD is becoming increasingly important, not just so that they have interoperable capability, but so that they can deconflict their existing operations or their upcoming concepts of operations.

The fact that we can go in and we can offer people one place to have consistent interoperability, one place to do the maintenance work, interoperable parts, a consistent supply chain, all the things that are really, really difficult in the market right now, we've been addressing upfront. We're really pleased with the progress that we're making there.

In addition to this, you can expect Draganfly to be adding to this product line this year on products that we have been working into the concepts of operations over the last couple of years. One of the advantages that we do have in the market is because we have been around so long, we are able to field an entire product line.

It generally takes a couple years to get a new product into market. Now, pretty much anybody can slap some propellers on an airplane and throw it up in the air, but that's a long way from actually getting something to a TRL 9 or something operational that can be worked in a very, very harsh environment, much less in conjunction with other systems out there.

While other companies, I do believe, are going to be moving into additional product lines, and I don't mean going out necessarily just buying another company and bolting on something, I mean actually building it so that it's interoperable, It just takes a lot of time. I think we've got a step up in this regard.

Now, I 100% believe that our comps out there are going to be very successful in the market, if not just generated by the incredible demand signals that we're getting, not just in the United States, not just in allies, but across even developing nations right now who are all looking for that asymmetric capability because this is still a relatively very inexpensive capability compared to what the alternatives are out there in the market. This is really important to us and a big part of our strategic differentiator.

Of course, the other strategic differentiator that's working out well for us is the fact that we manufacture on both sides of the North American border. We've got great representation in both countries.

As we go abroad, in many of the international opportunities out there right now, often, the credibility, the fact that we are selling into the Department of War right now meeting those standards, etc., but then are actually approaching it maybe from a position of a European or Canadian type of provider, that also provides us some great sales opportunities as well. Overall, a really positive quarter for us.

It has laid the groundwork for what we expect to be some really outstanding quarters coming forward. On that, I am going to open the Q&As that came in.

If you can just give me one quick second here. Appreciate your patience.

There's only six or seven of them. One of the questions that came up here is, 'Are you gaining traction with the Canadian government military for orders?

I was hoping something would have been announced after the end of March budget cycle. Can you comment?'

Certainly. We're super deep on I don't think I'm over-exaggerating by saying probably every level of CAF, Canadian Armed Forces, and Department of National Defence in Canada politically, bureaucratically, operator-based, etc.

There are about four or five significant programs that have been announced through Canadian DND. We are participating in all of them.

We're well-positioned, I believe, in all of them presently. In fact, the big CANSEC conference is in two weeks.

We have two separate sets of exclusive and private demonstrations that are happening at request in addition to all the I'll call it the Drone Dominance or what's called Minerva up in Canada programs, the Arctic military programs, etc., etc. We continue to take a pragmatic approach.

We've got our manufacturing set up up there. I think we're meeting that challenge honorably and on target at this time.

Like I say, the budgets up there are significant. Just given the fact that there's so few competitors in that regard, we think we're well-placed.

Second question here is, 'Are you going to participate in Drone Dominance Gauntlet 2?' The answer's yes.

We participated in Drone Dominance Gauntlet 1. We were down-selected in that.

We did not make the final grade. There was some nuance as to why that didn't happen.

We were only scored on two of the three challenges there, and we still only just narrowly missed it. There was some circumstance of why we were not able to participate in three, but given that, in my opinion, we most certainly would have made it.

We're very, very excited about Gauntlet 2, about what we can bring to the table, what our capabilities are. Again, because we bring so much operational experience to the table from the work that we've done abroad, in particular in Ukraine, we think we're well-suited for this.

'We seem well-cashed up, but I'm afraid of further dilution. Do you expect further raises, or can you be specific on what scenarios you would go back to market?'

Basically, right now it'd be M&A scenario or massive, massive orders. Even really big orders right now at this point with cash on hand, it's not a reason for us to finance.

We do have some very meaningful M&A ongoing, and we do expect to make some of those announcements upcoming. A couple of them are of such large size that we could potentially go back to market for those.

That'll be dependent on how the market's doing, what that dilution might be, and the accretive nature of hopefully what our shareholders are rewarded for these particular acquisitions. We have been very pragmatic about what we're looking at in terms of acquisitions.

I am happy to say that these would be significant revenue and EBITDA adds. That said, that's not why we're buying them.

We're buying them to execute on the interoperable strategy and the capacity capability which lends to our ability to innovate more quickly and secure our supply chain more succinctly. We've been very, very disciplined about that.

We've looked at, well, hundreds is an exaggeration, but dozens and dozens of opportunities. We've narrowed it down to a couple that we've been moving forward with.

So, 'What revenues are you currently getting out of Ukraine?' It's nominal.

Specifically from Ukraine, I would say that the answer is very nominal. In terms of Ukraine purchasing equipment being sponsored by other countries that are purchasing on behalf of Ukraine, we do expect that to be meaningful.

We have not built that into our consensus for this year. If anyone doesn't know, we don't at this point give guidance.

However, we think that there's really solid consensus out there amongst the analysts right now. We're very comfortable that we will hit consensus this year, and our consensus is based on orders and contracts that we have in hand currently.

They are not based on home runs, or a Drone Dominance, or a Minerva, or a big sale in Ukraine, or any number of the other dozen-plus outlier-type projects that we're well down the path of. Again, we just feel that at this point, in order to build strong credibility, not just with the market, but very importantly with our customers, is that we're not trying to overpromise.

We're really trying to be pragmatic about our approach to it. We, like I say, we've been around for 27 years.

We're not chasing the next quarter, at least not yet. We're probably a couple years away from worrying about what happens next quarter.

Right now, we're really establishing ourselves strategically so that we have a base to ensure that we can be doing very, very significant revenues in the relative near future. So.

