Draganfly Inc. (NASDAQ:DPRO) Q3 2025 Earnings Call Transcript

Draganfly Inc. (NASDAQ:DPRO) Q3 2025 Earnings Call Transcript November 13, 2025

Rolly Bustos: All right. To respect everybody’s time, I think we will get going right away. So again, greetings, and welcome to all the shareholders and stakeholders for joining us today for the Draganfly 2025 Q3 Earnings Call. My name is Rolly Bustos, and I am the Internal Investor Relations representative here at Draganfly. We appreciate you joining us. As always, we’ll start with our CEO and President, Cameron Chell, recapping the third quarter earnings highlights. Next will be a more detailed financial review with our CFO, Paul Sun. We will conclude, as always, by addressing the pre-submitted questions we have received. You are welcome to reach out to me any time at investor.relations@Draganfly.com, if you have further questions.

I remind everyone that 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, November 12, 2025. We’re under no obligation to update or renew these statements outside of material press release disclosure going forward. The full forward-looking disclaimer can be found on the screen right now. So Cam, if you’re ready, please go ahead.

Cameron Chell: Sounds great. Thanks, Rolly. Really appreciate that. And thank you, everybody, for taking the time to be with us today. We really deeply appreciate your time and consideration. So maybe just to hit the highlights out of the gate. So our revenue for Q3 2025 was $2.155 million, an increase of 14.4% year-over-year, that includes $1.6 million of product sales and about $530,000 of services. Our gross profit was $420,000, and our cash balance as of the September 30, 2025, was just underneath $70 million. So maybe just to run through a few of the highlights for the quarter. In particular, these are the ones that we felt were certainly material and meaningful to the shareholder and our future revenues. So first of all, we are unveiling the Outrider Southern Border drone, which is a Multi-Mission Drone in a Live Operation at Cochise County.

So we — basically, that whole operation is where we’ve got the Southern border sheriffs, basically commissioned by a heavy rider or what we call an Outrider drone, which is a drone that we designed with the Southern border sheriffs to be able to address the very specific mission sets that are required along the southern border. This very unique drone, which has a large addressable border opportunity globally, not just along the southern border, is actually a drone that really uniquely positions itself to be doing pretty much anything a fixed wing surveillance aircraft can do with the versatility of a Heavy Lift multi-rotor drone. And we’ll talk a little bit more, and I know there’s some Q&A that came in around that as well. So that was a very significant win for us.

And in fact, on Monday of next week, we are actually doing the inaugural missions with that drone going live and operational, so we’re really excited about the 100 or so different government and international representatives that will be there, witnessing and participating in those missions along the border in Arizona. So we also significantly bolstered our military and defense capabilities with the appointment of both Victor Meyers and Keith Kimmel, both are incredibly accomplished war fighters that bring very, very strong, both educational and operational backgrounds to the table. They are heading up our military Board of advisers. They’re operational within the business and are supporting our sales teams as well as our operational teams.

Q&A Session

So we’re super thrilled to have brought them on board, and they’re very well-known certainly within the community. We were approached and very pleased to put a deal together with Paladin AI, and so we are actually collaborating on a specific opportunity that was brought to us from a military customer, but in addition to that, we are putting together and incorporating their AI into our drone fleet. We have several AIs that are being incorporated into our drone fleet. We treat our AI kind of similar to payloads. And what that means is that because our entire systems are modular, whether it’s a particular type of camera, a particular type of payload, a particular type of sensor or even a particular type of AI, all of our system, right from hardware through the software, through design, is all managed in a way that can all be modular.

So if we’ve got a customer that’s coming to us that has a particular workflow requirement that requires a specific AI over another, we can incorporate that into it. Paladin has done some fantastic work in the industry, especially in forming. And so we’re really, really excited about the opportunity that we’ve been able to put together, that they’ve been able to put together with us and vice versa. And so we expect big things out of this relationship, and it does start off with a specific customer that we are working with. We also announced that Drone Nerds, who is the largest reseller in the United States, has taken on the Draganfly line. In particular, for public safety, but also for military as well. So we spent probably a year working with them, really helping ensure that we are positioned well within the customer base that they’re going to.

