Ann: DroneShield On Track for Another Record Results Year, page-20

Harry what are you talking about “pure hardware business”. If you really do own DRO I’m surprised you understand so little about the company.

From the October 2022 company presentation - note the 3.8m R&D contract completing mid year expected to be replaced with a new bigger one. Not Hardware.

“Executing on a 2 year $3.8m contract with Australian DoD, following on the initial $600k contract in 2020

• Follow-up contract expected in 2023

• Potential to take the work to the US DoD

• Land, Sea/sonar, Air, Space and Joint Forces

applications

- DroneShield’s AI software is well positioned

to solve Defence “big data” challenges”

From an email with the CEO in April 2021 he described it this way:

“Our solutions are broadly 4 categories- own product drone detection, own product drone defeat, and the two emerging categories of operating system (C2) software licences for broader security systems, and paid R&D work for broader systems for defence.

Three out of four of these (all except the defeat), carry ongoing/recurring revenues. So far it’s been insignificant (less than 5 percent) for the reported FY2020 as jammers (drone defeat) have up to now been our largest category until recently. However from this year onwards, the other 3 categories will be substantial, and so will show the recurring revenue growing quickly.

Generally speaking, we are also becoming much more of a software than a hardware company- yes we are still very good at things like waveform and circuit design, but our main strength is in embedded RF software, application software, and AI- this all plays into recurring revenues. “