Freelancer Limited

our Chief Financial Officer and Joint Company Secretary. Today, we'll talk about the summary of the 2024 results that we have released yesterday and talk about the outlook for the business. 2024 has marked a significant ongoing increase in the counter-drone requirements all around the world, settings, so talking about counter-terrorism and drones interfering with aircraft, for example. We'll start by talking about the financials for the business and then turn to the underlying themes, so I will turn to Caroline.

Thank you, Oleg. DroneShield's revenue reached a record $57.5 million in 2024, continuing our trend of year-on-year growth since its inception. Unlike 2023, which included a significant $33 million customer contract, the 2024 revenue was driven by smaller, consistent customer contracts, highlighting a shift towards a more stable model. For 2025, DroneShield is off to a strong start, having already recognized $18 million in revenue. Additionally, there is $34 million in revenue yet to be recognized, stemming from purchase orders that we've received but not yet delivered, as well as deferred subscriptions and warranties. This sets the company up for another solid year. DroneShield is continuing its focus on driving subscription revenue, which has seen a 100% increase from the prior year. DroneShield maintains a healthy cash balance of 250 million, which is being strategically invested to drive the development of our next generation products, and also the establishment of the necessary structures to operate a larger business. Cash receipts for 2024 are in line with revenue, whilst during 2023 a significant portion of subscription and warranties were deferred to be recognised in future periods. I'll hand over there to Oleg to speak about the pipeline. Thanks.

Thank you, Carol. There is $1.2 billion in pipeline that the business currently maintains, and that's across a range of geographies globally. US continues to be a significant contributor and the primary driver of our pipeline. However, we are seeing increasing contributions from Asia Pacific, and those following our news have seen a $12 million sale that we have announced last month. as well as other regions, for example, the roughly $8 million sale that we also announced in Europe last month. There are increasing opportunities in Australia. We are quite excited about the Land 156, the camera drone program to be rolled out across Australian Defence Force bases in Australia and also overseas that DroneShield is participating in. Last year, we took opportunity to significantly scale the size of the engineering capability of the business. We have grown roughly from about 90 staff at the end of 23 to approximately 275 staff today, including all the 200 engineers across a variety of hardware and software disciplines. Fundamentally, we are competing at the cutting edge of counter-drone technology globally against a very challenging diversity. What we often say is that we do not consider other counter-drone companies as our true competitors. manufacturers, which are starting to put significantly complex technologies specifically designed to avoid conventional counter-drone detection and defeat, which is why it's really important to have a substantial amount of ongoing research in the business. The products don't have to be perfect. The analogy we use is a little bit like a fence. People cut holes through fences, people climb over fences, but they still deter well over 95% of potential issues. However, the key is to continue to drive the development, which is why we're seeing quarterly software updates and hardware refreshes every two or three years. In addition to R&D, we are continuing to invest in our manufacturing capacity. All the products today are manufactured in Australia with two outsourced manufacturers around the country, as well as our own manufacturing capacity in our headquarters, which accounts for about 10 to 20% of the total. There are roughly three separate product families that we run, being the dismounted detection, dismounted defeat, and on the move, which is now combined with a fixed site for multi-sensor, multi-mission capability. In the on-the-move family of products, we both integrate third-party equipment and also being integrated by other parties into their overall suite of equipment. We do a variety of really complex technologies which link into our command and control system called Drone Sentry C2, which comes in a standard control room type environment, as well as the tactical configuration, which is in a form of tablet. And that is also expected to underpin our self growth in the future years. Today, the dismounted products correspond to being the backbone of our on-the-move fixed site capability, we expect the on-the-move family to contribute significantly to the total, creating a more balanced diversification of our revenues together with the third-party systems like radars, cameras, and also potentially kinetic defeat solutions, noting our partnership with The next slide is around geographic contributions, which I've briefly covered before. So US is our key market where we have approximately 20 people in Virginia and also using a number of third party distributors in addition to direct In the United Kingdom, we use a partnership with British Telecom, where we have already won a couple of contracts and looking forward to winning more transactions. So AUKUS, UK, US, Australia lines is important in ongoing work there. In Asia, we're seeing ongoing amount of work as essentially have a number of territorial conflicts and gray zone warfare between China and its neighbors. And we're working with a number of parties, including some very sizable opportunities. In fact, this is the area of probably largest In Europe, we