They’re a very discerning organization, and we really fit well within their NDAA-compliant strategy. And it should be noted, and I think I’m speaking with all accuracy here, is that in terms of a manufacturer, not just in North America, but a manufacturer anywhere in the world that has a comprehensive lineup of NDAA-compliant drones, I think we can point to Draganfly as the leader, if not really the only NDAA-compliant manufacturer out there that has 5-plus drone systems that are all NDAA compliant. And those range right from small FPV drones that we’re selling into the military right through to the Outrider drone, which is a hybrid dual diesel engine, 7-hour, 100-pound capacity drone. So Drone Nerds has got this capability now to be able to offer that entire product line, in particular, down to their public safety.

So we’re really thrilled to be — have been selected by them and get to work with them. We also had a fantastic show at AUSA. And this is really meaningful for us. So AUSA is the Army Association Show, basically the big military show in the United States. We were able to display there with our partner, which is the next highlight there, Global Ordinance. So Global Ordinance is one of the largest, what’s known as DLA primes out there, one of the largest suppliers of munitions and equipment into Ukraine, as an example, amongst many other things, multibillion-dollar organization. And so they featured our drones along with them and have now brought us into multiple opportunities that we’re working side-by-side on. So this show was really a coming out show for Draganfly in terms of our capabilities and capacities, and we had just an overwhelming response.

Now this was also highlighted by the fact that we had a very significant announcement with the U.S. Army, which we’ll talk about in just 1 second. We also announced that Autonomy Labs, which is a fantastic and strong U.K. company, basically decided to standardize on our platform being the Heavy Lift, which is not the hybrid version, but the actual electric version to be able to lay out their mine clearing, what they call, carpet. And so this is another great example, at least in my opinion, of payload companies who are looking to capitalize on the drone market, but are looking for the right manufacturer and the right solution provider to actually build their payloads around. So one of the key components of our modularity and our full product line is the fact that a payload is only going to be as successful as a drone platform as it can fly on.

So our — core strategy of ours is to be able to cater to those channel partners, those payload companies, again, whether they’re things like LED signs that we’ve done before, or whether they’re mine clearing carpets, or whether they’re particular camera systems or AI systems, the more of those that we can integrate into our drones, the bigger channel that we have that those payload providers are actually selling into as well. And that is a — it’s a key component. So Draganfly having been in the business for 25-plus years now, we have that experience to be able to integrate all those other payloads into it. And it takes a long time to get enough integrations to build some critical mass around somebody — an end user, a customer going, “Hey, wait a minute, I need to run this payload not just on a small ISR drone, but I also need to put it in conjunction with a medium lift logistics drone.

And so for them to be able to make an investment once into a particular payload, but use it across multiple use cases because they’ve got different size of drones that those payloads can fit on to, we’re finding that as a significant strategic differentiator or accommodator, if you will, for the customers that we’re dealing with in the market and our payload providers. So again, thrilled to have done this project with Autonomy Labs. We displayed with them over at the DESI show in London, and they’ve really knocked it out of the park in terms of the amount of orders that they were lining up and the amount of testing that they’ve got going on with multiple militaries around the world. We also demonstrated both our Flex FPV and our Commander 3 XL platform at the invitation-only U.S. Army T-Rex experimental showcase.

We were there actually, as I mentioned, by invite. We were demonstrating the 3XL and the FPV and how they can work in conjunction with each other. Again, if you think about that Commander 3 XL, which is above my left shoulder here, you really do notice that flat bottom on it because that gives a huge surface area for different payloads and multiple sensor capabilities. And so if you would also think about FPVs that are underneath that platform, and so you’ve got the 3XL, which can carry FPVs to a particular location, maybe a GPS denied location because the 3XL can handle the type of sophistication and radios required to be able to fly in those environments, and then be able to deploy FPVs from close range. The next notable one to bring up is that we have now — we’re well into working with standing up 7 new plants in the United States.

through our contract manufacturing arrangement. We are in the midst of tooling those plants right now. That is going to more than quadruple our capacity. And for any of those that don’t know that we currently in our own plants, we’ve got about $100 million of capacity that is now just kind of coming online. It took us until about Q3 to get that fully built out. We are now starting to produce on those particular lines, in particular, for the U.S. Army order that we announced about 4 weeks ago now. And so — but these 7 new plants coming online, based on demand that we’ve got coming through, will give us somewhere in the range of about 4x that capacity by the end of next year. The company that we selected to go with, it was an arduous process, but the group that we selected to go with, their real speciality is — I mean, they’re great contract manufacturing.

