Draganfly Inc. (NASDAQ:DPRO) Q3 2023 Earnings Call Transcript

The starting X2 drone is getting terrific traction. There are a number of pre-orders coming in. We have not officially recorded on our books any of those orders as of yet. But we’re basically in a position now to start the production on those and a great work to the Promo Drone, this will have an impact for us come Q1 and Q2. And then obviously, the Commander 3 XL, this base platform that was designed by our product team and engineers really is in a category by itself. It’s not that small type of ISR drone, it’s a very competitive market, not that we don’t make those on our work ventures. But on our production line, this is the area that we’re focusing on, a bit more category 2-ish and up and above between this and the heavy lift drone o be able to provide longer battery life, multiple different sensors.

We’ve got dozens and dozens and dozens of different integrations that are built for this drone. It’s really that multipurpose drone that can be used for anything from ISR through its delivery of any type of almost imaginable payload that you could think through. And it’s really just a big flying battery. That’s really — everything ends and begins and ends with your design of the battery. So lots of other product initiatives that are happening, they’re all customer-driven. But this platform is really what’s launching us right now. Some operational highlights for the last quarter, we secured the first defense orders for the Commander 3 XL with the US military, and it’s being utilized to enhance mission success in particular, in GPS-denied environments.

So incredibly important and incredibly tact and you need a very robust platform in order to house all of the additional equipment sensors, radio shields, antennas, et cetera, in order to operate in those environments, so really thrilled that we were selected in this regard and we are engaged at multiple levels with multiple militaries and divisions of – at our training center going through testing and preparing for the specs to on production. We were also selected by a state geological survey. Now this is important on lots of reasons because that geological survey is a heavy lift in terms of the battery requirement and the sensors that they are using. And it is helping standardize this drone for this type of work across the other state geological survey organizations.

Now again, in order to do this, you have to be an NDAA compliant drone. You have to have met stringent testing requirements, cybersecurity requirements in order to demonstrate that you don’t have the security breach and such. I know there’s a lot of talk about, oh, you have to be through UAS. You have to be this. We’ve been selling into these environments, not necessarily the military, but into agencies for years. So though we’re not necessarily on the Blue UAS means, we are able to sell into these markets because of our past history and because of our NDAA compliance and because we have that proven track record. That said, we are working diligently as it relates to Green UAS and expect those types of certifications to follow as well. But we had a very significant sale this last quarter into the Department of Corrections.

And as many people would know, the corrections market for the growing industry is significant. We do believe that this is probably the largest sale of equipment into the corrections industry to-date. And our pipeline, though it’s not represented yet in our order book, our pipeline is very, very robust in the corrections market. And that would be both drone and counter-drone technology as well as our vital intelligence technology, which provides health monitoring simply through the camera for prison populations and intake protocol. We also, this last quarter went to work for the Canadian Government, in particular, provincial government that had over 300 wildfires ranging at one particular time. And so we have signed a multiyear contract with that province where we’re providing crews and our drones in order to provide visual oversight, hot spotting, thermal flights at night to check for ground fires.

Next year, we’re moving into equipment delivery. Really have quickly become a leader in the space with operational experience and setting a standard — the standard operating procedures in order to expand this to other provinces as well as several states that we’re in discussions with. So we do expect, unfortunately, a very robust fire season next year with multiple engagements happening throughout North America. We are a leader in the energy research industry and has standardized – and association has also standardized on the Commander 3XL drone and this is really important because this particular customer is responsible for making the recommendation of how they inspect their infrastructure nationwide and having them have standardized on the Commander 3XL drone.