have now our own dedicated team on the ground, mostly based in Denmark, who are covering that market. And we are going to continue adding salespeople to this diverse region as obesity geopolitics is continuing to drive increase in defense budgets, as well as overall counter-drilling demand over there. Australia is one of our two homes together with the US and we will continue expanding with land 156 as well as other opportunities in the region. In terms of other geographies, so we have now got boots in the ground in Mexico as well as in Emirates and we'll continue being busy in those markets. In Latin America, we're seeing significant use of drones across Mexico, Colombia, and also going right up to the southern border of the US. And governments are seeking ways to effectively mitigate those issues fighting drug cartels. that conflict or series of conflicts. And in UAE, so as those been following up for a while, remember our first multimillion dollar sale back in 2018 actually came from Middle East. And now we're continuing to build up on that legacy, which is what our on the ground presence in the region is about, both selling directly and also seeking to partner with large integrators in the region. And that completes our presentation. I'm looking at the questions and I don't actually believe we have any, which is unusual for one of our webinars. So those that have questions as of the end, please feel free to email us to investors. And we'll answer you best we can. Actually, one quick question that we just received, which is how the US tariffs on China impact drone shield supply chain. So because there are no, we don't sell anything from China to the US or anywhere else. So in that sense, we are not impacted by the tariffs. Just to give you a sense of how DroneShield products are manufactured, there's approximately 75 to 80% of Australian content within our products. And then the rest mostly around chips, batteries and so on. We go to And a couple more questions coming through now. So I'll answer them now. The next one is, do we have expected timeframe to bring company to profit? We do not issue guidance. So I will answer you indirectly in a way that is hopefully constructive. The current cost base of the business is just a little bit north of $5 million a month. So this is essentially salaries and supporting R&D materials for close to 300 people plus associated costs. The business has fairly significant gross margin, which is through basically highly differentiated nature of our products. And going forward, we would expect revenue to be significantly higher than what it was in 24. And you would have noticed that with the cost base as it was, we just had a small loss in 24. So at a high gross margin, even a relatively small increase in revenue would result in profit that, like I was saying, unfortunately we do not give guidance because it's a nascent industry and it's just a little too hard to forecast. Next is a related question. Can we further explain the reason behind the $1 million loss? So hopefully I just mentioned, we have made a significant investment in capability of the business going from about 90 people to approximately 275. And this will grow to about call it 330 over the next several months, mostly around engineering, but also operational sales capability. So that investment, on what was only a small increase in revenue is what's been driving a $1 million loss. Now, if you think about the revenue, so what we're finding is that there were probably a number of reasons why the revenue was only a relatively small increase. But as the industry matures, what we're finding is the customers are essentially in the style of our releases, where we're now regularly getting contracts in sort of that $10 million benchmark. So we expect a lot of that sales momentum to start coming into And in fact, most importantly, you would have seen as Carlos started by saying, we have essentially either recognized or have received purchase orders for 52 million in revenue already just two months into the year compared to 57 million for the whole of 2020. The next question is, when we say there are no direct competitors, do we compete with drone manufacturers? Well, sorry, when we say there are no direct competitors, how do we view counter drone suppliers like D-Drone, Engel, et cetera? So at the back in the appendix, you see a page that has as compared to other counter drone manufacturers and both D-Drone and N-Drone are listed there. So D-Drone we're finding is mostly playing in the non-military space. So that's civilian area, which is still a very nascent area, which is also why we haven't really been going there. We generally find that Going from military to civilian is easier than other way around because the expectations of quality are higher in the military space. The main thing you have to watch for is the price point, which is where modularity of our products comes in, where essentially, so long as you can have a number of different products that you can have different price points and locate them at different points of the facility, et cetera, and meet the expectations of the customer and incorporate third-party products like cameras and radars and so on, which we're able to do, that should meet the requirements of the customer. So now we are competing with D-Drone and other civilian suppliers in the emerging civilian market. So markets like airports, And as those markets mature, we expect them to become a significant contributor to our revenues. Endural, so a slightly different beast. Obviously, very large and a fast-growing company. They're doing a lot more than just counter drone and for us counter drone is essentially our full-time job so we would expect to either compete with them or have them as our customer