They were very accommodating about the tooling and the training that we need to provide, but they are very, very good on global logistics and supply chain management. And that’s super key to us, in particular, because of the type of army orders that we’re now entertaining. We’re also, I believe, very uniquely positioned as an organization to support not just NATO, but in particular, the Canadian government. So Canada has now announced that 5% of their GDP is going to be moving towards defense spending. That’s literally billions of dollars of new spending in this coming year. And there’s upwards of $2 billion in the next couple of years spent just on drone technology. Now because of the unfortunate tariff war, which is working out fantastic for Draganfly between Canada and the United States, Canada has a very explicified Canadian policy right now.

And given the fact that we have manufacturing plants and strong routes from Canada, we’re very well positioned there, and have several initiatives ongoing in order to address that market and are likely — there might be 2 companies in the whole country of Canada that can address that market for the Canadian D&D., and in fact, the other company right now only has one particular type of drone and it’s more of a helicopter that would address that. So we think we’re incredibly well positioned up there and thrilled to be able to be a service to that nation. Not only to the nation of Canada, but because of our Canadian manufacturing, our opportunities in the Arctic, both with U.S., NORAD, Canada and the Arctic states of Sweden, Denmark, et cetera, really seem to be also burgeoning quite well.

So again, I would love to say that was part of our strategy. It wasn’t. It’s more luck than anything, but we’re super proud to be in that position, and we look forward to servicing those organizations and customers over the coming years. And then we did have a Fortune 50 telecom company start to buy our Heavy Lift Drones. Now their Heavy Lift Drone in this particular case is being used for communication support on post-natural disaster. And we’ve been very, very hopeful with this particular Fortune 50 telecommunication company to actually expand the relationship. So this is part of 2 big initiatives that are happening. First of all, they’re moving away from the Chinese manufacturing, and they were very explicit about needing a really solid long-term partner that had NDAA-compliant drones and had the capability to serve them at scale.

So this was an initial order, but it was a really important order for us. And in the event that we see more orders from this particular company, we see it as a signal from them that they’re standardizing on our fleet. And of course, those order sizes get well into the hundreds. And when I say hundreds, again, I’m not talking about a small ISR drone. I’m talking about a very sizable 9-foot drone that has incredible capabilities, is standing up cell towers, has tethered components to it and such. So — and then, of course, a very notable subsequent event from Q3, which was incredible for us as a company and as shareholders was that we announced an order for our FPVs from the U.S. Army. Now this particular order, though we have to remain shy on some of the details of it, I can tell you that the reason that we won this order, I think, is — I’d like to say it’s because we have a terrific FPV platform that does have some incredibly unique features, designed from our experience being boots on the ground in the Ukraine since 2022, but I think the other reason that we frankly won this is that this particular order isn’t just about providing drones, it’s actually providing supply chain and logistical support.

We’re actually training this particular section of the Army to actually be assembling and manufacturing our drones so that they can do modifications on the fly. And then we’re actually supporting that and providing the logistics for the resupply of all those drones into those locations. So it’s actually Draganfly manufacturing on U.S. Army location and presumably, hopefully, locations. So really, really significant. It took about 1.5 years, maybe plus in order to actually put this order together. And it is one of the reasons that about 2 years ago, a little less than 2 years ago, I guess, about 18 months ago, excuse me, is why we still — we started building out our capacity. So over the last 2 years, we basically had to cap our sales. We had to rebuild a bunch of our capacity in order to meet the demand of this and the other particular similar orders that we anticipate coming down from this.

