20-F

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON,

D.C. 20549

FORM

20-F

(MarkOne)

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended	December 31, 2024
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OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . .

Forthe transition period from ________________ to ___________

Commission<br> file number:	001-40688

DraganflyInc.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

BritishColumbia, Canada

(Jurisdiction of Incorporation or Organization)

235103rd St E., Saskatoon, SK, S7N 1Y8, Canada

(Address of Principal Executive Offices)

PaulSun, Chief Financial Officer

Telephone:

800.979.9794

E-mail:

paul.sun@draganfly.com

235103rd St E, Saskatoon, SK, S7N 1Y8, Canada

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title<br> of each class	Trading<br> Symbol(s)	Name<br> of each exchange on which registered
Common<br> Shares	DPRO	The<br> Nasdaq Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to section 15(d) of the Act

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

5,427,795

Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐Yes ☒No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐Yes ☒No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)

☒Yes ☐No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large<br> accelerated filer ☐	Accelerated<br> filer ☐	Non-accelerated<br> filer ☒
		Emerging<br> growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†The term “new or revised financial accounting standard” refers to any updated issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on an attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial ‎statements of the registrant included in the filing reflect the correction of an error to previously issued financial ‎statements. ☐‎

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of ‎incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery ‎period pursuant to §240.10D-1(b). ☐‎

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S.<br> GAAP	☐	International Financial Reporting Standards as issued by the International Accounting Standards Board	☒	Other	☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐Yes ☒No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court

☒Yes ☐No

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Table

of Contents

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Table<br> of Contents
General Matters		ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		iii
Part I		1
Item<br> 1.	Identity of Directors, Senior Management and Advisors	1
Item<br> 2.	Offer Statistics and Expected TimeTable	1
Item<br> 3.	Key Information	1
Item<br> 4.	Information on the Company	16
Item<br> 4A.	Unresolved Staff Comments	16
Item<br> 5.	Operating and Financial Review and Prospects	39
Item<br> 6.	Directors, Senior Management and Employees	40
Item<br> 7.	Major Shareholders and Related Party Transactions	53
Item<br> 8.	Financial Information	55
Item<br> 9.	The Offer and Listing.	55
Item<br> 10.	Additional Information	55
Item<br> 11.	Quantitative and Qualitative Disclosures About Market Risk	63
Item<br> 12.	Description of Securities Other than Equity Securities	64
PART II		64
Item<br> 13.	Defaults, Dividend Arrearages and Delinquencies	64
Item<br> 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	64
Item<br> 15.	Controls and Procedures	65
Item<br> 16.	[Reserved]	66
Item<br> 16A.	Audit Committee Financial Expert	66
Item<br> 16B.	Code of Ethics	66
Item<br> 16C.	Principal Accountant Fees and Services	67
Item<br> 16D.	Exemptions from the Listing Standards for Audit Committees	67
Item<br> 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	67
Item<br> 16F.	Change in Registrant’s Certifying Accountant	67
Item<br> 16G.	Corporate Governance	67
Item<br> 16H.	Mine Safety Disclosure	68
Item<br> 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	68
Item<br> 16J.	Insider Trading Policies	68
Item<br> 16K.	Cybersecurity	68
PART III		69
Item<br> 17:	Financial Statements	69
Item<br> 18:	Financial Statements	69
Item<br> 19.	Exhibits	70

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General

Matters

Unless otherwise noted or the context indicates otherwise “we”, “us”, “our”, the “Company” or “Draganfly” refer to Draganfly Inc. and its subsidiaries.

Unless otherwise indicated, financial information in this Annual Report on Form 20-F (this “Annual Report”) has been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Unless otherwise noted herein, all references to “$,” “C$,” “Canadian dollars,” or “dollars” are to the currency of Canada and “US$,” “United States dollars,” or “U.S. dollars” are to the currency of the United States.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the Jumpstart Our Business Startups Act (the “JOBS Act”), and as such, we have elected to comply with certain reduced U.S. public company reporting requirements.

The Company prepares and reports its consolidated financial statements in accordance with IFRS. However, this Annual Report may make reference to certain non-IFRS measures including key ‎‎performance indicators used by management. These measures are not recognized measures under IFRS ‎‎and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable ‎‎to similar measures presented by other companies. Rather, these measures are provided as additional ‎‎information to complement those IFRS measures by providing further understanding of the Company’s ‎results of ‎operations from management’s perspective. Accordingly, these measures should not be ‎considered in ‎isolation nor as a substitute for analysis of the Company’s financial information reported ‎under IFRS.

The ‎Company uses non-IFRS measures including “gross profit,” “gross margin” and “working capital” ‎which may be calculated ‎differently by other companies. These non-IFRS measures and metrics are used ‎to provide investors with ‎supplemental measures of the Company’s operating performance and liquidity ‎and thus highlight trends in the Company’s ‎business that may not otherwise be apparent when relying ‎solely on IFRS measures. Management believes that gross profit, defined as revenue less operating expenses, is a useful supplemental measure of operations. Gross profit helps provide an understanding on the level of costs needed to create revenue. Gross margin illustrates the gross profit as a percentage of revenue. Management believes that working capital, defined as current assets less current liabilities, is an indicator of the Company’s liquidity and its ability to meet its current obligations. The Company also ‎believes that securities analysts, investors and other ‎interested parties frequently use non-IFRS measures ‎in the evaluation of companies in similar industries. ‎Management also uses non-IFRS measures and ‎metrics in order to facilitate operating performance ‎comparisons from period to period, to prepare ‎annual operating budgets and forecasts and to determine ‎components of executive compensation. For ‎ reconciliations of these non-IFRS measures ‎to the relevant reported measures, please ‎‎see ‎the “Results of Operations – Cost of Goods Sold / GrossMargin” for a discussion of gross profit and gross margin, and for a discussion of working capital, “Selected FinancialInformation” sections of the Company’s Management’s Discussion and Analysis for the year ended December 31, 2024, attached to this Annual Report on Form 20-F in Exhibit ‎15.1.

Unless otherwise indicated, the Company has obtained the market and industry data contained in this Annual Report ‎from its internal research, management’s estimates and third-party public information and other industry ‎publications. While the Company believes such internal research, management’s estimates and third-‎party public information is reliable, such internal research and management’s estimates have not been ‎verified by any independent sources and the Company has not verified any third party public ‎information. While the Company is not aware of any misstatements regarding the market and industry ‎data contained in this Annual Report, such data involves risks and uncertainties and are subject to change based on ‎various factors, including those described under “Cautionary Statement Regarding Forward-Looking ‎Information and Statements” and “Item 3.D. Risk Factors”.‎

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CAUTIONARY

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. The statements we make regarding the following matters are forward-looking by their nature and are based on certain of the assumptions noted below:

●	the<br> intentions, plans and future actions of the Company;
●	statements<br> relating to the business and future activities of the ‎Company;
●	anticipated<br> developments in operations of the Company;
●	market<br> position, ability to compete and future ‎financial or operating performance of the Company;
●	the<br> timing and amount of funding required to execute the ‎Company’s business plans;
●	capital<br> expenditures;
●	the<br> effect on the Company of any changes to existing or new ‎legislation or policy or government regulation;
●	‎the<br> availability of labor;
●	‎the<br> Company’s ability to secure necessary regulatory approvals and permits
●	requirements<br> for additional capital;
●	goals,<br> strategies and future ‎growth and the success of the Company’s products;
●	the<br> adequacy of financial resources;
●	expectations<br> regarding revenues, ‎expenses and anticipated cash needs‎;
●	volatility<br> in the Company’s securities and the continued listing of the Company’s securities on Nasdaq; ‎and
●	general<br> market conditions and macroeconomic trends driven by pandemics and/or geopolitical conflicts, including supply chain disruptions,<br> market volatility, inflation, interests rates, and labor challenges, among other factors.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, those factors identified under the Risk Factors listed below in Item 3.D. of this Annual Report. Furthermore, unless otherwise stated, the forward-looking statements contained in this Annual Report are made as of the date hereof, and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes or otherwise, except as required by law.

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Part

I

Item 1.	Identity of Directors, Senior Management and Advisors

Not required.

Item 2.	Offer Statistics and Expected Timetable

Not required.

Item 3.	Key Information

3.A.

[Reserved]

3.B.	Capitalization and Indebtedness

Not required.

3.C.	Reasons for the Offer and Use Of Proceeds

Not required.

3.D.	Risk Factors

An investment in the Company’s common shares, without par value, (the “Common Shares”) is highly speculative and involves significant risks. In addition to the other ‎information contained in this Annual Report and the documents incorporatedby ‎reference herein and therein, you should review and carefully consider the risks described herein. The risks described herein are not the only risk factors facing us and should not be ‎considered exhaustive. Additional risks and uncertainties not currently known to us, or that we currently ‎consider immaterial, may also materially and adversely affect our business, operations and condition, financial ‎or otherwise.‎

RisksRelated to the Company, its Business and Industry

TheCompany has a history of losses.

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The Company has incurred net losses since its inception. The Company cannot assure that it can ‎become profitable or avoid net losses in the future or that there will be any earnings or revenues in any ‎future quarterly or other periods. The Company expects that its operating expenses will increase as it ‎grows its business, including expending substantial resources for research, development and marketing. ‎As a result, any decrease or delay in generating revenues could result in material operating losses.‎

Ashareholder’s holding in the Company may be diluted if the Company issues additional Common ‎Shares or other securities inthe future.‎

‎The Company may issue additional Common Shares or other securities in the future, which may dilute a ‎‎shareholder’s holding in the Company. ‎The Company’s articles permit the issuance of an unlimited ‎‎number of Common Shares, and shareholders have no pre-emptive rights in connection with further ‎‎issuances of any securities. The directors of the Company have the discretion to ‎determine if an ‎‎issuance of Common Shares or other securities is warranted, the price at which any such securities are ‎‎issued and the other ‎terms of issue of Common Shares or securities. In addition, the Company may ‎‎issue additional Common Shares upon the exercise of incentive stock options to ‎acquire Common ‎‎Shares under its share compensation plan or upon the exercise or conversion of other outstanding ‎convertible securities of the Company, which will result in further dilution to shareholders. In addition, ‎the ‎issuance of Common Shares or other securities in any potential ‎future acquisitions, if any, may also ‎‎result in further dilution to shareholder interests.‎‎

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TheCompany expects to incur substantial research and development costs and devote significant resources to ‎identifying and commercializingnew products and services, which could significantly reduce its profitability and ‎may never result in revenue to the Company.‎

‎The Company’s future growth depends on penetrating new markets, adapting existing products to new ‎applications, ‎and introducing new products and services that achieve market acceptance. The Company ‎plans to incur ‎substantial research and development costs as part of its efforts to design, develop and ‎commercialize new ‎products and services and enhance its existing products. The Company believes that ‎there are significant opportunities in a number of business areas. Because the Company accounts for ‎research and development costs as ‎operating expenses, these expenditures will adversely affect its ‎earnings in the future. Further, the Company’s ‎research and development programs may not produce ‎successful results, and its new products and services may not ‎achieve market acceptance, create any ‎additional revenue or become profitable, which could materially harm the ‎Company’s business, ‎prospects, financial results and liquidity.‎

Shortfallsin available external research and development funding could adversely affect the Company.‎

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‎The Company depends on its research and development activities to develop the core technologies ‎used in its unmanned aerial vehicles (“UAVs”) ‎products and for the development of the Company’s future products. A portion of the ‎Company’s research and ‎development activities can depend on funding by commercial companies and ‎the Canadian government. Canadian ‎government and commercial spending levels can be impacted by a ‎number of variables, including general ‎economic conditions, specific companies’ financial performance ‎and competition for Canadian government ‎funding with other Canadian government-sponsored programs ‎in the budget formulation and appropriation ‎processes. Moreover, the Canadian, federal and provincial ‎governments provide energy rebates and incentives to ‎commercial companies, which directly impact the ‎amount of research and development that companies ‎appropriate for energy systems. To the extent that ‎these energy rebates and incentives are reduced or eliminated, ‎company funding for research and ‎development could be reduced. Any reductions in available research and ‎development funding could ‎harm the Company’s business, financial condition and operating results.‎

TheCompany’s adoption of new business models could fail to produce any financial returns.‎

‎Forecasting the Company’s revenues and profitability for new business models is inherently uncertain ‎and ‎volatile. The Company’s actual revenues and profits for its business models may be significantly ‎less ‎than the Company’s forecasts. Additionally, the new business models could fail for one or more of ‎the ‎Company’s products and/or services, resulting in the loss of Company’s investment in the ‎development and ‎infrastructure needed to support the new business models, and the opportunity cost of ‎diverting management and ‎financial resources away from more successful businesses.‎

TheCompany will be affected by operational risks and may not be adequately insured for certain risks.‎

‎ The Company will be affected by a number of operational risks and the Company may not be adequately ‎insured ‎for certain risks, including: labour disputes; catastrophic accidents; fires; blockades or other ‎acts of social activism; ‎changes in the regulatory environment; impact of non-compliance with laws and ‎regulations; natural phenomena, ‎such as inclement weather conditions, floods, earthquakes and ground ‎movements. There is no assurance that the ‎foregoing risks and hazards will not result in damage to, or ‎destruction of, the Company’s technologies, personal ‎injury or death, environmental damage, adverse ‎impacts on the Company’s operation, costs, monetary losses, ‎potential legal liability and adverse ‎governmental action, any of which could have an adverse impact on the ‎Company’s future cash flows, ‎earnings and financial condition. Also, the Company may be subject to or affected ‎by liability or sustain ‎loss for certain risks and hazards against which the Company cannot insure or which the ‎Company may ‎elect not to insure because of the cost. This lack of insurance coverage could have an adverse ‎impact ‎on the Company’s future cash flows, earnings, results of operations and financial condition.‎

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TheCompany operates in evolving markets, which makes it difficult to evaluate the Company’s business and ‎future prospects.‎

‎The Company’s UAVs are sold in rapidly evolving markets. The commercial UAV market is in early stages of ‎customer adoption. Accordingly, the Company’s business and future prospects may be difficult to evaluate. The ‎Company cannot accurately predict the extent to which demand for its products and services will increase, if at all. ‎The challenges, risks and uncertainties frequently encountered by companies in rapidly evolving markets could ‎impact the Company’s ability to do the following:‎

●	generate<br> sufficient revenue to reach and maintain profitability;‎
●	acquire<br> and maintain market share;‎
●	achieve<br> or manage growth in operations;‎
●	develop<br> and renew contracts;‎
●	attract<br> and retain additional engineers and other highly-qualified personnel;‎
●	successfully<br> develop and commercially market new products;‎
●	adapt<br> to new or changing policies and spending priorities of governments and government agencies; and
●	access<br> additional capital when required and on reasonable terms.‎

If the Company fails to address these and other challenges, risks and uncertainties successfully, its business, results ‎of operations and financial condition would be materially harmed.‎

TheCompany operates in a competitive market.

The Company faces competition and new competitors will continue to emerge throughout the world. ‎Services offered by the Company’s competitors may take a larger share of consumer spending than ‎anticipated, which could cause revenue generated from the Company’s products and services to fall ‎below expectations. It is expected that competition in these markets will intensify.

‎If competitors of the Company develop and market more successful products or services, offer ‎competitive products or services at lower price points, or if the Company does not produce consistently ‎high-quality and well-received products and services, revenues, margins, and profitability of the ‎Company will decline.‎

‎The Company’s ability to compete effectively will depend on, among other things, the Company’s pricing ‎of services and equipment, quality of customer service, development of new and enhanced products ‎and services in response to customer demands and changing technology, reach and quality of sales and ‎distribution channels and capital resources. Competition could lead to a reduction in the rate at which the ‎Company adds new customers, a decrease in the size of the Company’s market share and a decline in ‎its customers. Examples include but are not limited to competition from other companies in the UAV ‎industry.‎

In addition, the Company could face increased competition should there be an award of additional ‎licenses in jurisdictions in which the Company operates in.‎

Themarkets in which the Company competes are characterized by rapid technological change, which requires ‎the Company to develop newproducts and product enhancements and could render the Company’s existing ‎products obsolete. ‎

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‎Continuing technological changes in the market for the Company’s products could make its products ‎less ‎competitive or obsolete, either generally or for particular applications. The Company’s future ‎success will depend ‎upon its ability to develop and introduce a variety of new capabilities and ‎enhancements to its existing product and ‎service offerings, as well as introduce a variety of new product ‎offerings, to address the changing needs of the ‎markets in which it offers products. Delays in ‎introducing new products and enhancements, the failure to choose ‎correctly among technical alternatives ‎or the failure to offer innovative products or enhancements at competitive ‎prices may cause existing and ‎potential customers to purchase the Company’s competitors’ products.‎

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If the Company is unable to devote adequate resources to develop new products or cannot otherwise ‎successfully ‎develop new products or enhancements that meet customer requirements on a timely basis, ‎its products could lose ‎market share, its revenue and profits could decline, and the Company could ‎experience operating losses.‎

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Failureto obtain necessary regulatory approvals from Transport Canada or other governmental agencies, or ‎limitations put on the use ofsmall UAV in response to public privacy concerns, may prevent the Company from ‎expanding sales of its small UAV to non-militarycustomers in Canada.‎

‎Transport Canada is responsible for establishing, managing, and developing safety and security ‎standards and regulations for civil aviation in Canada, and includes unmanned civil aviation ‎‎(drones). Civil operations include law enforcement, scientific research, or use by private sector ‎companies for commercial purposes. The Canadian Aviation Regulations (“CARs”) govern civil ‎aviation safety and security in Canada, and by extension govern operation of drones in Canada ‎to an acceptable level of safety.‎

While Transport Canada has been a leader in the development of regulations for the commercial ‎use of remotely piloted aircraft systems (“RPAS”) and continues to move forward rapidly with its regulatory development, it has ‎acknowledged the challenge of regulations keeping pace with the rapid development in ‎technology and the growing demand for commercial RPAS use, particularly in the beyond visual ‎line-of-sight environment. In 2012, the Canadian Aviation Regulation Advisory Council UAS ‎working group released its Phase 2 report which outlined a proposed set of revision to the CARs ‎to permit beyond visual line of sight operations. This report was the basis for the recently released Notice of Proposed Amendment (“NPA”) by Transport Canada on lower ‎risk beyond visual line-of-sight.‎

Failure to obtain necessary regulatory approvals from Transport Canada or other governmental ‎agencies, including the granting of certain Special Flight Operations Certificates (“SFOCs”), or limitations put on the use of RPAS in ‎response to public safety concerns, may prevent the Company from testing or operating its ‎aircraft and/or expanding its sales which could have an adverse impact on the Company’s ‎business, prospects, results of operations and financial condition.‎

Thereare risks associated with the regulatory regime and permitting requirements of the Company’s business.‎

‎A significant portion of the Company’s business is based on the operation of RPAS. The operation of ‎‎RPAS poses a risk or hazard to airspace users as well as personnel on the ground. As ‎the RPAS ‎‎industry is rapidly developing, the regulatory environment for RPAS is constantly evolving to keep pace. ‎‎‎As such, whenever a policy change with respect to operating regulations occurs, there is a risk that the ‎‎Company ‎could find itself to be in non-compliance with these new regulations. While the Company ‎‎endeavours to take all ‎necessary action to reduce the risks associated with the operations of RPAS and ‎‎to remain well-informed and up-‎to-date on any addendums and changes to the applicable regulations, ‎‎there is no assurance that an incident ‎involving an RPAS or the Company’s non-compliance would not ‎‎create a significant current or future liability for ‎the company.‎

The regulation of RPAS operations within the Canadian Domestic Airspace (“CDA”) is still evolving and is expected ‎to continue to change ‎with the proliferation of RPAS, advancements in technology, and standardization within the ‎industry. ‎Changes to the regulatory regime may be disruptive and result in the Company needing to adopt ‎‎significant changes in its operations and policies, which may be costly and time-consuming, and may ‎materially ‎adversely affect the Company’s ability to manufacture and make delivery of its products and ‎services in a timely ‎fashion.‎

The Company’s business and research and development activities are subject to oversight by Transport ‎‎Canada, the federal ‎institution responsible for transportation policies and programs, including the rules in ‎‎the CARs. Currently, Transport Canada requires that any non-recreational operators of RPAS have a ‎‎‎SFOC. The Company’s ability to develop, test, demonstrate, and sell products and ‎services depends on ‎‎its ability to acquire and maintain a valid SFOC.‎

‎In addition, there exists public concern regarding the privacy implications of Canadian commercial and ‎‎law ‎enforcement use of small UAV. This concern has included calls to develop explicit written policies ‎‎and procedures ‎establishing UAV usage limitations. There is no assurance that the response from ‎‎regulatory agencies, customers and ‎privacy advocates to these concerns will not delay or restrict the ‎‎adoption of small UAV by prospective non-military customers‎.‎

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TheCompany may be subject to the risks associated with future acquisitions.

As part of the Company’s overall business strategy, the Company may pursue select strategic ‎acquisitions that would provide additional product or service offerings, additional industry expertise, and ‎a stronger industry presence in both existing and new jurisdictions. Any such future acquisitions, if ‎completed, may expose the Company to additional potential risks, including risks associated with: (a) ‎the integration of new operations, services and personnel; (b) unforeseen or hidden liabilities; (c) the ‎diversion of resources from the Company’s existing business and technology; (d) potential inability to ‎generate sufficient revenue to offset new costs; (e) the expenses of acquisitions; or (f) the potential loss ‎of or harm to relationships with both employees and existing users resulting from its integration of new ‎businesses. In addition, any proposed acquisitions may be subject to regulatory approval.‎

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TheCompany’s inability to retain management and key employees could impair the future success of the Company.

The Company’s future success depends substantially on the continued services of its executive officers ‎and its key development personnel. If one or more of its executive officers or key development ‎personnel were unable or unwilling to continue in their present positions, the Company might not be able ‎to replace them easily or at all. In addition, if any of its executive officers or key employees joins a ‎competitor or forms a competing company, the Company may lose experience, know-how, key ‎professionals and staff members as well as business partners. These executive officers and key ‎employees could develop drone technologies that could compete with and take customers and market ‎share away from the Company.‎

TheCompany faces uncertainty and adverse changes in the economy.‎

‎

Adverse changes in the economy could negatively impact the Company’s business. Future economic ‎distress may ‎result in a decrease in demand for the Company’s products, which could have a material ‎adverse impact on the ‎Company’s operating results and financial condition. Uncertainty and adverse ‎changes in the economy could also ‎increase costs associated with developing and publishing products, ‎increase the cost and decrease the availability of ‎sources of financing, and increase the Company’s ‎exposure to material losses from bad debts, any of which could ‎have a material adverse impact on the ‎financial condition and operating results of the Company.‎

TheCompany is subject to certain market-based financial risks associated with its operations.

The Company could be subject to interest rate risks, which is the risk that the value of a financial ‎instrument might be adversely affected by a change in the interest rates. In seeking to minimize the risks ‎from interest rate fluctuations, the Company manages exposure through its normal operating and ‎financing activities, however market fluctuations could increase the costs at which the Company can ‎access capital and its ability to obtain financing and the Company’s cash balances carry a floating rate ‎of interest. In addition, the Company engages in transactions in currencies other than its functional ‎currency. Depending on the timing of these transactions and the applicable currency exchange rates, ‎conversions to the Company’s functional currency may positively or negatively impact the Company.‎

Negativemacroeconomic and geopolitical trends could affect demand for the Company’s products and its ability ‎to access sources of‎capital.‎

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‎There can be no assurance that the Company’s business and corresponding financial performance will not be ‎adversely affected by general negative economic or consumer trends or events, including pandemics, public health ‎crises, weather catastrophes, acts of terrorism, war, and political instability. In particular, global economic markets ‎have seen extensive volatility over the past few years owing to the outbreak of the COVID-19 pandemic, the war ‎between Russia and Ukraine, and the war between Israel and Hamas, the closing of certain financial institutions by ‎regulators in March 2023, and political instability. These events have created, and may continue to create, ‎significant disruption of the global economy, supply chains and distribution channels, and financial and labor ‎markets. If such conditions continue, recur or worsen, this may have a material adverse effect on the Company’s ‎business, financial condition and results of operations as consumer demand and its ability to access capital on ‎favorable terms, or at all, could be negatively impacted as a result of such conditions and consequences. ‎Furthermore, such economic conditions have produced downward pressure on share prices and on the availability ‎of credit for financial institutions and corporations while also driving up interest rates, further complicating ‎borrowing and lending activities. If current levels of market disruption and volatility continue or increase, the ‎Company might experience reductions in business activity, increases in funding costs, decreases in asset values, ‎additional write-downs and impairment charges and lower profitability.‎

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TheCompany may be subject to the risks associated with foreign operations in other countries.

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The Company’s primary revenues are expected to be achieved in Canada and the US. However, the ‎Company may expand to markets outside of North America and become subject to risks normally ‎associated with conducting business in other countries. As a result of such expansion, the Company ‎may be subject to the legal, political, social and regulatory requirements and economic conditions of ‎foreign jurisdictions. The Company cannot predict government positions on such matters as foreign ‎investment, intellectual property rights or taxation. A change in government positions on these issues ‎could adversely affect the Company’s business.‎

If the Company expands its business to foreign markets, it will need to respond to rapid changes in ‎market conditions, including differing legal, regulatory, economic, social and political conditions in these ‎countries. If the Company is not able to develop and implement policies and strategies that are effective ‎in each location in which it does business, then the Company’s business, prospects, results of ‎operations and financial condition could be materially and adversely affected.‎

Thereare tax risks the Company may be subject to in carrying on business in Canada.

The Company is a resident of Canada for purposes of the Income ‎Tax Act (Canada) (the “Tax Act”). Since the ‎Company ‎is operating in a new and developing industry there is a risk that ‎foreign governments may look to ‎‎increase their tax revenues or levy additional taxes to level the playing ‎field for perceived disadvantages ‎to ‎traditional brick and mortar businesses. There is no guarantee that ‎governments will not impose such ‎additional ‎adverse taxes in the future‎.‎

Ifcritical components or raw materials used to manufacture the Company’s products become scarce or ‎unavailable, then the Companymay incur delays in manufacturing and delivery of its products, which could ‎damage its business.‎

‎The Company obtains hardware components, various subsystems and systems from a limited group of ‎suppliers. ‎The Company does not have long-term agreements with any of these suppliers that obligate it ‎to continue to sell ‎components, subsystems, systems or products to the Company. The Company’s ‎reliance on these suppliers ‎involves significant risks and uncertainties, including whether its suppliers will ‎provide an adequate supply of ‎required components, subsystems, or systems of sufficient quality, will ‎increase prices for the components, ‎subsystems or systems and will perform their obligations on a ‎timely basis.‎

‎The global supply chain has experienced significant disruptions recently, caused by the COVID-19 ‎pandemic and ‎by geopolitical conflict, including the wars in Ukraine and Gaza, and the possibility of widening conflict in the ‎Middle East. These disruptions have impacted a ‎variety of products and goods and have had various downstream ‎effects, making it more difficult to ‎reliably and timely source and supply goods and has also resulted in shortages of ‎labor and equipment. ‎The macroeconomic impacts of the COVID-19 pandemic and global conflicts, including the ‎disruption of global shipping lanes in the Middle East, have contributed to ‎inflationary pressure, rising interest rates, ‎and increased market volatility, adding additional pricing uncertainty. These ‎conditions, if not mitigated or ‎remedied in a timely manner, could delay or preclude delivery of raw ‎materials needed to manufacture the ‎Company’s products or delivery of its products to customers, ‎particularly in international markets. If the ‎Company ‎is unable to obtain components from third-party ‎suppliers in the quantities and of the quality that it ‎requires, on a ‎timely basis and at acceptable prices, ‎then it may not be able to deliver its products on a timely or ‎cost-effective ‎basis to its customers, or at ‎all, which could cause customers to terminate their contracts with the Company, ‎‎increase the Company’s ‎costs and seriously harm its business, results of operations and financial condition. ‎‎Moreover, if any of ‎the Company’s suppliers become financially unstable, then it may have to find new suppliers. ‎‎It may take ‎several months to locate alternative suppliers, if required, or to redesign the Company’s products to ‎‎‎accommodate components from different suppliers. The Company may experience significant delays in ‎‎‎manufacturing and shipping its products to customers and incur additional development, manufacturing ‎and other ‎‎costs to establish alternative sources of supply if the Company loses any of these sources or ‎is required to redesign ‎‎its products. The Company cannot predict if it will be able to obtain replacement ‎components within the time ‎‎frames that it requires at an affordable cost, if at all.‎

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Naturaloutdoor elements such as wind and precipitation may have a material adverse effect on the ‎use and effectiveness of the Company’sproducts.

The Company’s business will involve the operation and flying of UAVs, a technology-based product ‎‎used outside. As such, the business is subject to various risks inherent in a technology-based ‎‎businesses operated in outdoor conditions, including faulty parts, breakdowns and crashes. Although ‎‎the Company anticipates the use of its UAVs in good climactic conditions and that adequate flying ‎‎conditions will be monitored by trained personnel, there can be no assurance that unpredictable natural ‎‎outdoor elements, which could be exacerbated due to risks associated with climate change, will not have a material adverse effect on the use and effectiveness of its products.‎

TheCompany’s products may be subject to recall or return.

Manufacturers and distributors of products are sometimes subject to the recall or return of their products ‎‎‎for a variety of reasons, including product defects, safety concerns, packaging issues and inadequate ‎‎or inaccurate ‎labeling disclosure. If any of the Company’s equipment were to be recalled due to an ‎‎alleged product ‎defect, safety concern or for any other reason, the Company could be required to incur ‎‎unexpected expenses of the recall ‎and any legal proceedings that might arise in connection with the ‎‎recall. The Company may lose a significant ‎amount of sales and may not be able to replace those sales ‎‎at an acceptable margin or at all. In ‎addition, a product recall may require significant management time ‎‎and attention. Additionally, product recalls may lead to ‎increased scrutiny of the Company’s operations ‎‎by Transport Canada or other regulatory agencies, requiring ‎further management time and attention and ‎‎potential legal fees, costs and other expenses.‎‎

‎‎Ifthe Company releases defective products or services, its operating results could suffer.‎

‎Products and services designed and released by the Company involve extremely complex software ‎‎programs and ‎are difficult to develop and distribute. While the Company has quality controls in place to ‎‎detect and prevent defects in its ‎products and services before they are released, these quality controls ‎‎are subject to human error, ‎overriding, and reasonable resource constraints. Therefore, these quality ‎‎controls and preventative measures may ‎not be effective in detecting and preventing defects in the ‎‎Company’s products and services before they have been released into ‎the marketplace. In such an ‎‎event, the Company could be required, or decide voluntarily, to suspend the availability of the product or ‎‎services, which could significantly harm its business and operating results‎.‎

‎TheCompany’s products and services are complex and could have unknown defects or errors, which may give ‎rise to legal claimsagainst the Company, diminish its brand or divert its resources from other purposes.‎

The Company’s UAVs rely on complex avionics, sensors, user-friendly interfaces and tightly integrated, ‎‎electromechanical designs to accomplish their missions. Despite testing, the Company’s products have ‎contained ‎defects and errors and may in the future contain defects, errors or performance problems ‎when first introduced, ‎when new versions or enhancements are released, or even after these products ‎have been used by the Company’s ‎customers for a period of time. These problems could result in ‎expensive and time-consuming design modifications ‎or warranty charges, delays in the introduction of ‎new products or enhancements, significant increases in the ‎Company’s service and maintenance costs, ‎exposure to liability for damages, damaged customer relationships and ‎harm to the Company’s ‎reputation, any of which could materially harm the Company’s results of operations and ‎ability to achieve ‎market acceptance. In addition, increased development and warranty costs could be substantial ‎and ‎could significantly reduce the Company’s operating margins.‎

‎The existence of any defects, errors, or failures in the Company’s products or the misuse of the ‎Company’s ‎products could also lead to product returns, recalls, or liability claims or lawsuits against it. A defect, error or ‎failure in one of the ‎Company’s UAV could result in injury, death or property damage and significantly ‎damage the Company’s ‎reputation and support for its UAV in general. The Company anticipates this risk ‎will grow as its UAV begins to be ‎used in Canadian domestic airspace and urban areas. The Company’s ‎UAV test systems also have the potential to ‎cause injury, death or property damage in the event that ‎they are misused, malfunction or fail to operate properly ‎due to unknown defects or errors.‎ Although the ‎Company maintains insurance policies, it cannot provide any assurance that this insurance will be ‎‎adequate to protect the Company from all material judgments and expenses related to potential future ‎claims or ‎that these levels of insurance will be available in the future at economical prices or at all. A ‎successful product ‎liability claim could result in substantial cost to us. Even if the Company is fully ‎insured as it relates to a particular claim, the ‎claim could nevertheless diminish the Company’s brand and ‎divert management’s attention and resources, which ‎could have a negative impact on the Company’s ‎business, financial condition and results of operations.‎

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TheCompany could be prohibited from shipping its products to certain countries if it is unable to obtain ‎Canadian government authorizationregarding the export of its products, or if current or future export laws limit ‎or otherwise restrict the Company’s business.‎

The Company must comply with Canadian federal and provincial laws regulating the export of its ‎products. In ‎some cases, explicit authorization from the Canadian government is needed to export its ‎products. The export ‎regulations and the governing policies applicable to the Company’s business are ‎subject to change. The Company ‎cannot provide assurance that such export authorizations will be ‎available for its products in the future. ‎Compliance with these laws has not significantly limited the ‎Company’s operations or sales in the recent past, but ‎could significantly limit them in the future. Non-‎compliance with applicable export regulations could potentially ‎expose the Company to fines, penalties ‎and sanctions. If the Company cannot obtain required government ‎approvals under applicable ‎regulations, the Company may not be able to sell its products in certain international ‎jurisdictions, which ‎could adversely affect the Company’s financial condition and results of operations.‎

Negativeconsumer perception regarding the Company’s products‎ could have a material adverse effect on the demand for the Company’s‎products and the business, results of operations, financial condition and cash flows of the Company.