depending on the situation but what I would say is the underlying theme with all this is from day one we said that we want to be the overarching supplier in just about every situation. So for example, Endural will not play in the civilian space while we go into the civilian space as well. We go geographically much wider than Endural. In fact, we're finding most of our US competitors tend to focus on just several niche markets. And a lot of them have to do with the US export compliance compared to the Australian export compliance. The process in Australia tend to be more streamlined. And so we're saying that we're doing a full range of detection and defeat across dismounted, on the move, fixed site, geographic diversification, and also what we believe is one of the largest and the oldest counter-drone engineering teams in the world. Now, why does the time matter? When you're using artificial intelligence to... detect and take down drones. You have to build very large data sets that support your artificial intelligence engines to basically accurately do the detection tasks. So when you're doing AI, actually writing algorithms is a relatively easy part. The much harder part is to having large, clean, well-tagged data sets. So that is where time is important. So your drones in the radio frequency background across Europe, Asia, US, Australia will all sound entirely different. So time in the market, understanding customer requirements is not something that can be done overnight and we're one of the oldest brand names in this industry. And everything I mentioned, by the way, up to now, what you'd call technical differentiators. When you think about commercial differentiators, it's having built our products in collaboration to the consumer space. What we say is that customers don't tend to buy Lockheed Martin, Joint Strike fighter planes off the internet and then leave Google feedback. It's a close confidential collaboration with the manufacturer. And that's what we see in the counter-drone space as well. And so those relationships then enable you to have the desired customer features inside of your products. and then in turn the customers buy into working with you over a multi-year period. The next question is, what is the timeframe of the Australian program? I believe that's referenced land 156 that we mentioned has the tender closed. When do we expect the contract to be issued? That information is confidential, so we can't comment, but you will see references to land 156 in the press that this program is expected to commence rollout in the next year or two. The next question is given the sales pipeline is tilting away from the US, what do we anticipate the revenue mix to be in FY25, presumably geographically? U.S. will continue to be a major contributor and will continue to grow. However, the point I was making earlier is that the other regions will also continue to grow significantly, most notably Asia-Pacific, Europe, and also Australia, of course. Although in Australia, the opportunities are a bit more binary, so specific to, for example, whether we're Windland 156. We believe there's going to be a more geographically balanced coverage. So in the past, like PM, we're looking at about 70% contribution from the US and I think from memory about maybe 10% from Australia and then 20% from everywhere else. This would be more balanced. It's difficult to say how much exactly, but that's exactly what we're seeking to achieve diversification across geographies and the product lineup. The next question is around the engineering numbers. So having grown to about 200 engineers, how do we think about managing group productively and how much more staff are we budgeting to add to the organization? So we're currently sitting at about 200 engineers out of approximately 275 people. will grow to approximately, at this point, the expectation is to grow to approximately 330 total staff, that's globally, but most of the growth will be within Australia and most of the additional 50 or so staff will be engineering hires. We were very careful in terms of how we hire. It's very easy to drop standards and we try to make sure that the new hires coming on are as good or better than the existing talent. And we search the market globally, not just in Australia. in a number of ways as we seek to attract world's best talent. Thankfully, Australia is a really good place to live. And at that point, we expect the, if the point was in regards to the cost, we expect to probably sit somewhere between five and a half and 6 million in terms of the cash cost of the business all up before revenue In terms of how the engineering team is managed, I think the classic management theory is that once you cross certain thresholds, being something like 30, 50, 100, 200, 300 people, the whole organizational structure tends to change. So we've been very cognizant of that in terms of how we do our internal communications. how we manage our roadmap and so on to make sure that we continue being productive, how we onboard people so they reach their peak productivity fastest. So there's a lot of thought that goes into this. The next question is around, what is the mix of military versus non-military tenders I would say approximately three quarters of the pipeline would correspond to military related which to me is generally intelligence, border security and so on. The next question is would we ever consider a line with other stocks. I think this is probably not, although these things are something that the board is regularly considering. My view is that the focus of the business should be on underlying business performance as opposed to having distractions. And also, and this is more of a philosophical point, I believe that reverse stock splits reduce liquidity. So that is not