So just a quick review. This is our drone platform. This view here does not include the Outrider drone, which actually goes live next Monday on the Arizona border. And that drone itself would look very similar to the drone that’s on the far right side, the Heavy Lift Drone, other than the fact that it has combustion engines on it as well. It can come with a variant of either 1 or 2 engines. It has the capability to fly up to 7 hours and carry 100 pounds of payload. That particular drone will be doing everything from communications, mesh networking, surveillance, reconnaissance, actual interdiction, logistical resupply, medical emergency support and many, many other things. I mean it is truly a drone that fits just an incredible array of use cases.

So the event next Monday has over 100 people coming from multiple countries, all pretty border-focused. And the word that we’re getting now is that we called this drone the outrider, but most people are calling it the border drone now because it’s a purpose-built border drone. The TAM on border and border surveillance for drones is literally globally in the hundreds of millions of dollars per year for this particular product line. So we have some pretty high hopes and certainly, early indications are that this is going to be a leading driver of sales for us, even next year, even though we hadn’t planned on it being a big driver of sales until 2027. You can see the other drone line up there, which I think I’ve explained pretty well in past calls.

The key thing here is that they’re all interoperable, all the payloads fit across it. If we’ve done an integration on one drone, whether it’s with an AI and yes, our Flex, even the FPV drone there has AI incorporated into it, whether we do it with that drone or all the way up to the Heavy Lift Drone or the commander — excuse me, the Outrider drone, you’re working with the same common operating environment, the same connections, the same buttons in the same places, flight characteristics and so on and so forth. So it’s also of note that the old DGI payloads that were supported by DGI, also fit into this modularity. So if somebody’s got an investment into a payload, they got FLIR cameras, or they got whatever it is, and they’re having to get rid of their DGI fleet, but they do not want to lose their investment into their FLIR cameras or their other payloads, those payloads actually integrate right into what we’re doing as well.

So again, it’s just some experience there that’s helped us think through how do we progress our customers into a new full product line. I won’t spend much time here. But basically, the military impact for what’s happening in the small UAV market is incredible. We recently saw in the last couple of weeks, the U.S. government talking about getting well over 1 million drones. And I know one of the questions that came in is, do we think we’re going to get our piece of that. And certainly, that’s what we’ve been planning on for years and working toward, and we are one of the few companies in North America that have that capability or capacity to be able to meet that demand. So we’re pretty excited about what’s happening there. We do have some validation around the Army orders that we previously sold in Special Forces and now into the Army as well as the many other initiatives that we’ve got going on across the whole Department of War.

At this point, what I’d like to do is, I’d like to turn it over to Paul Sun, our CFO, to run through our financial highlights. Paul?

Paul Sun: Yes. Thanks, Cam. Thanks, everyone, for joining. Appreciate it. Yes, just taking you through these tables here. Revenue for the third quarter was $2.16 million, up 14.4% from $1.89 million in the third quarter of 2024. Third quarter revenue did comprise of the $1.62 million from product sales with the balance coming from drone services that Cam mentioned at the outset. Gross profit, $421,000 this quarter compared to $441,000 in Q3 of last year. This quarter did have a onetime noncash write-down of inventory of $43,000. And otherwise, gross profit would have been $464,000 gross profit for Q3 of 2024 would have been $617,000 if we took away the onetime inventory write-down of $176,000 from the same period last year. So taking these noncash items into account, gross margin would have been 21.5% this quarter versus 32.7% year-over-year.

Total comprehensive loss for the quarter was $5.4 million, compared to a loss of $364,000 in the same quarter last year. This quarter did include noncash changes comprised of a fair value of derivative liability loss of $1.8 million, that $43,000 inventory write-down that I mentioned and a gain on a notes receivable of $35,000. So otherwise, it would have been a comprehensive loss of $3.6 million. The same period last time had a onetime noncash change in derivative liability of $3.6 million. The $176,000 inventory write-down that I mentioned, and then a gain on an impairment note of $8,000. So the comprehensive loss from last year would have been $3.8 million. So the decrease in loss is due to primarily foreign exchange gain and lower professional fees, offset by higher office and miscellaneous costs, wage costs and share-based payments.