The Company believes the UAV industry is highly dependent upon consumer perception regarding the ‎‎safety, efficacy, and quality of the UAV used. Consumer perception of these products can be ‎‎significantly influenced by scientific research or findings, regulatory investigations, litigation, media ‎attention, ‎and other publicity regarding the use of UAV. There can be no assurance that future scientific ‎research, ‎findings, regulatory proceedings, litigation, media attention, or other research findings or ‎publicity will be ‎favourable to the UAV market. Future research reports, findings, regulatory proceedings, ‎litigation, media ‎attention or other publicity that are perceived as less favourable than, or that question, ‎earlier research ‎reports, findings or publicity could have a material adverse effect on the demand for the ‎Company’s ‎products and the business, results of operations, financial condition and cash flows of the ‎Company. The ‎dependence upon consumer perceptions means that adverse scientific research reports, ‎findings, ‎regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or ‎with merit, ‎could have a material adverse effect on the Company, the demand for the Company’s ‎products, and the ‎business, results of operations, financial condition and cash flows of the Company. ‎Further, adverse ‎publicity reports or other media attention regarding the safety, the efficacy, and quality ‎of UAV based surveys in general, or the Company’s products specifically, ‎could have a material adverse ‎effect.‎

Ifthe Company fails ‎‎to successfully promote its product brand, this could have a material adverse ‎effect on the Company’sbusiness, prospects, ‎‎financial condition and results of operations‎.

The Company believes that brand recognition is an important factor to its success. If the Company fails ‎‎‎to promote its brands successfully, or if the expenses of doing so are disproportionate to any increased ‎‎‎net sales it achieves, it would have a material adverse effect on the Company’s business, prospects, ‎‎‎financial condition and results of operations. This will depend largely on the Company’s ability to ‎‎‎maintain trust, be a technology leader, and continue to provide high-quality and secure technologies, ‎‎‎products and services. Any negative publicity about the Company or its industry, the quality and ‎reliability of the Company’s technologies, products and services, the Company’s risk management ‎‎‎processes, changes to the Company’s technologies, products and services, its ability to effectively ‎‎‎manage and resolve customer complaints, its privacy and security practices, litigation, regulatory ‎activity, and the experience of sellers and buyers with the Company’s products or services, could ‎adversely affect the Company’s reputation and the confidence in and use of the ‎‎Company’s ‎technologies, products and services. Harm to the Company’s brand can arise from ‎‎many sources, ‎including; failure by the Company or its partners to satisfy expectations of service and quality; ‎inadequate protection of sensitive information; compliance failures and claims; litigation and ‎‎other ‎claims; employee misconduct; and misconduct by the Company’s partners, service ‎‎providers, or other ‎counterparties. If the Company does not successfully maintain a strong and trusted brand, its business ‎could be materially and adversely affected.‎ ‎

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TheCompany may be subject to electronic communication security risks.

A significant potential vulnerability of electronic communications is the security of transmission of ‎confidential ‎information over public networks. Cyberattacks could result in unauthorized access to the ‎Company’s computer ‎systems or its third-party IT service provider’s systems and, if successful, ‎misappropriate personal or confidential ‎information. Anyone who is able to circumvent the Company’s ‎security measures could misappropriate proprietary ‎information or cause interruptions in its operations. ‎The Company may be required to expend capital and other ‎resources to protect against such security ‎breaches or to alleviate problems caused by such breaches.‎

‎The last few years have seen an increase in the volume and sophistication ‎of targeted cyber-attacks. A failure of ‎the Company’s IT ‎infrastructure could severely limit the Company’s ability ‎to conduct ordinary operations or ‎expose the ‎Company to liability. To date, the Company’s systems have functioned capably, and it has not ‎‎experienced a material impact to its ‎operations as a result of an IT infrastructure issue. Data security breaches ‎suffered by well-known companies and institutions have attracted a substantial amount of media attention, ‎prompting new foreign, federal, provincial and state laws and legislative proposals addressing data privacy and ‎security. As a result, the Company may become subject to more extensive requirements to protect the customer ‎information that it processes in connection with the purchase of its products, resulting in increased compliance ‎costs.‎

While the Company has taken measures to protect against cyberattacks, even the most well-protected IT networks, ‎systems and facilities remain potentially vulnerable because ‎the techniques used in attempted security breaches are ‎continually evolving and generally are not ‎recognized until launched against a target or, in some cases, are designed ‎not to be detected and, in ‎fact, may not be detected. Any such compromise of the Company’s or its third party’s IT ‎service ‎providers’ data security and access, public disclosure, or loss of personal or confidential business ‎‎information, could result in legal claims and proceedings, liability under laws to protect privacy of ‎personal ‎information, and regulatory penalties, and could disrupt the Company’s operations, require significant ‎‎management attention and resources to remedy any damages that result, and damage its reputation and ‎customers ‎willingness to transact business with us, any of which could adversely affect our business.‎ ‎

TheCompany’s business could be adversely affected if its consumer protection and data privacy practices are not ‎perceived asadequate or there are breaches of its security measures or unintended disclosures of its consumer data.‎

‎The rate of privacy law-making is accelerating globally and interpretation and application of consumer ‎protection ‎and data privacy laws in Canada, the United States, Europe and elsewhere are often uncertain, ‎contradictory and in ‎flux. As business practices are being challenged by regulators, private litigants, and ‎consumer protection agencies ‎around the world, it is possible that these laws may be interpreted and ‎applied in a manner that is inconsistent with ‎the Company’s data and/or consumer protection practices. If ‎so, this could result in increased litigation government ‎or court-imposed fines, judgments or orders ‎requiring that the Company change its practices, which could have an ‎adverse effect on its business and ‎reputation. Complying with these various laws could cause the Company to incur ‎substantial costs or ‎require it to change its business practices in a manner adverse to its business.‎

TheCompany relies on its business partners, and they may be given access to sensitive and proprietary ‎information in order to provideservices and support to the Company’s teams.‎

‎The Company relies on various business partners, including third-party service providers, vendors, ‎licensing partners, ‎development partners, and licensees, among others, in some areas of the Company’s ‎business. In some cases, these ‎third parties are given access to sensitive and proprietary information in ‎order to provide services and support to the ‎Company’s teams. These third parties may misappropriate ‎the Company’s information and engage in ‎unauthorized use of it. The failure of these third parties to ‎provide adequate services and technologies, or the failure ‎of the third parties to adequately maintain or ‎update their services and technologies, could result in a disruption to ‎the Company’s business ‎operations. Further, disruptions in the financial markets and economic downturns may ‎adversely affect ‎the Company’s business partners and they may not be able to continue honoring their obligations ‎to the ‎Company. Alternative arrangements and services may not be available to the Company on commercially ‎‎reasonable terms or the Company may experience business interruptions upon a transition to an ‎alternative partner ‎or vendor. If the Company loses one or more significant business partners, the ‎Company’s business could be ‎harmed.‎

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Ifthe Company fails to protect, or incurs significant costs in defending, its intellectual property and other ‎proprietary rights,the Company’s business, financial condition, and results of operations could be materially ‎harmed.‎

‎The Company’s success depends, in large part, on its ability to protect its intellectual property and other ‎proprietary ‎rights. The Company relies primarily on patents, trademarks, copyrights, trade secrets and ‎unfair competition laws, ‎as well as license agreements and other contractual provisions, to protect the ‎Company’s intellectual property and ‎other proprietary rights. However, a portion of the Company’s ‎technology is not patented, and the Company may ‎be unable or may not seek to obtain patent ‎protection for this technology. Moreover, existing Canadian legal ‎standards relating to the validity, ‎enforceability and scope of protection of intellectual property rights offer only ‎limited protection, may ‎not provide the Company with any competitive advantages, and may be challenged by ‎third parties. The ‎laws of countries other than Canada may be even less protective of intellectual property rights. ‎‎Accordingly, despite its efforts, the Company may be unable to prevent third parties from infringing ‎upon or ‎misappropriating its intellectual property or otherwise gaining access to the Company’s ‎technology. Unauthorized ‎third parties may try to copy or reverse engineer the Company’s products or ‎portions of its products or otherwise ‎obtain and use the Company’s intellectual property. Moreover, ‎many of the Company’s employees have access to ‎the Company’s trade secrets and other intellectual ‎property. If one or more of these employees leave to work for ‎one of the Company’s competitors, then ‎they may disseminate this proprietary information, which may as a result ‎damage the Company’s ‎competitive position. If the Company fails to protect its intellectual property and other ‎proprietary rights, ‎then the Company’s business, results of operations or financial condition could be materially ‎harmed. ‎From time to time, the Company may have to initiate lawsuits to protect its intellectual property and other ‎‎proprietary rights. Pursuing these claims is time consuming and expensive and could adversely impact ‎the ‎Company’s results of operations.‎

‎In addition, affirmatively defending the Company’s intellectual property rights and investigating whether ‎the ‎Company is pursuing a product or service development that may violate the rights of others may ‎entail significant ‎expense. Any of the Company’s intellectual property rights may be challenged by others ‎or invalidated through ‎administrative processes or litigation. If the Company resorts to legal proceedings ‎to enforce its intellectual property ‎rights or to determine the validity and scope of the intellectual property ‎or other proprietary rights of others, then the ‎proceedings could result in significant expense to the ‎Company and divert the attention and efforts of the ‎Company’s management and technical employees, ‎even if the Company prevails.‎

Obtainingand maintaining the Company’s patent protection depends on compliance with various procedural, document ‎submission, fee payment,and other requirements imposed by governmental patent agencies, and its patent ‎protection could be reduced or eliminated for non-compliancewith these requirements.‎

‎The Canadian Intellectual ‎Property Office (“CIPO”), the United States Patent and ‎Trademark Office (“USPTO”) and various foreign national or international patent agencies ‎require compliance with a number of procedural, documentary, fee payment, and other similar provisions during ‎the patent application process. Periodic maintenance fees on any issued patent are due to be paid to the CIPO, the USPTO and ‎various foreign national or international patent agencies in several stages over the lifetime of the patent. While an ‎inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the ‎applicable rules, there are situations in which non-compliance can result in abandonment or lapse of the patent or ‎patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance ‎events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file ‎national and regional stage patent applications based on the Company’s international patent application, failure to respond to ‎official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit ‎formal documents. If the Company fails to maintain the patents and patent applications covering its product candidates, its ‎competitors might be able to enter the market, which would have a material adverse effect on the Company’s business. ‎

While a patent may be granted by a national patent office, there is no guarantee that the granted patent ‎is valid. ‎Options exist to challenge the validity of a patent which, depending upon the jurisdiction, may ‎include re-‎examination, opposition proceedings before the patent office, and/or invalidation proceedings ‎before the relevant ‎court. Patent validity may also be the subject of a counterclaim to an allegation of ‎patent infringement.‎

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Pending patent applications may be challenged by third parties in protest or similar proceedings. Third ‎parties can ‎typically submit prior art material to patentability for review by the patent examiner. Regarding ‎Patent Cooperation ‎Treaty applications, a positive opinion regarding patentability issued by the ‎International Searching Authority does ‎not guarantee allowance of a national application derived from the ‎Patent Cooperation Treaty application. The ‎coverage claimed in a patent application can be significantly ‎reduced before the patent is issued, and the patent’s ‎scope can be modified after issuance. It is also ‎possible that the scope of claims granted may vary from jurisdiction ‎to jurisdiction.‎

The grant of a patent does not have any bearing on whether the invention described in the patent ‎application would ‎infringe the rights of earlier filed patents. It is possible to both obtain patent protection ‎for an invention and yet still ‎infringe the rights of an earlier granted patent.‎

TheCompany may be sued by third parties for alleged infringement of their proprietary rights, which could be ‎costly, time-consumingand limit the Company’s ability to use certain technologies in the future.‎

‎The Company may become subject to claims that its technologies infringe upon the intellectual property ‎or other ‎proprietary rights of third parties. Any claims, with or without merit, could be time-consuming ‎and expensive, and ‎could divert the Company’s management’s attention away from the execution of its ‎business plan. Moreover, any ‎settlement or adverse judgment resulting from these claims could require ‎the Company to pay substantial amounts ‎or obtain a license to continue to use the disputed technology, ‎or otherwise restrict or prohibit the Company’s use of ‎the technology. The Company cannot assure that it ‎would be able to obtain a license from the third party asserting ‎the claim on commercially reasonable ‎terms, if at all, that the Company would be able to develop alternative ‎technology on a timely basis, if at ‎all, or that the Company would be able to obtain a license to use a suitable ‎alternative technology to ‎permit the Company to continue offering, and the Company’s customers to continue ‎using, the ‎Company’s affected product. An adverse determination also could prevent the Company from offering ‎‎its products to others. Infringement claims asserted against the Company may have a material adverse ‎effect on its ‎business, results of operations or financial condition.‎

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‎TheCompany may not be able to protect its intellectual property rights throughout the world.‎

‎Filing, prosecuting, and defending patents on all of the Company’s product candidates throughout the world would be ‎prohibitively expensive. Therefore, the Company has filed applications and/or obtained patents only in key markets ‎including the United States and Canada. Competitors may use the Company’s technologies in jurisdictions where it has not ‎obtained patent protection to develop their own products and their products may compete with products of the Company.‎‎

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‎Ifthe Company is required to write down goodwill and other intangible assets, the Company’s financial ‎condition and resultscould be negatively affected. ‎

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Goodwill impairment arises when there is deterioration in the capabilities of acquired assets to generate ‎cash flows, ‎and the fair value of the goodwill dips below its book value. The Company is required to ‎review its goodwill for ‎impairment at least annually. Events that may trigger goodwill impairment include ‎deterioration in economic ‎conditions, increased competition, loss of key personnel, and regulatory ‎action. Should any of these occur, an impairment of ‎goodwill or other intangible assets relating to the acquisition of Dronelogics ‎Systems Inc. could have a negative effect on the assets of the ‎Company.‎

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Fromtime to time, the Company may become involved in legal proceedings, which could adversely affect the ‎Company.‎

‎The Company may, from time to time in the future, become subject to legal proceedings, claims, ‎litigation and ‎government investigations or inquiries, which could be expensive, lengthy, and disruptive ‎to normal business ‎operations. In addition, the outcome of any legal proceedings, claims, litigation, ‎investigations or inquiries may be ‎difficult to predict and could have a material adverse effect on the ‎Company’s business, operating results, or ‎financial condition.‎

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TheCompany’s directors and officers may have conflicts of interest in conducting their duties.

Because directors and officers of the Company are or may become directors or officers of other ‎‎reporting companies or have significant shareholdings in other technology companies, the directors and ‎‎officers of the Company may have conflicts of interest in conducting their duties. The Company and its ‎‎directors and officers will attempt to minimize such conflicts. In the event that such a conflict of interest ‎‎arises at a meeting of the directors of the Company, a director who has such a conflict will abstain from ‎‎voting for or against a particular matter in which the director has the conflict. In appropriate cases, the ‎‎Company will establish a special committee of independent directors to review a particular matter in ‎‎which several directors, or officers, may have a conflict. In determining whether or not the Company will ‎‎participate in a particular program and the interest therein to be acquired by it, the directors will primarily ‎‎consider the potential benefits to the Company, the degree of risk to which the Company may be ‎‎exposed and its financial position at that time. Other than as indicated, the Company has no other ‎‎procedures or mechanisms to deal with conflicts of interest.‎

‎The Company’s Articles ‎provide that the Company must indemnify a director or former director against all judgments, ‎penalties ‎or fines to which such person is or may be liable by reason of such person being or having ‎been a director of the ‎Company and the executive officers and directors may also have rights to ‎indemnification from the Company, ‎including ‎pursuant to directors’ and officers’ liability insurance ‎policies, that will survive termination of their ‎‎agreements‎.‎

Changesin accounting standards and subjective assumptions, estimates and judgments by ‎management ‎related to ‎complex accountingmatters could significantly affect the Company’s ‎reported financial results ‎or financial condition.‎

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Changes in accounting standards and subjective assumptions, estimates and judgments by ‎management ‎related to ‎complex accounting matters could significantly affect the Company’s ‎reported financial results ‎or financial condition.‎

‎Generally accepted accounting principles and related accounting pronouncements, implementation ‎‎guidelines and ‎interpretations with regard to a wide range of matters that are relevant to the Company’s ‎‎business, including but not limited to ‎revenue recognition, impairment of goodwill and intangible assets, ‎‎inventory, income taxes and litigation, are highly ‎complex and involve many subjective assumptions, ‎‎estimates and judgments. Changes in these rules or their ‎interpretation or changes in underlying ‎‎assumptions, estimates or judgments could significantly change the Company’s reported ‎financial ‎‎performance or financial condition in accordance with generally accepted accounting principles.‎

RisksRelated to the Company’s Common Shares

Themarket price of the Common Shares is highly volatile.‎

The market price of the Common Shares is highly volatile and has been subject to wide fluctuations ‎in response to a number of factors that are beyond the Company’s control, including but not limited ‎to‎

●	revenue<br> or results of operations in any quarter failing to meet the expectations, published or otherwise, of ‎the investment community;‎
●	actual<br> or anticipated changes or fluctuations in its results of operations;‎
●	announcements<br> by us or the Company’s competitors of new products or new or terminated significant contracts, ‎commercial relationships<br> or capital commitments;‎
●	rumors<br> and market speculation involving it or other companies in its industry;‎
●	changes<br> in its executive management team or the composition of the board of directors of the Company (the “Board”);‎
●	fluctuations<br> in the share prices of other companies in the technology and emerging growth sectors;‎
●	general<br> market conditions and macroeconomic trends driven by factors outside the Company’s control, such as pandemics, geopolitical<br> conflicts, supply chain disruptions, market volatility, inflation, rising interest rates, political instability, and labor challenges,<br> among other factors;
●	actual<br> or anticipated developments in its business or its competitors’ businesses or the competitive ‎landscape generally;‎
●	litigation<br> involving us, the Company’s industry or both, or investigations by regulators into its operations or those of ‎competitors;‎

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| --- | | ● | announced<br> or completed acquisitions of businesses or technologies by the Company or its competitors;‎ | | --- | --- | | ● | new<br> laws or regulations or new interpretations of existing laws or regulations applicable to its ‎business;‎ | | ● | shareholder<br> activism and related publicity;‎ | | ● | foreign<br> exchange rates; and | | ● | other<br> risk factors as set out in this Annual Report and in the documents incorporated by ‎reference into this Annual Report.‎ |

If the market price of the Company’s Common Shares drops significantly, shareholders could institute securities class action ‎lawsuits against it, regardless of the merits of such claims. Such a lawsuit could cause it to incur substantial ‎costs and could divert the time and attention of management and other resources from the Company’s business, which ‎could harm its business, results of operations and financial condition.‎

Thereis no guarantee that an active trading market for the Company’s Common Shares will be maintained on ‎the CSE and/or Nasdaq.Investors may not be able to sell their Common Shares quickly or at the ‎latest market price if the trading in our Common Sharesis not active.‎

The Company’s Common Shares are currently listed on the Canadian Stock Exchange (“CSE”), the Nasdaq Stock Market, LLC (“Nasdaq”), and the Frankfurt Stock Exchange, ‎however, it shareholders may be unable to sell significant quantities of Common Shares into the public ‎‎trading markets without a significant reduction in the price of their Common Shares, or at all and there ‎can be no guarantee that an active trading market for the Common Shares ‎may be maintained. There can ‎be no assurance that ‎there will be sufficient liquidity of its Common Shares on the trading market, and ‎that we will continue to meet ‎the listing requirements of the CSE, Nasdaq or any other public listing ‎exchange.‎

Failureto meet Nasdaq’s continued listing requirements could result in the delisting of the Company’s Common Shares, negativelyimpact the price of the Company’s Common Shares and negatively impact its ability to raise additional capital.

If the Company fails to satisfy the continued listing requirements of the Nasdaq, such as corporate governance requirements or the minimum closing bid price requirement, the exchange may take steps to delist the Company’s Common Shares. Such a delisting would likely have a negative effect on the price of the Company’s Common Shares and would impair shareholders’ ability to sell or purchase its Common Shares when they wish to do so.

As previously disclosed, in September 2023 and March 2024, the Nasdaq informed the Company that it was not in compliance with the $1 bid price requirement in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”) and that, in March 2024, the Company’s Common Shares were subject to delisting from Nasdaq. The Company requested a hearing before a Nasdaq Hearings Panel (the “NasdaqPanel”) with such request automatically staying any suspension or delisting action pending the hearing and the expiration of any additional extension period granted by the Nasdaq Panel following the hearing.

In April 2024, the Company received notification that it failed to comply with the Minimum Stockholders’ Equity Requirement which served as an additional and separate basis for delisting. Following the May 21st hearing, the Nasdaq Panel granted an additional extension period with regard to the Bid Price Requirement that would expire on September 17, 2024. In addition, at the hearing, the Company presented a plan to regain compliance with the Minimum Stockholders’ Equity Requirement which plan the Company implemented on August 7, 2024 via amendments to warrants issued in October 2023 and in May 2024.

On October 1, 2024, Nasdaq informed the Company that it had regained compliance with the Bid Price Requirement and the Minimum Stockholders’ Equity Requirement. The letter from Nasdaq further informed the Company that it is subject to a Mandatory Panel Monitor for a period of one year from October 1, 2024. If, within that one-year monitoring period, the Company is again out of compliance with the Minimum Stockholders’ Equity Requirement, the Company will not be afforded the opportunity to present a plan of compliance to Nasdaq with respect to that deficiency nor additional time to cure that deficiency. Instead, Nasdaq will issue a Delist Determination Letter and the Company will have the opportunity to request a hearing before a Nasdaq Panel to respond to such letter.

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Futureissuances of equity securities by us or sales by the Company’s existing shareholders may cause the price ‎of its Common Sharesto fall.‎

The market price of the Company’s Common Shares could decline as a result of issuances of securities or sales by its ‎existing shareholders in the market, including by its directors, executive officers and significant ‎shareholders, or ‎the perception that these sales could occur. Sales of the Company’s Common Shares by ‎shareholders might also make it ‎more difficult for it to sell Common Shares at a time and price that it ‎deems appropriate. The Company also expects to ‎issue Common Shares in the future. Future issuances of Common ‎Shares, or the perception that such issuances ‎are likely to occur, could affect the prevailing trading ‎prices of the Common Shares.‎

Wemay never pay dividends over the foreseeable future.‎

Investors should not rely on an investment in the Company’s Common Shares to provide dividend ‎income. The ‎Company does not anticipate that it will pay any cash dividends to holders of its Common ‎Shares in the ‎foreseeable future. Instead, the Company plans to retain any earnings to maintain and expand ‎its ‎operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting ‎‎the amount of dividends that may be declared or paid on its Common Shares. Accordingly, investors ‎must ‎rely on sales of their Common Shares after price appreciation, which may never occur, as the only ‎way to ‎realize any return on their investment. As a result, investors seeking cash dividends should not ‎purchase the ‎Company’s Common Shares.‎

UnitedStates investors may not be able to obtain enforcement of civil liabilities against us.

‎

The Company is incorporated under the laws of British Columbia, Canada, and its principal executive offices are located in Canada. Most of the Company’s directors and officers and most of the experts named in this Annual Report reside outside of the United States and all or a substantial portion of the Company’s assets and the assets of these persons are located outside the United States. Consequently, it may not be possible for an investor to effect service of process within the United States on the Company or those persons. Furthermore, it may not be possible for an investor to enforce judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws or other laws of the United States against those persons or the Company. There is doubt as to the enforceability, in original actions in Canadian courts, of liabilities based upon United States federal securities laws and as to the enforceability in Canadian courts of judgments of United States courts obtained in actions based upon the civil liability provisions of the United States federal securities laws. Therefore, it may not be possible to enforce those actions against the Company, certain of the Company’s directors and officers or the experts named in this Annual Report.

Weare an emerging growth company and intend to take advantage of reduced disclosure requirements ‎applicable to emerging growth companies,which could make the Company’s Common Shares less attractive to ‎investors.

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We are an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth ‎company until the earliest to occur of (i) the last day of the fiscal year in which we have total annual gross ‎revenue of $1.07 billion or more; (ii) December 31, 2026 (the last day of the fiscal year ending after the fifth ‎anniversary of the date of the completion of the first sales of its common equity pursuant to an effective ‎registration statement under the Securities Act); (iii) ‎the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-‎year period; or (iv) the date we qualify as a “large accelerated filer” under the rules of the SEC, which means the ‎market value of the Company’s Common Shares held by non-affiliates exceeds $700 million as of the last business day of ‎its most recently completed second fiscal quarter after we have been a reporting company in the United States ‎for at least 12 months. For so long as we remain an emerging growth company, we are permitted to and intend to ‎rely upon exemptions from certain disclosure requirements that are applicable to other public companies that ‎are not emerging growth companies. These exemptions include not being required to comply with the auditor ‎attestation requirements of Section 404 (“Section 404”) of the Sarbanes-Oxley Act (2002), as amended (the “Sarbanes-OxleyAct”).‎

We may take advantage of some, but not all, of the available exemptions available to emerging growth ‎companies. ‎We cannot predict whether investors will find the Company’s Common Shares less attractive if it relies on these ‎‎exemptions. If some investors find the Company’s Common Shares less attractive as a result, there may be a less ‎active ‎trading market for its Common Shares and the price of its Common Shares may be more volatile. ‎

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Wewill incur increased costs as a result of operating as a public company in the United States ‎and the ‎Company’s managementwill be required to devote substantial time to new compliance initiatives.‎

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As a U.S. public company, particularly if or when we are no longer an “emerging growth company” as ‎defined ‎‎under the JOBS Act, we incur significant legal, accounting and other expenses, in addition to ‎those we ‎incur as a ‎Canadian public company, that we did not incur prior to being listed on Nasdaq. In ‎‎addition, the Sarbanes-Oxley ‎Act, and rules implemented by the SEC and Nasdaq impose various other ‎‎requirements on public companies, and ‎the Company spends time and resources to ensure compliance with its ‎‎reporting obligations in both Canada and the ‎United States.‎

For example, pursuant to Section 404, we are required to furnish a report by our management on our ‎internal ‎control over financial reporting (“ICFR”), which, if or when we are no longer an emerging growth ‎company, must ‎be accompanied by an attestation report on ICFR issued by our independent registered ‎public accounting firm. ‎To achieve compliance with Section 404, we must document and evaluate our ‎ICFR, ‎which is both costly and challenging. In this regard, we must dedicate internal resources, ‎potentially engage outside consultants and adopt a detailed work plan to assess and document the ‎‎adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through ‎testing that ‎controls are functioning as documented and implement a continuous reporting and ‎improvement process for ‎ICFR. Despite our efforts, there is a risk that neither we nor our independent ‎registered public accounting firm will ‎be able to conclude that our ICFR is effective as required by ‎Section 404. This ‎could result in a determination that there are one or more material weaknesses in our ‎ICFR, which could cause an ‎adverse reaction in the financial markets due to a loss of confidence in the ‎reliability of our consolidated ‎financial statements.‎

In addition, becoming a public company in the United States has increased legal and financial ‎compliance as well ‎as regulatory costs, such as additional Nasdaq fees, and has made some of our ‎public company obligations ‎more time consuming. We invest resources to comply with evolving laws, ‎regulations and standards in ‎both Canada and the United States, and this investment results in increased ‎general and administrative ‎expenses and increased diversion of management’s time and attention from ‎revenue-generating activities to ‎compliance activities. If our efforts to comply with public company laws, ‎regulations and standards in the ‎United States are insufficient, regulatory authorities may initiate legal ‎proceedings against us and our business ‎may be harmed.‎

Being a public company in the United States and complying with applicable rules and ‎regulations also ‎makes it more expensive for us to obtain sufficient levels of director and officer liability insurance ‎‎coverage. This factor may also make it more difficult for us to attract and retain qualified executive ‎officers and ‎members of our Board of Directors.‎

TheCompany may lose its foreign private issuer status in the future.

The Company may in the future lose its foreign private issuer status if a majority of the Common Shares are owned of record in the United States and the Company fails to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to the Company under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs the Company incurs as a Canadian foreign private issuer eligible to use a multi-jurisdictional disclosure system (the “MJDS”) adopted in the United States and Canada. If the Company is not a foreign private issuer, it would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer.

Asa foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. ‎issuer, which may limitthe information publicly available to the Company’s U.S. shareholders.‎

We currently qualify as a “foreign private issuer” under applicable U.S. federal securities laws and, therefore, are ‎not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. As a result, we do ‎not file the same reports that a U.S. domestic issuer ‎would file with the SEC, although we are required to file ‎with or furnish to the SEC the continuous ‎disclosure documents that we are required to file in Canada under ‎Canadian securities laws. In addition, ‎the Company’s officers, directors and principal shareholders are exempt from the ‎reporting and “short swing” profit ‎recovery provisions of Section 16 of the Exchange Act. Therefore, the Company’s ‎shareholders may not know on as ‎timely a basis when its officers, directors and principal shareholders purchase ‎or sell our securities as ‎the reporting periods under the corresponding Canadian insider reporting requirements are ‎longer. In ‎addition, as a foreign private issuer, the Company is exempt from the proxy rules under the Exchange Act. The Company is ‎also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material ‎non-‎public information. While the Company expects to comply with the corresponding requirements relating to proxy ‎statements ‎and disclosure of material non-public information under Canadian securities laws, these ‎requirements differ from ‎those under the Exchange Act and Regulation FD and shareholders should not ‎expect to receive in every case the ‎same information at the same time as such information is provided ‎by U.S. domestic issuers.

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In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate ‎governance ‎practices, except to the extent that such laws would be contrary to U.S. federal securities ‎laws and Nasdaq ‎listing rules and provided that we disclose the requirements we are not following and ‎describe the Canadian ‎practices we follow instead. We rely on this exemption in part. As a result, the Company’s ‎shareholders may not have ‎the same protections afforded to shareholders of U.S. domestic issuers that ‎are subject to all U.S. corporate ‎governance requirements.

