Draganfly Inc.

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. So as always, welcome and greetings to all the shareholders and stakeholders who always tend to join us on these calls. This time is the Dragonfly 2026 Q2 earnings call. My name is Roley Bustos. I'm the Internal Investor Relations Rep here at Dragonfly. We appreciate you all joining us as always. We'll start with our CEO and President, Cameron Chell. He'll 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, investor.relations at dragonfly.com, 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 10, 2026. were under no obligation to update or renew these statements outside of material press release disclosure going forward. The full forward look and 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, Roley. Sure appreciate it and appreciate everybody taking the time to afford us the opportunity to update our earnings call for this last quarter. The net-net here is that Dragonfly, 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 where we've ended up and what the pipeline looks like going forward. So our revenue was $2.664 million. That's a year-over-year increase of about 26%. We had a 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 Dragonfly to provide their association members, the 3,000 campuses that are a part of this, with the training for drones and counter drones. Paul Mullen, Deborah Greenberg Cameron Chell, Paul Mullen, Deborah Greenberg Paul Mullen, Deborah Greenberg Paul Mullen, Deborah Greenberg and 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. We'll sign up another three of the 50 that are indicative in the pipe. 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 this ticket to it in probably the second quarter of next year, which works well in terms of most of the budget timing and actually most of the decision timing that it takes for things to move forward. But we really want to make sure that we've got a great reference base in this regard because it's a bit of a captured market for us. So, Really hats off to our public safety organization and how they organized this. I will mention as a subsequent event, we also did sign the Small and Rural Association and a very, very important association for us to sign as well. And part of our whole strategy here is not necessarily to go after the urban centers. So those urban centers are really well serviced by organizations like Skydio, Axion, Brink, 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 release of our grown-in-a-box solution to them. However, the rural, which makes up about 80% of police forces in the country, but they're smaller. So they're a little bit more expensive to work with, but they're not quite as fussy. So 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 trying to roll it out in a measured way. We also completed the acquisition of Skip Dynamics. Now, this is a really strategic acquisition for us. Skip Dynamics, the two founders involved here are former Navy grads. They're actually the individuals that designed the original FPVs for the Marines and over 15 years ago, trained Marines and built protocol around FPVs. Now, a lot of people don't know this, but FPVs weren't invented in Ukraine. They were introduced to Ukraine by the U.S. Marines as a bit of a Hail Mary to like, you know, You guys are in a tough spot. Try this. And lo and behold, it worked. So 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 in the existing work that they do within the government, it 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. So part of the strategy here is twofold, and we see it unfolding exactly as these guys had predicted. There's two reasons that fixed wings will become much, much more prevalent today. over the coming couple of years. First of all, if there's engagement in Taiwan or the South Pacific, you're dealing with a surface area, an ocean that's five times the size 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 marine or beachfront type of engagement. So 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 we're down to the final few contestants or selections for that. And we feel pretty good about it. Now, interestingly enough, this particular plane is also an excellent ISR. It could be hand-thrown. Paul Mullen, Deborah Greenberg Very, very low cost, like four-figure costs. And that's really important. And they're completely customizable inside. So depending on the type of radio that you want to run or the type of payload that you want to have or ordinance or such. So it's very, very modular as well. So it really fits our... are our philosophy of modular drones. Dragonfly was very proud to be awarded by DEVCOM or a counter drone development of a counter drone system. This is an ultra light, ultra mobile counter drone system. Cameron Chell, Paul Mullen, Deborah Greenberg and a factor that can be either kinetic or RF and some pretty sophisticated software on the tracking side. So 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 dev group contract is significant and I believe translates into hundreds of millions of dollars of revenue, not just within – Paul Mullen, Deborah Greenberg 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. And 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. And I would suggest this is also a reason that we continue to see 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. So 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. And candidly, this is why we worked in partnership to develop this entire camera system. It's very unique to Dragonfly. It will fit on any of our models. It'll also fit onto other drone models as well. and really launches us into the optics business. Dragonfly, the Flex, the FPV drone was selected by two additional U.S. 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 I but a couple of them that are disposable is in particular that you've got arms and blades that you can switch out. So what that means is that you've got variability in your mission profile without having to carry a whole bunch more equipment. Cameron Chell, Paul Mullen, Deborah Greenberg Paul Mullen, Deborah Greenberg you know speed and maneuverability is marginal between any of them but because you can put some bigger blades on this even with shorter arms 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 so some great lessons that have come out of that we see a great future for this particular one ACSL and Dragonfly have partnered to bring NDAA-compliant Japanese drones into the Canadian and actually into the U.S. market as well. But into the Canadian market, it's exclusive. But into both of these markets, it's important to note that these are not just typical ACS drones. are in our lineup because we've integrated them with our other drones. So you'll see on the front of the ACSL drone, a camera system that pops off and another camera that can pop on, whether it be a thermal or a higher res or Hyper Spectral or whatever the case may be. There's four different cameras. But those cameras now also pop off and are being fitted onto the Apex drone and eventually onto all of the drones. So we'll have an interchangeable camera system that will be included in the ASL line. Now, only Dragonfly will have that interchangeable capability with ASL. So we're building strategic differentiators into this particular product line. Paul Mullen, Deborah Greenberg utilize valuable resources to develop a Me Too type product. And I'm not suggesting ACL is a Me Too or that companies in Me Too, they've done some really, really cool things here, but 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. And of course, our product line tends to be one, first of all, interchangeable, modular. We, you know, arguably we're still the only folks out there that have a fully integrated product line across six different drone sets. So 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 three. drones. But interestingly enough, the biggest demand that signal that we see over the next couple of years is going to be medium and long range strike drones. And hence, that's exactly why we bought the expertise and technology behind skip dynamics. So 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. Cameron Chell, Paul Mullen, Deborah Greenberg The procurement cycles. 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. So much of that testimony was applied over into NATO. It was invited also by the prime minister's office to attend the NATO summit in Turkey, along with six other countries. are all Canadian Defence Executives. And it was probably one of the most productive and 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 growing space, what are the things that we need to do to be effective long-term. Not an exporter, but what do we need to do to build a successful long-term industrial base? Paul Mullen, Deborah Greenberg, Paul Mullen, Deborah Greenberg, 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. So again, we've worked ourselves into a very privileged situation to be able to serve the people that serve, and we're 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?

Yeah, thanks, Cam. Thanks, everyone, for joining. So, yeah, this first slide here, we'll look at a snapshot of second quarter, comparing it to the year-over-year quarter last year. So revenue, as Cam mentioned, 26% up to $2.7 million from $2.1 million in the second quarter of 2025. Second quarter revenue comprised up $2.6 million in product sales with $100,000 worth of balance coming from drone services. Gross profit $533.1 thousand compared to $5.04 and 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. Paul Mullen, Deborah Greenberg Total comprehensive loss for the quarter was $11.8 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 million and a small fair value of derivative liability loss of $8.9 million. Paul Mullen, Increase is primarily due to higher office and admin costs, R&D, share based comp, professional fees, travel and wages. And we'll go to the next slide, please, to do a quarter over quarter change. Looks good. Yeah, so revenue for Q2 was up 15.2% to 2.7% 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%. Thank you very much. 43.7 thousand. So Q2 would have been 11.7 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 costs, 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 got a snapshot of the balance sheet. So you can see total assets increased from $101.3 to $154 million from the end of the year, largely due to the increase in cash. You 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 shareholders 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 that February financing. And with that, I'll pass it back to you, Kim.