If we move to the next slide, please. Yes, we just went through the year-over-year changes. So here, I’ll do a quarter-over-quarter between Q3 of this year and Q2 of this year. Revenue for Q3 ’25 increased $41,000 to $2.16 million, up from the $2.12 million in Q2 of ’25, an increase of 2% due to higher product sales. The gross margin for Q3 ’25, again, was 19.5% compared to 23.9% for Q2 ’25. Again, if we back out that onetime inventory write-down mentioned before for Q3, and the $10,000 write-down from Q2 ’25, gross margin, again, would have been 21.5% for Q3 and 24.3% for Q2, with the difference being product mix during the quarters. Total comprehensive loss for Q3, again, was $5.4 million compared to $4.7 million for Q2 of ’25. And again, please recall, we had that loss in fair value of derivative liability of the $1.8 million, the write-down of inventory of $43,000, and the gain on the note of $35,000, so the comprehensive loss would have been $3.6 million.

If we adjust for the noncash items in Q2, which included a noncash gain of a derivative liability of $180,000, a write-down of $10,000 of inventory, and a gain on a note of $8,000 that loss would have been $4.6 million. So the quarter-over-quarter decrease in loss is primarily due to the foreign exchange gain and lower professional fees, offset by wage costs and share-based payments. Going to the next slide, please. Yes, so just kind of looking at some high-level balance sheet items here. You can see total assets increased from the $10.2 million at the end of ’24 to $77 million, which is largely due to the increase in cash over the year. Working capital as at the end of September was $69 million versus $3.8 million at the end of December. However, if we ex out the fair value of derivative liability of $3 million, working capital would have been a surplus of $73 million this quarter and $6 million at the end of December last year.

Doing the same analysis for the shareholders’ equity at this quarter end would be $73 million versus the $70 million shown and $6.8 million at the end of December versus the $4.6 million shown here. And as you can see, we continue to have minimal debt. And our company’s cash balance, as Cam mentioned at the outset, was $69.9 million at the end of September, compared to $6.3 million at the end of December. And with that, I’ll pass it back to you, Cam.

Cameron Chell: Great. Thanks, Paul. So what I’ll do now, if it’s all right with everybody, is I’ll jump into some of the questions. There’s 9 questions that came in. I’ll certainly do my best to be timely and answer them as thoroughly as is reasonably and regulatorily possible. So the first one that we’ve got here is it says you seem to have more cash on hand now than ever, what are the scenarios or use cases for any potential future raise? So we’ll be opportunistic about potential future raises. We — I think, we’ve raised less cash certainly than our comparables out there, and we’re cognizant of cash being a strategic advantage. That said, we’re highly, highly sensitive to dilution and shareholder value. So basically, we’ve got $70 million cash on hand.

We’re burning about $1.5 million a month. Things are scaling in a great way. Pipelines are — literally, I can’t even say the numbers because they’re really truly unbelievable. So there’s not an acute need to raise cash. And we certainly, as a company that’s been around for 27 years, we’re able to — we think we have very good visibility to EBITDA positive and cash flow positive over some time here. That said, there are some key acquisitions that we’re interested in. They are, to be clear, not necessarily acquisitions around technology or a particular product. Our acquisitions, which I think is a bit different than our comps out there are very focused on the people. So — we have the — we’re in a fortunate position to be able to build what we sell and integrate what we sell.

We’re highly engineering-focused and customer integration organization. So what’s most important to us is having the right team and people to be able to do that. So there are some pretty cool acquisitions out there that do have some great products and tech that fit with what we’re doing, but they’re probably not at the size or scale that maybe we see some of the comps out there doing because really what we’re interested in is culture and how those people fit in, how we better serve our customers, how that can scale, how that can add to the scalability of what our customers are asking for us right now because the scalability that’s being asked of us is truly astronomical. So us is not about layering in more acquisitions, which can sometimes be more problems.

We’re really about layering in the right personalities, people and leadership and technical capability in order to meet the demand that’s at hand right now. And of course, those customers who are making those demands and they — and that’s kind of really where the market is at right now, we want them to be incredibly confident with the people that we’re bringing on. So that tends to be a bit of our acquisition focus, which I think is probably another one of the questions in here. So in terms of raises, if we needed to do a raise for an acquisition, we would consider that. If it was opportunistic in the market, everybody says when the cash is there and you’re in growth phase, you kind of really want to make sure that you do not take it. But we’re going to be — we’re definitely going to be prudent about that to the best of our ability.