At some point in the future, we may cease to be a foreign private issuer. If we cease to ‎qualify, we will ‎be subject to the same reporting requirements and corporate governance requirements as a U.S. ‎‎domestic issuer, which may increase the Company’s costs of being a public company in the ‎United States.‎

Item 4.	Information on the Company
4.A.	History and Development of the Company
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Name,Address and Incorporation

The Company was incorporated as Drone Acquisition Corp. (“DAC”) under the Business Corporations Act (British Columbia) (the “BCBCA”) on June 1, 2018 ‎for the purpose of reorganizing and recapitalizing the business of Draganfly Innovations Inc. (“Former Draganfly”). Effective July 17, 2019, the Company amended its articles to ‎remove various classes of ‎authorized but unissued preferred shares and replace them with only one class of preferred ‎shares (the “PreferredShares”). Effective August 15, 2019, the Company changed its name to “Draganfly Inc.” On ‎August 22, 2019, the Company amended its articles to re-designate its Class A Common Shares as ‎Common ‎Shares‎.‎

The Company’s head office is located at 235 103rd St E, Saskatoon, SK, S7N 1Y8, Canada. The Company’s telephone number is (800) 979-9794. The Company’s registered office is located at Suite 2700, 1133 Melville Street, Vancouver, British ‎Columbia V6E 4E5. ‎ The Company’s registered agent in the United States is C T Corporation System, 1015 15^th^ Street N.W., Suite 1000, Washington, D.C., 20005 and its telephone number is (202) 572-3133.

GeneralDevelopment of the Business of the Company

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Founded in 1998, we believe that Former Draganfly is recognized as one of the first commercial multi-rotor manufacturers and has a legacy for its innovation and superior customer service. Zenon Dragan is the founder of Former Draganfly and is a recognized leading expert on UAV.

Former Draganfly introduced its first systems in 1999 and since evolved and shaped the UAV industry. The Company’s aircraft are widely used by public safety agencies worldwide and we believe that we were one of the first UAV to receive a FAA (Federal Aviation Administration) Certificate of ‎‎Authorization in the fall of 2009 with the Mesa County Colorado Sheriff’s Office. In 2013, the Royal Canadian Mounted Police flew one of the Company’s drones to locate and save the life of an accident victim.

We believe that Draganfly aircraft have achieved many industry firsts, including:

●	one<br> of the first public safety UAV to shoot aerial photos documenting a manned aircraft accident in an urban area;
●	one<br> of the first UAV operated by a public safety organization flown at night to locate and save a life;
●	one<br> of the first UAV helicopter to be granted a county wide U.S. FAA Certificate of ‎‎Authorization;

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| --- | | ● | named<br> as a test platform at one of the U.S. FAA’s certified test sites; | | --- | --- | | ● | one<br> of the first to have a drone included in the Smithsonian National Air and Space Museum; and | | ● | four<br> of the first six compliance certifications for its products issued by Transport ‎Canada. |

ThreeYear History

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A detailed description on the significant developments of the business of the Company over the last three completed financial years is set out below.

The Common Shares were consolidated on September 5, 2024. See “Information on the Company – History and Development of theCompany – Three Year History – Financial year ended December 31, 2024”. Unless otherwise specified herein, all numbers and prices indicated in this section are presented on a pre-consolidation basis.

Financialyear ended December 31, 2022

On March 22, 2022, the Company announced that it had received an order for the Company’s Medical ‎Response and Search and Rescue Drones from Coldchain for immediate deployment with Revived ‎Soldiers Ukraine. Draganfly provided an immediate combined total of 10 North American-made Medical ‎Response and Search and Rescue Drones. In addition, Draganfly donated three drone systems to ‎Revived Soldiers Ukraine. The total initial order size (subject to conditions) is up to 200 units.‎

On May 9, 2022, the Company announced that John M. Mitnick was appointed as Chairman of the Board, ‎effective April 27, 2022.‎

On May 9, 2022, the Company announced that Cameron Chell, Chief Executive Officer of the Company, ‎was appointed as President of the Company, effective April 27, 2022.‎

On May 9, 2022, the Company announced that Scott Larson would be stepping down as Interim ‎President and appointed as Lead Director effective April 27, 2022.‎

On May 9, 2022, the Company announced that Paul Mullen, Vice President of Draganfly’s Vital ‎Intelligence Group, was appointed as Chief Operating Officer of the Company, effective March 1, 2022 .‎

One June 1, 2022, the Company announced the launch of its new North American-made Heavy Lift and ‎Commander 3 XL Drones. The Heavy Lift is capable of automated missions and manual flight operations ‎with a payload capacity of 67 pounds. The Commander 3 XL is a high-endurance, weather-resistant, ‎multirotor UAV that is designed for easy assemble and rapid deployment.‎

One June 7, 2022, the Company announced the launch of its new North American-made Long-range Light ‎Detection and Ranging (“LiDAR”) system. The LiDAR system provides accurate distance measurements ‎and improved resolution over conventional photogrammetry methods.‎

One June 21, 2022, the Company announced that Alabama State University (“ASU”) was offering the ‎Draganfly Drone Technology Course through ASU’s Division of Continuing Education. The program ‎provides an introduction to UAVs and explores advanced topics including ‎regulations, airspace operations, and navigation.‎

On August 1, 2022, the Company announced that Deborah R. Greenberg, was appointed as Chief Legal ‎Officer of the Company, effective July 4, 2022. Her role was subsequently expanded to include the ‎Human Resources and Information Technology functions as the Chief Legal and Corporate Services ‎Officer, effective December 1, 2022.‎

On November 17, 2022, the Company announced DEF-C, a Ukrainian company involved in the civil and ‎‎defense sectors, had selected the Company as an exclusive provider of drones and related services.‎

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On November 18, 2022, the Company announced the fulfillment of an additional order of 30 ‎reconnaissance drones through its channel partner DEF-C, along with continued support from DroneAid. ‎Draganfly’s drone technology is being deployed to provide valuable intelligence, surveillance, and ‎reconnaissance information. On December 7, 2022, the Company announced the launch of the Draganfly ‎UAS A.I.R. Space flight facility dedicated to the advancement of Unmanned Aircraft Systems program Adoption, Innovation & ‎Research. The facility will provide a control site for the design, validation and optimization of standard ‎operating procedures, sensor selection and data collection techniques.‎

Financialyear ended December 31, 2023

On January 31, 2023, the Company announced Remote Sensing Instruments, a Geospatial ‎Technology company in India working in the field of Remote Sensing and Geographic Information ‎System, entered into a strategic agreement with the Company for the development of manufacturing, ‎distribution, and sales of Draganfly products in India.‎

On January 31, 2023, the Company entered into an equity distribution agreement with Maxim ‎Group LLC (“Maxim”) ‎‎dated January 31, 2023, pursuant to which the Company could, from time ‎to time, distribute in an ‎‎‎”at-the-‎market offering” up to US$15 million in Common Shares (the “‎‎ATM Shares”) in the ‎United States only, on Nasdaq.‎ The Company ‎distributed 650,729 ATM Shares under the Offering at an average price of ‎‎$2.69 per share for net ‎proceeds of $1,526,810.‎

On February 23, 2023, the Company announced that it entered into a distribution agreement with ‎AeroCine Ventures, Inc. d/b/a Vermeer. Pursuant to the distribution agreement, Vermeer will distribute ‎Draganfly’s products that incude the Vermeer VPS (visual positioning ‎system) payload with Draganfly’s Commander 3XL. ‎

On March 7, 2023, Draganfly announced that it entered into a business development and partnership ‎agreement with SkyeBrowse Inc. (“SkyeBrowse”), whereby SkyeBrowse will integrate its reality capture ‎platform with Draganfly public safety drones. As per the agreement, the Company will provide consulting ‎and marketing services to SkyeBrowse for two years. ‎‎

On March 31, 2023, the Company announced the closing of a firm commitment underwritten public offering with gross proceeds to the Company expected to be US$8.0 million, before deducting underwriting discounts and other estimated expenses payable by the Company. The offering consisted of 8,000,000 Common Shares at a price to the public of US$1.00 per Common Share.

On April 11, 2023, the Company announced that it entered into a strategic cooperation and product ‎integration agreement with CODAN Communications (“CODAN”), to supply its UAV platform for ‎integration with CODAN’s technology and communications solutions. Under the terms of the agreement, ‎CODAN and the Company agree to combine their respective capabilities in a joint effort to integrate their ‎product and services capabilities in order to submit joint proposals and enter into contracts with potential ‎customers. ‎

On April 19, 2023, Draganfly announced it entered into a referral agreement with AgileMesh, Inc. ‎‎(“AgileMesh”) whereby AgileMesh will add the Company’s UAV Platform to its wireless surveillance ‎product line and refer potential customers to Draganfly. As per the agreement, AgileMesh will receive ‎commissions based on the aggregate amount of revenue recognized by the Company from customers ‎that are introduced to Draganfly by AgileMesh. ‎

On June 21, 2023, the Company announced it had entered into an agreement with HEAL-Corp, a Non-Government Organization, and the Ukrainian National Academy of Internal Affairs (the “National Academy”) regarding the development of a training program on the use of drones and their countermeasure systems. Working in conjunction with the National Academy, Draganfly will implement a designed curriculum to be used within the training program. Recently, HEAL-Corp delivered Trauma Resuscitation and Evacuation Casualty Care training to the Ministry of Internal Affairs.

On August 3, 2023, Draganfly announced its new manufacturing facility in Saskatoon, Saskatchewan is scheduled to come online in Q3. This expansion is part of Draganfly’s commitment to meeting the increasing market potential for products and solutions. The Saskatoon facility is specifically designed to accommodate a growing demand for UAV systems and components, including those engineered for the Heavy Lift, Commander 3 XL, and the Company’s newest product, the Precision Delivery System.

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On August 23, 2023, the Company announced it will be providing drone pilot crews and drone technology to a Canadian Provincial Government to assist with firefighting mitigation, preparedness, response, and recovery efforts. Draganfly’s advanced drone technology and highly trained personnel will aid emergency services in their mission to protect lives, property, infrastructure, and ecosystems.

On September 7, 2023, Draganfly announced that Tim Dunnigan was appointed to Draganfly’s Advisory Board to help lead Company’s initiatives for the new Pentagon Replicator program, a U.S. Department of Defense initiative announced in August 2023. The program aims to rapidly expand domestic sUAS production & innovation for military applications.

On September 12, 2023, the Company announced it was awarded a contract to provide its Vital Intelligence technology to a state corrections agency to its facilities enhance security and efficiency for the benefit of the community, the staff, and the inmates.

On September 14, 2023, the Company announced it had secured its first defense orders for its Commander 3 XL with the U.S. military.

On September 22, 2023, the Nasdaq notified the Company that the closing price of its Common Shares for the 30 ‎consecutive business day period from August 10, 2023 to September 21, 2023 did not meet the Minimum Bid Price ‎Requirement of Nasdaq’s rules. The notice has no immediate effect on the listing of the Common Shares, and the ‎Common Shares continued trade on the Nasdaq under the symbol “DPRO”. Pursuant to Nasdaq Listing Rule ‎‎5810(c)(3)(A), the Company was given 180 calendar days (or until March 20, 2024) to regain compliance with the ‎Minimum Bid Price Requirement, unless Nasdaq were to grant the Company, upon request, an additional 180 ‎calendar day extension to meet such requirements. To regain compliance, the Common Shares must have a closing ‎bid price of US$1.00 for a minimum of 10 consecutive business days. If the Company does not regain compliance ‎with the Minimum Bid Price Requirement (including through the implementation of a reverse share split or another ‎means) by March 20, 2024, the Common Shares may subject to delisting.

On September 27, 2023, the Company announced its new manufacturing and production facility in Saskatoon, Saskatchewan, had officially opened.

On October 30, 2023, Draganfly announced that it had closed its underwritten offering for gross proceeds of approximately US$3.5 million, before deducting underwriting discounts and offering expenses. Pursuant to the Offering, the Company issued:

(i)

4,800,000<br> units of the Company at a price of US$0.55 per unit, with each such unit comprising of one<br> Common Share and one Common Share purchase warrant (the “October 2023 Warrants”).<br> Each October 2023 Warrant entitles the holder thereof to purchase one Common Share at an<br> exercise price of US$0.6123, subject to adjustment, until October 30, 2028; and

(ii)

1,600,000<br> pre-funded units of the Company the at a price of US$0.5499 per unit, with each such unit<br> comprising of one pre-funded Common Share purchase warrant (the “October 2023 Pre-Funded Warrants”) and one October 2023 Warrant. Each October 2023 Pre-Funded Warrant entitled<br> the holder thereof to purchase one Common Share at an exercise price of US$0.0001, subject<br> to adjustment, until the October 2023 Pre-Funded Warrants are exercised in full. The October<br> 2023 Pre-Funded Warrants were exercised in full prior to the Company’s 2024 financial<br> year end.

On November 28, 2023, Draganfly announced it has received a Transport Canada Special Flight Operations Certificate for its Heavy Lift Drone to support advanced flight testing above 55lbs/25KG MTOW. This will allow highly specialized development of advanced delivery, industrial and defense applications. The Heavy Lift Flight Testing SFOC allows Draganfly to conduct these specialized and advanced operations utilizing the Heavy Lift within an approved flight test area, enabling the Company to initiate direct application and use-case testing. This development also allows Draganfly to enhance and optimize highly specialized operational and maintenance manuals and Standard Operating Procedures for a variety of conditions and scenarios.

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Financialyear ended December 31, 2024

On January 16, 2024, the Company announced an agreement with Mass General Brigham to provide drone delivery and solutions for the healthcare system’s Home Hospital patients. The Company’s technology aims to enhance the quality of care and support for Mass General Brigham’s Home Hospital patients by reducing traffic-related delays around its geographic catchment of the greater Boston metro area, eliminating challenges associated with traditional transportation methods, and enabling the swift and efficient delivery of essential supplies. The medical drone pick-up and deliveries facilitated by the Company’s technology can include critical medicines, technical equipment, and laboratory work.

On January 23, 2024, the Company announced that it was selected as a solutions provider of choice by Arabian Aero Investment LLC, a Dubai-based company backed by a member of the Dubai Royal Family, which had announced the launch of a groundbreaking solar-powered charging platform in the UAE. The Company is to develop solutions for integrating UAVs with the UAE’s inaugural end-to-end electric mobility platform that combines solar charging points with last-mile delivery, ushering in a new era of sustainable delivery systems. This initiative signifies the start of an ambitious plan to decarbonize the UAE’s transportation landscape over the next three years.

On January 25, 2024, the Company announced enrollment of the Commander 3XL platform in the Green UAS program, a new program administered by the Association for Uncrewed Vehicle Systems. In this initiative, coupled with the associated Trusted Cyber program, Draganfly aims to achieve certification for the Commander 3XL platform, ensuring it meets the most stringent cybersecurity and supply chain standards specified in the National Defense Authorization Act (“NDAA”). The Company’s engagement in the Green UAS program is geared towards fast-tracking the endorsement of the Commander 3XL platform among commercial entities and state and federal government agencies, including the Departments of Defense and Homeland Security.

On January 30, 2024, the Company announced that it was selected by MMS Products, Inc. to develop a drone-based tactical multi-drop payload system. This drone payload system is designed explicitly for tactical multi-drop and ISR operations. The highlight of this development is the integration with MMS Products’ Mjolnir, a highly configurable delivery device renowned for its versatility and effectiveness in various operational scenarios. The tactical multi-drop system boasts universal mount capabilities that can be easily adapted or attached to a wide range of drone models, and will be optimized for use with the Company’s Commander 3XL. This optimization with the Commander 3XL drone will enhance the performance and efficiency of both technologies, resulting in a robust turnkey tactical solution.

On February 7, 2024, the Company announced that its Commander 3 XL Drone was voted Best Enterprise Drone, Best Search and Rescue Drone and Best Delivery Drone at The Droning Company’s Annual Droning Awards.

On February 13, 2024, the Company announced that it was selected by the Ulkatcho Group of Companies to provide and expand UAV solutions and capabilities within the Ulkatcho First Nation’s Traditional Territory which will include, but are not limited to Commercial UAV services for Mapping & Survey, Resource & Wildlife Management, Training, Emergency Response & Wildfire Monitoring. The Ulkatcho First Nation is one of Canada’s largest landowners, encompassing a vast expanse from the west coast to the interior of British Columbia, rich in natural resources.

Pursuant to the Company’s prospectus supplement dated February 21, 2024, the Company completed an underwritten public offering in the United States, with Maxim acting as sole book running manager, and issued 13,400,000 units on February 26, 2024 for gross proceeds of approximately US$3.6 million (the “February 2024 Public Offering”), comprising the following:

(i)	11,200,000<br> units at a price of US$0.27 per unit, with each unit consisting of one Common Share and one<br> Common Share purchase warrant (the “February 2024 Warrant”). Each February<br> 2024 Warrant entitles the holder thereof to purchase one Common Share at an exercise price<br> of US$0.36, subject to adjustment, until February 26, 2029; and

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| --- | | (ii) | 2,200,000<br> pre-funded units at a price of US$0.2699 per unit, with each unit consisting of one pre-funded<br> Common Share purchase warrant (the “February 2024 Pre-Funded Warrant”)<br> and one February 2024 Warrant. Each February 2024 Pre-Funded Warrant entitles the holder<br> thereof to purchase one Common Share at an exercise price of US$0.0001, subject to adjustment,<br> until the February 2024 Pre-Funded Warrants are exercised in full. The February 2024 Pre-Funded<br> Warrants were exercised in full prior to the Company’s 2024 financial year end. | | --- | --- |

In connection with the February 2024 Public Offering, the Company issued 670,000 underwriter’s warrants (the “February 2024Underwriter’s Warrants”), with each February 2024 Underwriter’s Warrant entitling the holder thereof to purchase one Common Share at an exercise price of US$0.3375, subject to adjustment, until February 26, 2027.

On March 13, 2024, the Company announced that Knightscope, Inc. had selected Draganfly to jointly develop an autonomous security solution that combines Draganfly drones with Knightscope Autonomous Security Robots, emergency communications devices & Knightscope Security Operations Center user interface & remote monitoring platform.

As previously disclosed, on September 22, 2023, the Company received a letter from the Listing Qualifications ‎Department of Nasdaq notifying the Company of its noncompliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid ‎Price Rule”) by failing to maintain a minimum bid price for the Common Shares of at least $1.00 per ‎share for 30 consecutive business days. The Company was allowed an initial 180-day grace period, or until March ‎‎20, 2024, (the “Bid Price Compliance Period”), to regain compliance with the Bid Price Rule. To regain compliance ‎with the Bid Price Rule the closing bid price of the Common Shares needed to be at least $1.00 per share ‎for a minimum of ten consecutive business days during the Bid Price Compliance Period.

‎On March 21, 2024, the Company received notification that it had failed to regain compliance with the Bid Price ‎Rule and is not eligible for a second 180 day compliance period because of its failure to comply with the $5 million ‎minimum stockholders’ equity initial listing requirement for the period ended September 30, 2023. The ‎Company timely requested a hearing before the Nasdaq Panel. The hearing request automatically stayed any suspension or delisting action pending the hearing ‎and the expiration of any additional extension period granted by the Nasdaq Panel following the hearing. In April 2024, the Company received notification that it failed to comply with the minimum stockholders’ equity requirement which served as an additional and separate basis for delisting. Following the May 21st hearing, the Nasdaq Panel granted an additional extension period with regard to the Bid Price Rule that would expire on September 17, 2024. In addition, at the hearing, the Company presented a plan to regain compliance with the minimum stockholders’ equity requirement which plan the Company implemented on August 7, 2024 via amendments to warrants issued in October 2023 and in May 2024. On October 1, 2024, Nasdaq informed the Company that it had regained compliance with the Bid Price Requirement (via the 25:1 share consolidation) and the minimum stockholders’ equity requirement. The letter from Nasdaq further informed the Company that it is subject to a Mandatory Panel Monitor for a period of one year from October 1, 2024.

If, within that one-year monitoring period, the Company is again out of compliance with the minimum stockholders’ equity requirement, the Company will not be afforded the opportunity to present a plan of compliance to Nasdaq with respect to that deficiency nor additional time to cure that deficiency. Instead, Nasdaq will issue a Delist Determination Letter and the Company will have the opportunity to request a hearing before a Nasdaq Panel to respond to such letter.

On April 22, 2024, the Company announced a collaboration with communication experts Doodle Labs, and control systems specialists UXV Technologies. This collaborative effort is set to redefine operational capabilities for law enforcement, first responders, and military specialists. The collaboration combines the Company’s Commander 3XL UAV, Doodle Labs’ Helix Mesh Rider®Radio, and UXV Technologies Soldier Robotic Controller ground control station, together offering a secure, robust, and ruggedized solution for demanding missions.

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On April 24, 2024, the Company announced a memorandum of understanding with Squamish Search and Rescue (“SSAR”), pursuant to which Draganfly will serve as SSAR’s UAV solutions partner. SSAR and Draganfly will explore integrated continuous testing of equipment and operation procedures to meet the ever-demanding specialized SSAR operations. This work will enhance the Commander 3XL’s utility in various search and rescue training scenarios, further expanding its operational capabilities.

On April 25, 2024, the Company announced a strategic collaboration with ParaZero Technologies Ltd., a pioneer in drone safety systems aimed at enhancing the safety and efficacy of UAVs in medical and emergency response operations.

Pursuant to the Company’s prospectus supplement dated April 29, 2024, the Company completed an underwritten public offering in the United States, with Maxim acting as sole placement agent, and issued 13,513,514 units on May 1, 2024 for gross proceeds of approximately US$3.5 million (the “May 2024 Public Offering”), comprising the following:

(i)	‎‎7,063,514<br> units at a price of US$0.259 per unit, with each unit comprising of one Common Share and<br> one Common Share purchase warrant (the “May 2024 Warrants”). Each May<br> 2024 Warrant entitles the holder thereof to purchase one Common Share at an exercise price<br> of $0.3540 (Canadian equivalent of US$0.259), subject to adjustment, until May 1, 2029; and
(ii)	‎6,450,000<br> pre-funded units at a price of $0.2589 per unit, with each unit consisting of one pre-funded<br> Common Share purchase warrant (the “May 2024 Pre-Funded Warrants”) and<br> one May 2024 Warrant. Each May 2024 Pre-Funded Warrant entitles the holder thereof to purchase<br> one Common Share at an exercise price of $0.00014 (the Canadian dollar equivalent of US$0.0001),<br> subject to adjustment, until the May 2024 Pre-Funded Warrants were exercised in full prior<br> to the Company’s 2024 financial year end. The May 2024 Pre-Funded Warrants were exercised<br> in full prior to the Company’s 2024 financial year end.
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In connection with the May 2024 Public Offering, the Company issued 675,676 placement agent’s warrants (the “May 2024 Agent’sWarrants”), with each May 2024 Agent’s Warrants entitling the holder thereof to purchase one Common Shares at $0.4425 (the Canadian dollar equivalent of US$0.3236), subject to adjustment, until May 1, 2027.

On May 7, 2024, the Company announced the launch of its newest product, the FlexForce Modular FPV UAV System, available exclusively to Government & Military buyers following a FPV UAV Demonstration and Training. The NDAA-Compliant FlexForce FPV System features a set of quick-exchange assemblies, available in four-, seven- and ten-inch configurations.

On June 13, 2024, the Company announced that it was selected by First Atlantic Nickel Corp. to utilize its proprietary survey technologies and services to help explore for what could be the first awaruite and district scale nickel project in Atlantic Canada.

Andrew Hill Card and John M. Mitnick did not run for re-election as directors of the Company at the annual general meeting of the shareholders held on July 18, 2024.

On July 19, 2024, the Company announced results of its annual general meeting of shareholders held on July 18, 2024. In addition, the Company also announced the appointment of Kim G.C. Moody to the Board. Scott Larson was appointed the Interim Chair of the Company.

On July 25, 2024, the Company announced the appointment of Thomas B. Modly and Tim Dunnigan to the Board.

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On August 6, 2024, the Company announced the delivery of its newest Advanced First Responder assets to SSAR, inclusive of the Commander 3XL drone and modular payloads. In addition, the Company also announced that to enable each of the ‎October 2023 Warrants and May 2024 Warrants to be treated as shareholders’ equity, and not a derivative liability on the Company’s ‎balance sheet, holder of these warrants and the Company entered into an amendment agreements to amend certain provisions related to determining ‎the value of underlying Common Shares on completion of fundamental transactions in exchange for the exercise ‎price of each of the October 2023 Warrants and May 2024 Warrants being reduced by:

(i)	warrant<br> amendment agreement dated May 1, 2024 entered between the Company and holder of the October<br> 2023 Warrants, certain amendments to the terms of the October 2023 Warrants were amended<br> including revising the exercise price to $0.3583, being US$0.259, removing the cashless exercise<br> procedure, and changing the currency of the originally issued October 2023 Warrants to Canadian<br> dollars; and
(ii)	warrant<br> amendment agreement dated August 7, 2024 entered between the Company and holder of the October<br> 2023 Warrants and May 2024 Warrants, the exercise price of the October 2023 Warrants was<br> reduced to $0.2277 (Canadian equivalent of US$0.1646) and the exercise price of the May 2024<br> Warrants was reduced to $0.2250 (Canadian equivalent of US$0.1646).
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On August 12, 2024, the Company announced a strategic partnership with The Institute for Drone Technology, a leading drone solution provider for the Australian government and enterprise sectors. This agreement appoints The Institute for Drone Technology as a value-added distributor of the Company’s cutting-edge drone technology in Australia.

Pursuant to the Company’s prospectus supplement dated August 19, 2024, the Company completed an underwritten public offering in the United States, with Maxim acting as sole placement agent, and issued 16,666,666 units for gross proceeds of approximately US$2 million (the “August 2024 Public Offering”), comprising the following:

(i)	8,666,666<br> units at a price of US$0.12 per unit, with each unit consisting of one Common Share and one<br> Common Share purchase warrant (the “August 2024 Warrant”). Each August<br> 2024 Warrant entitles the holder thereof to purchase one Common Share at an exercise price<br> of $0.2048 (the Canadian dollar equivalent of US$0.15), subject to adjustment, until August<br> 21, 2029; and
(ii)	8,000,000<br> units at a price of US$0.12 per unit minus $0.00014 (the Canadian dollar equivalent of US$0.0001),<br> with each unit consisting of one pre-funded Common Share purchase warrant (the “August 2024 Pre-Funded Warrant”) and one August 2024 Warrant. Each August 2024 Pre-Funded<br> Warrant entitles the holder thereof to purchase one Common Share at an exercise price of<br> $0.00014 (the Canadian dollar equivalent of US$0.0001), subject to adjustment, until the<br> August 2024 Pre-Funded Warrants are exercised in full. The August 2024 Pre-Funded Warrants<br> were fully exercised in full prior to the Company’s 2024 financial year end.
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In connection with the August 2024 Public Offering, the Company issued 833,333 placement agent’s warrants (the “August 2024Agent’s Warrants”), with each August 2024 Agent’s Warrant entitling the holder thereof to purchase one Common Share at $0.2048 (the Canadian dollar equivalent of US$0.15), subject to adjustment, until August 21, 2027.

On September 5, 2024, the Company completed a consolidation of its issued and outstanding Common Shares on the basis of one post-consolidated Common Share for every 25 pre-consolidated Common shares (the “Consolidation”) which was given effect on September 5, 2024.

On September 10, 2024, the Company announced launch of its newest product, the APEX Drone, designed specifically to meet the demanding needs of military and law enforcement surveillance operations.

On September 17, 2024, the Company along with Nightingale Security, a leader in robotic aerial security, were selected by a major oil and gas company to develop a fully automated UAS solution for infrastructure monitoring. This project marks a significant step in leveraging advanced UAS remote sensing technology to enhance operational efficiency and safety in the oil and gas sector.

On September 24, 2024, the Company announced receipt of a purchase order from TB2 Aerospace (“TB2”) for Commander 3XL Drones to be deployed with TB2 Drone Recharging Operational Payload System Pods (“DROPS”) within the U.S. Department of Defense for various mission types. This order represents the beginning of the deployment and scaling of the DROPs system in conjunction with the Draganfly line of drones.

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On October 8, 2024, the Company announced Olen Aasen’s stepping down from the Board. In addition, Kim G.C. Moody was appointed as the new Audit Chair, Tim Dunnigan joined the Audit Committee, and Andrew Hill Card joined the advisory board of the Company.

Pursuant to the Company’s prospectus supplement dated November 18, 2024, the Company completed an underwritten public offering in the United States, with Maxim acting as sole placement agent, and issued 1,600,000 units for gross proceeds of approximately US$3.76 million (the “November 2024 Public Offering”), comprising the following:

(i)

400,000<br> units at a price of US$2.35 per unit on the post-Consolidation basis, with each unit consisting<br> of one Common Share and one Common Share purchase warrant (the “November 2024 Warrant”).<br> Each November 2024 Warrant entitles the holder thereof to purchase one Common Share at an<br> exercise price of $3.3086 (the Canadian dollar equivalent of US$2.35), subject to adjustment,<br> until November 19, 2029; and

(ii)

1,200,000<br> units at a price of US$2.3499 per unit on the post-Consolidation basis, with each unit consisting<br> of one pre-funded Common Share warrant (the “November 2024 Pre-Funded Warrant”)<br> and one November 2024 Warrant. Each August 2024 Pre-Funded Warrant entitles the holder thereof<br> to purchase one Common Share at an exercise price of $0.00014 (the Canadian dollar equivalent<br> of US$0.0001), subject to adjustment, until the November 2024 Pre-Funded Warrants are exercised<br> in full. The August 2024 Pre-Funded Warrants were fully exercised in full prior to the Company’s<br> 2024 financial year end.

‎In connection with the November 2024 Public Offering, the Company issued 80,000 placement agent’s warrants on the post-Consolidation basis (the “November 2024 Agent’s Warrants”), with each November 2024 Agent’s Warrant entitling the holder thereof to purchase one Common Share at $4.1357 (the Canadian dollar equivalent of US$2.9375), subject to adjustment, until November 19, 2027.

To enable each of the ‎October 2023 Warrants, May 2024 Warrants and August 2024 Warrants to be treated as shareholders’ equity, and not a derivative liability on the Company’s ‎balance sheet, the holders of these warrants and the Company entered into amendment agreements to amend certain provisions related to determining ‎the value of underlying Common Shares on completion of fundamental transactions in exchange for the exercise ‎price of each of the October 2023 Warrants, May 2024 Warrants and August 2024 Warrants in such number on a post-Consolidation basis being reduced to $3.3086 (Canadian equivalent to US$2.35) on a post-Consolidation basis.

On December 18, 2024, the Company announced the successful completion of initial flights as part of a proof-of-concept, research-and-development drone delivery project for Mass General Brigham Home Hospital.

January1, 2025 to the Effective Date

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On January 16, 2025, the Company announced a strategic collaboration with Volatus Aerospace Inc. (“Volatus”), a global provider of aerial solutions. This collaboration will address the growing demand for precision data acquisition in energy markets by integrating Volatus’ advanced Bathymetric sensor technology with the Company’s Heavy Lift Drone. Under the terms of the agreement, Volatus Aerospace will operate as an OEM approved dealer of the Company’s robust portfolio of multi-use UAV platforms, including the Heavy Lift Drone, Commander 3XL, and Apex Drones. These NDAA compliant drones will enrich Volatus’ current offerings, enabling more selection for its clients.

On January 23, 2025, the Company announced that it secured a Federal Aviation Administration waiver enabling its small unmanned aircraft to conduct operations over human beings and moving vehicles. This waiver marks a significant milestone for the Company and highlights its commitment to advancing the capabilities of UAV operations in complex urban environments. These regulatory exemptions reinforce the Company’s position as an innovator in the UAV space and showcase its readiness to meet the evolving needs of its defense, government, and commercial partners.

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On February 5, 2025, the Company confirmed through recent sales activities its positioning and preparedness to support the enhancement of border security amid evolving global trade and security uncertainties and shifting geopolitical dynamics.