going to be necessarily great for share price either. The next question is, is the Trump administration going to have impact on our expected sales? So I guess really in between the lines of that question, that is, what is the current status of Ukraine negotiations likely to mean for our business? Ukraine has actually been not a huge contributor to our recent sales. Interestingly, as the US is now becoming more uncertain in terms of the military aid to Ukraine, there is a significant potential of European governments stepping up, depending on where those discussions go. And we're seeing that in our pipeline. But more generally, I don't think the global conflicts are going to go away. As I was saying before, we're seeing fairly full-on drone-based warfare in places like Mexico and Colombia. We're seeing a lot of tensions and a lot of it has in the Asia Pacific region around China. So we don't believe that all of this will suddenly go away and the world continues to be geopolitically a tense place for the foreseeable future. And drones will continue to be the choice of a lot of that technology, whether it's gray zone warfare or simply the choice of technology to conduct reconnaissance missions, to conduct payload delivery missions and with it, the need for counter drone equipment. The genie is out of the bottle now. And I think it's pretty factual that drones are going to be the future of war. And so with it will be the need for counter drone equipment. The other thing is there's a big difference between traditional defense technologies. So we're talking guns, helmets, and so on. drones and counter drone equipment. So helmets and guns and other similar things existed since, you know, very, very long time ago. So there's a world situation of those technologies and yes, war drives, war drive demand for that. But as you know, things have unflow that demand can also seize. With drones and counter drone, the market penetration for those technologies So even in the very likely case there's world peace tomorrow, military planners will be looking at Ukraine and Latin America and Middle East and Asia Pacific and saying, well, drones are clearly the choice of a strike and reconnaissance mechanism in the future. So we need a whole lot of drones and a whole lot of counter-drone equipment to stop the adversary doing that. So I don't think demand for counter-drone equipment The next question is, have we built enough capacity in the manufacturing expansion to be able to satisfy short delivery times? There's approximately 60 million in book value of inventory, which roughly corresponds to north of 200 million in sale value of the equipment that we have on the shelf. The equipment technically takes approximately four months to build, and most of it is lead times for our components. There is anywhere between 100 and 400 line items inside of most products that we make, working with dozens of different suppliers. So as mentioned at the start of the presentation, there is approximately a quarter of a billion dollars of book value, of sort of sale value of the equipment. There is... There is four months lead time for us to build more. Customers generally are happy to wait a period of time if there is a mega large order. And as mentioned up front at the start of the presentation, there is about $500 million us and the two outsourced manufacturers that we use. So we don't expect for that to be an issue, certainly in terms of getting to several hundred million of revenue per year. The next question is, why does DroneShield not have any kinetic defeat systems? So firstly, we do partner with basically fry electrics in anything that moves towards them, which is a form of kinetic defeat. We also believe that kinetic defeat is area of We have the likes of Comfort with their Crows remote weapon safety system that is used by a lot of the US Army. So it's a global market leader in the remote weapon station capability. There are emerging laser solutions. And for example, there's a great Australian company called AIM Defense that we'll be seeking to work with at the right time. And generally what we're finding is that because we're an integrator, a lot of our capability is driven by what our customers request. So far we're finding that soft defeat is actually a lot more ubiquitous. And also, like I said, there are plenty of people that make good hard defeat capabilities. So we didn't feel the need to go into that themselves. I believe that the future for a business like ours will be to be the best in individual technologies that we can be, being radio frequency-based sensing, smart jamming, and then for the rest, for us to be the best integrator that we can be. And that basically includes artificial intelligence, power and center fusion, how you provide your analytics, how you talk to other battle management systems and so on. So I think the next question I'll pass to Carla just to spare you guys listening to me. So the question is, can we provide a rundown of the intended R&D spent in FY25 and how much of it is expected to be expensed?

Okay, great. So you would have noticed in our annual report that this year is the first time I think we went to capitalization of our R&D, which has been a really good start place for the business because previously we weren't able to capitalise a lot of that R&D. So this year we've capitalised approximately 6 million of our R&D and moving forward we're looking to capitalise approximately 60% of the engineering salaries that are working on pure research and development of our next generational products. So that will be a significant amount. We're looking to capitalise around $20 million in terms of R&D. So over the next year, hopefully more than that, but we're looking at around 60%, and that would be $20 million. Great.