So the second question that came in is, can you expand on the press release about manufacturing and overseas military facilities? How large is the potential here in terms of revenue? Are the financial metrics of this much different than manufacturing is done in North America, and then shipped as a final product? So I’ll speak to the extent that I can about this. So the manufacturing in overseas facilities is very specifically in military facilities where they’re manufacturing a Draganfly product. And it’s a little bit more of assembly than manufacturing. The prime driver here is that those facilities need to be able to modify and have capabilities that they don’t need to go back through a procurement cycle in order to order some new capability on a drone.

They need to be able to do those modifications and such themselves. So they need to be trained in how to manufacture, how to modify, how to repair, how to change the product within the concept of operations that might be changing in their tactical situation at that time. And so that’s really the driving premise. And then the other part of that is, is an Army base ever going to be able to do that on scale? If you think about what’s happening in places like the Ukraine right now, you have individual brigades that are using hundreds of thousands of drones per month. And so you’re not going to get that kind of scale on an army base. So you need a partner that can actually still provide that scale into your theater of operations while you still have the capability to actually make the modifications or drive your technology or tactics forward.

And so that’s more of the type of relationship that’s here, which is why it is so strategic and such a big deal. In terms of scale, all I can say is that there’s a lot of brigades in the U.S. Department of War and in all the NATO and the 5 I countries. And when I was at AUSA, one of the big announcements from the Army was that every soldier is going to be trained on a drone, every single soldier. And the reason is that if you think about those FPVs right now, which are not — they’re just the tip of the iceberg of what’s coming, and they tend to be the focus right now. But basically, every soldier has a grenade that can go 10 kilometers. Now that’s — I mean that’s what they choose to use it for. So the scale is absolutely enormous. But then when you also look at what’s happening on the logistics side, on the resupply side and all the rest of it, and they need that embedded manufacturing capability, which is what we’re calling it a hybrid embedded manufacturing, I really am not at liberty to say what the sizes are, but you can figure out pretty quick that it’s numbers that are just completely astronomical.

So the U.S. has stated that they intend to order millions of drones. Do you think we’ll be able to get a meaningful piece of that? I do. And it doesn’t have to be a big percentage of it for it to be meaningful. And the ethos that Draganfly is, we want to make sure that every one of our customers, whether they’re military, industrial, commercial, whatever the case is, our job is to help ensure that our customer is unbeatable, absolutely uncompetable. And so again, whether that’s a military or an industrial customer, what we like to do is add value. So will we eventually be the biggest drone manufacturer in the world or something? I don’t know, and that’s actually not our goal. We want to be the best partner to our customers that make them uncompetable.

So we really want to continue to be that high-value, highly sought-after organization that brings a lot of experience and a lot of consciousness to the table in terms of the products and the services that we’re able to enable our customers with. So the short answer is, yes, I think we can get a piece of it, and we’ll just keep working to do so. Canada has said that they want to purchase Canadian-made drones. Can we expect meaningful orders from Canada and the Department of Defense at some point? I believe so. I can’t give you predictability or any deeper insight, but I think we are as well positioned by far as anybody in the world to be able to provide that very big budget. We don’t often think of Canada as a military force. That said, it’s about the seventh-largest economy in the world, and now you get 5% of that economy going into rearming and reimagining what they’re doing.

And a very meaningful part of that is going into drone technologies as is all military budgets now because we’ve moved from into an entire new phase, where everything is actually becoming about — not just about automation, but about autonomy. And the leading edge of autonomy is, quite frankly, drones, whether it’s controlling autonomy, being autonomous, being in airspace, managing aerospace, all of it, drones are the leading edge of that. And so even small military budgets now are meaningful because so much of that budget is being focused into this particular area. So is border security still the main focus for the company? Yes. I mean, if Cochise County and the Southern Sheriffs is any indication of where we’ve been fortunate enough, very blessed to be able to be positioning ourselves as a border management specialist, not just with our drones, but with our tactical solutions team to be able to understand the ConOps and integrate the understanding of the ConOps into functional equipment, yes, border management, border security is a huge, huge piece of what we’re doing.

