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DroneShield Ltd (ASX:DRO) Quarterly Report

Sydney, Australia, July 27, 2018 - (ABN Newswire) - DroneShield Ltd (ASX:DRO.AX - News) (OTCMKTS:DRSHF - News) ("DroneShield" or the "Company") is pleased to provide the following update on its activities during the three-month period ended 30 June 2018 and its Appendix 4C quarterly cash flow report for the same period.

Key Developments

DroneShield made significant progress in the quarter to 30 June 2018. The key developments to the date of this report include the following.


- On 14 June 2018, DroneShield has announced a $3.2m order (the "MOD Order") for 70 DroneGuns(TM) for use by a Middle Eastern Ministry of Defence (the "MOD")(see Note below). This is the largest known order for tactical drone mitigation equipment of this kind globally, the first order for multiple DroneGun(TM) units, the largest order in the Company's history, and the Company's first multi-million dollar order. The Company expects for the majority of the cash inflows from the MOD Order to be received during the current, and the two subsequent quarters.

- As the Company's marketing and product development efforts over the recent two years started maturing, the Company received cash inflows of $431,681 from customers during the quarter, the Company's best quarter in terms of cash generation since inception (this compares to $35,708 received from customers in the prior quarter).

Sales, Marketing and Deployments

- The MOD order was important for several reasons:

o The MOD has one of the largest defence budgets in the world. The Company considers this order as just a start of its relationship with the MOD and expects to receive substantial (and substantially larger) additional orders for this product and other products of the Company for the MOD and for other ministries and agencies in-country and elsewhere in the region.

o The sale, the largest ever in the industry for this kind of equipment, establishes DroneShield as the leader in the industry, globally, and places DroneShield well ahead of its competitors in the global anti-drone industry "land grab".

o A large order by one of the most sophisticated users of security and defence equipment in the world validates the quality, effectiveness and competitiveness of DroneShield products.

o DroneShield's sales pipeline includes dozens of contracts that DroneShield is pursuing, in various stages of advancement, in dozens of countries. These range from a few tens of thousands of dollars to tens of millions of dollars each. Necessarily, not all, and there can be no assurance that any, of these sales opportunities will result in sales. However, DroneShield expects that this validation by a demanding user will accelerate the adoption of our products by a range of governmental and corporate users globally and accelerate the execution time-frame for DroneShield sales.

o DroneShield has previously advised the market of its discussions with larger industry participants about a range of potential corporate transactions. These discussions are on-going. Larger defence "prime contractors" and security integrators are looking to ascertain which companies emerge as the winners in the anti-drone "arms race." This order places DroneShield at the forefront of the industry and is likely to have a substantial positive effect on DroneShield's corporate discussions with larger industry players.

- On 23 April 2018, DroneShield announced that its products were utilised by the Australian Defence Force for the protection of the ASEAN-Australia Special Summit 2018 in Sydney.

o The Association of Southeast Asian Nations (ASEAN) is the premier regional grouping in Southeast Asia.

o The heads of the ten ASEAN states and the Australian delegation including Prime Minister Turnbull met in Sydney, the first time such a meeting was held in Australia.

o Monitoring of drone activity at high profile events has become an important component of event management, similar to perimeter access control or participant credentialing.

DroneShield's product DroneGun(TM) was used by the Australian Defence Force at the event, on behalf of the New South Wales Police for the protection of the participants from potential drone threats.

- On 14 May 2018, DroneShield announced that its European Hub had commenced operations. The detection capabilities showcased at the European Hub include multi sensor detection incorporating radar and radio frequency direction finder sensors (RadarZeroTM and RfOneTM), complemented by jamming capabilities provided by DroneGun Tactical(TM) and DroneShield's stationary jammer product DroneCannon(TM).

- DroneShield's in-house and distributor salesforce continued to progress a number of opportunities, including participating in a number of governmental procurement processes.

- DroneShield continued to participate in a number of defence and security conferences, including Eurosatory in Paris in June (as part of Team Defence Australia).

Product Development and Certifications

- On 21 May 2018, DroneShield announced the results of independent certification by 360degRF, a US based specialised radiofrequency testing laboratory, as compatible (that is, not interfering) with the most commonly utilized communications and navigation systems employed in the United States aviation/airport environment.

o RfOne(TM) and RadarZero(TM), core modules within DroneShield's DroneSentinel(TM) detection system, have been assessed as creating no increase in background EMI when operational, measured across a wide range of aviation frequency bands used by airports and aircraft.

o DroneCannon(TM), the drone mitigation element of DroneShield's DroneSentry(TM) system, has been determined to operate strictly within the advertised bands. In the non-GPS mode, these ranges are outside of aviation frequency bands.

- During the quarter, DroneShield continued to invest resources in further developing professional mass-scale production capabilities, to cater for orders such as the Middle Eastern MoD order for 70 DroneGun Tacticals(TM).

Note: The Company's ability to fulfil the order is subject to approval by a U.S. regulator overseeing defence exports. For clarity, only some of the Company's potential orders require such approval since sales of some of the Company's products to a number of countries allied with the United States do not require U.S. regulatory approval. The Company expects to receive such approval, if it is granted, in the next two months, using the established U.S. defence product sale approval process. There are, of course, no guarantees that the approval for this particular order will be granted.

To view the full report, please visit:

About DroneShield Ltd:

Based in Sydney, Australia and Virginia, USA, DroneShield Ltd (ASX:DRO.AX - News) (OTCMKTS:DRSHF - News) is a worldwide leader in drone security technology. The Company has developed the pre-eminent drone security solution that protects people, organisations and critical infrastructure from intrusion from drones. Its leadership brings world-class expertise in engineering and physics, combined with deep experience in defence and intelligence.


Oleg Vornik CEO and Managing Director Email: Tel: +61-2-9995-7280


DroneShield Ltd

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