Thank you, Carla. So going on with questions, and there are plenty coming, which is great. Is Andrew a big competitor for LAN 1500? How likely is it to win the SIP? What happens if DroneShield is not chosen for it? Thank you. So there's very little we can talk about. This is a bound by confidentiality, but I would say we have a number of unique differentiators for the system integration partner. And we also believe that there are The next question is, over the last few months, the investor noticed several large institutional investors take significant stakes in Roam Shield. Does this change any part of how we operate or does it provide further opportunities potentially? So you would have noticed that most recently we had Rego take a substantial, just over 5% stake. December. That doesn't really change the way we operate. These are passive investors. Fundamentally, our focus is on continuing to drive the business and deliver best long-term outcomes. Next question, can we speak to how long larger contracts may take to close after entering pipeline? That really depends on whether this is the first contract of its kind that the customer is looking to place the drone shield or whether it's essentially the next step after a number of smaller contracts. I would say the short answer to the question is probably somewhere between six and 18 months. And whether it's closer to six or closer to 18 depends on the customer's own understanding of their internal processes. So most of the delays often happen on the customer's end as opposed to anything to do with us. where the customer is figuring out, okay, this is the first time, which is usually what happens when the customer plates a light counter-drawn order with us. This is the first time they place the counter-drawn order. How do they go about paperwork? Who is supposed to sign off, et cetera? Now, the good news is once they've gone through it once, it's easier for them to do it again. But six to 18 months is a short answer. For our typical sales contracts today, what percentage of revenues are recurring? If you define recurring as repeat customers, I would say well over 90% of our revenues are recurring. If you are defining recurring as odds so we're talking maybe 5% but we expect it to continue to build up over time and that relates to ongoing software subscriptions why as we launch new generations of products the aim is to have every single product have software subscription. Today, not every product does. For example, RomGun does not. And also, we'll be aiming to have multiple subscription products sitting over certain of our products. For example, from CenturyX all the time. In terms of the target for recurring revenues, which was a prolonged budget from the same investor. So we stated in the past that we are seeking to have goals to 50% from our revenues being recurring. And this is a combination of software subscriptions and long-term R&D contracts. Timeframe is a little difficult to tell, but anticipating in the next five years. The next question is related to what we covered before. How do we explain approximately $60 million in operating expenses being approximately $5 million a month? So you're looking at around 300 people. You're looking at R&D expenses such as an echo chamber, number of R&D projects, hardware and software. For the sales, you're looking at participating in a number of global conferences, demos and so on. So that's basically what's driving the number. The next question is around the civilian sector. So given it lags behind the military industry, are we seeing an uptick airports and and so on and can we provide a breakdown in percentage between the current pipeline in the military versus civilian projects so yes we're seeing an uptick in in those projects a lot of it will be legislation focused so today around the world including both us and australia in the legislation, where there is a general understanding that it's common sense if you're, for example, a law enforcement officer, if you are a national significant asset like a key airport, that you should be able to have a counter-drill solution. However, the legislation is still catching up with it. And the amount of that catch-up ranges the specific type of the user and so on. So we are actively monitoring that situation and also in certain places actually actively participating in promoting civilians to both detect and safely defeat a drone. So noticing we don't do hard defeat, so there is much less collateral impact from a jammer compared to a remote weapon station. Our products are well suited for civilian installations. So we expect that to increase over time, but legislation will probably be the biggest driver of this. And then percentage of breakdown between the pipeline and military versus civilian, I would say probably 75% military. Next question, estimates of the current 5 million cash costs per month when we get from 270 to 330 people. So I would say overall, and this is not just staff, but associated costs, including the R&D and sales costs, probably somewhere between 5.5 and 6 million a month. Now on the P&L basis, that's gonna be less as what Carlo mentioned before, that will be capitalizing and expensing elements, especially to do with R&D. The next question is, do executives plan on buying back into the business after last year's sell-off? So I'm assuming the question is around the selling of shares by some of the executives. So obviously we can't comment on this, but what I'd say is stay tuned. The next question is around U.S. brokers, stock brokers. So FYI, most U.S. brokers charge a lot to trade the drone from stock. And so many people that the person that's asking the question knows have avoided buying. Are we aware of this and what can we do about this? So... I think there are a number of ways to do this and it is possible for Americans, for example, to set up an account with an Australian broker and avoid the costs that some, I don't