And I do find that we’re pretty uniquely positioned there because it is a particular specialty that isn’t just about ISR. When you’ve got folks coming over that border, you’ve got search and rescue situations, you’ve got human trafficking, you’ve got weapons, you’ve got armed militias, you’ve got drugs coming in. So the variance of what’s happening is so incredible that you need to have a specialized team that really understands how to work with our — with the law enforcement professionals and the super great people along the border that are holding our economy and our people safe in order to be able to provide that service. So again, those tactical solutions that we provide, the integrated services that we have at a tactical level are really our strategic differentiator for building great product.

Do we see consolidation with the drone industry? For sure. Yes, there’s — I think we’re going to continue to see a great expansion. A lot of small companies, they’re talking about 1 million drones. They’re talking about easing procurement. They’re talking, what’s going to — like — this is not an easy business. You’re talking about putting aircraft in the air. And so any way you slice it, a lot of people can order parts off Amazon and think they can build a drone. But when you’re talking about building drones at these levels, with these mission-critical requirements and/or flying them over people or vehicles or that type of stuff, I mean, you’re just dealing in an environment that most people do not understand. Then on top of that, trying to scale production, that’s a whole other set of problems out there.

So we think there’s going to be a big rush of folks. There is a big rush of folks into the industry. We’ve seen it 7 or 8 times before over the last 25-plus years. There’s going to be fallout from it, and there’s going to be great talent available out there, and we’re hopeful to pick up some of that talent because there are super talented people in lots of organizations that are working on these problems, including our comps out there. I think our comps are probably obvious names, they’re going to do great. There’s kind of like the 4 or 5 companies out there that have kind of made it through some very lean times, have some capacity capability now, have some experience. And they’ve got enough scars like we all have enough scars where we’re going to muddle our way through and be able to solve these solutions or solve these problems at scale.

And so I think the industry in general is starting to shape up quite nicely. There’s also a couple of privates that will do well. But yes, there’s going to be consolidation for sure as there always is. So can you give us an update on what your production capacity is and if you had planned to increase in 2026? Yes. So our #1 focus is our organic capacity, which is — can do up to about $100 million. And that’s what we really want to make sure that we’re streaming that in ’26. And then — but we are bringing on more capacity in ’26, and so it will expand far beyond that, but our focus is on our organic capability. We — part of the reason that we’ve got outsourcing capability that we’re bringing on stream is for some of our supply chain management and being able to provide from different parts of the countries and different parts of the borders to ensure that we’ve got efficiency around tariffs, efficiency around manufacturing, delivery, supply chain, et cetera.

So again, pretty unique positioning in terms of North American manufacturing and being able to suffice all parts of North American and European, in particular, manufacturing. So again, it wasn’t part of the master plan, but it sure worked out well for us. And it was maybe a little part of the master plan, but not all that much. So can you tell us what percentage of revenues would be military versus commercial? Do you expect military to be a major part of your revenue going forward? Yes. Right now, it’s — I’m going to say we’ve had our revenue capped here for the last couple of years, and that’s certainly now about to change very quickly or is changing very quickly. And I would say that military is, let’s call it, 30-ish percent of that. But that will be — next year, it will be 90% just one single order dwarfs the numbers that we’ve done for the last 3 years.

And there’s multiple types of those orders that are falling into place. So it could be 99%. We could see our commercial or our public safety market go up 200% this year. And military sales will still be 90% just because the individual order sizes, and then the resupply and everything else is just so absolutely mind-boggling. So what do you feel differentiates Draganfly? Our integrated practices, our integrated tactical services. That is a big differentiator for us. So when we worked on the Cochise product, we spent months on the border on horseback, on ATV. We understand the communication points where the holes were. We got to learn where the cartels were, how they think, what they operate, what are their techniques, like all of that stuff.