On March 3, 2025, the Company announced an expansion of the strategic collaboration with Volatus, to address rapidly growing global demand for the automation and digitization of geospatial data collection and analysis solutions for Utility Infrastructure. This teaming agreement builds on the prior collaboration agreement, harnessing Volatus’ operational and regulatory capabilities, advanced sensor technology and Draganfly’s advanced product, engineering, and integration capabilities. This expanded collaboration will engage high-profile global power and infrastructure providers to enhance efficiency and safety in power utility solutions.

On March 10, 2025, the Company announced the establishment of its new U.S. location in Tampa, Florida. Strategically positioned near key military and government clients, this expansion includes a demonstration and live fire testing facility, reinforcing Draganfly’s commitment to delivering cutting-edge drone solutions to its U.S. customers.

On March 20, 2025, the Company announced the appointment of Christopher Miller to the Board.

SignificantAcquisitions During 2024

Draganfly did not complete any significant acquisitions during its most recently completed financial year for which disclosure is required under Part 8 of National Instrument 51-102 — Continuous Disclosure Obligations of the Canadian Securities Administrators.

Marketfor Securities

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TradingPrice and Volume of Common Shares

The Common Shares are listed and posted for trading on the CSE and Nasdaq under the symbol “DPRO”. The ‎following table sets forth the price range (high and low prices) in Canadian dollars of the Common ‎Shares and volume traded on the CSE, for the periods indicated ‎(as reported by the CSE)‎‎.

Period	High (C)	Low (C)	Volume
2024
January*				612,188
February*				4,550,499
March*				1,871,072
April*				2,400,602
May*				1,356,569
June*				469,942
July*				505,402
August*				2,621,665
September				130,231
October				75,705
November				129,539
December				253,114
2025
January				‎166,676‎
February				77,338
March 1 – 26				61,908

All values are in US Dollars.

* The information reflects prices and volumes on the pre-Consolidation basis.

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The ‎following table sets forth the price range (high and low prices) in United States dollars of the Common ‎Shares and volume traded on the Nasdaq, on a post-Consolidation basis, for the periods indicated ‎(as reported by the Nasdaq)‎‎.

Period	High ()	Low ()	Volume
2024
January*				4,562,100
February*				36,962,400
March*				23,200,000
April*				25,079,900
May*				28,903,600
June*				9,226,800
July*				16,180,800
August				10,813,137
September				3,833,931
October				2,029,737
November				7,556,033
December				12,134,210
2025
January				4,936,794
February				1,821,396
March 1 - 26				1,945,642

All values are in US Dollars.

* The information reflects prices and volumes on the pre-Consolidation basis.

PriorSales

The following tables summarize the issuances of unlisted securities for the year ended December 31, ‎‎2024 and issuances subsequent to December 31, 2024 and as of the date of this report. Unless otherwise specified, the numbers and prices contained in the table below are presented on the pre-Consolidation basis.

Warrants

Date of Issuance	Number of Warrants Issued			Exercise Price
February 26, 2024		13,400,000	^(1)^	US$	0.36
February 26, 2024		2,200,000	^(1)^	US$	0.0001
February 26, 2024		670,000	^(1)^	US$	0.3375
May 1, 2024		13,513,514	^(2)(4)^	C$	0.354	^(4)^
				(US$	0.259	)^(4)^
May 1, 2024		6,450,000	^(2)^	C$	0.00014
				(US$	0.0001	)
May 1, 2024		675,676	^(2)^	C$	0.4425
				(US$	0.3236	)
August 21, 2024		16,666,666	^(3)(6)^	C$	0.2048	^(6)^
				(US$	0.15	)^(6)^
August 21, 2024		8,000,000	^(3)^	C$	0.00014
				(US$	0.0001	)
August 21, 2024		833,333	^(3)^	C$	0.2048
				(US$	0.15	)
November 19, 2024		1,600,000	^(5)^	C$	3.3086	^(5)^
				(US$	2.35	)^(5)^
November 19, 2024		1,200,000	^(5)^	C$	0.00014	^(5)^
				(US$	0.0001	)^(5)^
November 19, 2024		80,000	^(5)^	C$	4.1357	^(5)^
				(US$	2.9375	)^(5)^

Notes:

(1)	Representing<br> 13,400,000 February 2024 Warrants, 2,200,000 February 2024 Pre-Funded Warrants and 670,000<br> February 2024 Underwriter’s Warrants issued pursuant to the February 2024 Public Offering<br> on a pre-Consolidation basis. The exercise prices corresponding to these warrants are also<br> presented on a pre-Consolidation basis.

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| --- | | (2) | Representing<br> 13,513,514 May 2024 Warrants, 6,450,000 May 2024 Pre-Funded Warrants and 675,676 May 2024<br> Agent’s Warrants issued pursuant to the May 2024 Public Offering on a pre-Consolidation<br> basis. The exercise prices corresponding to these warrants are also presented on a pre-Consolidation<br> basis. | | --- | --- | | (3) | Representing<br> 16,666,666 August 2024 Warrants, 8,000,000 August 2024 Pre-Funded Warrants and 833,333 August<br> 2024 Agent’s Warrants issued pursuant to the August 2024 Public Offering on a pre-Consolidation<br> basis. The exercise prices corresponding to these warrants are also presented on a pre-Consolidation<br> basis. | | (4) | The<br> Company and the holder of these May 2024 Warrants entered into an amendment agreement on<br> November 19, 2024, whereby the exercise price of each warrant in such number converted on<br> the post-Consolidation basis was reduced to $3.3086 (or US$2.35) per share on a post-Consolidation<br> basis. As a result, each of the 540,541 May 2024 Warrants (calculated on a post-Consolidation<br> basis based on the original number of 13,513,514 May 2024 Warrants) have now a reduced price<br> of $3.3086. | | (5) | Representing<br> 1,600,000 November 2024 Warrants, 1,200,000 November 2024 Pre-Funded Warrants and 80,000<br> November 2024 Agent’s Warrants issued pursuant to the November 2024 Public Offering<br> on a post-Consolidation basis. The exercise prices corresponding to these warrants are also<br> presented on a post-Consolidation basis. | | (6) | The<br> Company and the holder of these August 2024 Warrants entered into an amendment agreement<br> on November 19, 2024, whereby the exercise price of each warrant in such number converted<br> on the post-Consolidation basis was reduced to $3.3086 (or US$2.35) per share on a post-Consolidation<br> basis. As a result, each of the 666,667 August 2024 Warrants (calculated on a post-Consolidation<br> basis based on the original number of 16,666,666 August 2024 Warrants) have now a reduced<br> price of $3.3086. |

StockOptions

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No stock options were granted during the Company’s financial year ended 2024.

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RestrictedShare Units

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During the Company’s financial year ended December 31, 2024, the Company awarded restricted share units (“RSUs”) pursuant to its share compensation plan exercisable for an aggregate of 4,630,443 Common Shares on a pre-Consolidation basis or approximately 185,218 Common Shares on a post-Consolidation basis.

Date of Award	Number of <br> RSUs Awarded		Award Date <br> Fair Value
May 20, 2024		4,658,320	C$	0.36

The award date is not a trade day. The fair value indicated above represents the closing price of the Common Share on May 17, 2024, the last trade day before the award.

EscrowedSecurities

The following table summarizes the Company’s securities that remain in escrow or subject to restrictions ‎‎on transfer as of the date hereof:

Designation of Class‎	Number of securities held in ‎<br> <br>escrow or that are subject to ‎<br> <br>contractual restriction on transfer			Percentage <br> of Class
November 2024 Agent’s Warrants		80,000	^(1)^		100	%

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Notes:

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(1)	The<br> November 2024 Agent’s Warrants were issued and are subject to a contractual restriction<br> on exercising such that these warrants may only be exercised after May 19, 2025, and may<br> not be transferred, other than pursuant to exceptions under FINRA Rule 5110(e)(2) for a period<br> of 180 days from the commencement of sales made under the November 2024 Public Offering.

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Dividends

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The Company has not declared or paid a dividend. Other than the requirements of the BCBCA, there are ‎‎no restrictions on the Company that would prevent it from paying a dividend. However, as of March 27, 2025, the Board intends to retain any future earnings (when available) for ‎reinvestment in ‎the Company’s business, and therefore, it has no current intention to declare or pay ‎dividends on the ‎Common Shares in the foreseeable future. Any future determination to pay dividends ‎on the Common ‎Shares will be at the sole discretion of the Board of Directors after considering a variety ‎of factors and ‎conditions existing from time to time including its earnings, financial condition and other ‎relevant factors.

LegalProceedings and Regulatory Actions

Draganfly is not, and has not been at any time within the most recently completed financial year, a party ‎to any legal proceedings, nor is or was Draganfly’s property the subject of any legal proceedings, known ‎or contemplated, that involves a claim for damages exclusive of interest and costs that met or exceeded ‎‎10% of the Company’s current assets.‎

Further, there have not been any (a) penalties or sanctions imposed against the Company by a court ‎relating to securities legislation or by a securities regulatory authority during the year ended December ‎‎31, 2024, (b) any other penalties or sanctions imposed by a court or regulatory body against the ‎Company that would likely be considered important to a reasonable investor in making an investment ‎decision, or (c) settlement agreements entered into by the Company before a court relating to securities ‎legislation or with a securities regulatory authority during the year ended December 31, 2024‎.

Interestsof Management and Others in Material Transactions

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Other than as set forth herein, or as previously disclosed, the Company is not aware of any material ‎interests, ‎direct or indirect, by way of beneficial ownership of securities or otherwise, of any director or ‎executive officer ‎or any shareholder holding more than 10% of the Common Shares or any associate or ‎affiliate of any of the ‎foregoing in any transaction within the three most recently completed financial ‎years or during the current ‎financial year or any proposed or ongoing transaction of the Company which ‎has or will materially affect the ‎Company.

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Auditor,Transfer Agent and Registrar

The auditors of the Company are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional ‎Accountants, 1500-1700, 1140 W Pender Street, Vancouver, BC V6E 4G1.‎

Endeavor Trust Corporation is the transfer agent and registrar for the Common Shares at its principal ‎office in Vancouver, British Columbia‎.

Interestsof Experts

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There is no person or company whose profession or business gives authority to a statement made by ‎such person or company and who is named as having prepared or certified a statement, report or ‎valuation described or included in a filing, or referred to in a filing, made under NI 51-102 by the ‎Company during, or related to, the Company’s most recently completed financial year other than Dale ‎Matheson Carr-Hilton Labonte LLP, the Company’s auditors.‎

Dale Matheson Carr-Hilton Labonte LLP are the auditors of the Company and have confirmed that they ‎are independent with respect to the Company within the meaning of the relevant rules and related ‎interpretations prescribed by the relevant bodies in Canada and any applicable legislation or regulations.‎

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Denis Silva, a director of the Company, is a lawyer at DLA Piper (Canada) LLP, which law firm provides ‎legal services to the Company. As of the date hereof, the associates and partners of DLA Piper ‎‎(Canada) LLP, as a group, beneficially own, directly or indirectly, less than 1% of the outstanding ‎Common Shares. ‎

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AdditionalInformation

Additional information about the Company is available on SEDAR+ at www.sedarplus.ca and on our website at www.draganfly.com. We do not incorporate the contents of our website or of www.sedarplus.ca into this Annual Report. Information on our website does not constitute part of this Annual Report. In addition, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC which can be viewed as www.sec.gov.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal ‎holders of ‎Draganfly’s securities and securities authorized for issuance under equity compensation ‎plans, where applicable, ‎will be contained in ‎Draganfly’s information circular for the next annual meeting ‎of shareholders that involves the ‎election of directors and additional information as provided in ‎‎Draganfly’s comparative financial statements for its ‎most recently completed financial year. Draganfly ‎will provide this information to any person, upon request made ‎to the Chief Financial Officer of ‎‎Draganfly at 235 103rd St E, Saskatoon, SK, S7N 1Y8, Canada. The ‎documents will also be ‎located on SEDAR+ at www.sedarplus.ca.‎

Additional financial information is provided in the Company’s comparative financial statements and ‎‎management’s discussion and analysis for the period ended December 31, 2024, which are also ‎available on ‎SEDAR+.‎

4.B.	Business Overview

General

The Company is an award-winning, manufacturer, contract engineering, and product ‎development ‎company within the UAV space, serving the public safety, agriculture, industrial ‎inspections, and mapping and surveying ‎markets. The Company is driven by passion, ingenuity, and the ‎need to provide efficient solutions and first-class ‎services to its customers around the world with the ‎goal of saving time, money, and lives. ‎

The business of the Company is conducted through three wholly-owned subsidiaries: (a) Draganfly ‎Innovations Inc.; (b) ‎Draganfly Innovations USA Inc.; and (c) Dronelogics Systems Inc.‎

The business of Draganfly Innovations and Draganfly Innovations USA is the provision of engineering ‎services and ‎manufacture of commercial UAV, RPAS, and ‎‎UVS (unmanned vehicle system) and software, serving the public safety, ‎agriculture, industrial inspections, and ‎mapping and surveying markets. ‎

‎Dronelogics is a solutions integrator for custom robotics, hardware and software that provides a wide ‎scope of ‎services including sales, training, rentals, maintenance, flying and data processing services. ‎

DroneIndustry Overview

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Drones or UAV have rapidly evolved from a military origin to commercial and civil government ‎‎applications from security to farming. The increased automation of drones provides additional value to ‎‎existing workflows, triggering more widespread adoption. A global shift to sustainable and eco-friendly ‎‎options has further increased demand for drone usage.‎

Drone applications are being utilized in multiple industries on a global basis. The Company believes that defense will remain the ‎‎largest market over the foreseeable future. However, the mobile phone industry created an affordable ‎‎technology stack for drones. The ability to carry a camera enabled many people to utilize the platforms ‎‎for media production and beyond. That demand initiated in the consumer market and has migrated along ‎‎with technological advancements into the growth of commercial drone industry.‎

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The major segments of the drone market are drone hardware, software and services. Drone hardware are ‎‎the physical goods, including drone platforms, aerial mobility platforms and components and systems. ‎‎The software segment includes flight planning, navigation and computer vision, unmanned traffic ‎‎management (“UTM”), fleet operations, ecosystems, networks and software development kits (“SDKs”). ‎Drone ‎services include the provision of flight operations, data analysis and hardware repair and mainte‎nance. Drone service providers ‎‎(“DSPs”) include system integrators, pilot training providers, retailers ‎and marketplaces, coalitions and ‎organizations, drone test sites, insurance providers and universi‎ty/educational facilities. The commercial drone industry has been growing rapidly in recent years, with ‎drones becoming increasingly popular for a wide range of applications. From capturing aerial footage to ‎conducting inspections of infrastructure, drones offer a cost-effective and efficient solution to a range ‎of tasks. According to Teal Group, the global market for commercial drones is expected to reach $18.88 ‎billion by 2030, with strong demand coming from industries such as agriculture, construction, and logis‎tics. ‎

One of the biggest drivers of growth in the commercial drone industry is the availability of advanced ‎technologies such as Artificial Intelligence (“AI”), machine learning, and computer vision. These technolo‎gies enable drones to perform a wide range of tasks that were previously difficult or impossible, such as ‎automated inspections and precision agriculture. Additionally, the development of high-quality, light-‎weight sensors and cameras has made it possible to capture high-resolution images and video footage, ‎in challenging environments.‎

Drone application methods are being used by a variety of industries today. There are approximately ‎‎eight methods that are garnering the most attention: mapping, surveying, inspection, ‎‎filming/photography, dispensing/spraying, warehousing, monitoring/detection, and delivery. These ‎‎applications are being used today by the civil government, educational facilities, agricultural, ‎‎construction, health care, real estate, energy, transportation, insurance, security, and scientific industries.

Productsand Services

The Company can provide its customers with an entire suite of products and services that include: quad-‎copters, ‎‎‎fixed wing ‎aircrafts, ground based robots, handheld controllers, flight training, and software ‎used for tracking, live ‎‎‎streaming, ‎and data collection. In addition, Draganfly has a ‎health/telehealth platform that is a set of ‎technologies ‎that remotely detects a number of biometrics such as heart rate, oxygen saturation and blood ‎pressure. The Company is also offering ‎sanitary spraying services to indoor and outdoor public ‎gathering spaces ‎such as sport stadiums and ‎fields to provide additional protection against the spread of contagions, such as COVID-‎‎19. ‎ ‎

The Company generates revenues across the following categories

	Revenues
	Fiscal year ended December 31,
Category of Activity	2024		2023		2022
Product Sales	$	5,426,313	$	‎5,287,093‎	$	5,550,432
Provision of Services	$	1,196,803	$	‎1,267,749‎	$	2,054,627

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The Company did not derive significant revenue from any customers that exceed 10% ‎of total revenues for ‎the year ended December 31, 2024, or December 31, 2023.

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DraganflyProducts

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‎‎Manufactured Solutions

‎The Company is among the longest-running manufacturers of multirotor drones in the world. Draganfly’s ‎drones include the following:‎

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Draganfly Commander 3XL - The Commander 3 XL Drone is a modular platform capable of carrying payloads of more than 20 pounds making it<br> the ideal choice for industry leaders across a variety of major markets including public safety and agriculture. The Commander 3<br> XL Drone’s fuselage consists of a simple rectangular tube. Each component of the drone has been specifically designed to ensure<br> the airframe can pack down into a transportable case.

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| --- | | ● | Draganfly Heavy Lift Drone - The Draganfly Heavy Lift Drone is a versatile, multi-rotor UAV, designed to enhance deliveries and flight<br> times. Compatible with a variety of interchangeable payloads, this heavy-duty drone can carry more and fly longer. The DHL Drone<br> can be configured to carry up to 67 pounds. | | --- | --- | | ● | Draganflyer Commander2 ‎– The Draganflyer Commander2 is a multi-mission, high-endurance, electric sUAS that ‎combines the signature<br> design elements of our past Draganflyer systems with the most advanced features ‎to date. The Commander2 can be used for numerous<br> applications across many industries including ‎agriculture, public safety, and aerial 3D modeling. Paired with powerful MAVLink-based<br> flight planning ‎software, the Draganflyer Commander2 supports both fully- and semi-automated missions, as well as ‎manual<br> flight operations with a pilot in the loop for a high level of system control to handle any ‎operational task‎. | | ● | Draganfly Medical Response – The Draganfly Medical Response Drone is an integrated solution that features a Draganfy Drone combined<br> with a cold-chain logistics enclosure. This solution is able to provide first responders with visual oversight of a scene and ensures<br> the timely delivery of temperature-sensitive medical supplies including blood, vaccines and test samples to dangerous or hard-to-reach<br> areas. | | ● | Draganfly Long Range LiDAR - Draganfly’s Long Range LiDAR (DLR- LiDAR) system provides accurate distance measurements and improved<br> resolution over conventional photogrammetry methods. The cutting-edge sensor technology can be mounted on UAV, airplanes, and helicopters<br> for those professionals requiring precision imagery. | | ● | Tango2 – a high endurance, dual battery, sUAS capable of carrying a wide array of payload systems. The aircraft utilizes the Draganfly<br> intelligent power management system to extend flight time while increasing safety. This sUAS is ideal for agricultural monitoring<br> and research, mapping, surveying, environmental monitoring, and search and rescue. |

Universal Control System

The Draganfly Universal Control System is a complete, handheld ground control system that is built to ‎‎integrate ‎with other software and hardware systems. The Draganfly Universal Control System is designed ‎‎to provide precise ‎control over sUAS helicopters, fixed-wing, and ground-based robots. Draganfly ‎‎software provides sophisticated ‎flight planning, automated takeoff, grid following, waypoints, landing, ‎‎data collection, and video downlink.‎

Software

The Draganfly Surveyor drone flight planning software is an intuitive, easy to use, application that ‎‎enables ‎customers to quickly plan, fly, and process meaningful data. Based on the project, camera type, ‎‎optics, and ‎altitude, the drone software determines the appropriate camera shutter interval, aircraft ‎‎speed, and flight plan to ‎capture the optimum required photo overlap to generate 2D and 3D maps and ‎‎models. The Draganfly Surveyor ‎directly integrates with Pix4Dmapper for survey-grade results and can ‎‎be used alongside other third-party ‎photogrammetry programs.‎

Vital Intelligence

The Draganfly Vital Intelligence platform is a touchless health ‎assessment system that leverages ‎proprietary machine-vision methods to measure biometrics such as heart rate, oxygen saturation and ‎blood pressure. Vital ‎Intelligence is a data platform that turns an existing camera into a touchless ‎ ‎detection system. Draganfly integrates this technology into a ‎variety of ‎platforms and camera systems – ‎both on the ground and in the air – to support use cases such as visitor intake and other general health ‎and wellness applications.‎

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DraganflyServices

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Custom Engineering

Draganfly is a contract engineering partner for government agencies, enterprise organizations, academic ‎institutions, ‎and businesses of all sizes. The Draganfly team’s truest capabilities are actualized during the ‎engineering process as ‎hardware designers, software designers, engineers, project managers, and ‎vertical-specific experts come together to ‎build custom drone solutions for its partners. Draganfly’s end-‎to-end engineering services include‎:

●	Hardware<br> design: Component, product, and system design;
●	Software<br> design: Custom software and interface design;
●	Development:<br> Including integration with third party platforms, PixX4D, Pixhawk, Ardupilot, DJI ‎and ‎more‎;
●	Modeling:<br> 3D design and modeling of mechanical components;
●	ITAR<br> ‎(International Traffic in Arms Regulations) equipment management: Approved handling and integration ‎of ITAR, and Controlled<br> Goods ‎technologies‎; and
●	Support:<br> Testing, training, documentation, and repairs.

Training

Draganfly offers custom-designed training packages that are tailored to specific operations and use ‎‎cases. The ‎Company also offers basic training for new UAV owners, and advanced classes for users ‎‎who understand the ‎fundamentals and are looking for new ways to increase flight efficiency or comply ‎‎with federal regulations‎.‎

Flight Services

Draganfly has a team of qualified pilots that conduct flights on behalf of its customers. The team ‎‎specializes in ‎working with emergency services including police, fire, and search and rescue personnel. ‎‎Draganfly also supports ‎industrial applications, utility and power companies, environmental and ‎‎agricultural entities and others‎.

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Geographic Information Systems (GIS) Data Services

Draganfly has a team of qualified GIS Data Specialists and Surveyors that support the delivery of ‎services to clients in various markets. These services include the creation and maintenance of data sets ‎of spatial analysis. ‎

Spraying Services

Draganfly operates, in partnership with a leader in natural and organic disinfectants, to ‎administer a sanitization spraying service in large public venues by misting a surface spray across the ‎entire venue in four to six hours.‎

PrincipalMarkets

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Draganfly has more than 20 years of experience designing and manufacturing professional drones for ‎military, public safety, energy, agriculture, and insurance. Draganfly has sold products and services to a number of countries but predominantly focuses on the North American market given its geographical ‎location.‎

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Militaryand Government

Military and government contractors have partnered with Draganfly to improve personnel and ‎infrastructure ‎‎safety. Draganfly works with partners to design and manufacture custom airframes, design ‎and develop ‎payloads, ‎and manage complex flight operations. Draganfly team members hold advanced ‎pilot ‎certificates and are ‎approved to fly in controlled airspace and at airports. Since the Company’s ‎‎development team is cleared by ‎Canada’s Controlled Goods Program, the team is permitted to handle ‎‎ITAR equipment and technologies, and the ‎Company’s facilities are built to protect those technologies ‎‎and ensure they are only handled by approved ‎personnel.‎

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PublicSafety

In 2013, the Royal Canadian Mounted Police flew one of the Company’s drones to locate and save the ‎life of an ‎accident victim, which we believe was one of the first times a public safety organization used a ‎UAV to save a life. ‎Years later, the Company is still using drone technology to keep the public ‎safe. Draganfly works with its ‎partners to identify ‎unknowns, such as substances, spills, packages, and ‎chemicals while not putting human lives at ‎risk‎. ‎Draganfly builds aerial and ground systems with custom ‎payloads and sensors to scan scenes, survey ‎public ‎events, locate objects, and clear debris faster and ‎more safely than on-the-ground manpower. The ‎Company also ‎empowers its partners to maximize ‎existing infrastructures via custom application programming interface integrations ‎that ensure Draganfly’s ‎technology enhances their ‎safety systems‎.

Environmentaland Energy

Draganfly offers a suite of commercial UAV solutions for energy companies and those servicing the ‎‎energy market, ‎like surveyors and consultants. Draganfly equips energy companies with the hardware ‎‎and software they need to ‎optimize existing operations, improve safety, and respond after a natural ‎‎disaster. Partners can use Draganfly ‎hardware and 3D modeling software to remotely inspect sites that ‎‎would put human lives at risk. They also conduct ‎environmental monitoring with Draganfly’s sample ‎‎collection solutions, assessing water and ground pollution, gas ‎composition, infrastructure, and other ‎‎environments.‎

Agriculture

Draganfly works with its partners to collect high-quality data, using multi- and hyper-spectral imaging, 3D ‎modeling, and a suite of sophisticated sensor technology that assesses environmental factors. Seed ‎companies use Draganfly technology to optimize growth season, measuring seed trial results throughout ‎the research and development process. Farmers can use Draganfly flight and data collection services to ‎monitor hectares of land year-round, assessing factors like fertilizer efficiency, weed production, and ‎more. ‎

Operations

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CanadianOperations

Draganfly Innovation Inc.’s products are manufactured at its machine shop within its leased head office ‎based in Saskatoon, Saskatchewan, Canada. Draganfly Innovations Inc. operates the fully operational ‎leased facility located at 235 103rd St E, Saskatoon, SK, S7N 1Y8, Canada. This facility is to be used only for ‎the purposes of Draganfly Innovations Inc. operating its business of design, development, production, ‎distribution, sale and/or licensing of drones or robots, or such other use as permitted by the landlord ‎from time to time. ‎

Dronelogics Systems Inc.’s products and services are provided through its leased space located at Unit 319, 2999 ‎Underhill Avenue, ‎Burnaby, British Columbia‎. ‎

‎UnitedStates Operations

‎The Company, through its wholly-owned subsidiary, Draganfly Innovations USA Inc., has a storage facility in Hoschton, Georgia that currently stores some inventory for operations in the ‎United States‎. ‎

The Company has derived its revenues across the following primary geographic market segments for the last three fiscal years:

	Revenues
	Fiscal year ended December 31,
Region	2024		2023		2022
Canada	$	6,585,402	$	‎6,162,672‎	$	6,919,038
United States	$	37,714	$	‎392,170‎	$	686,021

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CompetitiveConditions

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Although Draganfly is acknowledged as a drone industry pioneer that we believe was the first to develop ‎the ‎commercial multi rotor ‎helicopter, there ‎are now many drone hardware companies in the world. As ‎technology ‎has ‎improved ‎and costs for hardware and software have come down, the line between ‎consumer and commercial ‎‎‎drones has blurred, enabling the rise of Prosumer drones. A Prosumer drone ‎is a drone is designed to satisfy elements of professional and consumer segments, often featuring ‎integrated sensors designed to deliver a combination of performance and value with little ability to ‎customize the drone for the required use-case. Historically, Draganfly has serviced early adopters in the ‎public safety industry. At ‎this stage of ‎‎the commercial drone adoption curve, the average public safety ‎organization (local, ‎regional, and even federal law ‎‎enforcement, for example), has been introduced to ‎drones through the adoption of Consumer and Prosumer platforms. Hence, these ‎organizations tend to ‎use lower cost drones ‎‎that have become quite sophisticated that can accomplish ‎most of their use ‎cases. The dominant companies in the ‎industry are Chinese drone manufacturers that ‎are reputed to ‎comprise a substantial portion of the consumer and now commercial ‎drone ‎market. The majority of foreign manufactured ‎‎drones are geared towards broad applications involving the masses. Draganfly ‎has ‎moved away from ‎‎competing directly with these companies and in some cases sells these products through its subsidiary, ‎‎Dronelogics Systems Inc., or ‎has chosen to serve niche markets outside of where the foreign ‎manufactured drones tends to ‎be. ‎There are also ‎some organizations that tend to be US based that ‎either prefer or are mandated to not use ‎foreign ‎drones such as ‎those produced by China. Some of ‎these organizations are sensitive to their work ‎being exposed to that ‎of overseas ‎governments which has ‎at least for the time being, created a niche ‎market for players such as ‎Draganfly. The ‎combined shift ‎away from foreign made drones (national security issues) and regulatory improvements by the FAA ‎in ‎respect of drone usage is driving industry demand. As Draganfly has evolved to move with the industry ‎trends, ‎the ‎Company now uses some third party hardware and software as part ‎of some of its ‎customization and engineering services work. ‎Draganfly ‎has also moved into innovative engineering ‎‎procurement which is very specialized. As the drone industry matures, ‎this may bring more competitors ‎to this space or ‎the ‎Company’s customers may choose to develop the in-house ‎expertise to do the work ‎that they currently ‎‎outsource to Draganfly. However, it is the Company’s view that there ‎will be a growing ‎customer base ‎that will ‎require specialized drone hardware, software and service solutions outside of ‎the capabilities of the consumer & prosumer drone platforms that only a handful of companies can do.‎

The market remains highly competitive. Private equity continues to actively capitalize drone start-ups ‎.

RegulatoryFramework

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A new regulatory framework relating to the use of drones in Canada was published by Transport ‎Canada ‎‎in ‎January 2019 and came into effect on June 1, 2019. The changes, published in the ‎Canadian Aviation ‎‎Regulations ‎‎(“CARs”), Part IX, introduce new rules based on the weight of the RPA and the intended ‎‎operation. This framework ‎creates three broad ‎categories of RPAS: (i) small RPAS in limited (low risk) ‎‎operations (“Small RPAS Basic”); (ii) ‎‎small RPAS in advanced (complex) operations (“Small RPAS ‎‎Advanced”); and (iii) all other RPA ‎operations that ‎fall outside (i) and (ii) above. These regulations focus ‎‎on foundational issues ‎such as aircraft marking and ‎registration, pilot knowledge and certification, ‎‎airworthiness of the ‎aircraft, and flight rules.‎

‎Small RPAS Basic are defined as RPAS weighing between 250 grams and 25 kilograms and operated in ‎‎rural ‎and ‎unpopulated areas. These RPAS will require identification markings, including name, address ‎‎‎and contact ‎information of the owner and pilot of the RPA. Pilots must be at least 14 years of ‎age and ‎‎must hold a valid Basic ‎RPA licence that is specific to small drones. Additional ‎restrictions are imposed ‎‎that include that the RPA cannot ‎operate: (i) within approximately 30 meters of ‎people or open-air ‎‎assemblies of people, (ii) above 400 feet, (iii) ‎within approximately 1.85 kilometers of ‎heliports or (iv) ‎‎within approximately 5.5 kilometers of airports. These ‎regulations require the RPA to ‎always be operated ‎‎within visual line-of-sight.‎

‎

The RPA will be assigned a unique ‎identification/registration number issued by ‎‎Transport ‎Canada. Pilots must be at least 16 years of age and must ‎hold a valid Advanced RPAS license ‎‎‎that is specific to small drones. Approval for operation must be granted by Air ‎Traffic Control ‎when ‎‎operating in controlled airspace or near controlled aerodromes. A set of flight rules must be ‎‎followed at ‎‎all times for these more complex operations. Restrictions, including distances from ‎people, are ‎‎‎determined based on the safety certification of the RPA being operated.‎

The current legislation utilizes a similar Special Flight Operations Certificate (“SFOC”) application ‎‎‎process, as the ‎previous regulations, to approve any operations that do not fit within the ‎regulatory ‎‎regime set out above, such as ‎operating beyond visual-line-of-sight. For those wishing ‎to operate ‎‎outside of the regulatory framework set out in ‎CARs, part IX, there will be a variety of ‎SFOC application ‎‎processes tailored to the nature and use of the RPA. The ‎more complex and ‎riskier the proposed ‎‎operation, the more thorough and detailed the SFOC application process.‎

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‎Those operators requiring an SFOC must apply to the Transport Canada Civil Aviation Regional ‎Office at ‎‎least 30 ‎working days prior to the date of the proposed RPAS operation. Transport ‎Canada has wide ‎‎discretion in reviewing ‎and approving SFOC applications; however, to date the ‎Company has never been ‎‎refused an SFOC for which it has ‎applied. The purpose of the SFOC ‎application review is to ensure that ‎‎the proposed operation is safe and associated ‎risks have ‎been adequately mitigated by the Company.‎

Draganfly operates in accordance with Part IX - Remotely Piloted Aircraft Systems, of Transport Canada’s Canadian Aviation Regulations and Standards, which is periodically updated and governs the safety assurance and operations of Remotely Piloted Aircraft Systems with Canada.