believe all US brokers would be charging high amount, but avoid the cost that some of the US brokers are buying. we would strongly recommend to trade on the ASX primary exchange as opposed to the pink slips secondary exchange in the US for better execution price and liquidity. For those that want to be connected with a broker, so I would highly recommend Bell Potter that has a US desk, please contact us. So investors at dronechill.com and we'll put you in touch with them to set up an account. if you're an American wanting to trade drones into the primary exchange. Next one, Ukraine has a drone shield copied gun with a stolen tech on the same products. Where's this, I mean, it's competitive against that. Look, I don't think it's stolen tech. A gun-shaped jammer is a common, situation we were one of the very first to sell this concept but i would say there are a lot of differentiators between a cheap gun-shaped jammer and look i don't i don't have a comment on i don't know what specific product is being referred to here apart from the fact it's a gun-shaped jammer But there is a lot of science that goes into how you send the signal, how you build the product and so on from your gun-shaped jammer. There are products which simply emit a ton of energy and not necessarily safe for the operator and often being just simply fried in the field. DroneShield is the opposite of that, where we are at the high end of the quality. So there's quite a bit of science into making a good product. Now, Ukrainians will obviously use whatever they can get their hands on. It's a difficult situation for them. Some will be our products to the extent that we're able to secure military aid for them. Some will be their own. Some will be maybe third-party suppliers. So we're not particularly concerned about it, except, of course, we want to keep highlighting the quality of our products. The next question is, how confident are we to having robust enough security systems internally to prevent cyber attacks on our engineering designs or through our employees? So we have set up a fairly sophisticated internal security department, which is led by an executive with previous security experience at sort of companies which would have experienced the best of cyber attacks in the world. So our security team is very well familiar with the sort of attacks which could be done. thankfully never had a successful attack so far, although there is certainly no lack of trying from what we believe. We also spend quite a bit of focus on educating our employees in terms of phishing emails and so on and how information is managed. So there are particular cyber attacks and information sharing best practices for defense and other sensitive businesses and we follow the best of those practices. Do we have any purchase or acquisitions on the horizons on the horizon so when we did the capital raise in the middle of last year we talked about a a business in the electronic warfare space that we're considering to acquire we're still working with that business doing the diligence on them and if it transpires we will acquire them we are being very diligent about it it's obviously a big distraction if It goes wrong, and at the same time, we continue to scan the market for any other suitable acquisitions. There's nobody in the counter-drone space itself which interests us because we believe that we're fairly unique. However, in other areas, most notably electronic warfare, we continue to scan the market. Can we talk more about DroneShield software solutions and potential subscription-based recurring earnings? So what I can say is that a lot of our products, not all yet, like I was saying, DroneGun does not have it yet, have subscriptions associated with it where we do quarterly updates to the firmware. Think about it like antivirus, right? So... It's a move using AI to a library-less based approach where instead of using sort of a fingerprint type library, you're saying, okay, well, like just with your eyes, you can tell something is a drone. And if you've never seen the drone before, the algorithm in the radio frequency space can basically figure out that something is a drone and advise what the close of the drone has seen to this never seen before threat. The key challenge with detection, which I would argue is harder than defeat even in a lot of cases, is drones operate on a very busy part of the spectrum and they're increasingly utilizing more and more of really diverse parts of the spectrum, especially if they seek into avoid traditional counter-drone detection defeat techniques. So with it, software updates become increasingly important, but at certain point you're saying that even the underlying hardware you need to upgrade, which we'll be doing with the sort of two or three year cycles and quarterly software update cycle on top of the hardware. In terms of the recurring earnings from that, so you would have seen in 24, we posted approximately 5% of total revenues being off the back of that. we introduce all of our new generations of products, 100% of them will have software subscriptions attached to them and some of them will have multiple software subscriptions attached to them. So with it, we expect the recurring or SaaS-based earnings to continue increasing. Next question is, is there a chance that jamming will be useless in the future. So I think there's a chance for anything, but I don't see the chance likely in the near term. The reasons for that is that drones continue to need radio frequency connection, even as autonomy is increasing. Yes, there is increasing GPS guided navigation, but you can jam GPS and then the drone has basically nowhere to go. Yes, there is image or terrain based navigation, but today has severe distance limits. And when you think about the fiber optic cables, which seems to be the latest trend If you think about it pragmatically, so you have a drone that's basically spooling potentially kilometers of