'Drone sector is currently seeing record budgets for DAWG. Please describe how Draganfly is positioned across different categories of spending and what is likely the most significant near-term revenue opportunities.'

There are certainly the big RFPs out there like a Drone Dominance, and there are a number of those out there from the Marines, as an example, also in other nations, as an example, which I've spoken to a bit. We're chasing those, and we think we're well-positioned.

It'd be naive to say, 'Oh, we're going to win all of them,' but we're going to win our fair share of them. I'm confident in that.

Maybe even hopefully more than our fair share of them. That said, in terms of the specific military opportunities, which this whole call seems to be skewed towards, if you look at something called Executive Order 44807, that's where O-6 and O-5 command level personnel can be making purchasing decisions.

I think it's really important to watch some things like the Army Marketplace, the Marine Marketplace. These are Amazon-type closed websites where O-5 and O-6 commands can go in and make purchases.

These are coming to bear later in the year, and I think you're going to want to watch really closely who are the first movers who were chosen to be on that. Pre those coming out, that Executive Order 44807 is a really important order because if you look at the O-5s and O-6s, many of which are in Special Operations, that are making the early decisions now, who are they choosing?

Evidenced by what we talked about earlier in the presentation and the sales that we have made in first quarter, that's where we continue to win. Most important for us at this point is to continue to win in our military business, is to continue to win with that warfighter, to continue to win with that O-5 and O-6.

The operators need to believe in the equipment, in the people that are building the equipment, supplying the equipment, understanding the concepts of operations. That's where we're really spending our time right now.

Again, a little bit slower, a little bit more pragmatic. I'm not saying what anybody else is doing is wrong, but This is where we find that we can exercise the skills that we have, the capabilities that we have the best.

Again, because of the differed personnel that we have and the long-standing experience. So, 'Draganfly is sitting on $140 million in cash, and the stock's trading relatively low.

I don't understand, they're saying less than two bucks a share, but that's not quite true, obviously. Maybe they're talking enterprise value.

Could you help investors understand why the market is undervaluing Draganfly compared to all other drone companies, where Draganfly could be in a commanding position compared to some of your counterparts? What do you see as the clearest path forward in the next 6 to 12 months in closing the gap of investor confidence?'

Man, that is a great question. We are very, very aware of this, and I think it represents an incredible buying opportunity in Draganfly.

If you're looking at an organization that's not chasing the quarter, but building something really sustainable across a strategy that's around understanding what are the longer-term concepts of operations and how are they going to have to be met by a particular company, that's likely why we're a bit of a laggard in this space. We recognize we are.

We're not panicked by it at all. We've seen seven or eight drone cycles in the past.

Of course, nothing like this. Every single time, everybody's been bigger, everybody's been smarter, everybody's had more cash, everybody's got the better engineers, the better whatever the case is, and every single time, they're all gone, and Draganfly's still here.

Now, I don't think in this particular cycle everybody's going to be all gone. There's some really great operators out there, and they're doing a fantastic job.

I do get a sense a little bit more that, one, they were cashed up sooner, they're three or four quarters ahead of us in terms of maybe some of that cycle. Also, their strategies are a bit different.

Again, not saying their strategies are wrong, it's just not a strategy that lends to what we want to build and where we think we'll be an ultimate one of significant, dominant players in the space. Those strategies might be larger acquisitions, unrelated acquisitions, revenue-based acquisitions, that maybe some sales between companies that bolster those revenue numbers a bit.

Again, all not bad strategies. All can work.

For us, our capability is really based on in-field work, proving out that product and working from the ground up. Now, I do think we have some great top cover.

We've made some incredible resource acquisitions or hires in the last 6 months. I think we have an incredibly strong board that also has a very pragmatic approach to what the militaries around the world, in particular the DOW, want to see and how they want to be treated, what type of company that they want to deal with.

Again, not saying that the other companies are not the types of companies they want to deal with, but our capabilities lend to this particular strategy. I think it represents an incredible buying opportunity in Draganfly right now when you compare our capability to the other capabilities that are out there.

It's just a matter of time before that revenue number, more than in my opinion, catches up and probably surpasses maybe where a number of others are, maybe not all of them, but certainly where a number of the others are. 'The press release on Friday, the 8th, was pretty big, but exciting.

Any color on what potential size these deals might be?' The press release on Friday was about two additional sales into Department of War units.

All I can say is that they were Special Operations-type of units. Two things: These are the leading types of units that other non-Special Operations units are looking to in terms of what capabilities are they building and who are they choosing to build them with.

In the bigger picture, the potential size of them is much larger even than just the size within these specific units. However, what we have seen is in the units that I would loosely call us embedded with—we definitely have one unit that we are entirely embedded with—the other ones that we are being relied on as a preferred vendor and partner, we continue to see every single month their orders going up.

Not just their orders, their actual requirements changing, and they're coming to us because, 'Hey, we got a requirement change. We have an idea.

We want to do this. We got a budget for that.

Can you guys pull this off? Can you put people in this situation, and can we design something together?'

The potential size of these things certainly is well into the tens of millions, if not more, just within units, right? Again, this has got nothing to do with the RFPs out there or the larger programs, which are also participating in.

Not to be vague, I think it's understandable why we're required to be vague on many of these things. The numbers will prove themselves out.

So. On that note, I hope we've been thorough enough for everybody today.

We really appreciate the time and consideration as always. We want to throw our thanks out to our people in Draganfly, to our shareholders, and of course, to our customers whether they're in public safety, industrial, or on the military side.

We appreciate the freedom you provide for us and the quality of life. On that note, we continue to look forward to being of service, saving time, money, and lives, and thank you for your loyalty and your attention today.