The Company is currently fully compliant with all current regulatory requirements and has applied ‎for, and ‎‎received ‎Transport Canada approval for several SFOCs.‎

Seasonality

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In terms of financial performance, the fourth quarter tends to be the weakest quarter for the Company due to the Company’s customers closing down for a few weeks for the holiday season coupled with poorer weather conditions for flying drones and performing drone services.

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Components

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The Company obtains hardware components, various subsystems and systems, and raw materials from ‎a limited group of suppliers. The Company does not have long-term agreements with any of these ‎suppliers that obligate such suppliers to continue to sell components, subsystems, systems or products ‎to the Company. The Company’s reliance on these suppliers involves significant risks and uncertainties, ‎including whether suppliers will provide an adequate supply of required raw materials, components, ‎subsystems, or systems of sufficient quality, will increase prices for the raw materials, components, ‎subsystems or systems, and will perform their obligations on a timely basis. See “‎Item 3.D.‎ Risk Factors”.‎

IntangibleProperties

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Intangibles such as patents, software, specific technology know-how, and applications expertise all have ‎a significant effect on the Company’s business. At present, drone delivery technology cannot be ‎purchased as an off-the-shelf solution; therefore, the Company has been focused on developing ‎proprietary technology which meets or exceeds anticipated Canadian government requirements. By virtue ‎of being the first commercial ‎UAV company in the industry, the Company’s subsidiary, Draganfly ‎Innovations, holds commercial patents. ‎

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As at the Effective Date, the Company has the following patents and patents pending in the application ‎stage in its portfolio and intends to continue to expand and grow its intellectual property portfolio: ‎

Title	Country	Application<br> No.	Issue<br> Date	Patent<br> No.	Status
Multi Rotor UAV With Compact Folding<br> Rotor Arms	Canada	2,917,434	4/23/2019	2,917,434	Issued
Vehicle with Aerial and Ground Mobility	Canada	2,787,279	10/22/2013	2,787,279	Issued
Vertical Takeoff and Landing Unmanned Aircraft<br> System	Canada	2,935,793	1/15/2021	2,935,793	Issued
Wheel with Folding Segments	Canada	2,787,075	10/29/2013	2,787,075	Issued
Action Camera System for Unmanned Aerial Vehicle	United States	15/707,752	1/22/2019	10,187,580	Issued
Action Camera System for Unmanned Aerial Vehicle	United States	14/533,995	9/19/2017	9,769,387	Issued
Cascade Recognition for Personal Tracking via<br> Unmanned Aerial Vehicle (UAV)	United States	14/642,370	7/18/2017	9,710,709	Issued
Cascade Recognition for Personal Tracking via<br> Unmanned Aerial Vehicle (UAV)	United States	15/651,672	2/13/2018	9,892,322	Issued
Cascade Recognition for Personal Tracking via<br> Unmanned Aerial Vehicle (UAV)	United States	15/894,292	10/8/2019	10,438,062	Issued
Dual Rotor Helicopter with Tilted Rotational<br> Axes	United States	12/458,608	11/8/2011	8,052,081	Issued
Helicopter with Folding Rotor Arms	United States	13/200,825	10/23/2012	8,292,215	Issued
Multi Rotor UAV With Compact Folding Rotor<br> Arms	United States	14/994,080	7/31/2018	10,035,581	Issued
Pixel Based Image Tracking System For Unmanned<br> Aerial Vehicle (UAV) Action Camera System	United States	15/256,193	10/10/2017	9,785,147	Issued
Pixel Based Image Tracking System for Unmanned<br> Aerial Vehicle (UAV) Action Camera System	United States	14/825,956	9/13/2016	9,442,485	Issued
Real Time Noise Reduction System for Dynamic<br> Motor Frequencies Aboard an Unmanned Aerial Vehicle (UAV)	United States	14/642,496	11/8/2016	9,489,937	Issued
System and Method for Adaptive Y Axis Power<br> Usage and Non Linear Battery Usage for Unmanned Aerial Vehicle Equipped with Action Camera System	United States	14/825,914	12/6/2016	9,511,878	Issued
Tandem Wing Aircraft System with Shrouded Propeller	United States	15/584,815	8/13/2019	10,377,488	Issued
Vehicle with Aerial and Ground Mobility	United States	14/641,468	3/21/2017	9,598,171	Issued
Vehicle with Aerial and Ground Mobility	United States	13/846,074	3/31/2015	8,991,740	Issued
Vertical Take Off And Landing (VTOL) Aircraft<br> Having Variable Center Of Gravity	United States	15/706,158	10/20/2020	10,807,707	Issued
Vertical Takeoff and Landing Unmanned Aircraft<br> System	United States	15/164,718	8/28/2018	10,059,442	Issued
Visually Intelligent Camera Device with Peripheral<br> Control Outputs	United States	14/939,369	8/6/2019	10,375,359	Issued
Wheel with Folding Segments	United States	13/739,419	6/17/2014	8,753,155	Issued

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The Company also has the following registered trademarks and pending ‎applications‎:‎

Description	Name/Title	Official No.	Governmental Entity
Trademark<br> Application	DRAGANFLY	TMA1,242,120	CIPO
Registered<br> Trademark	DRAGANFLYER<br> EXPLORE	TMA1,025,742	CIPO
Registered<br> Trademark	DRAGANFLYER<br> APEX	TMA1,025,624	CIPO
Registered<br> Trademark	DRAGANFLYER<br> COMMANDER	TMA1,008,809	CIPO
Registered<br> Trademark	DRAGANFUEL	TMA997,118	CIPO
Registered<br> Trademark	DRAGANFLY<br> INNOVATIONS	TMA908,564	CIPO
Registered<br> Trademark	DRAGANFLYER	TMA906,939	CIPO
Registered<br> Trademark	DRAGANFLY<br> & DESIGN	TMA905,935	CIPO
Registered<br> Trademark	DRAGANFLY	TMA1,071,582	CIPO
Registered<br> Trademark	DRAGANFLY	TMA1,069,670	CIPO
Registered<br> Trademark	DRAGANFLYER<br> GUARDIAN	TMA904,883	CIPO
Registered<br> Trademark	DRAGANVIEW	TMA886,217	CIPO
Registered<br> Trademark	DRAGANFLYER<br> APEX	6248237	USPTO
Registered<br> Trademark	DRAGANFLY	6373176	USPTO
Registered<br> Trademark	DRAGANFLYER<br> COMMANDER	5760146	USPTO
Registered<br> Trademark	DRAGANFUEL	5563360	USPTO
Registered<br> Trademark	DRAGANFLY<br> INNOVATIONS	5130969	USPTO
Registered<br> Trademark	DRAGANFLYER	4920316	USPTO
Registered<br> Trademark	DRAGANFLY<br> & Design	5130970	USPTO
Registered<br> Trademark	DRAGANFLYER<br> GUARDIAN	4995725	USPTO
Registered<br> Trademark	DRAGANVIEW	4920317	USPTO
Trademark<br> Application^(1)^	DRAGANFLY	88488410	USPTO

Note

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(1)	The<br> US application is suspended pending registration of the Canadian mark.

MarketOpportunity

Drones have rapidly evolved from their military origin to commercial and civil government applications from ‎security to farming. The Company believes that an increased automation of drones provides additional value to existing workflows, triggering ‎more widespread adoption, while a global shift to sustainable and eco-friendly options has further increased demand for ‎drone usage. ‎According to Drone Industry Insights, the commercial and private drone market could grow from $22.5 billion in ‎‎2020 to $42.8 billion in 2025, representing compound annual growth rate (“CAGR”) of 13.8%.^1^

Drone application methods are being used by a variety of industries today. The most active segments are mapping, ‎surveying, inspection, filming/photography, dispensing/spraying, warehousing, monitoring/detection, and delivery. ‎These applications are being used today by the civil government, educational facilities, agricultural, construction, ‎health care, real estate, energy, transportation, insurance, security, and scientific industries for public safety, data ‎collection and profit. According to the Drone Industry Insights, the fastest growing drone application method will be ‎delivery and is forecasted at 28.6% CAGR over the next five years and it is widely believed over 100,000 new jobs will ‎be created in the drone market by 2025.^2^ However, regulatory hurdles and intense industry scrutiny need to be ‎addressed.‎

^1^See Global Drone Market Report 2020-2025.

^2^See Global Drone Market Report 2020-2025.

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Our existing products are configured to meet the needs of multiple industries. We continue to add new customers in ‎different market verticals. We are actively designing and developing new products and services to meet increased ‎customer demands.‎

GrowthStrategy

Draganfly markets its products and services as a drone solution platform that enables customer to do things not ‎easily done before and to collect data not easily available before. Draganfly provides solutions to our customers ‎utilizing drones and adjunct technologies. Sensors, software, AI and more all make up this ability to provide ‎solutions that only a company with end-to-end capabilities can provide. Draganfly grows by dealing with the ‎decision makers in organizations who generally have budget control and/or profit and loss responsibility. Draganfly will ‎continue to develop specific solutions and IP for industry verticals by working directly with customers. Draganfly ‎will also pursue an acquisition strategy focused on adding additional capabilities to its platform that strengthen its ‎value proposition of being able to provide new and total solutions that other drone companies cannot. Draganfly is focused on growth through developing new products, expanding its customer base, and pursuing accretive acquisition opportunities, both within and outside North America, in new markets that complement its existing portfolio.

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Salesand Marketing

Draganfly plans to expand it sales and market capabilities in three key areas. First, Draganfly intends to implement a sales force that has the ability ‎to build relationships and sell specifically designed solutions into industry verticals. This sales force will be ‎specialized into segments that sell either direct or into a channel dependent on the specific product or service ‎solution being provided. Draganfly plans to expand business development personnel that can work with specific industries to envision ‎and develop new product lines and services not yet contemplated by our customers. Second, Draganfly plans to drive greater market ‎awareness of the Draganfly brand via public relations ‎Third, Draganfly plans targeted marketing and advertising via tradeshows/conferences which are virtual or physical as well as target digital advertising campaigns used to generate inbound inquires for specific products, services or ‎solution opportunities.

Customers

Key customers are customers looking to gain strategic advantage in particular markets via the use of drones and ‎drone technology. These are often large organizations with a specific problem that they are currently solving in an ‎expensive manner which usually means the use of teams of people or expensive personnel. By designing solution ‎and providing everything from design to manufacturing to sensor development and even giving recognition on ‎patents of IP development (not with commercial interest) to providing the services and housing the data we develop ‎customer relationships that are very “sticky”. ‎

SpecializedSkill and Knowledge

There is a specialized skill required for the development, operations, maintenance, sales and marketing ‎of the Company’s technology. The Company’s current staff possesses the necessary skills and ‎knowledge required for the Company’s business; however, additional employees may be added to staff ‎as needed. All operational staff hold the appropriate licenses and certificate as mandated by Transport ‎Canada.‎

Changesto Contracts

No aspect of Draganfly’s business is anticipated to ‎be affected in the current financial year by renegotiation or termination of any contract.

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CapitalExpenditures

During the years ended December 31, 2024, 2023 and 2022, we did not undertake any material capital expenditures.

4.C.	Organizational Structure

We have three wholly-owned subsidiaries. The following chart shows the Company’s subsidiaries:‎

4.D.	Property, Plant and Equipment

Draganfly Innovation Inc.’s products are manufactured at its machine shop within its leased head office ‎located at ‎‎‎235 103rd St E, Saskatoon, SK, S7N 1Y8, Canada (approximately 6,631 square feet in size).‎

Dronelogics Services Inc.’s services are provided through its leased space located at Unit 319, 2999 Underhill ‎‎Avenue, ‎Burnaby, British Columbia (approximately 2,752 square feet in size). ‎‎

The Company, through its wholly-owned subsidiary, Draganfly Innovations USA Inc., has a storage space at 24 Pearl Industrial Avenue, Hoschton, Georgia where inventory is stored (approximately 300 square ‎feet in size).‎

The Company, through its wholly-owned subsidiary, Draganfly Innovations USA Inc., has the right to use the Duette Training Facility and Aerial Range located at 1375 Duette Road, Duette, Florida for training events, demos, courses and extended storage.

See also “‎Item 4.B.‎ Business Overview Operations – Operations”.

Item 4A.	Unresolved Staff Comments

Not applicable.

Item 5.	Operating and Financial Review and Prospects

The management’s discussion and analysis of the Company for the year ended December 31, 2024 is included in this Annual Report in Exhibit 15.1, which is incorporated herein by reference.

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6.A	Directors and Senior Management
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The following table sets forth the name, office held, age, and functions and areas of experience in the Company of each of our directors and senior management:

Name and Municipality<br><br> <br>of Residence	Age	Position Held<br><br> <br>and Date<br><br> <br>Appointed	Principal Occupation within the past five years
Cameron Chell<br><br> <br>Bowen<br> Island, British Columbia, Canada	56	President<br> (May 9, 2022) and Chief Executive Officer (August 14, 2019) and a Director<br><br> <br>(August<br> 14, 2019)	President<br> and Chief Executive Officer of the Company since May, 2022, Before this Cameron was Chairman and CEO of the Company; President, Chairman<br> and co-founder of ‎CurrencyWorks Inc. from ‎November 2017 to December 2024; Chief ‎Executive Officer and co-founder of<br> ‎Business Instincts Group ‎Inc‎.‎from 2009 to ‎‎2021; Executive Chairman of WEconnect Health as of September<br> 2024; ‎from 2009 to ‎‎2021; Co-founder of BitRail, LLC from May 2019 to May ‎‎‎2020; co-creator and Chairman<br> of KODAKOne from May ‎‎2017 to May ‎‎2020; Director of Health Outcomes Worldwide ‎from June 2017 to ‎February<br> 2021; and Chairman of TruTrace ‎Technologies Inc. from April ‎‎2017 to September 2020‎.‎.
Scott Larson^(2)(4)^<br><br> <br>Burnaby,<br> British Columbia, Canada	52	Interim<br> Chair (July 18, 2024) and a Director<br><br> <br>(August<br> 14, 2019)	President<br> of the Company from July 3, 2020 to May 9, 2022; currently CEO of CO2 Lock Corp, a climate tech startup focusing on permanent CO2<br> storage through mineralization; currently CEO of SpaceAlpha Technologies, an Earth observation company building out space-based synthetic<br> aperture radar;  former Chief ‎Executive ‎Officer of Kater Technologies, a Vancouver-based ‎mobility as a service<br> ‎‎(MaaS) company building out an ‎integrated intermodal transportation ‎‎platform incorporating ‎public transportation,<br> buses, taxis and ride hailing ‎vehicles into ‎a single service, from January 2019 to March 2020; former ‎‎Chief Executive<br> Officer of ‎Helios Wire, a satellite company ‎building out a ‎space-enabled IoT/M2M network‎, from 2016 to ‎‎2019;<br> and former Chief ‎Executive Officer and founder of ‎UrtheCast ‎Corp. from 2010 to 2015.
Denis Silva^(2)(3)^<br><br> <br>Vancouver,<br> British Columbia, Canada	45	Director<br><br> <br>(August<br> 14, 2019)	Corporate<br> and securities partner with the law firm DLA Piper (Canada) ‎LLP since July 2020; and ‎partner at the law firm Gowling WLG<br> (Canada) LLP from 2015 to 2020.
Julie Myers Wood^(1)(3)(4)^<br><br> <br>McLean,<br> Virginia, United States	55	Director<br><br> <br>(September<br> 9, 2021)	Chief<br> Executive Officer of Guidepost Solutions LLC since ‎May 2014; ‎and has held several ‎high level positions within the<br> U.S. ‎government including at the ‎Departments of Justice, Homeland ‎Security, Treasury, and Commerce, ‎as well as<br> at the White ‎House.
Kim G.C. Moody^(1)(3)^<br><br> <br>Calgary,<br> Alberta,<br><br> <br>Canada	57	Director<br><br> <br>(July<br> 18, 2024)	Chartered<br> Accountant, Registered Trust and Estate Practitioner and a tax specialist practicing in Calgary as the CEO / Director Canadian Tax<br> Advisory with Moodys Private Client Law LLP / Moodys Private Client LLP and Moodys Tax (a division of Moodys Private Client Law LLP);<br> Former Chair and Former Deputy Chair of the Board, Former Treasurer, as well as Former Chair of the Technical Committee for the Society<br> of Trust and Estate Practitioners of Canada.

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| --- | | Thomas B. Modly^(1)^<br><br> <br>Sarasota,<br> Florida, United States | 64 | Director<br><br> <br>(July<br> 25, 2024) | Independent<br> consultant and author; former Acting Secretary of the Navy and the 33rd Under Secretary of<br> the Navy. | | --- | --- | --- | --- | | Tim Dunnigan^(2)^<br><br> <br>Tampa,<br> Florida, United States | 57 | Director<br><br> <br>(July<br> 25, 2024) | CEO<br> and President of MMS Products, Inc.; founder of CaptureTec, LLC, co-founder of Talon Aerolytics,<br> Inc. | | Christopher Miller<br><br> <br>Virginia,<br> United States | 59 | Director<br><br> <br>(March<br> 19, 2025) | Executive<br> at DZYNE Technologies, a private autonomous flight company, since 2022. Former consultant<br> (2021-2022); former acting U.S. Secretary of Defense (2020-2021); former Director of the<br> National Counterterrorism Center (2020); former Assistant Secretary of Defense for Special<br> Operations and Low-Intensity Conflict (2020). | | Paul Sun<br><br> <br>Oakville,<br> Ontario, Canada | 53 | Chief<br> Financial Officer (August 14, 2019) | Chief<br> Financial Officer of the Company since August 2019; Chief Financial Officer of Former ‎Draganfly since July 2015; and Managing<br> Director, ‎Institutional Equity Sales at Beacon Securities Limited‎ from January 2013 to December 2014. | | Paul Mullen<br><br> <br>Burnaby,<br> British Columbia, Canada | 42 | Chief<br> Operating Officer (March 1, 2022) | Chief<br> Operating Officer of the company since March 1, 2022; Vice ‎President since April 13,<br> 2021. Vice President (2019-2021) Monark ‎Ventures. Various Roles including Manager Sales,<br> Technical Service ‎Delivery & Operations at Shaw Cablesystems G.P. from 2001-2018.<br> ‎ | | Deborah Greenberg<br><br> <br>Hampstead,<br> Quebec, Canada<br><br> <br>**** | 58 | Chief<br> Legal and ‎Corporate Services ‎Officer and ‎Corporate ‎Secretary (July 4, ‎‎2022)‎ | Chief<br> Legal Officer of the Company since July 4, 2022; Chief Legal and ‎Corporate Services Officer of the Company since December 1,<br> 2022; ‎Chief Legal Officer (2017-2019) and Chief Information Officer (2019-‎‎2021) at Canada Mortgage and Housing Corporation;<br> Various roles ‎including General Counsel at Aimia from 2007-2017.‎ |

Notes:‎

(1)	Member<br> of the Audit Committee.
(2)	Member<br> of the Nominating and Corporate Governance Committee.
(3)	Member<br> of the Compensation Committee.
(4)	Member<br> of the ATM Committee.

The directors listed above will hold office until the next annual meeting of the Company or until their ‎successors are elected or appointed. ‎There are no family relationships among our directors and executive officers. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any of our directors or executive officers was selected.

As at March 27, 2025, the directors and senior officers of Draganfly, as a group, beneficially own or ‎control, directly or indirectly, 37,221 Common Shares on a post-Consolidation basis or 0.686% of the issued and outstanding Common ‎Shares.‎

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CorporateCease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of management, no director or executive officer as at the date hereof, is or was within ‎‎10 years before the date hereof, a director, chief executive officer or chief financial officer of any ‎company (including Draganfly), that (a) was subject to an order that was issued while the director or ‎executive officer was acting in the capacity as director, chief executive officer or chief financial officer, ‎or (b) was subject to an order that was issued after the director or executive officer ceased to be a ‎director, chief executive officer or chief financial officer and which resulted from an event that occurred ‎while that person was acting in the capacity as director, chief executive officer or chief financial officer. ‎For the purposes hereof, “order” means (a) a cease trade order, (b) an order similar to a cease trade ‎order, or (c) an order that denied the relevant company access to any exemption under securities ‎legislation, that was in effect for a period of more than 30 consecutive days.‎

To the knowledge of management, other than as disclosed herein, no director or executive officer of ‎Draganfly, or a shareholder holding a sufficient number of securities of Draganfly to affect materially the ‎control of the company (a) is, as at the date hereof, or has been within the 10 years before the date ‎hereof, a director or executive officer of any company (including Draganfly) that, while that person was ‎acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, ‎made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted ‎any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or ‎trustee appointed to hold its assets, or (b) has, within the 10 years before the date hereof, become ‎bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject ‎to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver ‎manager or trustee appointed to hold the assets of the director, executive officer or shareholder.‎

To the knowledge of management, no director, executive officer or shareholder holding a sufficient number ‎of securities of Draganfly to materially affect the control of the Company has been subject to: (i) any ‎penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory ‎authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other ‎penalties or sanctions imposed by a court or regulatory body that would likely be considered important ‎to a reasonable investor in making an investment decision.‎

Conflictsof Interest

There are potential conflicts of interest to which the directors and officers of Draganfly will be subject to ‎in connection with the operations of Draganfly. In particular, certain of the directors and officers of ‎Draganfly are involved in managerial or director positions with other companies whose operations may, ‎from time to time, be in direct competition with those of Draganfly or with entities which may, from time ‎to time, provide financing to, or make equity investments in, competitors of Draganfly. ‎

In accordance with the applicable corporate and securities legislation, directors who have a material ‎interest or any person who is a party to a material contract or a proposed material contract with ‎Draganfly are required, subject to certain exceptions, to disclose that interest and generally abstain from ‎voting on any resolution to approve the contract. In addition, the directors are required to act honestly ‎and in good faith with a view to the best interests of Draganfly. Certain of the directors and each of the ‎executive officers of Draganfly have either other employment or other business or time restrictions ‎placed on them and accordingly, these directors of Draganfly will only be able to devote part of their ‎time to the affairs of Draganfly. To the extent that conflicts of interest arise, such conflicts will be ‎resolved in accordance with the provisions of the applicable corporate law.‎

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SummaryCompensation Table

For the year ended December 31, 2024 our directors and executive officers received compensation for services, as follows:

						Non-Equity<br> Incentive Plan Compensation (C)
Name<br> and Principal Position	Year	Salary ()	Share- Based<br> Awards ()(1)(2)		Option- Based<br> Awards ()(3)(4)	Annual Incentive Plans(5)	Long-<br> <br>Term<br> <br>Incentive<br> <br>Plans		Pension Value ()	All<br> Other Compen- sation ()(6)		Total Compen- sation ()
Cameron Chell^(8)^<br> <br>Chairman,<br> CEO and Director	2024							Nil
Paul Sun<br> <br>CFO	2024							Nil
Scott Larson^(9)^<br> <br>Interim<br> Chair and Director	2024							Nil			^(7)^
Denis Silva<br> <br>Director	2024							Nil			^(7)^
Julie Myers Wood<br> <br>Director	2024							Nil			^(7)^
Kim Moody<br> <br>Director	2024							Nil
Tim Dunnigan<br> <br>Director	2024							Nil
Thomas B. Modly<br> <br>Director	2024							Nil
Christopher Miller<br> <br>Director	2024							Nil
Paul Mullen<br> <br>COO	2024							Nil
Deborah Greenberg<br> <br>Chief<br> Legal and Corporate Services Officer	2024							Nil
Olen Aasen<br> <br>Former<br> Director	2024							Nil			^(7)^
Andrew Hill Card, Jr<br> <br>Former<br> Director	2024							Nil			^(7)^
John M. Mitnick<br> <br>Former<br> Director	2024			(10)				Nil			^(7)^

All values are in US Dollars.

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Notes:‎

(1)	‎”Share-Based<br> Award” means an award under an equity incentive plan of equity-based instruments that do not ‎have option-like features,<br> including, for greater certainty, common shares, restricted shares, restricted share ‎units, deferred share units, phantom shares,<br> phantom share units, common share equivalent units and stock.‎
(2)	Based<br> on the number of restricted share units (“RSUs”) granted multiplied by the market price of the underlying Common<br> Shares on the ‎grant date. This methodology was chosen in order to be consistent with industry.

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| --- | | (3) | ‎”Option-Based<br> Award” means an award under an equity incentive plan of options, including, for greater certainty, ‎share options, share<br> appreciation rights and similar instruments that have option-like features.‎ See also “Item ‎6.E. Share Ownership”. | | --- | --- | | (4) | This<br> does not represent cash paid to the individual. This figure is based on the grant date fair value of such stock options of the Company<br> (“Options”). The grant date fair value was determined in accordance with IFRS. This methodology was chosen in<br> order to be consistent with the accounting fair value used by the Company in its financial statements and since the Black-Scholes<br> option pricing model is a commonly used methodology for valuing options which provides an objective and reasonable estimate of fair<br> value. The key assumptions of this valuation include current market price of the stock, exercise price of the option, option term,<br> risk-free interest rate, dividend yield of stock and volatility of stock return. Calculating the value of stock options using the<br> Black-Scholes option pricing model is very different from a simple “in-the-money” value calculation. In fact, stock options<br> that are well out-of-the-money can still have a significant “grant date fair value” based on a Black-Scholes option pricing<br> model, especially where, as in the case of the Company, the price of the share underlying the option is highly volatile. Accordingly,<br> caution must be exercised in comparing grant date fair value amounts with cash compensation or an in-the-money option value calculation.‎ | | (5) | ‎Represents<br>annual cash bonus awards that are declared and paid annually. The Company does not have a formal ‎bonus plan and the amount of bonuses<br>paid is not set in relation to any formula or specific criteria but is ‎a result of a subjective determination by the Compensation<br>Committee and the Board. As of March 27, 2025, the annual cash bonus awards for the executive officers of the Company for the year ended<br>December ‎‎31, 2024 have not been determined or approved by the Board.‎ | | (6) | This<br> amount represents the aggregate amount of perquisites paid to the ‎individual. | | (7) | This<br> amount represents director’s fees paid to such director. | | (8) | Mr.<br> Chell did not receive any additional compensation for serving as director of the Company. Mr. Chell did receive consulting fees in<br> connection with his role as an Officer of the Company, included above in the Salary amount. Mr. Chell did receive consulting fees<br> for services provided to the Company. | | (9) | Mr.<br> Larson did receive consulting fees for services provided to the Company, included above in the Salary amount. | | (10) | The<br> share-based awards granted to Mr. Mitnick were cancelled after Mr. Mitnick’s stepped down from the Board on July 18, 2024. | | 6.C. | Board Practices | | --- | --- |

All of our directors are elected at the annual general meeting of our shareholders and each holds such office until his or her successor is elected or appointed, unless his or her office is earlier vacated by way of the director’s resignation or death or under any of the relevant provisions of our Articles or the BCBCA.

Employment,Consulting and Directors’ Service Contracts

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The Company is not a party to any contract, agreement, plan or arrangement that provides for ‎‎payments to a director or executive officer at, following or in connection with any termination (whether ‎‎voluntary, involuntary or constructive), resignation, retirement, a change in control of the Company, its ‎‎subsidiaries or affiliates or a change in a director or executive officer responsibilities, other than as ‎‎described below.‎

The Company’s consulting agreement, as amended, (the “Chell Consulting Agreement”) with 1502372 ‎Alberta Ltd. (the “Consultant”) and Cameron Chell requires the Company to pay monthly fees of ‎C$35,416.67 (amounting to C$425,000 annually) for the provision by of executive services by the Consultant ‎to the Company, and in this regard, has Cameron Chell hold the position of President and Chief Executive ‎Officer of the Company and contains the following provisions: (a) where termination notice is given by the ‎Company, other than for certain specified reasons as set out in the Chell Consulting Agreement, the ‎Company shall give the Consultant at least 60 days’ advance notice in writing; and (b) where termination is ‎given by the Consultant, the Consultant shall give the Company 60 days’ advance notice in writing. If the ‎Chell Consulting Agreement is terminated pursuant to either (a) or (b) above, then the Consultant will be ‎entitled to the fees earned to the effective date of termination and any expenses incurred on behalf of the ‎Company prior to the effective date of termination which are otherwise reimbursable by the Company ‎pursuant to the terms of the Chell Consulting Agreement. The Consultant is also entitled a bonus as ‎determined by the Compensation Committee equal to 100% of the Consultant annual fees. The Consultant is ‎a private company controlled by Cameron Chell. During the year ended December 31, 2021, the Company ‎and the Consultant entered into an amending agreement to the Chell Consulting Agreement to increase the ‎monthly fees from US$14,166.67 (amounting to US$170,000 annually) to C$35,416.67 (amounting to ‎C$425,000 annually). During the year ended December 31, 2022 the Company and the Consultant entered ‎into an additional amending agreement appointing Mr. Chell as President of the Company and expanding ‎the scope of the services to reflect this new role. ‎

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The Company’s consulting agreement, (the “Larson Consulting Agreement”) with Scott Larson, for his services to the Company as a consultant, and not as a director, which supersedes and replaces all previous agreements between Mr. Larson and the Company, requires the ‎Company pay (a) an hourly fee of $350, plus applicable taxes, and (b) as determined by the Company, an ‎annual success fee, for corporate development, operational and financial related services. The Larson ‎Consulting Agreement may be terminated by Mr. Larson upon giving the Company sixty (60) days advance ‎notice in writing, or by the Company by giving Mr. Larson four (4) months advance notice in writing or pay in ‎lieu thereof.

The Company’s employment agreement, as amended, (the “Sun Agreement”) with Paul Sun requires the ‎Company pay (a) an annual base salary of C$275,010 and (b) as determined by the Company’s ‎Compensation Committee, an annual bonus of up to the base salary, for the provision of executive services ‎as Chief Financial Officer to the Company. If the Sun Agreement is terminated by the Company without just ‎cause, Mr. Sun will be entitled to remuneration in the amount equal the base salary and Mr. Sun’s last bonus ‎earned divided by 12 and multiplied by six. Mr. Sun is also entitled to receive a lump sum payment equal to ‎‎18 months of his base salary and average bonus upon a change of control of the Company. ‎

The Company’s employment agreement, as amended, (the “Mullen Agreement”) with Paul Mullen requires ‎the Company to pay (a) an annual base salary of C$257,500 and (b) as determined by the Company’s ‎Compensation Committee, an annual bonus, for the provision of executive services as Chief Operating ‎Officer to the Company. If the Company terminates the Mullen Agreement without cause, Mr. Mullen is ‎entitled to severance equaling to the his annual salary earned to the date of cessation of employment, all ‎earned but unpaid bonus payment, any outstanding vacation and reimbursement of final expenses, and an ‎additional lump sum payment equaling to three (3) months salary. If Mr. Mullen is terminated without cause ‎within twelve (12) months of a change of control, then Mr. Mullen is entitled to a lump sum payment equal to ‎twelve (12) months of his annual salary and average performance bonus.‎ ‎

The Company’s employment agreement, as amended, (the “Greenberg Agreement”) with Deborah ‎Greenberg requires the Company to pay (a) an annual base salary of C$309,000 and (b) as determined by ‎the Company’s Compensation Committee, an annual bonus, for the provision of executive services as Chief ‎Legal and Corporate Services Officer to the Company. If the Greenberg Agreement is terminated by the ‎Company without just cause, Ms. Greenberg will be entitled to remuneration in the amount equal the base ‎salary and Ms. Greenberg’s last bonus payable on a pro-rata basis. Mrs. Greenberg is also entitled to ‎receive a lump sum payment equal to 18 months of her base salary and the greater of her targeted annual ‎performance bonus multiplied by a factor of 1.5 or the average performance bonus paid to her over the two ‎year period to the change of control of the Company. ‎

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AuditCommittee

The Audit Committee is a committee of the Board to which the Board delegates its responsibility for oversight of the financial reporting process. The Audit Committee is also responsible for managing, on behalf of our shareholders, the relationship between the Company and the external auditor.