fiber optic cable behind it. Think about the likelihood of drones snagging cables between each other to the trees, to the buildings, the weight of those cables, what happens if you're in adverse weather. So all of that plays a part. So we think practically that is unlikely to happen. And the other thing to keep in mind is Drones is not a binary thing, meaning it's not like you have a drone on one side and there's a intercontinental ballistic missile on the other. So as systems like ours put drone manufacturers to put enough circuitry in the drone to take it from a $1,000 drone to $100,000 drone, at which point other kinetic defeat methods become possible. cost viable, we have arguably succeeded. So remember that our mission is not to take down anything in the air, but to take the mass and the cost-effective threat from the equation. And that is very difficult to produce that is fully jam-proof silver future now in Kenya. Next one, what do we think about the high amount of short sellers? So those of you that read my Forbes article will see my view on this. I genuinely don't understand this. I wish the short sellers came out and stated their reasons. We have over 200 million of cash in the bank. We are tracking for another all time high revenue year we are in an industry with insane amount of tailwinds. I genuinely don't understand those people to the extent you have a large contract being announced and we have a number of those in the pipeline that will likely cause a significant change in the share price likely prior to open if we receive that contract overnight, as we often do with our global business. So I'll be curious to see what the logic of the assurance is, because it'll need to be Next question is, do we think DroneShield has better chances globally than US-based competitors because of Australia's kind and neutral status in the world? Look, I think it depends on the geography you're talking about. So there are a lot of countries which would strongly prefer to buy American kit and receive a lot of US equipment. foreign military aid, where being a US-based manufacturer is an advantage. But, I mean, look, being Australian is not a disadvantage. I certainly don't see it that way. The next question is, is there a possibility that our inventory becomes obsolete or loses value? In short, yes, but there are a number of ways in which we mitigate it. So we make sure that we do not just keep building the same product up to the point where a new product is released. So you do a build and then you run down the stock and you obviously have your technology roadmap. And so you would know usually about a year, a year and a half in advance when the next launch of the successor product is. So you aim to run down your stock prior to that, and we've been doing this for the entire life of DroneShield, although, of course, the scale of everything is now higher. And also, there is a possibility to update those products without completely tossing them out, right? So if you're talking about changing frequency sets, changing some of the circuitry, that can be done at a fraction of the cost of building a new product as well. The next question is, do we have any plans to establish a US listing or a proper listing in the over-the-counter markets? This is something that the board is regularly assessing, but at this point, we're not doing it as we believe this is gonna be a significant distraction to And we prefer to focus on growing the underlying business. The next question I'll pass to Carla. million in revenue visibility or 52 that were mentioned at the start of the call to be booked in the first half of 2021?

Yes, I do expect that majority of that will be booked in the first half of 2025 and the remainder, most of the hardware deliveries in relation to that 52 million will be delivered in the half year and the remaining of the year, the significant portion is deferred subscriptions and warranties.

Thank you, Carlo. The next question is, when will senior execs have skin in the game to align interest with investors? So we use performance options to provide alignment between a number of employees. So over 100 employees out of the 300 or so in the company have those performance options, which basically convert to shares across when DroneShield achieves 200 million in a rolling 12-month period. So think of it as 200 million of annual revenue, annual cash receipts, which is a significant incentive and alignment between the employees and the investors. Next question. It seems like the entire world is more sensitive to drone activity because what's happening Do we think this will increase the speed of anti-drone legislation? Yes, and also we're seeing other things like, for example, the New Jersey drone sightings have no doubt brought the public eye in the US to the issue, and this will help accelerate the legislation. I'd say any sort of high-profile incident involving drones continues to play on the minds of the legislators. How high will the SaaS be in the future? So previously I mentioned that over the next several years, we are aiming, targeting between the SaaS and the long-term R&D contracts, which are fundamentally software anyways, to be up to 50% of the revenue. Do we think our shares are underappreciated or undervalued? Look, it's difficult for me to provide that comment. Those who are interested in broker reports, so we are being actively covered by showing partners and Bell Potter. Those are independent views. We don't endorse them necessarily, but we have copies of the reports and we're welcome. Everybody who wants to see those, please write to us at investors at dronkheel.com and we'll provide copies of those reports which basically give broker values and forecasts on our business. Are there any vulnerabilities in electronic component supply given the current escalating international trade wars? We don't see any. So our supply chain is fairly concentrated to the US and Australia. And