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DroneShield Ltd (ASX:DRO) Share Purchase Plan - Offer Letter

Sydney, Australia, Oct 17, 2018 - (ABN Newswire) - Your board is writing to you today with an offer to participate in a Share Purchase Plan ("SPP" or "Plan") which entitles Eligible Shareholders (defined below) to purchase new shares in DroneShield Limited ("DRO" or the "Company" or "DroneShield") (ASX:DRO.AX - News) (OTCMKTS:DRSHF - News) at the price of $0.14 per share, up to the value of $15,000 each. The Company intends to raise approximately $750,000 under the Plan.

Patersons Securities Limited ("Lead Manager") has agreed to act as the lead manager. In the event that Eligible Shareholders do not subscribe for Shares under the Plan to the amount of $750,000, the Lead Manager may place the resultant shortfall to its clients provided the shortfall does not exceed the placement capacity of the Company pursuant to ASX Listing Rules 7.1 and 7.1A ("Shortfall Placement"). If total applications from Eligible Shareholders under the Plan exceed $750,000, the directors of the Company may, in their absolute discretion, accept or scale-back all applications on an equitable basis. Directors may also, in their absolute discretion, decide to increase acceptances in the event of oversubscriptions and increase the size of the Plan (subject to compliance with the Corporations Act and ASX Listing Rules).

In addition to the Plan, DroneShield may, in consultation with the Lead Manager, elect to undertake a placement of additional shares at the same price as the shares offered under the Plan ("Top-Up Placement"). The maximum number of shares that may be issued under the Top-Up Placement would be equal to the Company's then placement capacity pursuant to ASX Listing Rules 7.1 and 7.1A (which is currently 42,489,055 Shares), subject to compliance with the ASX Listing Rules.

The Lead Manager will be entitled to a fee of 6% of the gross amount placed by the Lead Manager under the Shortfall Placement and the Top-Up Placement, a management fee of $7,500 plus one option to acquire a share (exercisable at $0.22 on or before 14 June 2019 each) for every four shares placed by the Lead Manager.

The Board believes that the funds from the SPP will assist the Company with an expansion of its marketing efforts globally, as well as its working capital requirements while the multiple governmental tenders and other product sales processes in which the Company is participating internationally run their course.

Recent Progress

There has been a proliferation of cheap commercial off-the-shelf drones and an exponential increase in their use for nepharious purposes (including terrorist attacks, attacks on heads of state, use by non-state actors on the battlefield and unlawful use around airports, critical infrastructure, prisons, stadiums, events, commercial venues and VIPs). Among others, recent reports have included:

- October 2018: Christopher Wray, the Director of the FBI stated the following in written testimony to the U.S. Senate Homeland Security and Governmental Affairs Committee: "The FBI assesses that, given their retail availability, lack of verified identification requirement to procure, general ease of use, and prior use overseas, UAS [drones] will be used to facilitate an attack in the United States against a vulnerable target, such as a mass gathering."

- September 2018: Passenger jet carrying 240 people nearly hit a drone at 15,000ft in the UK airspace

- August 2018: Venezuelan President Nicolas Maduro was attacked by weaponised drones during a live televised speech in Caracas

- May 2018: FBI hostage rescue team was reported to have been attacked by a swarm of drones during a hostage raid

- February 2018: Drone "dive bombed" a passenger jet above Las Vegas

- January 2018: Homemade drones bombed a Russian Airbase in Syria

- November 2017: The U.S. Department of Homeland Security issued a terror bulletin focusing on the threat of weaponised drones

- November 2017: A drone struck an Aerolinas Argentinas passenger Boeing on final approach to Buenos Aires Airport in Argentina, and the passenger jet sustained damage

- October 2017: Footage uploaded to YouTube reportedly showed an armed ISIS drone destroying an arms depot in northern Syria

The drone detection and interdiction industry is in its nascent stages. It did not exist until several years ago, and governments did not commence to allocate funding to this industry until recently. However, with the substantial increase in malicious drone activities, virtually every government now concerns itself with how to protect its infrastructure and people against such activities.

DroneShield is at the forefront of this effort. The Company has built on the 2017 launches of its cutting-edge products, and has made substantial progress, in recent months. This includes the following.

- A June 2018 $3.2 million order for 70 units of DroneGun TacticalTM for use by a substantial Middle Eastern Ministry of Defence, approved by the U.S. regulator in September 2018

- An October 2018 order for multiple units of DroneGun TacticalTM for use by a major Asian government agency

- An October 2018 Central American government order for DroneSentryTM and DroneGun TacticalTM units

- Deployment at 2018 Winter Olympic Games in South Korea

- Deployment at 2018 Commonwealth Games in Gold Coast, Australia

- Deployment at 2018 ASEAN Summit in Sydney

- Deployment at the United States Marine Corps / United States Navy 2018 Urban 5th Generation Marine Exploration and Experimentation Exercise (U5G 2018)

- Sale of DroneGunsTM to the Paraguayan military

- Placing DroneShield products on the United States GSA Schedule, making them available to U.S. governmental users on an off-the-shelf basis

- DroneGun TacticalTM certification for human exposure

- United States / Canada DD2345 Certification

- Assignment of NATO Stock Number for DroneGunTM

- Partnership with ISI for an on-vehicle counterdrone solution

- Safety for deployment at airports certification

- Setup and commencement of operation of the European Hub

- Participation at numerous high profile events such as AUSA, Eurosatory and DSA (with support of Team Defence Australia), Land Forces, SOFWERX Thunderdrone, FIDAE, Modern Day Marine and others

- Receipt of number of grants, awards and recognition by Company or its staff, including R&D Tax Incentive Grant, NSW Export Awards Finalist, 2018 Young Innovator Award, and SME Innovation Grant

- Launch of multiple additional products, based on end-user feedback

Through its network of approximately 60 distributors in approximately 50 countries, DroneShield is capitalising on its recent sales successes and its reputation as a leader in the space, by pursuing dozens of contracts ranging in size from tens of thousands of dollars to tens of millions of dollars each. (see Note below)

Funds raised under the SPP will be used towards expansion of the Company's sales and marketing efforts, further development of and improvements to products to accommodate specific customer requirements and general working capital.

All of the shareholder directors intend to participate personally in the SPP as a sign of confidence in the Company.

Please refer to the Company's ASX platform (ASX:DRO.AX - News) or for further details with respect to the Company's operations. The Company's investor presentation is enclosed.

Your continuing support is greatly appreciated.

Note: Necessarily, not all (and there can be no assurance that any) of the Company's sales opportunities will result in sales.

To view the Share Purchase Plan and Investor Presentation, 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 pre-eminent drone security solutions that protect 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, intelligence, and aerospace.


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


DroneShield Ltd

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