Pursuant to National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators‎ (“NI 52-110”), the Company is required to disclose certain information with respect to its Audit Committee, as summarized below.

AuditCommittee Terms of Reference

The Company must, pursuant to NI 52-110, have a written charter which sets out the duties and ‎responsibilities of its Audit Committee. The terms of reference of the Audit Committee are attached ‎hereto as Exhibit 15.2.‎

AuditCommittee Composition

The following are the members of the Audit Committee:‎

Kim<br> Moody^(1)^	Independent^(2)^	Financially<br> Literate^(2)^
Thomas<br> B. Modly	Independent^(2)^	Financially<br> Literate^(2)^
Julie<br> Myers Wood	Independent^(2)^	Financially<br> Literate^(2)^
Notes:
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(1)	Chairman<br> of the Audit Committee.
(2)	As<br> defined by NI 52-110.

RelevantEducation and Experience

All members of the Audit Committee have been either directly involved in the preparation of the financial statements, filing of quarterly and annual financial statements, dealing with auditors, or as a member of the Audit Committee. All members have the ability to read, analyze and understand the complexities surrounding the issuance of financial statements.

Kim Moody

Kim Moody is a Chartered Accountant, Registered Trust and Estate Practitioner and a tax specialist practicing in Calgary as the CEO / Director Canadian Tax Advisory with Moodys Private Client Law LLP / Moodys Private Client LLP and Moodys Tax (a division of Moodys Private Client Law LLP). Mr. Moody is also recently branched out through his professional corporation to put more energy into some of his “passion projects” involving public speaking, coaching, leadership studies, taxation policy and economics / public policy. Mr. Moody obtained his Bachelor of Management degree from The University of Lethbridge in 1992 and his CA designation from The Institute of Chartered Accountants of Alberta in 1994. Mr. Moody Kim is a past Chair and past Deputy Chair of the Board, past Treasurer, as well as past Chair of the Technical Committee for the Society of Trust and Estate Practitioners of Canada.

Thomas B. Modly

Thomas Modly, who served as the Acting Secretary of the Navy and the 33rd Under Secretary of the Navy, brings unparalleled expertise in leadership and business operations within the Department of the Navy, along with decades of prior business, government, and strategy experience. Throughout his tenure in government, Mr. Modly focused on increasing the agility and accountability of the Department of Defense, with a particular emphasis on advanced education and the installation of a culture of continuous learning across Navy and Marine Corps forces.

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Julie Myers Wood

Julie Myers Wood has more than 25 years of experience in the public and private sector working on regulatory and enforcement issues from many perspectives, including as federal prosecutor, defense counsel, government investigator and compliance consultant. Ms. Wood is currently the Chief Executive Officer at Guidepost Solutions, a leading investigations, compliance, monitoring, and security firm with offices throughout the United States, as well as England, Mexico, Colombia, and Singapore.

During her government service, Ms. Wood was appointed by President Bush to serve as Assistant Secretary of Homeland Security for Immigration and Customs Enforcement (ICE). Additionally, she worked for the Office of Independent Counsel under Kenneth Starr and was appointed Assistant Secretary for Export Enforcement at the Department of Commerce. Ms. Wood began her legal career at the law firm of Mayer, Brown & Platt in Chicago, Illinois. She is a graduate of Baylor University and Cornell Law School.

Relianceon Certain Exemptions

At no time since the commencement of the Company’s financial year ended December 31, 2024, has the ‎Company relied on any exemption from NI 52-110, including Section 2.4 of NI 52-110 (De Minimis Non-‎Audit Services), or an exemption granted under Part 8 of NI 52-110.‎

The Company has relied upon the exemption provided by section 6.1 of NI 52-110 which exempts ‎venture issuers from the requirement to comply with the restrictions on the composition of its Audit ‎Committee‎.

AuditCommittee Oversight

At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.

Pre-ApprovalPolicies and Procedures

The Audit Committee is authorized by the Board to review the performance of the Company’s external ‎auditors and approve in advance provision of services other than auditing and to consider the ‎independence of the external auditors, including reviewing the range of services provided in the context ‎of all consulting services bought by the Company. The Audit Committee is authorized to approve any ‎non-audit services or additional work which the Chairman of the Audit Committee deems as necessary ‎who will notify the other members of the Audit Committee of such non-audit or additional work‎.

ExternalAuditor Service Fees

See “Item 16C. Principal Accountant Fees and Services”‎.

CompensationCommittee

The Compensation Committee is responsible for ensuring that the Company has appropriate procedures for ‎reviewing executive compensation and making recommendations to the Board with respect to the ‎compensation of the Company’s executive officers. The Compensation Committee seeks to ensure that ‎total compensation paid to all executive officers is fair and reasonable and is consistent with the ‎Company’s compensation philosophy.

The Compensation Committee is also responsible for recommending compensation for the directors, as well ‎as stock option (“Option”) grants, and restricted share unit (“RSU”) grants to the directors, officers, ‎employees and consultants pursuant to the Company’s share compensation plans. The Share ‎Compensation Plan (as defined below) assists the Company in employee retention and cash preservation, ‎while encouraging Common Share ownership and entrepreneurship on the part of the Company’s NEOs.

The Compensation Committee consists of Julie Myers Wood (Chair), Kim Moody and Denis Silva, all of whom ‎were affirmatively determined by the Board to be independent (outside, non-management) directors. The Board is satisfied that the composition of the ‎Compensation Committee ensures an objective process for determining compensation. Each member of the ‎Committee has direct experience relevant to their responsibilities on the Committee, including acting as ‎officers and directors of other publicly traded companies so that they are familiar with remuneration for ‎companies within the Company’s peer group.‎

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As at December 31, 2024, the Company had fifty four employees (fifty employees located in Canada and four employees located in the U.S.) where fifty one are full-‎time and three are part-time employees. There is one full time and one part-time consultant whose ‎services were, and continue to be, used on a regular basis for day-‎to-day operations.

6.E.	Share Ownership

The following table sets out the number of Common Shares, Options and RSUs owned or over which control or direction is exercised by each our directors and executive officers and, where known after reasonable enquiry, by their respective associates or affiliates as at March 27, 2025. Unless otherwise indicated, the numbers contained in the table below are post-Consolidation numbers.

Name<br> and position	Number<br> <br>and<br> <br>Percentage<br> <br>of<br> <br>Common<br> <br>Shares^(1)^	Type of<br> <br>‎compensation<br> <br>security	Number<br> of‎ <br>compensation securities		Date of issue or grant	Issue,<br> ‎conversion or exercise price ()	Expiry Date^(2)^
Cameron Chell<br> <br>Chairman,<br> CEO and Director	8,830 (0.1627%)	Options		2,000	October 30, 2019			October<br> 30, 2029
		RSUs		3,387	May 29, 2023			March<br> 20, 2025
		RSUs		28,824	May 20, 2024			May<br> 20, 2027
Scott Larson President and<br> Director	3,125 <br>(0.0576%)	Options		2,000	October 30, 2019			October<br> 30, 2029
		Options		4,000	July 3, 2020			July<br> 3, 2025
		RSUs		587	May 29, 2023			March<br> 20, 2025
		RSUs		6,000	May 20, 2024			May<br> 20, 2027
Denis Silva<br> <br>Director	730 <br>(0.0134%)	Options		666	October 30, 2019			October<br> 30, 2029
		RSUs		587	May 29, 2023			March<br> 20, 2025
		RSUs		6,000	May 20, 2024			May<br> 20, 2027
Julie Myers Wood<br> <br>Director	4,609 <br>(0.0849%)	Options		1,200	April 30, 2020			April<br> 30, 2030
		Options		1,034	September 9, 2021			September<br> 9, 2026
		RSUs		587	May 29, 2023			March<br> 20, 2025
		RSUs		6,000	May 20, 2024			May<br> 20, 2027
Kim G.C. Moody<br> <br>Director	Nil	Options		Nil	N/A			N/A
		RSUs		Nil	N/A			N/A
Thomas B. Modly<br> <br>Director	Nil	Options		Nil	N/A			N/A
		RSUs		Nil	N/A			N/A
Tim Dunnigan<br> <br>Director	Nil	Options		1,200	November 9, 2023			November<br> 9, 2033
		RSUs		Nil	N/A			N/A
Christopher Miller<br> <br>Director	Nil	Options		Nil	N/A			N/A
		RSUs		Nil	N/A			N/A
Paul Sun<br> <br>CFO	10,549 <br>(0.1944%)	Options		1,333	October 30, 2019			October<br> 30, 2029
		RSUs		1,707	May 29, 2023			March<br> 20, 2025
		RSUs		18,108	May 20, 2024			May<br> 20, 2027
Paul Mullen<br> <br>Chief<br> Operating Officer	4,024 <br>(0.0741%)	Options		400	April 27, 2021			April<br> 31, 2031
		RSUs		1,600	May 29, 2023			March<br> 20, 2025
		RSUs		16,955	May 20, 2024			May<br> 20, 2027
Deborah Greenberg<br> <br>Chief<br> Legal and ‎Corporate Services ‎Officer and ‎Corporate ‎Secretary	5,354 <br>(0.0986%)	Options		Nil	N/A			N/A
		RSUs		1,920	May 29, 2023			March<br> 20, 2025
		RSUs		20,346	May 20, 2024			May<br> 20, 2027

All values are in US Dollars.

Notes:

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(1)	Percentages<br> based on 5,427,795 Common Shares issued and outstanding as of ‎March ‎27, 2025. The numbers of Common Shares in this column<br> are derived from Canada’s System for Electronic Disclosure by Insiders (“SEDI”).‎
(2)	In<br> connection with the RSUs, the expiry dates represent the last vesting dates.

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ShareCompensation Plan

The Board has previously adopted the Share Compensation Plan that provides for the granting of Options and RSUs on such terms and conditions as prescribed by the Share Compensation Plan. The Share Compensation Plan is a “rolling” plan, pursuant to which the maximum number of Common Shares issuable under the Share Compensation Plan and any other share compensation arrangement of the Company including the RSUs that may be awarded under the Share Compensation Plan, is 15% of the Common Shares then issued and outstanding. The Share Compensation Plan was adopted effective August 19, 2019 and amended effective April 14, 2021.

The Share Compensation Plan provides participants (each, a “Participant”), who may include participants who are citizens or residents of the United States (each, a “US Participant”), with the opportunity, through RSUs and Options, to acquire an ownership interest in the Company. The RSUs will rise and fall in value based on the value of the Common Shares. Unlike the Options, the RSUs will not require the payment of any monetary consideration to the Company. Instead, each RSU represents a right to receive one Common Share following the attainment of vesting criteria determined at the time of the award. See “Restricted Share Units –Vesting Provisions” below. The Options, on the other hand, are rights to acquire Common Shares upon payment of monetary consideration (i.e., the exercise price), subject also to vesting criteria determined at the time of the grant. See “Options – VestingProvisions” below.

Purposeof the Share Compensation Plan

The stated purpose of the Share Compensation Plan is to advance the interests of the Company and its subsidiaries, and its shareholders by: (a) ensuring that the interests of Participants are aligned with the success of the Company and its subsidiaries; (b) encouraging stock ownership by such persons; and (c) providing compensation opportunities to attract, retain and motivate such persons.

EligiblePersons

The following people are eligible to participate in the Share Compensation Plan: any officer or employee of the Company or any officer or employee of any subsidiary of the Company and, solely for purposes of the grant of Options, any director of the Company or any director of any subsidiary of the Company, and any Consultant (defined under the Share Compensation Plan as an individual (other than an employee or a director of the Company) or a corporation that is not a U.S. Person that: (a) is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an affiliate of the Company, other than services provided in relation to an offer or sale of securities of the Company in a capital raising transaction, or services that promote or maintain a market for the Company’s securities; (b) provides the services under a written contract between the Company or the affiliate and the individual or the Company, as the case may be; (c) in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an affiliate of the Company; and (d) has a relationship with the Company or an affiliate of the Company that enables the individual to be knowledgeable about the business and affairs of the Company.

Administrationof the Share Compensation Plan

The Share Compensation Plan is administered by the Board or such other persons as may be designated by the Board (the “Administrators”) based on the recommendation of the Board or the compensation committee of the Board, if applicable. The Administrators determine the eligibility of persons to participate in the Share Compensation Plan, when RSUs and Options will be awarded or granted, the number of RSUs and Options to be awarded or granted, the vesting criteria for each award of RSUs and grant of Options and all other terms and conditions of each award and grant, in each case in accordance with applicable securities laws and the requirements of the CSE and the Nasdaq.

Restrictionson the Award of RSUs and Grant of Options

The awards of RSUs and grants of Options under the Share Compensation Plan is subject to a number of restrictions:

(a)	the<br> total number of Common Shares issuable to insiders under the Share Compensation Plan and any other share compensation arrangements<br> of the Company cannot exceed 15% of the Common Shares then outstanding; and

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| --- | | (b) | the<br> aggregate sales price (meaning the sum of all cash, property, notes, cancellation of debt, or other consideration received or to<br> be received by the Company for the sale of the securities) or amount of Common Shares issued during any consecutive 12 month period<br> will not exceed the greatest of the following: (i) US$1,000,000; (ii) 15% of the total assets of the Company, measured at the Company’s<br> most recent balance sheet date; or (iii) 15% of the outstanding amount of the Common Shares, measured at the Company’s most<br> recent balance sheet date. | | --- | --- |

In the event of any declaration by the Company of any stock dividend payable in securities (other than a dividend which may be paid in cash or in securities at the option of the holder of Common Shares), or any subdivision or consolidation of the Common Shares, reclassification or conversion of the Common Shares, or any combination or exchange of securities, merger, consolidation, recapitalization, amalgamation, plan of arrangement, reorganization, spin off involving the Company, distribution (other than normal course cash dividends) of Company assets to holders of Common Shares, or any other corporate transaction or event involving the Company or the Common Shares, the Administrators may in their sole discretion make such changes or adjustments, if any, as the Administrators consider fair or equitable to reflect such change or event including, without limitation, adjusting the number of Options and RSUs outstanding under the Share Compensation Plan, the type and number of securities or other property to be received upon exercise or redemption thereof, and the exercise price of Options outstanding under the Share Compensation Plan, provided that the value of any Option or RSU immediately after such an adjustment shall not exceed the value of such Option or RSU prior thereto.

RestrictedShare Units

The total number of Common Shares that may be issued on exercise of Options and RSUs, together with any other share compensation arrangements of the Company, shall not exceed 15% of the number of issued and outstanding Common Shares from time to time.

Mechanicsfor RSUs

RSUs awarded to Participants under the Share Compensation Plan are credited to an account that is established on their behalf and maintained in accordance with the Share Compensation Plan. After the relevant date of vesting of any RSUs awarded under the Share Compensation Plan, a Participant shall be entitled to receive and the Company shall issue or pay (at its discretion): (i) a lump sum payment in cash equal to the number of vested RSUs recorded in the Participant’s account multiplied by the volume weighted average price of the Common Shares traded on the CSE for the five (5) consecutive trading days prior to the payout date; (ii) the number of Common Shares required to be issued to a Participant upon the vesting of such Participant’s RSUs in the Participant’s account will be, duly issued as fully paid and non-assessable shares and such Participant shall be registered on the books of the Company as the holder of the appropriate number of Common Shares; or (iii) any combination of thereof.

VestingProvisions

The Share Compensation Plan provides that: (i) at the time of the award of RSUs, the Administrators will determine the vesting criteria applicable to the awarded RSUs; (ii) vesting of RSUs may include criteria such as performance vesting; (iii) each RSU shall be subject to vesting in accordance with the terms set out in an agreement evidencing the award of the RSU attached as Exhibit A to the Share Compensation Plan (or in such form as the Administrators may approve from time to time) (each an “RSU Agreement”); and (iv) all vesting and issuances or payments in respect of an RSU shall be completed no later than December 15 of the third calendar year commencing after the award date for such RSU.

It is the current intention that RSUs may be awarded with both time-based vesting provisions as a component of the Company’s annual incentive compensation program, and performance based vesting provisions as a component of the Company’s long term incentive compensation program.

Under the Share Compensation Plan, should the date of vesting of an RSU fall within a blackout period or within nine business days following the expiration of a blackout period, the date of vesting will be automatically extended to the tenth business day after the end of the blackout period.

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Termination,Retirement and Other Cessation of Employment in connection with RSUs

A person participating in the Share Compensation Plan will cease to be eligible to participate in the following circumstances: (i) receipt of any notice of termination of employment or service (whether voluntary or involuntary and whether with or without cause); (ii) retirement; and (iii) any cessation of employment or service for any reason whatsoever, including disability and death (an “Event of Termination”). In such circumstances, any vested RSUs will be issued (and with respect to each RSU of a US Participant, such RSU will be settled and shares issued as soon as practicable following the date of vesting of such RSU as set forth in the applicable RSU Agreement, but in all cases within 60 days following such date of vesting; and unless otherwise determined by the Administrators in their discretion, any unvested RSUs will be automatically forfeited and cancelled (and with respect to any RSU of a US Participant, if the Administrators determine, in their discretion, to waive vesting conditions applicable to an RSU that is unvested at the time of an Event of Termination, such RSU shall not be forfeited or cancelled, but instead will be deemed to be vested and settled and shares delivered following the date of vesting date of such RSU as set forth in the applicable RSU Agreement). Notwithstanding the above, if a person retires in accordance with the Company’s retirement policy at such time, the pro rata portion of any unvested performance based RSUs will not be forfeited or cancelled and instead shall be eligible to become vested in accordance with the vesting conditions set forth in the applicable RSU Agreement after such retirement (as if retirement had not occurred), but only if the performance vesting criteria, if any, have been met on the applicable date. For greater certainty, if a person is terminated for just cause, all unvested RSUs will be forfeited and cancelled.

Options

The total number of Common Shares that may be issued on exercise of Options and RSUs, together with any other share compensation arrangements of the Company, shall not exceed 15% of the number of issued and outstanding Common Shares from time to time.

Mechanicsfor Options

Each Option granted pursuant to the Share Compensation Plan will entitle the holder thereof to the issuance of one Common Share upon achievement of the vesting criteria and payment of the applicable exercise price. Options granted under the Share Compensation Plan will be exercisable for Common Shares issued from treasury once the vesting criteria established by the Administrators at the time of the grant have been satisfied. However, the Company will continue to retain the flexibility through the amendment provisions in the Share Compensation Plan to satisfy its obligation to issue Common Shares by making a lump sum cash payment of equivalent value (i.e., pursuant to a cashless exercise), provided there is a full deduction of the number of underlying Common Shares from the Share Compensation Plan’s reserve.

VestingProvisions

The Share Compensation Plan provides that the Administrators may determine when any Option will become exercisable and may determine that Options shall be exercisable in instalments or pursuant to a vesting schedule. The Option agreement will disclose any vesting conditions prescribed by the Administrators.

Termination,Retirement and Other Cessation of Employment in connection with Options

A person participating in the Share Compensation Plan will cease to be eligible to participate where there is an Event of Termination. In such circumstances, unless otherwise determined by the Administrators in their discretion, any unvested Options will be automatically cancelled, terminated and not available for exercise and any vested Options may be exercised only before the earlier of: (i) the termination of the Option; and (ii) six months after the date of the Event of Termination. If a person is terminated for just cause, all Options (whether or not then exercisable) will be automatically cancelled.

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OtherTerms

The Administrators will determine the exercise price and term/expiration date of each Option, provided that the exercise price in respect of that Option shall not be less than the Market Price on the date of grant. “Market Price” is defined in the Share Compensation Plan, as of any date, the closing price of the Common Shares on the CSE for the last market trading day prior to the date of grant of the Option or if the Common Shares are not listed on a stock exchange, the Market Price shall be determined in good faith by the Administrators.

No Option shall be exercisable after ten years from the date the Option is granted. Under the Share Compensation Plan, should the term of an Option expire on a date that falls within a blackout period or within nine business days following the expiration of a blackout period, such expiration date will be automatically extended to the tenth business day after the end of the blackout period.

Unless otherwise determined by the Board, in the event of a change of control, any surviving or acquiring corporation shall assume any Option outstanding under the Share Compensation Plan on substantially the same economic terms and conditions or substitute or replace similar options for those Options outstanding under the Share Compensation Plan on substantially the same economic terms and conditions.

Transferability

RSUs awarded and Options granted under the Share Compensation Plan or any rights of a Participant cannot be transferred, assigned, charged, pledged or hypothecated, or otherwise alienated, whether by operation of law or otherwise.

Reorganizationand Change of Control Adjustments

In the event of any declaration by the Company of any stock dividend payable in securities (other than a dividend which may be paid in cash or in securities at the option of the holder of Common Shares), or any subdivision or consolidation of Common Shares, reclassification or conversion of the Common Shares, or any combination or exchange of securities, merger, consolidation, recapitalization, amalgamation, plan of arrangement, reorganization, spin off involving the Company, distribution (other than normal course cash dividends) of Company assets to holders of Common Shares, or any other corporate transaction or event involving the Company or the Common Shares, the Administrators may make such changes or adjustments, if any, as they consider fair or equitable, to reflect such change or event including adjusting the number of Options and RSUs outstanding under the Share Compensation Plan, the type and number of securities or other property to be received upon exercise or redemption thereof, and the exercise price of Options outstanding under the Share Compensation Plan, provided that the value of any Option or RSU immediately after such an adjustment shall not exceed the value of such Option or RSU prior thereto.

AmendmentProvisions in the Share Compensation Plan

The Board may amend the Share Compensation Plan or any RSU or Option at any time without the consent of any Participant provided that such amendment shall:

(a)	not<br> adversely alter or impair any RSU previously awarded or any Option previously granted, except as permitted by the adjustment provisions<br> of the Share Compensation Plan and with respect to RSUs and Options of US Participants;
(b)	be<br> subject to any regulatory approvals including, where required, the approval of the CSE or the Nasdaq; and
(c)	be<br> subject to shareholder approval, where required, by the requirements of the CSE or the Nasdaq, provided that shareholder approval<br> shall not be required for the following amendments:
(i)	amendments<br> of a “housekeeping nature”, including any amendment to the Share Compensation Plan or ‎a RSU or Option that is necessary<br> to comply with ‎applicable laws, tax or accounting provisions or the requirements of any ‎regulatory authority or Exchange<br> and any amendment to the Share Compensation Plan or a ‎RSU or Option to correct or rectify any ambiguity, ‎defective provision,<br> error or omission therein, including any amendment to ‎any definitions therein;‎
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| --- | | (ii) | amendments<br> that are necessary or desirable for RUS or ‎Options to qualify for favourable treatment under any applicable tax law;‎ | | --- | --- | | (iii) | a<br> change to the vesting provisions of any RSU or any Option ‎‎(including any alteration, extension or acceleration thereof);‎ | | (iv) | a<br> change to the termination provisions of any Option or RSU ‎‎(for example, relating to termination of employment, resignation,<br> ‎retirement or death) that does not entail an extension beyond the original ‎expiration date;‎ | | (v) | the<br> introduction of features to the Share Compensation Plan that would permit the Company to, ‎instead of issuing Common Shares from<br> treasury upon the vesting of the ‎RSUs, retain a broker and make payments for the benefit ‎of Participants to such broker<br> who would purchase Common Shares in ‎the open market for such Participants; ‎ | | --- | --- | | (vi) | the<br> amendment of the Share Compensation Plan as it relates to making lump sum payments to ‎Participants upon the vesting of the RSUs;‎<br> and | | (vii) | the<br> amendment of the cashless exercise feature set out in the Share Compensation Plan. | | (d) | ‎be<br> subject to disinterested shareholder approval in the event of any reduction in ‎the exercise price of any Option granted under<br> the Share Compensation Plan to an insider Participant‎. | | --- | --- |

For greater certainty, shareholder approval will be required in circumstances where an amendment to the Share Compensation Plan would:

(a)	increase<br> the fixed maximum percentage of issued and outstanding Common Shares issuable under the Share Compensation Plan, other than by virtue<br> of the adjustment provisions in the Share Compensation Plan, or change from a fixed maximum percentage of issued and outstanding<br> Common Shares to a fixed maximum number of Common Shares;
(b)	increase<br> the limits referred to above under “Restrictions on the Award of RSUs and Grant of Options”;
(c)	reduce<br> the exercise price of any Option (including any cancellation of an Option for the purpose of reissuance of a new Option at a lower<br> exercise price to the same person);
(d)	extend<br> the term of any Option beyond the original term (except if such period is being extend by virtue of a blackout period); or
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(e)	amend<br> the amendment provisions in Section 6.4 of the Share Compensation Plan.
6.F.	Action to Recover Erroneously Awarded Compensation
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Not Applicable.

Item 7.	Major Shareholders and Related Party Transactions
7.A.	Major Shareholders
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To the knowledge of the Board and executive officers of the Company, other than as disclosed below, as at March 27, 2025 no persons or ‎companies beneficially own, directly or indirectly or exercise control or direction over shares carrying 5% or ‎more of the voting rights attached to all outstanding shares of the Company‎. No holder of Common Shares has different voting rights from any other holders of Common Shares.

Armistice Capital, LLC and Steven Boyd (collectively “Armistice”) reported on a Schedule 13-G, filed with the SEC on February 14, 2024, that they were the beneficial owner of 4,938,978 Common Shares (on a pre-Consolidation basis). Post-Consolidation of the Common Shares, Armistice beneficially holds 480,794 shares, representing 8.86% of the Company’s common shares.

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Key management personnel include those persons having authority and responsibility for planning, directing and ‎controlling the activities of the Company as a whole. The Company has determined that key management personnel ‎consist of members of the Company’s Board of Directors and corporate officers.‎

On August 1, 2019, the Company entered in a business services agreement (the “Agreement”) with Business Instincts Group, a company that Cameron Chell, CEO and director has a material interest in that he previously controlled, to provide: corporate development and governance, strategic facilitation and management, general business services, office space, corporate business development video content, website redesign and management, and online visibility management at fees set out in the Agreement. For the year ended December 31, 2024, the company incurred fees of $273,475 (December 31, 2023 - $429,766) which are included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $Nil (December 31, 2023 - $3,780).

On October 1, 2019, the Company entered into an independent consultant agreement (“Consultant Agreement”) with 1502372 Alberta Ltd, a company controlled by Cameron Chell, CEO and director, to provide executive consulting services to the Company and all fees are set in the Consultant Agreement. For the year ended December 31, 2024, the Company incurred fees of $487,688 (December 31, 2023

• $592,500) included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $55,781 (December 31, 2023 - $35,417).

On July 3, 2020, the Company entered into an executive consultant agreement (“Executive Agreement”) with Scott Larson, a director of the Company, to provide executive consulting services, as President, to the Company. On May 9, 2022, Scott Larson ceased to be President of the Company and entered into an agreement to provide executive consulting services to the Company and all fees are set in the consulting agreement. For the year ended December 31, 2024, the Company incurred fees of $116,266 (December 31, 2023 - $215,019) included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $18,000 (December 31, 2023 - $9,287).

Tradepayables and accrued liabilities

As at December 31, 2024, the Company had $185,032 (December 31, 2023 - $190,664) payable to related ‎parties that was included in accounts payable. The balances outstanding are unsecured, non-interest bearing and due on ‎demand.‎

Keymanagement compensation

Key management includes the Company’s directors and members of the executive management team. ‎Compensation awarded to key management for the years ended December 31, 2024, 2023, and 2022 included:‎

For<br> the year ended December 31	2024 ()	2023 ()	2022 ()
Director fees
Management fees paid to a company ‎controlled<br> by CEO and director
Management fees paid to a company ‎controlled<br> by  a ‎director
Management fees paid to a company that the<br> CEO holds an economic interest in
Management fees paid to a company controlled<br> by a director
Salaries
Share-based payments
Totals

All values are in US Dollars.

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Not applicable.

Item 8.	Financial Information

The audited consolidated financial statements for the years ended December 31, 2024 and 2023 can be found under “Item 18. Financial Statements”.

8.B.	Significant Changes

We are not aware of any significant change that has occurred since December 31, 2024, the date of the audited consolidated financial statements included in this Annual Report, and that has not been disclosed elsewhere in this Annual Report.

Item 9.	The Offer and Listing.
9.A.	Offer and Listing Details
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The Common Shares are listed and posted for trading on the CSE under the trading symbol “DPRO”, on ‎the Nasdaq under the symbol “DPRO”, and on the Frankfurt Stock Exchange under the trading symbol “3U8A”.

9.B.	Plan of Distribution

Not applicable.

9.C.	Markets

A discussion of all stock exchanges and other regulated markets on which our securities are listed is provided under “Item 9.A. Offer and Listing Details.”

9.D.	Selling Shareholders

Not applicable.

9.E.	Dilution

Not applicable.

9.F.	Expenses of the Issue

Not applicable.

Item 10.	Additional Information
10.A.	Share Capital
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Not applicable.

10.B.	Memorandum and Articles of Association

The Company was incorporated under the laws of the Province of British Columbia, Canada, and was assigned the number BC1166724. The Company is governed by the BCBCA.

Our Articles do not contain a description of our objects and purposes.

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Our Articles do not restrict a director’s power to vote on a proposal, arrangement or contract in which the director is materially interested, vote compensation to themselves or any other members of their body in the absence of an independent quorum or exercise borrowing powers. There is no mandatory retirement age for our directors and our directors are not required to own securities of the Company in order to serve as directors.

Our authorized share capital consists of an unlimited number of Common Shares of which 5,427,795 were ‎issued and ‎outstanding as of ‎‎March 27, 2025 and an unlimited number of Preferred Shares, issuable in ‎series, none of which were issued and ‎outstanding as of ‎‎March 27, 2025.

Each Common Share entitles the holder ‎to receive notice of and attend all meetings of the shareholders. ‎Each Common Share carries ‎the right to one vote. The ‎holders of Common Shares are entitled to receive ‎any dividends declared by the Company in respect of the ‎Common ‎Shares at such time and in such ‎amount as may be determined by the Board, in its discretion. In the event of the ‎‎liquidation, dissolution, or ‎winding up of the Company, whether voluntary or involuntary, holders of Common Shares ‎are also ‎entitled ‎to participate, rateably, in the distribution of the assets of the Company, subject to the rights of the ‎holders ‎of any other class ‎of shares ranking in priority to the Common Shares. ‎‎

The Preferred Shares may be issuable in series ‎and the directors may, from time to time before the issue of ‎any Preferred Shares of ‎any particular series, define and ‎attach special rights, privileges, restrictions, and ‎conditions to the Preferred Shares of any series, ‎including voting rights, ‎entitlement to dividends, and ‎redemption, conversion, and exchange rights. In the event of the liquidation, ‎dissolution, or ‎winding up of ‎the Company, whether voluntary or involuntary, holders of Preferred Shares will rank on a parity with ‎‎‎holders of the Preferred Shares of every other series and be entitled to preference over the Common ‎Shares and over ‎any other ‎shares of the Company ranking junior to the Preferred Shares.‎

The provisions in our Articles attaching to the Common Shares may be altered, amended, repealed, suspended or changed by the affirmative vote of the holders of not less than two-thirds of the Common Shares present in person or by proxy at any such meeting of holders.

Our Articles provide for our directors to hold office until the expiry of his or her term (which is stipulated to be immediately before the next election or appointment of directors at an annual general meeting of our shareholders) or until his or her successor is elected or appointed, unless their respective office is earlier vacated in accordance with our Articles or with the provisions of the BCBCA. A director appointed or elected to fill a vacancy on the Board holds office for the unexpired term of their predecessor.