obviously the two nations are fairly well linked. We have a dedicated supply chain team, which is regularly talking to all of our suppliers and make sure that we're not stuck I often recite a story from about maybe five years ago where RF Control has a, what is a roughly $20 knob that is made by one specific US-based manufacturer. And we're talking a device that's worth hundreds, sorry, tens of thousands of dollars, right? And the knob just went out of stock for about three months. So that's five years ago. And basically our production has ceased for three months while the knob was got back in stock. So we learned the lesson. And also, by the way, during the lockdowns from the 21, 22, we also seen a lot of disruptions. So we have learned to build our supply chain with sufficient amount of backup redundancy that this kind of thing doesn't happen. Now, naturally, there's only so much redundancy you can do for key components like chips. But so far, we haven't encountered any issues. DroneShield still has a lot of cash on hand, true. Is there any consideration being given to strategic acquisitions or significant equipment purchases that will help us either with acquisition of peripheral systems to your offering or reduction in the cost base of manufacturing? So with the last one, we're not looking to purchase anything to do with our manufacturing supply chain and that's deliberate. We are a very high margin business. Manufacturing is a fundamentally a low margin business and it's a very different skillset. So our skillset is to rapidly innovate, rapidly prototype, understand what the market needs, see the themes in the market in the next several years. and large scale manufacturing is not simple whatsoever and it has its own complexities and we certainly do not want to make an acquisition that will a reduce our margins and to walk into a lot of issues. Our Our main objective here is not to reduce the manufacturing costs.

I mean, don't get me wrong.

Our supply chain team, we got the very best pricing and payment terms, but success to this business will not be taking another one or 2% of our cost base. It will be about growing revenues, which is where our focus is going. In terms of acquisitions, so I mentioned before that we're seeking to focus on electronic warfare type solutions. So whether it's hiring top talent, using consultancy based approaches, or purchasing businesses, if that makes most sense to supplement what we believe a very cutting edge team within the company already. Next one, can we expand a little around the gross margin comment? Can we put a range on it? We'll prefer not to formally give an answer because obviously we deal with customers. And the last thing I want is to have customers then using that information to negotiate against us. But I mentioned the broker reports earlier. They're independent views. If you don't have access to those broker reports, please write to us. And we'll, so investors at drunkship.com and we'll send you those broker reports and you can further gross margins from that. Is the transcripts of this conversation going to be available? Look, not at this point. We're just keeping it to the webinars. The next question is, why don't directors not back the business and buy shares or market to show executive commitment. So like I was saying, stay tuned. There is a bit of complexity around it. It's not as simple as it sounds, but when we have an update on that front, Next question related to what I just said. The person goes, many investors are concerned about the staff of the company having sold their shares. What would you say to those investors? So a number of staff in the business still have meaningful holdings of shares. And importantly, over 100 out of the 300 staff in the company, including myself and Carla, business, which link to a very significant upside in the company. So if we can hit 200 million of annual revenue, that provides a very meaningful incentives for us. So that is essentially the alignment between the investors and the staff. Next question is, what thoughts do we have on our revenue target for FY28? Sorry, we don't provide guidance, but again, happy to refer you to broker reports. Next question is, are we going to be at Falcon Peak? event in August to demonstrate the tech to US Army. I can't comment to specific events, but our US team does literally dozens of events every quarter and all the events which are relevant, we attend. Do we see a chance to enter the European market due to rising defense budgets? And is there already bigger projects in the pipeline in Europe? Yes, we have entered the European market. We have hired several top notch salespeople from one of our European competitors. They're based in Denmark, but we have staff outside of Denmark as well, and we are hiring more. We believe that Europe will be a key growth area. So we're already active. You would have seen the $8 million sale in Europe that we announced last month. And there are very meaningful, chunky pipeline opportunities in Europe. And you can see in our best presentation in the European section of the pipeline, there's a meaningful amount allocated against it. I think Europeans are... waking up and coming to a conclusion that they need to look out for their own safety. And the world is not what it used to be 5, 10, 20 years ago. And drones are the future warfare. So with that, I think we're going to start increasing the defense spend as a percentage of GDP for a lot of European countries, which are right now well sub 2% for a lot of them to be close in line with US, Australia, and so on. So we expect to benefit from that. And yes, stronger incontinent presence, including a dedicated European Drone Shield Entity. I believe we have now answered the majority of the questions. We won't go through all of it. However, please feel free to email us at investors at dronegym.com and we'll seek to answer the remaining questions. Thank you for your time.