And then we sat with the sheriffs of the southern border, and we spent the time designing what is the capabilities that they need to meet. So whether that was that instance, whether it’s some of our industrial clients, whether it was the opportunity that we created over the last — was provided to us, excuse me, over the last 2 years with this latest Army contract, it was that same process. It didn’t start with the product. It started with understanding the concept of operations, the use cases, and then — and really kind of figuring out, okay, what can make your situation such that we can help make you uncompetable. And I think that’s our differentiator. Now further to that, we’ve got 25 years of experience that allows us to have a full product line.

So we can actually leverage that and be able to provide those types of products out there and services. So at the end of the day, it’s our people. And I hate saying that because it sounds like such a typical answer, but that is how we utilize the incredible talent that we’ve got in the company in order for us to be differentiated. I do think the fact that we’ve got manufacturing not just like on 2 — across 2 borders is a big differentiator as well because that Canadian market has turned into a monster opportunity. And so that’s pretty unique as well. So — and I think ultimately, what will carve out a durable market share for us over the next 3 years, from a strategic standpoint, we’re all about creating blue ocean opportunities. So there are a number of companies, and there’s a whole bunch more coming that are going after that kind of Mavic 3 replacement, small ISR drone, which is a lucrative market right now.

But ultimately, that market, in our opinion, what we’ve seen over the years is that’s a market that’s going to continue to get chipped away at. There’s multiple players going after it. Right now, they’re $30,000. A year from now, there’ll be $20,000. 18 months from now, they’re going to be $4,000 drones again. And maybe the comps out there aren’t going to agree with me on that. And then the risk is actually — there are — everybody thinks that DGI came in and dominated the market. Well, we have to remember that the North American market was being dominated by multiple foreign manufacturers, primarily out of Asia. And if it wasn’t DGI, it was going to be one of them that basically took the rest of us out in North America. It’s just that DGI was so good.

They were able to dominate those players as well. Well, a lot of those players were from countries that can produce NDAA-compliant products. So if I were to make a prediction, in a number of years from now, we’re going to see the Eastern Europeans, we’re going to see the Southeast Asians, we’re going to see them in that kind of small competitive ISR prosumer space, again, with NDAA product. Now we got kind of like a 3- to 5-year kind of window here where that isn’t going to be the case, but it’s also not been a reason where we’ve really kind of focused on that particular product line. If you look at the rest of the other 5 products that we’ve got, they kind of skip over that piece. Now we’ve got some strategic alliances and such in that area so that we can address it with our customers, but that’s just not a piece of the market that we’ve seen North American manufacturers be overly successful with.

Now the market is very different, and I could be completely wrong on it. But notwithstanding, when we take on a market like the border, we’re building a border solution, and we think that we’ve created a very unique scenario where we’ve got an addressable TAM where it’s going to be very tough for other folks to compete in there because of the job that we do, making our customers so uncompetable. And so whether it’s that particular product or the embedded hybrid manufacturing product or any number of the others that we either have and/or will be announcing, we like to create blue ocean opportunities. So we’ve got these pockets or hides of burgeoning high-margin business that are very attuned and custom and ideal for the products that we make.

And that’s a multibillion-dollar sales funnel, certainly over the coming years. And so we don’t necessarily have to be, hey, let’s go build a typical drone and have to be the #1 or the #2 player. We’re — even though we’re a small company right now, we are the #1 or #2 player in the markets that we are addressing, and they are large total addressable markets. So on that note, I am going to wrap up the call. Rolly, thank you so much for all the work that you do. I know that I get so much feedback from shareholders about how candid you are, how hard you work, you’re 24/7. And I encourage anybody that if you’ve got questions or anything that you need help with to reach out to Rolly. He also has the rest of the organization standing behind him in order to be of greatest service that we can be to our shareholders, all of which none of this would be possible.

And then finally, just to our team members and to our employees, you’re the most important thing that we have going out there. And that ethos of helping make our customers completely uncompetable is the ethos that keeps — certainly keeps my passion going, and I see you guys executing that every single day with customers in ways just going deeper for them than I’ve seen across many, many organizations I’ve been lucky enough to be a part of over the last 35, 40 years of entrepreneurship. So I couldn’t be more proud. Thank you so much, everybody, for being here and reach out if you have any questions.

Paul Sun: Thanks, everybody.