An annual meeting of shareholders must be held at such time in each year that is not later than 15 months after the last preceding annual meeting and at such place as the Board may from time to time determine. The holders of not less than five percent of the issued Common Shares that carry the right to vote at a meeting may requisition our Board to call a meeting of shareholders for the purposes stated in the requisition. The quorum for the transaction of business at any meeting of shareholders is two persons who are, or represented by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to vote at the meeting. In addition to those persons who are entitled to vote at a meeting of shareholders, the only other persons entitled to be present at the meeting are the directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited to be present at the meeting by the directors or by the chair of the meeting and any persons entitled or required under the BCBCA or our Articles to be present at the meeting; but if any of those persons does attend the meeting, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

Except as provided in the Investment Canada Act, there are no limitations specific to the rights of non-Canadians to hold or vote the Common Shares under the laws of Canada or the Province of British Columbia, or in our charter documents.

Our Articles do not contain provisions that would have an effect of delaying, deferring or preventing a change in control of the Company. Our Articles do not contain any provisions that would operate only with respect to a merger, acquisition or corporate restructuring of our company.

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Our Articles do not contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed.

Our Articles are not significantly different from the requirements of the BCBCA and the conditions imposed by our Articles governing changes in capital are not more stringent than what is required by the BCBCA.

10.C.	Material Contracts

There are no material contracts entered into by Draganfly within the two most recently completed financial ‎years, or ‎before the two most recently completed financial years but which are still in effect, other than ‎contracts entered into ‎in the ordinary course of business.

10.D.	Exchange Controls

There are currently no government laws, decrees, regulations or other legislation of Canada or the United States that restrict the export or import of capital (including the availability of cash and cash equivalents) or that affect the remittance of dividends, distributions, interest or other payments to non-residents of Canada or the United States holding our Common Shares. Any remittances of dividends to United States residents and to other non-residents are, however, subject to withholding tax. See “Taxation” below.

10.E.	Taxation

CertainU.S. Federal Income Tax Considerations

The following discussion describes the material U.S. federal income tax consequences relating to the ownership and disposition of Common Shares by U.S. Holders (as defined below). This discussion applies to U.S. Holders that hold Common Shares as capital assets (generally, property held for investment). This discussion is based on the Code, U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as certain financial institutions, banks, insurance companies, broker-dealers and traders in securities or other persons that generally mark their securities to market for U.S. federal income tax purposes, tax-exempt entities or government organizations, retirement plans, regulated investment companies, real estate investment trusts, certain former citizens or residents of the United States, persons who hold Common Shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated investment, persons required to accelerate the recognition of any item of gross income with respect to the Common Shares as a result of such income being recognized on an applicable financial statement, persons that have a “functional currency” other than the U.S. dollar, persons that own directly, indirectly or through attribution 10% or more of the voting power or value of our shares, corporations that accumulate earnings to avoid U.S. federal income tax, partnerships and other pass-through entities (or arrangements treated as a partnership for U.S. federal income tax purposes), and investors in such pass-through entities). This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences.

As used in this discussion, the term “U.S. Holder” means a beneficial owner of Common Shares that is, for U.S. federal income tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income of which is subject to U.S. federal income tax regardless of its source or (4) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Common Shares, the U.S. federal income tax consequences relating to an investment in the Common Shares will depend in part upon the status and activities of such entity or arrangement and the particular partner. Any such entity or arrangement should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership and disposition of Common Shares.

U.S. Holders should consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership and disposition of Common Shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

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PassiveForeign Investment Company Consequences

In general, a corporation organized outside the United States will be treated as a PFIC, for any taxable year in which either (1) at least 75% of its gross income is “passive income”, or (2) on average at least 50% of its assets, determined on a quarterly basis, are assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

Based on the current and expected composition of our income and the value of our assets, we believe that we were ‎not a PFIC United States federal income tax purposes for the for the taxable year ended December 31, 2024 and ‎we expect that we will not be a PFIC for the current taxable year. Nevertheless, because our PFIC status must be ‎determined annually with respect to each taxable year and will depend on the composition and character of our ‎assets and income, including our use of proceeds from an offering of Common Shares, and the value of our assets ‎‎(which may be determined, in part, by reference to the market value of Common Shares, which may be volatile) ‎over the course of such taxable year, we may be a PFIC in any taxable year. The determination of whether we will ‎be or become a PFIC may also depend, in part, on how, and how quickly, we use our liquid assets and the cash ‎raised in an offering of Common Shares. If we determine not to deploy significant amounts of cash for active ‎purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of ‎the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, ‎there can be no assurance that we will not be a PFIC for any future taxable year. In addition, it is possible that the ‎U.S. Internal Revenue Service may challenge our classification of certain income and assets as non-passive, which ‎may result in us being or becoming a PFIC in the current or subsequent years.‎

If we are a PFIC in any taxable year during which a U.S. Holder owns Common Shares, the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for the Common Shares, and (2) any gain recognized on a sale, exchange or other disposition, including a pledge, of the Common Shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for Common Shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.

If we are a PFIC for any year during which a U.S. Holder holds Common Shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder holds the Common Shares, unless (i) we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale” election with respect to the Common Shares or for the period immediately preceding our cessation in meeting the tests described above the Common Shares were subject to a mark-to-market election or (ii) the U.S. Holder makes a timely and effective “qualified electing fund” election (“QEF Election”) with respect to all taxable years during such U.S. Holder’s holding period in which the we are a PFIC. If the election is made, the U.S. Holder will be deemed to sell the Common Shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s Common Shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.

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If we are a PFIC for any taxable year during which a U.S. Holder holds Common Shares and one of our non-U.S. corporate subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to our non-U.S. subsidiaries.

If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on Common Shares if such U.S. Holder makes a valid “mark-to-market” election for our Common Shares. A mark-to-market election is available to a U.S. Holder only for “marketable stock”. Our Common Shares will be marketable stock as long as they remain listed on the Nasdaq and are regularly traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. If a mark-to-market election is in effect, a U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of Common Shares held at the end of such taxable year over the adjusted tax basis of such Common Shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such Common Shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in Common Shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of Common Shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss.

A mark-to-market election will not apply to Common Shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize or acquire in the future notwithstanding the U.S. Holder’s mark-to-market election for the Common Shares.

A U.S. Holder who makes a QEF Election generally must report on a current basis its share of our net capital gain and ordinary earnings for any year in which were are a PFIC, whether or not we distribute any amounts to our shareholders. However, U.S. holders should be aware that there can be no assurance that we will satisfy the record keeping requirements that apply to a QEF, or that we will supply U.S. holders with information that such U.S. holders require to report under the QEF election rules, in the event that the Company is a PFIC and a U.S. holder wishes to make a QEF election.

Each U.S. person that is an investor of a PFIC is generally required to file an annual information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.

The U.S. federal income tax rules relating to PFICs are very complex. U.S. Holders are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of Common Shares, the consequences to them of an investment in a PFIC, any elections available with respect to the Common Shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of Common Shares of a PFIC.

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Distributionson the Common Shares

Subject to the discussion above under “— Passive Foreign Investment Company Consequences,” a U.S. Holder that receives a distribution with respect to Common Shares generally will be required to include the gross amount of such distribution (before reduction for any Canadian withholding taxes withheld therefrom) in gross income as a dividend when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s Common Shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s Common Shares, the remainder will be taxed as capital gain. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends. Distributions on Common Shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.

Dividends paid by a “qualified foreign corporation” are eligible for taxation in the case of non-corporate U.S. Holders at a reduced long-term capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain requirements are met. Each non-corporate U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends with regard to its particular circumstances.

A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the ‎dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (a) ‎if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury ‎of the United States determines is satisfactory for purposes of this provision and which includes an exchange of ‎information provision, or (b) with respect to any dividend it pays on Common Shares that are readily tradable on ‎an established securities market in the United States. We believe that we qualify as a resident of Canada for ‎purposes of, and are eligible for the benefits of, the U.S.-Canada Treaty, which the IRS has determined is ‎satisfactory for purposes of the qualified dividend rules and that it includes an exchange of information provision, ‎although there can be no assurance in this regard. Further, our Common Shares will generally be considered to be ‎readily tradable on an established securities market in the United States if they remain listed on the Nasdaq, as we ‎intend the Common Shares to be. Therefore, subject to the discussion above under “—Passive Foreign Investment ‎Company Consequences”, if the U.S. Treaty is applicable, or if the Common Shares are readily tradable on an ‎established securities market in the United States, dividends paid on Common Shares will generally be “qualified ‎dividend income” in the hands of non-corporate U.S. Holders, provided that certain conditions are met, including ‎conditions relating to holding period and the absence of certain risk reduction transactions.‎

Sale,Exchange or Other Disposition of Common Shares

Subject to the discussion above under “— Passive Foreign Investment Company Consequences,” a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange or other disposition of Common Shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other disposition and such U.S. Holder’s adjusted tax basis in the Common Shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale, exchange or other disposition, the Common Shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder from the sale or other disposition of Common Shares will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.

MedicareTax

Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% Medicare tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of Common Shares. If you are a U.S. person that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of this Medicare tax to your income and gains in respect of your investment in Common Shares.

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InformationReporting and Backup Withholding

U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in Common Shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets). As described above under “Passive Foreign Investment Company Consequences”, each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than US$100,000 for Common Shares may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.

Dividends on and proceeds from the sale or other disposition of Common Shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption. Backup withholding may apply to amounts subject to reporting if the holder (1) fails to provide an accurate U.S. taxpayer identification number or otherwise establish a basis for exemption, or (2) is described in certain other categories of persons. However, U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.

U.S. Holders should consult their own tax advisors regarding the backup withholding tax and information reporting rules.

THE

ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.‎

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CertainCanadian Federal Income Tax Considerations for United States Residents

The following is, at the date of this Annual Report, a summary of certain Canadian federal income tax considerations generally applicable to the holding and disposition of Common Shares acquired by a holder who, at all relevant times, (a) for the purposes of the Tax Act (i) is not resident, or deemed to be resident, in Canada, (ii) deals at “arm’s length” with the Company, and is not “affiliated” with the Company (each as defined in the Tax Act), (iii) acquires and holds Common Shares as capital property, (iv) does not use or hold Common Shares in the course of carrying on, or otherwise in connection with, a business carried on or deemed to be carried on in Canada, and (v) is not an insurer that carries on an insurance business in Canada and elsewhere or “authorized foreign bank” (as defined in the Tax Act), or other holder of special status, and (b) for the purposes of the Canada-U.S. Tax Convention (1980) (the “Tax Treaty”), is a resident of the United States, has never been a resident of Canada, does not have and has not had, at any time, a “permanent establishment” (as defined in the Tax Treaty) of any kind in Canada, and otherwise qualifies for the full benefits of the Tax Treaty. Holders who meet all the criteria in clauses (a) and (b) above are referred to herein as “United States Holders”, and this summary only addresses such United States Holders.

This summary does not deal with special situations, such as the particular circumstances of traders or dealers, tax exempt entities, insurers or financial institutions, or other holders of special status or in special circumstances. Such holders, and all other holders who do not meet the criteria in clauses (a) and (b) above, should consult their own tax advisors.

This summary is based on the current provisions of the Tax Act, the regulations promulgated thereunder (the “Regulations”), the current provisions of the Tax Treaty (each as in force as of the date of this Annual Report) and the Company’s understanding of the administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act and Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof  (the “Proposed Amendments”) and assumes that such Proposed Amendments will be enacted in the form proposed. However, such Proposed Amendments might not be enacted in the form proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policies or assessing practices, whether by legislative, governmental or judicial decision or action, nor does it take into account tax laws of any province or territory of Canada or of any other jurisdiction outside Canada, which may differ significantly from those discussed in this summary.

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For the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Common Shares must generally be expressed in Canadian dollars. Amounts denominated in United States currency generally must be converted into Canadian dollars using a rate of exchange that is acceptable to the CRA.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular United States Holder, and no representation with respect to the Canadian federal income tax consequences to any particular United States Holder or prospective United States Holder is made. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, all United States Holders should consult with their own tax advisors for advice with respect to their own particular circumstances.

WithholdingTax on Dividends

Amounts paid or credited or deemed to be paid or credited as, on account or in lieu of payment of, or in satisfaction of, dividends on Common Shares to a United States Holder will be subject to Canadian withholding tax. Under the Tax Act, the rate of withholding is 25% of the gross amount of the dividend.

Under the Tax Treaty, the rate of withholding on any such dividend beneficially owned by a United States Holder is ‎generally reduced to 15%, and may further be reduced to 5% if the United States Holder is a company entitled to ‎full benefits under the Tax Treaty that owns, directly or indirectly, at least 10% of the voting stock of the Company.‎

Dispositionsof Common Shares

A United States Holder generally will not be subject to tax under the Tax Act in respect of a capital gain realized on ‎the disposition or deemed disposition of a Common Share, nor will a capital loss arising therefrom be recognized ‎under the Tax Act, unless such Common Share constitutes “taxable Canadian property” (as defined in the Tax Act) ‎of the United States Holder at the time of disposition and the United States Holder is not entitled to relief under the ‎Tax Treaty.‎

Provided the Common Shares are listed on a “designated stock exchange” (as defined in the Tax Act) (which currently includes the Nasdaq and CSE) and are so listed at the time of disposition, the Common Shares generally will not constitute “taxable Canadian property” of a United States Holder at that time unless, at any time during the 60-month period immediately preceding the disposition, the following two conditions are met concurrently: (i) 25% or more of the issued shares of any class or series of shares of the Company were owned by or belonged to one or any combination of (a) the United States Holder, (b) persons with whom the United States Holder did not deal at “arm’s length” (within the meaning of the Tax Act), or (c) partnerships in which the United States Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships; and (ii) more than 50% of the fair market value of the Common Shares was derived directly or indirectly from one or any combination of (a) real or immovable property situated in Canada, (b) “Canadian resource properties” (as defined in the Tax Act), (c) “timber resource properties” (as defined in the Tax Act), or (d) options in respect of, interests in, or, for civil law purposes, a right in, the foregoing property, whether or not such property exists. Notwithstanding the foregoing, a Common Share may be deemed to be “taxable Canadian property” in certain other circumstances. United States Holders should consult their own tax advisors as to whether their Common Shares will constitute “taxable Canadian property”.

UnitedStates Holders who may hold Common Shares as “taxable Canadian property” should consult their own tax advisors with respectto the application of Canadian capital gains taxation, any potential relief under the Tax Treaty, and special compliance procedures underthe Tax Act, none of which are described in this summary.

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SHAREHOLDERS

ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE CANADIAN OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY NON-U.S., STATE OR LOCAL TAXES.

10.F.	Dividends and Paying Agents

Not applicable.

10.G.	Statement by Experts

Not applicable.

10.H.	Documents on Display

Documents concerning our company referred to in this Annual Report may be viewed by appointment during normal business hours at our registered and records office at Suite 2700, 1133 Melville Street, Vancouver, British ‎Columbia V6E 4E5.

10.I.	Subsidiary Information

Not applicable.

10.J.	Annual Report to Security Holders

The Company will prove this Annual Report to securityholders, as applicable, in electronic format in accordance with the EDGAR Filer Manual.

Item 11.	Quantitative and Qualitative Disclosures About Market Risk

We are exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

CreditRisk

Credit risk is the risk of an unexpected loss if a customer or third party fails to meet its contractual obligations. The Company is subject to credit risk on its cash and receivables. The Company limits its exposure to credit loss on cash by placing its cash with a high-quality financial institution. The Company performs credit evaluations of its customers. Receivables are shown net of any provision made for impairment of the receivables. Due to this factor, the Company believes that no additional credit risk, beyond amounts provided for collection loss, is inherent in receivables.

Credit and liquidity risk associated with cash and the marketable security is managed by ensuring assets are placed with major financial institutions with strong investment grade ratings.

Credit risk on trade and other receivables reflects the risk that the Company may be unable to recover them. Trade and other receivables that are greater than 30 days are considered past due. The table below sets out the status of trade and other receivables, allowance for doubtful accounts of $140,011 has been recorded as at December 31, 2024 and $216,238 December 31, 2023.

	December 31, 2024		December 31, 2023
0 – 30 days	$	346,979	$	271,622
31 – 60 days		150,575		109,928
61 – 90 days		32,002		64,259
91 + days		197,153		203,803
	$	726,709	$	649,612

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| --- |

Liquidityrisk

---

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a ‎planning and budgeting process in place to help determine the funds required to support the Company’s normal operating ‎requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business ‎requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. ‎Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through ‎private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access ‎to significant equity funding.‎

InterestRate Risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposure through its normal operating and financing activities. The Company is exposed to minimal interest rate risk on its cash balances as they carry a floating rate of interest. We do not currently hedge our interest rate risk.

ForeignCurrency Risk

We are also exposed to market risk related to change in foreign currency exchange rates. Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company does engage in significant transactions and activities in currencies other than its functional currency, the Canadian dollar. Such transactions are primarily denominated in the U.S. dollar. Transactions in foreign currencies are translated into Canadian dollars at rates of exchange at the time of such transactions Depending on the timing of the transactions and the applicable currency exchange rates such conversions may positively or negatively impact the Company. We do not currently hedge our foreign exchange rate risk.

Item 12.	Description of Securities Other than Equity Securities
12.A.	Debt Securities
---	---

Not applicable.

12.B.	Warrants and Rights

Not applicable.

12.C.	Other Securities

Not applicable.

12.D.	American Depositary Shares

Not applicable.

---

PART

II

Item 13.	Defaults, Dividend Arrearages and Delinquencies

Not applicable.

ITEM 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

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---
---	---

The effective date of the registration statement on Form F-10 (File No. 333-258074) for the Company’s initial underwritten public offering of securities in the United States was July 29, 2021 (defined herein as the “US Offering”). The offering of 5,000,000 Common Shares at a price of U.S.$4.00 per share closed on August 3, 2021 for gross proceeds of U.S.$20,000,000, before deducting underwriting discounts and offering expenses of approximately U.S.$2,400,000 for total net proceeds to the Company from the offering of U.S.$17,600,000. ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”), was the sole book-running manager for the offering.

In addition, ThinkEquity was granted a 45-day over-allotment option following the closing date to purchase up to an additional 750,000 shares. On September 15, 2021, the Company announced the exercise of 95,966 of the over-allotment shares at a price of U.S.$4.00 per share for additional gross proceeds of U.S.$383,864, bringing the aggregate gross proceeds of the US Offering to U.S.$20,383,864 before deducting underwriting discounts and offering expenses. After deducting underwriting discounts and offering expenses of U.S.$2,400,000, the total net proceeds to the Company from the US Offering were approximately U.S.$17,983,864. None of the net proceeds of the US Offering were paid directly or indirectly to any director or officer of ours or to their associates, persons owning 10% or more of any class of our equity securities, or to any of our affiliates.

The Company has fully used the net proceeds of the US Offering. The proceeds that the Company has used have been used for general corporate purposes, including funding ongoing operations, growth initiatives, and working capital. There has been no material change in the use of proceeds from our initial public offering from that described in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on July 30, 2021 (the “Supplement”). The Company used the net proceeds of the offering, together with existing cash, for general corporate purposes, including to fund ongoing operations, to fund growth initiatives and/or for working capital requirements including the continuing development and marketing of the Company’s core products, potential acquisitions and research and development, as set out in the Supplement.

Item 15.	Controls and Procedures

DisclosureControls and Procedures

At the end of the period covered by this Annual Report, an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and Rule 15d-15(e)‎ under the Exchange Act) was carried out by the Company’s principal executive officer (the “CEO”) and principal financial officer (the “CFO”). Based upon that evaluation, the Company’s CEO and CFO have concluded that, as of the end of the period covered by this Annual Report, the design and operation of the Company’s disclosure controls and procedures are effective to ensure that (i) information required to be disclosed in reports that the Company files or submits to regulatory authorities is recorded, processed, summarized and reported within the time periods specified by regulation, and (ii) is accumulated and communicated to management, including the Company’s CEO and CFO, to allow timely decisions regarding required disclosure.

It should be noted that while the Company’s CEO and CFO believe that the Company’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Company’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

ManagementReport on Internal Control Over Financial Reporting & Auditor Attestation

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934, as amended) and has designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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| --- |

In designing and evaluating the Company’s internal control over financial reporting, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its reasonable judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024.

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AttestationReport of Independent Auditor

In accordance with the JOBS Act enacted on April 5, 2012, the Company qualifies as an “emerging growth company,” which entitles the Company to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. Specifically, the JOBS Act defers the requirement to have the Company’s independent auditor assess the Company’s internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act. As such, the Company is exempted from the requirement to include an auditor attestation report in this Annual Report for so long as the Company remains an EGC, which may be for as long as five years following its initial registration in the United States.

Changesin Internal Control over Financial Reporting

During the year ended December 31, 2024, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 16.	[Reserved]
Item 16A.	Audit Committee Financial Expert
---	---

The Company’s Audit Committee, which consists exclusively of independent directors within the meaning of NI 52-110 and the Nasdaq listing requirements, is comprised of Kim Moody, Julie Myers and Thomas B. Modly. Kim Moody is the Chair of the Audit Committee. The Board of Directors has determined that Kim Moody, Julie Myers and Thomas B. Modly each meet the independence requirements for directors, including the heightened independence standards for members of the audit committee under Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and NI 52-110. The Board has determined that Kim Moody is “financially literate” within the meaning of NI 52-110 and the Nasdaq listing requirements and an “audit committee financial expert” as defined by Rule 10A-3 under the Exchange Act. For a description of the education and experience of each member of the Audit Committee, see “Item 6A. Directors, Senior Management and Employees.”

Item 16B.	Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics applicable to all of its directors, officers and employees, including its CEO and CFO, which is a “code of ethics” as defined in section 406(c) of the Sarbanes-Oxley Act. The Code of Business Conduct and Ethics sets out the fundamental values and standards of behavior that the Company expects from our directors, officers and employees with respect to all aspects of its business.

If the Company grants any waiver of the Code of Business Conduct and Ethics, whether explicit or implicit, to a director or executive officer, it will disclose the nature of such waiver on its website to the extent required by, and in accordance with, the rules and regulations of the SEC.

The full text of the Code of Business Conduct and Ethics is posted on the Company’s website at www.draganfly.com and the System for Electronic Document Analysis and Retrieval+ (SEDAR+) profile at www.sedarplus.ca. The information on or accessible through the website is not part of and is not incorporated by reference into this Annual Report, and the inclusion of the website address in this Annual Report is only for reference.

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| --- |

The Audit Committee is responsible for reviewing and evaluating the Code of Business Conduct and Ethics periodically and will recommend any necessary or appropriate changes thereto to the Board for consideration. The Audit Committee will also assist the Board of Directors with the monitoring of compliance with the Code of Business Conduct and Ethics.

Item 16C.	Principal Accountant FeeS and Services

The following table sets forth information regarding the amount billed and accrued to the Company by Dale Matheson Carr-Hilton Labonte LLP, for the fiscal years ended December 31, 2024 and 2023:

	Year Ended December 31,
Services	2024		2023
Audit Fees^(1)^	$	235,000	$	235,000
Audit-Related Fees^(2)^	$	114,000	$	83,000
Tax Fees^(3)^	$	15,000	$	12,600
Other Fees^(4)^	$	-	$	-

---

Notes:

(1)	“Audit fees”<br> means the aggregate fees billed for professional services rendered by our principal accounting firm for the audit of the Company’s<br> annual financial statements and the review of its comparative interim financial statements.
(2)	“Audit-related fees”<br> means the aggregate fees billed for professional services rendered by the Company’s principal accounting firm for the assurance<br> and related services, which mainly included the audit and review of financial statements and are not reported under “Audit<br> fees” above.
(3)	“Tax fees”<br> means the aggregate fees billed for professional services rendered by the Company’s principal accounting firm for tax compliance,<br> tax advice and tax planning.
(4)	“Other fees”<br> means the aggregate fees incurred in each of the fiscal years listed for the professional tax services rendered by the Company’s<br> principal accounting firm other than services reported under “Audit fees,” “Audit-related fees” and “Tax<br> fees.”

The policy of the Company’s Audit Committee is to pre-approve all audit and non-audit services provided by Dale Matheson Carr-Hilton Labonte LLP, its independent registered public accounting firm, including audit services, audit-related services, tax services, and other services as described above.

Item 16D.	Exemptions from the Listing Standards for Audit Committees

Not Applicable.

ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not Applicable.

Item 16F.	Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G.	Corporate Governance

The Company is a foreign private issuer and its Common Shares are listed on the Nasdaq Capital Market. Rule 5615(a)(3) of the rules of the Nasdaq Stock Market LLC Rules (the “Nasdaq Rules”) permits a foreign private issuer to follow its home country practices in lieu of certain requirements of the 5600 Series of the Nasdaq Rules, which set forth corporate governance requirements. In order to claim such an exemption, the Company must disclose the significant differences between its corporate governance practices and those required to be followed by U.S. domestic issuers under the Nasdaq Rules. Set forth below is a brief summary of such differences.

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QuorumRequirement

Nasdaq Rule 5620(c) requires that each company that is not a limited partnership shall provide for a quorum as specified in its by-laws for any meeting of holders of common stock; provided, however, that in no case shall such quorum be less than 33 1/3% of the outstanding shares of the company’s common voting stock. The Company does not presently follow this Nasdaq Rule. Instead, and in accordance with the Nasdaq exemption, the Company complies with the BCBCA which does not require a quorum of no less than 33 1/3% of the outstanding shares of the Company’s common voting shares and provides that the quorum for the transaction of business at a meeting of shareholders is the quorum established by the Company’s Articles, which is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting.

IndependentCompensation Committee

Nasdaq Rule 5605(d)(2) requires that listed companies have a compensation committee comprised entirely of independent directors. The Company does not have a compensation committee comprised entirely of independent directors. Under Canadian securities laws, National Policy 58-201 only recommends that a compensation committee be composed entirely of independent directors. The rules of the CSE likewise do not require an entirely independent compensation committee.

Item 16H.	Mine Safety Disclosure

Not applicable.

Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Item 16J.	insider tRading policies

Not Applicable.

Item 16k.	cybersecurity

Draganfly conducts annual IT general controls (ITGC) audits through a third-party firm to evaluate internal risks to key business systems. Any significant deficiencies identified are promptly addressed and documented. Additionally, to mitigate external risks, Draganfly has enlisted the services of an Extended Detection and Response (XDR) provider for continuous 24/7 monitoring, threat hunting, incident response, and vulnerability management.

The XDR platform aggregates data from various sources including network scanners, endpoint agents, and cloud APIs. This data undergoes rigorous analysis leveraging machine-learning-powered threat intelligence and human expertise to swiftly identify and address cybersecurity threats in real-time. Any unusual findings are promptly communicated to the Systems Administrator via ticketing. In instances of critical alerts posing a material risk to the company, affected systems are immediately quarantined at the kernel level, isolating them from network communication until remedial actions can be taken.

Furthermore, Draganfly conducts quarterly reviews of the XDR provider services overseen by the Systems Administrator. To mitigate the risk of the XDR provider compromising Draganfly’s systems, an air-gap approach is implemented, ensuring that the provider cannot directly intervene in Draganfly’s systems except to quarantine systems, a capability that can be terminated by the Systems Administrator at any time.

In addition to our robust cybersecurity measures, Draganfly prioritizes employee awareness and readiness to counter emerging threats. Regular cybersecurity training is conducted to educate our staff on recognizing and mitigating social engineering attacks. These sessions emphasize the importance of vigilance and critical thinking when encountering suspicious emails, phone calls, or other forms of communication aimed at deceiving individuals into divulging sensitive information or compromising security protocols.

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As of the current reporting period, Draganfly has not experienced any cybersecurity incidents. However, we recognize that social engineering attacks pose a significant threat to our business operations and financial condition. While we remain vigilant and have implemented robust security measures to mitigate such risks, we acknowledge that social engineering attacks have the potential to compromise our systems and disrupt our operations.

The full Board receives a quarterly report and dashboard which sets out our security stance (whether there have been any incidents), and our phish-prone percentage as we believe that is our highest risk factor.

Management receives the same quarterly report and as the team meets weekly, any concerns or decisions ‎relating to security are brought forward by the Chief Legal and Corporate Services Officer. Should there be ‎any specific issues or incidents, the Chief Legal and Corporate Services Officer would report them ‎immediately to the Chair of the Board and the chair of the Audit Committee.‎

---

PART

III

Item 17:	Financial Statements

Refer to Item 18. Financial Statements.

Item 18:	Financial Statements

FinancialStatements Filed as Part of this Annual Report:

Independent Auditor’s Report of Dale Matheson Carr-Hilton Labonte LLP , dated March 27, 2025;	F-2
Consolidated Statements of Financial Position for the years ended December 31, 2024 and 2023;	F-3
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024 and 2023;	F-4
Consolidated Statements of Changes in Shareholder Equity (Deficiency) for the years ended December 31, 2024 and 2023;	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023;	F-6
Notes to the Consolidated Financial Statements	F-7

| 69 |

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---	---

---

The following Exhibits are being filed as part of this Annual Report, or are incorporated by reference where indicated:

Exhibit Number	Description
1.1	Certificate of Incorporation dated June 1, 2018 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-40688) filed with the SEC on April 4, 2022)
1.2	Articles dated June 1, 2018 (incorporated herein by reference to the Company’s Registration Statement on Form S-8 (Registration Number 333-259459) filed with the SEC on September 10, 2021)
1.3	Certificate of Change of Name dated August 15, 2019 ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎40688) filed with the SEC on April 4, 2022)
1.4	Notice of Articles dated June 1, 2018 (incorporated herein by reference to the Company’s Registration Statement on Form S-8 (Registration Number 333-259459) filed with the SEC on September 10, 2021)
2.1	Specimen Option Agreement of the Company ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎40688) filed with the SEC on April 4, 2022)‎
2.2	Specimen Restricted Share Unit Agreement of the Company ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎‎40688) filed with the SEC on April 4, 2022)‎
2.3	Specimen Warrant Certificate of the Company ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎‎‎40688) filed with the SEC on April 4, 2022)‎
2.4	Specimen Warrant Certificate of the Company ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎‎‎‎40688) filed with the SEC on April 4, 2022)‎
2.5	Specimen Warrant Certificate of the Company ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎‎‎‎‎40688) filed with the SEC on April 4, 2022)‎
4.1	Business Services Agreement between the Company and Business Instincts ‎Group Inc. dated August 1, 2019 ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. 001-‎‎‎40688) filed with the SEC on April 4, 2022)‎
4.2#	Share Compensation Plan dated August 9, 2019, as amended April 14, 2021 (incorporated herein by reference to the Company’s Registration Statement on Form S-8 (Registration Number 333-259459) filed with the SEC on September 10, 2021)
4.3#	Consultant Agreement ‎with 1502372 Alberta Ltd., dated October 1, 2019 ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on April 4, 2022)‎
4.4#	Independent Consultant Agreement Amending Agreement with 1502372 Alberta Ltd. dated April 1, 2022 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.5#	Independent Consulting Agreement with Scott Larson dated April 1, 2022 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.6#	Employment Agreement with Paul Sun dated November, 2020 ‎ ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on April 4, 2022)‎‎‎
4.7#	Amending Agreement with Paul Sun, dated September 3, 2021 ‎ ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on April 4, 2022)‎‎‎
4.8#	Employment Agreement Amending Agreement with Paul Sun dated April 1, 2022 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.9#	Employment Agreement Amendment with Paul Sun dated April 21, 2023 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.10#	Employment Agreement with Paul Mullen dated April 12, 2021 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.11#	Employment Agreement Amending Agreement with Paul Mullen dated April 1, 2022 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.12#	Employment Agreement Amendment with Paul Mullen dated April 1, 2023 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.13#	Employment Agreement with Deborah Greenberg dated June 3, 2022 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.14#	Employment Agreement Amendment with Deborah Greenberg dated April 1, 2023 (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024)
4.15*	Common Share Purchase Warrant Issued August 21, 2024
4.16*	Pre-Funded Common Share Purchase Warrant Issued August 21, 2024
4.17*	Common Share Purchase Warrant Issued November 19, 2024

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| --- | | 4.18* | Pre-Funded Common Share Purchase Warrant Issued November 19, 2024 | | --- | --- | | 8.1* | Subsidiaries of the Company | | 11.1 | Code of Business Conduct and Ethics ‎ ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on April 4, 2022)‎‎‎ | | 12.1* | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | | 12.2* | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | | 13.1† | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 13.2† | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 15.1* | Management’s Discussion and Analysis for the fiscal year ended December 31, 2024 | | 15.2 | Audit Committee Charter ‎ ‎(incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on April 4, 2022)‎‎‎ | | 15.3* | Consent of independent registered public accounting firm (Dale Matheson Carr-Hilton Labonte LLP) | | 97 | Compensation Clawback Policy (incorporated herein by reference to the Company’s Annual Report on Form 20-F (File No. ‎‎001-‎‎40688) filed with the SEC on March 27, 2024) | | 101* | The following materials<br> from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2024, formatted in eXtensible Business<br> Reporting Language (XBRL): | | (i) Consolidated Balance<br> Sheets as of December 31, 2024 and 2023; | | --- | | (ii) Consolidated Statements<br> of Operations for the years ended December 31, 2024 and 2023; | | (iii) Consolidated Statements<br> of Comprehensive Loss for the years ended December 31, 2024 and 2023; | | (iv) Consolidated Statements<br> of Changes in Stockholders’ Equity for the years ended December 31, 2024 and 2023; | | (v) Consolidated Statements<br> of Cash Flows for the years ended December 31, 2024 and 2023; and | | (vi) Notes to Consolidated<br> Financial Statements | | 104* | Cover Page Interactive<br> Data File (formatted as Inline eXtensible Business Reporting Language (iXBRL) and contained in Exhibit 101) | | --- | --- |

* Filed herewith.

‎† Furnished herewith

‎# Indicates management contract or compensatory plan.‎

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Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

DRAGANFLY INC.
	/s/ Paul Sun
By:	Paul Sun
Title:	Chief Financial Officer

Date: March 27, 2025

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Draganfly

Inc.

Consolidated

Financial Statements

Years

Ended December 31, 2024 and 2023

(Expressedin Canadian Dollars)

| F-1 |

| --- |

Report of Independent RegisteredPublic Accounting Firm

To the shareholders and the board of directors of Draganfly Inc.

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Draganfly Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive loss, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses in developing its business, and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DMCL

DALE

MATHESON CARR-HILTON LABONTE LLP

CHARTERED

PROFESSIONAL ACCOUNTANTS

We have served as the Company’s auditor since 2018

Vancouver, Canada (PCAOB ID 1173)

March 27, 2025

| F-2 |

| --- |

DraganflyInc.

ConsolidatedStatements of Financial Position

Expressedin Canadian Dollars

		December 31,			December 31,
As at	Notes	2024			2023
ASSETS
Current Assets
Cash and cash equivalents		$	6,252,409		$	3,093,612
Receivables	4		573,390			649,612
Inventory	5		1,532,263			1,596,536
Prepaids and deposits	6		724,513			1,342,215
Total current assets			9,082,575			6,681,975
Non-current Assets
Equipment	8		529,542			680,801
Intangible assets	9		45,141			56,426
Investments	7		14,286			189,403
Receivable	4		156,200			-
Right of use assets	10		372,344			721,687
TOTAL ASSETS		$	10,200,088		$	8,330,292
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Trade payables and accrued liabilities	12,19	$	2,399,187		$	2,638,981
Customer deposits			466,295			104,715
Deferred income	13		18,542			12,112
Loans payable	14		-			85,058
Derivative liability	15		2,198,121			4,196,125
Lease liabilities	11		154,147			362,001
Total current liabilities			5,236,292			7,398,992
Non-current Liabilities
Deferred income	13		68,139			95,562
Lease liabilities	11		273,874			428,022
TOTAL LIABILITIES			5,578,305			7,922,576
SHAREHOLDERS’ EQUITY
Share capital	15		110,742,984			97,070,976
Reserves – share-based payments	15		7,698,304			6,870,139
Reserves - Warrants	15		3,776,428			-
Accumulated deficit			(117,465,829	)		(103,588,356	)
Accumulated other comprehensive income (loss)			(130,104	)		54,957
TOTAL SHAREHOLDERS’ EQUITY			4,621,783			407,716
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	10,200,088		$	8,330,292

Natureand Continuance of Operations and Going Concern (Note 1)

Approved and authorized for issuance by the Board of Directors on March 27, 2025.

“Scott Larson”	“Cameron Chell”

The

accompanying notes are an integral part of these consolidated financial statements.

| F-3 |

| --- |

DraganflyInc.

ConsolidatedStatements of Comprehensive Loss

Expressedin Canadian Dollars

		For the years ended December 31,
	Notes	2024			2023			2022
REVENUE
Sales of goods	16	$	5,368,476		$	5,287,093		$	5,550,432
Provision of services	16		1,192,579			1,267,749			2,054,627
TOTAL REVENUE			6,561,055			6,554,842			7,605,059
COST OF SALES	5		(5,162,851	)		(4,490,728	)		(6,814,384	)
GROSS PROFIT			1,398,204			2,064,114			790,675
OPERATING EXPENSES
Amortization	9		11,285			35,960			179,482
Depreciation	8,10		565,806			510,677			593,277
Director fees	19		504,620			600,933			522,349
Insurance			1,111,052			1,825,137			3,722,237
Office and miscellaneous	17		1,853,578			6,303,879			5,397,961
Professional fees	19		3,016,594			4,145,586			6,821,583
Research and development			927,412			1,554,823			651,302
Share-based payments	15,19		1,182,618			2,021,664			3,311,024
Travel			231,432			704,994			396,388
Wages and salaries	19		6,733,303			6,976,792			6,105,020
Total operating expenses			(16,137,700	)		(24,680,445	)		(27,700,623	)
OTHER INCOME (EXPENSE)
Change in fair value of derivative liability	15		1,842,618			211,110			5,502,688
Finance and other costs			107,225			83,280			44,345
Foreign exchange gain			268,537			(249,563	)		745,102
Gain (loss) on disposal of assets			11,432			(944	)		(10,755	)
Gain (loss) on write-off of notes receivable			40,020			(101,351	)		(309,385	)
Government income			-			5,232			2,446
Write down of deposit			-			-			(228,572	)
Loss on impairment of goodwill and intangibles			-			-			(6,454,914	)
Other income (expense)	18		(1,407,809	)		(943,243	)		(35,371	)
NET LOSS FOR THE YEAR			(13,877,473	)		(23,611,810	)		(27,654,364	)
OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified to profit or loss
Foreign exchange translation			(9,944	)		(94,861	)		447,542
Items that will not be reclassified to profit or loss
Change in fair value of equity investments at FVOCI	7		(175,117	)		(3,180	)		(98,483	)
COMPREHENSIVE LOSS FOR THE YEAR			(14,062,534	)		(23,709,851	)		(27,305,305	)
Net loss per share
Basic & diluted		$	(4.40	)	$	(14.58	)	$	(20.34	)
Weighted average number of common shares outstanding - basic & diluted			3,156,891			1,619,343			1,342,279

The

accompanying notes are an integral part of these consolidated financial statements.

| F-4 |

| --- |

DraganflyInc.

ConsolidatedStatements of Changes in Shareholders’ Equity

Expressedin Canadian Dollars

	Number of Shares			Share Capital			Reserves – Share-Based Payments			Equity Warrants		Accumulated Deficit			Change in Fair Value of Investments at FVTOCI			Exchange Differences on Translation of Foreign Operations			Total Shareholders’ Equity
															Accumulated Other Comprehensive Income (Loss)
	Number of Shares			Share Capital			Reserves – Share-Based Payments			Reserves - Warrants		Accumulated Deficit			Change in Fair Value of Investments at FVTOCI			Exchange Differences on Translation of Foreign Operations			Total Shareholders’ Equity
Balance at December 31, 2021		1,326,938		$	81,038,365		$	6,406,117		$	-	$	(52,322,182	)	$	(332,640	)	$	136,579		$	34,926,239
Shares issued for the exercise of stock options		500			51,875			(25,000	)		-		-			-			-			26,875
Shares issued for the exercise of warrants		662			87,170			-			-		-			-			-			87,170
Shares issued for the exercise of RSUs		43,104			2,427,801			(2,427,801	)		-		-			-			-			-
Shares issue costs		-			(5,122	)		-			-		-			-			-			(5,122	)
Share-based payments		-			-			3,311,024			-		-			-			-			3,311,024
Net loss		-			-			-			-		(27,654,364	)		-			-			(27,654,364	)
Change in fair value of equity investments at FVOCI		-			-			-			-		-			(98,483	)		-			(98,483	)
Translation of foreign operations		-			-			-			-		-			-			447,542			447,542
Balance at December 31, 2022		1,371,204		$	83,600,089		$	7,264,340		$	-	$	(79,976,546	)	$	(431,123	)	$	584,121		$	11,040,881
Shares issued for financing – ATM (“At-the-market”)		26,030			1,748,946			-			-		-			-			-			1,748,946
Share issue costs		-			(222,136	)		-			-		-			-			-			(222,136	)
Shares issued for financing		512,000			11,376,230			-			-		-			-			-			11,376,230
Share issue costs		-			(2,072,886	)		224,868			-		-			-			-			(1,848,018	)
Shares issued for the exercise of RSUs		60,332			2,640,733			(2,640,733	)		-		-			-			-			-
Share-based payments		-			-			2,021,664														2,021,664
Net loss		-			-			-			-		(23,611,810	)		-			-			(23,611,810	)
Change in fair value of equity investments at FVOCI		-			-			-			-		-			(3,180	)		-			(3,180	)
Translation of foreign operations		-			-			-			-		-			-			(94,861	)		(94,861	)
Balance at December 31, 2023		1,969,566		$	97,070,976		$	6,870,139		$	-	$	(103,588,356	)	$	(434,303	)	$	489,260		$	407,716
Balance		1,969,566		$	97,070,976		$	6,870,139		$	-	$	(103,588,356	)	$	(434,303	)	$	489,260		$	407,716
Shares issued for financing		1,477,208			10,384,145			-			-		-			-			-			10,384,145
Share issue costs		-			(1,632,871	)		509,454			-		-			-			-			(1,123,417	)
Shares issued for the exercise of warrants		1,991,668			4,056,827			-			-		-			-			-			4,056,827
Shares returned to treasury		(36,000	)		-			-			-		-			-			-			-
Shares issued for the exercise of RSUs		25,353			863,907			(863,907	)		-		-			-			-			-
Warrants – equity treatment		-			-			-			3,776,428											3,776,428
Share-based payments		-			-			1,182,618			-		-			-			-			1,182,618
Net loss		-			-			-			-		(13,877,473	)		-			-			(13,877,473	)
Change in fair value of equity investments at FVOCI		-			-			-			-		-			(175,117	)		-			(175,117	)
Translation of foreign operations		-			-			-			-		-			-			(9,944	)		(9,944	)
Balance as of December 31, 2024		5,427,795		$	110,742,984		$	7,698,304		$	3,776,428	$	(117,465,829	)	$	(609,420	)	$	479,316		$	4,621,783
Balance		5,427,795		$	110,742,984		$	7,698,304		$	3,776,428	$	(117,465,829	)	$	(609,420	)	$	479,316		$	4,621,783

The

accompanying notes are an integral part of these consolidated financial statements.

| F-5 |

| --- |

DraganflyInc.

Statement of Cash Flows

Expressedin Canadian Dollars

	For the years ended December 31,
	2024			2023			2022
OPERATING ACTIVITIES
Net loss for the year	$	(13,877,473	)	$	(23,611,810	)	$	(27,654,364	)
Adjustments for:
Amortization		11,285			35,960			179,482
Depreciation		565,806			510,677			593,277
Bad debt		186,627			216,238			-
Change in fair value of derivative liability		(1,842,618	)		(211,110	)		(5,502,688	)
Write down of inventory		627,106			331,671			1,976,514
(Recovery) impairment of notes receivable		(40,020	)		101,351			309,385
Impairment of goodwill and intangibles		-			87,415			6,454,914
Write down of deposit		-			-			228,572
Finance and other costs		1,443,740			920,008			(34,427	)
(Gain) loss on sale of assets		11,432			18,426			-
Share-based payments		1,182,618			2,021,664			3,311,024
Adjustments for profit loss		(11,731,497	)		(19,579,510	)		(20,138,311	)
Net changes in non-cash working capital items:
Receivables		(266,418	)		1,223,112			(681,838	)
Inventory		(562,833	)		(872,265	)		(150,241	)
Prepaids		617,702			965,509			2,958,581
Trade payables and accrued liabilities		(231,812	)		(464,441	)		1,661,697
Customer deposits		361,580			(90,043	)		22,624
Deferred income		(20,993	)		43,984			(21,543	)
Cash used in operating activities		(11,834,271	)		(18,773,654	)		(16,349,031	)
INVESTING ACTIVITIES
Purchase of equipment		(167,257	)		(490,391	)		(79,713	)
Disposal of equipment		103,923			46,976			10,755
Purchase of intangible assets		-			-			(4,684	)
Repayment (Issuance) of notes receivable		40,020			63,838			842,297
Cash provided by (used in) investing activities		(23,314	)		(379,577	)		768,655
FINANCING ACTIVITIES
Proceeds from issuance of common shares for financing		17,751,927			17,474,107			-
Share issue costs		(2,656,180	)		(2,690,278	)		(5,122	)
Proceeds from issuance of common shares for warrants exercised		373,415			-			87,170
Proceeds from issuance of common shares for stock options exercised		-			-			26,875
Repayment of loans		(85,058	)		(6,747	)		(6,746	)
Repayment of lease liabilities		(357,778	)		(330,159	)		(150,275	)
Cash provided by (used in) financing activities		15,026,326			14,446,923			(48,098	)
Effects of exchange rate changes on cash		(9,944	)		(94,861	)		447,542
Change in cash		3,168,741			(4,706,308	)		(15,628,474	)
Cash and cash equivalents, beginning of year		3,093,612			7,894,781			23,075,713
Cash and cash equivalents, end of year	$	6,252,409		$	3,093,612		$	7,894,781
The following are included in cash flow from operating activities:
---	---	---	---	---	---	---
Interest paid in cash	$	67,856	$	57,041	$	51,338
Share issue costs in accounts payable		25,695		293,661		-

The

accompanying notes are an integral part of these consolidated financial statements.

| F-6 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

1.

NATURE AND CONTINUANCE OF OPERATIONS AND GOING CONCERN

Draganfly Inc. (the “Company”) was incorporated on June 1, 2018 under the Business Corporations Act (British Columbia). The Company creates quality, cutting-edge unmanned and remote data collection and analysis platforms and systems that are designed to revolutionize the way companies do business. The Company’s shares trade on the Canadian Securities Exchange (the “CSE”), on the Nasdaq Capital Market (the “Nasdaq”) under the symbol “DPRO” and on the Frankfurt Stock Exchange under the symbol “3U8A”. The Company’s head office is located at 235 103^rd^ St. E, Saskatoon, SK, S7N 1Y8 and its registered office is located at 2800 – 666 Burrard Street, Vancouver, BC, V6C 2Z7.

These

consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. To date, the Company has not been profitable and has an accumulated deficit of $117,465,829. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing and or achieve profitable operations in the future. These factors raise substantial doubt over the Company’s ability to continue as a going concern. These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION

Statementof Compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Reporting Interpretation Committee (“IFRIC”). The material accounting policy information set out below was consistently applied to all years presented unless otherwise noted.

These consolidated financial statements were authorized for issue by the Board of Directors on March 27, 2025.

Basisof consolidation

Each subsidiary is fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date when such control ceases.

The consolidated financial statements include the accounts and results of operations of the Company and its wholly owned subsidiaries listed in the following table:

SCHEDULE OF WHOLLY OWNED SUBSIDIARIES

Name of Subsidiary	Place of Incorporation	Ownership Interest
Draganfly Innovations Inc. (“DII”)	Canada		100	%
Draganfly Innovations USA, Inc. (“DI USA”)	US		100	%
Dronelogics Systems Inc. (“Dronelogics”)	Canada		100	%

All intercompany balances and transactions were eliminated on consolidation.

| F-7 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

Adoptionof new policy

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units for equity treatment warrants, whereby the carrying amount of the warrants is determined based on any difference between gross proceeds and the estimated fair market value of the common shares. If the proceeds from the offering are less than or equal to the estimated fair market value of common shares issued, no value is assigned to the warrants. Warrants that are issued as payment to a finder or other transaction costs are accounted for as share-based payments.

Foreigncurrency translation

Transactions in foreign currencies are translated into the functional currency at rates of exchange at the time of such transactions. Monetary assets and liabilities are translated at the reporting period rate of exchange. Non-monetary assets and liabilities are translated at historical exchange rates. Gains and losses resulting from foreign exchange adjustments are included in profit or loss.

The functional currencies of the parent company and each subsidiary are as follows:

Draganfly Inc.	Canadian Dollar
Draganfly Innovations Inc.	Canadian Dollar
Draganfly Innovations USA, Inc.	US Dollar
Dronelogics Systems Inc.	Canadian Dollar

Financial statements of subsidiaries for which the functional currency is not the Canadian dollar are translated into Canadian dollars as follows: all asset and liability accounts are translated at the year-end exchange rate and all revenue and expense accounts and cash flow statement items are translated at average exchange rates for the year. The resulting translation gains and losses are recorded as exchange differences on translation of foreign operations in other comprehensive loss.

Share-basedpayments

The Company may grant stock options or restricted share units (“RSU’s”) to its directors, officers, employees and consultants. The Company records share-based compensation related to stock options using the Black-Scholes Option Pricing Model.

The RSU’s granted entitle an employee, director or officer to either the issuance of common shares or cash payments payable upon vesting with terms determined by the Company’s Board of Directors at the time of the grant. If on the grant date it is determined there is an obligation to settle in cash, the RSU’s are accounted for as liabilities, with the fair value remeasured at the end of each reporting period and on the settlement date. Changes in fair value are recognized in profit and loss. Expense is recognized over the vesting period.

The Company has a present obligation to settle in cash if the choice of settlement in shares has no commercial substance, or the Company has a past practice or a stated policy of setting in cash, or generally settles in cash whenever the counterparty asks for cash settlement. If no such obligation exists, RSUs are accounted for as equity settled share-based payments and are valued using the share price on grant date. Upon settlement:

a)	If<br> the Company elects to settle in cash, the cash payment is accounted for as the repurchase of an equity interest (i.e. as a deduction<br> from equity), except as noted in (c) below.
b)	If<br> the Company elects to settle by issuing shares, the value of RSUs initially recognized in reserves is reclassified to share capital,<br> except as noted in (c) below.

| F-8 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

c)

If<br> the Company elects the settlement alternative with the higher fair value, as at the date of settlement, the Company recognizes an<br> additional expense for the excess value given (i.e. the difference between the cash paid and the fair value of shares that would<br> otherwise have been issued, or the difference between the fair value of the shares and the amount of cash that would otherwise have<br> been paid, whichever is applicable).

The aggregate sales price or amount of common shares issued during any consecutive 12-month period will not exceed the greatest of the following: (i) USD $1,000,000; (ii) 15% of the total assets of the Company, measured at the Company’s most recent balance sheet date; or (iii) 15% of the outstanding amount of the common shares of the Company, measured at the Company’s most recent balance sheet date. At the election of the Board of Directors, upon each vesting date, participants receive (a) the issuance of common shares from treasury equal to the number of RSUs vesting, or (b) a cash payment equal to the number of vested RSUs multiplied by the fair market value of a common share, calculated as the closing price of the common shares on the CSE for the trading day immediately preceding such payment date; or (c) a combination of (a) and (b).

In conjunction with private placements or brokered financings, the Company may issue compensatory warrants to agents as consideration for services provided. Awards of grants are accounted for in accordance with the fair value method of accounting and result in an increase in share issue costs and a credit to warrants within shareholders’ equity when warrants are issued.

Lossper share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the year.

Diluted

income per share is calculated by dividing the profit attributable to common shareholders of the parent by the weighted average number of common shares outstanding during the year plus the weighted average number of common shares that would be issued on the conversion of all the dilutive potential common shares into common shares. The Company had 3,717,502 warrants, 31,204 options and 188,100 RSU’s that would be potentially dilutive if the Company were not in a loss position and were to calculate diluted income per share.

FinancialInstruments

Financial instruments are accounted for in accordance with IFRS 9 Financial Instruments: Classification and Measurement. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets/liabilities	Classification
Cash and cash equivalents	Fair value through profit<br> or loss
Receivables	Amortized cost
Notes receivable	Fair value through profit<br> or loss
Investments	Fair value through other<br> comprehensive income
Trade payables	Amortized cost
Customer deposits	Amortized cost
Loans payable	Amortized cost
Derivative<br> liability	Fair<br> value through profit or loss

| F-9 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

a)Financial assets

Classificationand measurement

The Company classifies its financial assets in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) or at amortized cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

The classification of debt instruments is driven by the business model for managing the financial assets and their contractual cash flow characteristics. Debt instruments are measured at amortized cost if the business model is to hold the instrument for collection of contractual cash flows and those cash flows are solely principal and interest. If the cash flows are not solely principal and interest, it is classified as FVTPL. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payments of principal and interest.

Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL, for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument by-instrument

basis) to designate them as at FVTOCI.

Financialassets at FVTPL

Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are recorded to profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of financial assets held at FVTPL are included in the profit or loss in the period in which they arise. Derivatives are also categorized as FVTPL unless they are designated as hedges.

Financialassets at FVTOCI

Financial assets carried at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Financialassets at amortized cost

Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date.

Impairmentof financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the loss allowance is measured for the financial asset at an amount equal to twelve month expected credit losses. For trade receivables the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

Derecognitionof financial assets

Financial assets are derecognized when the risks and rewards of ownership have been transferred. Gains and losses on derecognition of financial assets classified as FVTPL or amortized cost are recorded to profit or loss. Gains or losses on financial assets classified as FVTOCI remain within accumulated other comprehensive loss.

| F-10 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

b)Financial liabilities

The Company classifies its financial liabilities into one of two categories as follows:

FVTPL

• This category comprises derivatives and financial liabilities incurred principally for the purpose of selling or repurchasing in the near term. They are carried at fair value with changes in fair value recognized in profit or loss.

Other financial liabilities - This category consists of liabilities carried at amortized cost using the effective interest method. Trade payables, customer deposits and loans payable are included in this category.

Derecognitionof financial liabilities

Financial liabilities are derecognized when its contractual obligations are discharged, cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and/or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. Gains and losses on derecognition are recognized in profit or loss.

Impairmentof non-financial assets

The carrying amounts of the non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If indicators exist, then the asset’s recoverable amount is estimated. The recoverable amounts of the following types of intangible assets are measured annually, whether or not there is any indication that it may be impaired:

●	an intangible<br> asset with an indefinite useful life; and
●	an intangible asset not<br> yet available for use;

The recoverable amount of an asset or cash-generating unit (“CGU”) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

In respect of assets other than goodwill and intangible assets that have indefinite useful lives, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed in a subsequent period when there has been an increase in the recoverable amount of a previously impaired asset or CGU. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

| F-11 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

Incometaxes

Currentincome tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income taxes relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferredincome tax

Deferred income tax is recognized, using the asset and liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Inventory

Inventory consists of raw materials and finished goods for manufacturing of multi-rotor helicopters, industrial areal video systems, civilian small unmanned aerial systems or vehicles, health monitoring equipment, and wireless video systems. Inventory is initially valued at cost and subsequently at the lower of cost and net realizable value. Cost is determined using the first-in-first-out method. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The costs of purchase include the purchase price, import duties and non-recoverable taxes and transport, handling and other costs directly attributable to the acquisition of finished goods, materials or services. The costs of conversion include direct materials and labour costs and a systematic allocation of fixed and variable overheads incurred in converting materials into finished goods. The Company reviews inventory for obsolete and slow-moving goods and any such inventory is written-down to net realizable value.

Revenuerecognition

Revenue comprises the fair value of consideration received or receivable for the sale of goods and consulting services in the ordinary course of the Company’s business. Revenue is shown net of return allowances and discounts.

Salesof goods

The Company manufactures and sells a range of multi-rotor helicopters, industrial aerial video systems, and civilian small unmanned aerial systems or vehicles. Sales are recognized at a point-in-time when control of the products has transferred. The control transfer occurs in proximity to shipping. Revenue is recognized when the transfer of control has occurred.

Revenue from these sales is recognized based on the price specified in the contract, net of the estimated discounts and returns. Accumulated experience is used to estimate and provide for the discounts and returns, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. To date, returns have not been significant. No element of financing is deemed present as the sales are made with a credit term of 30 to 60 days, which is consistent with market practice.

| F-12 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

Some contracts include multiple performance obligations, such as the sale of hardware and support or maintenance. Where support or maintenance is performed by another party and does not include an integration service it is accounted for as a separate performance obligation. In this case, the transaction price will be allocated to each performance obligation based on stand-alone selling price. Where the stand-alone selling price is not directly observable, the price is estimated based on expect cost plus margin. Where the support or maintenance is provided by the Company, the contract is analyzed to identify the performance obligations and transaction price. The price is then allocated across the obligations identified in the contract. Revenue is recognized when the Company satisfies a performance obligation.

Services

The Company provides consulting, custom engineering, drones as a service, and investigating and solving on a project-by-project basis under fixed-price and variable price contracts. Revenue from providing services is recognized over time as the services are rendered.

The Company provides rental of equipment which is measured based on rates through contracts or other written agreements with customers. Revenue is recognized in the period when services are performed and only when there is reasonable assurance that the revenue will be collected.

DeferredIncome

A payment received is included as deferred revenue when products have yet be shipped to the customers as of the period end or there are unfulfilled obligations related to the revenue received. The amount to be recognized within twelve months following the year-end date is classified as current.

Costof Goods Sold

Cost of sales includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight costs, as well as provisions for reserves related to product shrinkage, or lower of cost and net realizable value adjustments as required.

IntangibleAssets

An intangible asset is an identifiable asset without physical substance. An asset is identifiable if it is separable, or arises from contractual or legal rights, regardless of whether those rights are transferrable or separable from the Company or from other rights and obligations. Intangible assets include intellectual property, which consists of patent and trademark applications, brands and software.

Intangible assets acquired externally are measured at cost less accumulated amortization and impairment losses. The cost of a group of intangible assets acquired is allocated to the individual intangible assets based on their relative fair values. The cost of intangible assets acquired externally comprises its purchase price and any directly attributable cost of preparing the asset for its intended use. Research and development costs incurred subsequent to the acquisition of externally acquired intangible assets and on internally generated intangible assets are accounted for as research and development costs.

Intangible assets with finite useful lives are amortized on a straight-line basis over the expected life of each intellectual property to write off the cost of the assets from the date they are available for use.

| F-13 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

SCHEDULE

OF INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

Class of intangible asset	Useful live
Customer relationships	5 years
Software	5 years
Patents	5<br> years

Goodwill represents the excess of the value of the consideration transferred over the fair value of the net identifiable assets and liabilities acquired in a business combination. Goodwill is allocated to the cash generating unit to which it relates.

Equipment

On January 1, 2024, there was change in estimate related to the useful lives of computer equipment and furniture and equipment with the depreciation changing from 30% declining balance to 3 year straight line for computer equipment and from 20% declining balance to 5 year straight line for furniture and equipment. The impact of this change in estimate in 2024 resulted in an increase in depreciation of $54,220. It is not practical to quantify the impact on future years, but the change in estimate will result in the assets currently on the books related to this change in estimate depreciating faster over a shorter time frame.

Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the consolidated statement of comprehensive loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the consolidated statement of comprehensive loss.

Depreciation is generally calculated on a straight-line balance method with the exception of vehicles that are on a declining balance method to write off the cost of the assets to their residual values over their estimated useful lives. Depreciation for leasehold improvements is fully expensed over the expected term of the lease. The depreciation rates applicable to each category of equipment are as follows:

SCHEDULE

OF CLASS OF EQUIPMENT

Class of equipment	Depreciation rate
Computer equipment	3 years – straight<br> line
Furniture and equipment	5 years – straight<br> line
Leasehold improvements	Expected lease term
Vehicles	30%<br> - declining balance

| F-14 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

Researchand development expenditures

Expenditures on research are expensed as incurred. Research activities include formulation, design, evaluation and final selection of possible alternatives, products, processes, systems or services. Development expenditures are expensed as incurred unless the Company can demonstrate all of the following:

(i)	the technical<br> feasibility of completing the intangible asset so that it will be available for use or sale;
(ii)	its intention to complete<br> the intangible asset and use or sell it;
(iii)	its ability to use or sell<br> the intangible asset;
(iv)	how the intangible asset<br> will generate probable future economic benefits. The Company can also demonstrate the existence of a market for the output of the<br> intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
(v)	the availability of adequate<br> technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(vi)	its ability to measure<br> reliably the expenditure attributable to the intangible asset during its development.

Leases

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the commencement date, the lease liability is recognized at the present value of the future lease payments and discounted using the interest rate implicit in the lease or the Company’s incremental borrowing rate. A corresponding right-of-use (“ROU”) asset is recognized at the amount of the lease liability, adjusted for any lease incentives received and initial direct costs incurred. Over the term of the lease, financing expense is recognized on the lease liability using the effective interest rate method and charged to net income, lease payments are applied against the lease liability and depreciation on the ROU asset is recorded by class of underlying asset.

The lease term is the non-cancellable period of a lease plus periods covered by an optional lease extension option if it is reasonably certain that the Company will exercise the option to extend. Conversely, periods covered by an option to terminate are included if the Company does not expect to end the lease during that time frame. Leases with a term of less than twelve months or leases for underlying low value assets are recognized as an expense in net income on a straight-line basis over the lease term.

A lease modification is accounted for as a separate lease if it materially changes the scope of the lease. For a modification that is not a separate lease, on the effective date of the lease modification, the Company will remeasure the lease liability and corresponding ROU asset using the interest rate implicit in the lease or the Company’s incremental borrowing rate. Any variance between the remeasured ROU asset and lease liability will be recognized as a gain or loss in net income to reflect the change in scope.

Newlyadopted accounting standards

On January 1, 2024 the Company adopted amendments to IAS 1, Presentationof Financial Statements, issued by IASB. The amendment is to clarify the classification of a liability as either current or non-current based on the Company’s right at the end of the reporting period. There is no material impact on the disclosures or amounts reported in the consolidated financial statements.

| F-15 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

2.

MATERIAL ACCOUNTING POLICY INFORMATION AND BASIS OF PREPARATION (CONT’D)

Newaccounting standards issued not yet effective

In April 2024, the IASB issued IFRS 18, Presentation and Disclosuresin Financial Statements, to replace IAS 1, Presentation of Financial Statements, effective January 1, 2027, with early adoption permitted. The new standard is aimed to set out overall requirements for presentation and disclosures in the financial statements. Management is reviewing the impact the standard will have on the consolidated financial statements.

In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures to address the classification and measurement of financial instruments, with an emphasis to clarify the date of recognition and derecognition of financial asset and liabilities, effective January 1, 2026, with early adoption permitted. Management is reviewing the impact of these amendments, but they are not expected to have a material impact on the consolidated financial statements.

3.

MANAGEMENT JUDGEMENT AND ASSUMPTIONS

Significantestimates and assumptions

The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions about reported amounts at the date of the consolidated financial statements and in the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Share-basedpayments

The cost of share-based payment transactions with directors, officers and employees are measured by reference to the fair value of the equity instruments. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining and making assumptions about the most appropriate inputs to the valuation model including the expected life, volatility, risk-free interest rate, expected forfeiture rate and dividend yield.

Incometaxes

Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these income tax provisions at the end of each reporting period. However, it is possible that at some future date an additional liability could result from audits by tax authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made. Deferred tax assets are recognized when it is determined that the Company is likely to recognize their recovery from the generation of taxable income.

Inventory

Inventory is valued at the lower of cost and net realizable value. Net realizable value is determined with reference to the estimated selling price less costs to sell. The Company estimates selling price based upon assumptions about future demand and current and anticipated retail market conditions. The future realization of these inventories may be affected by future technology or other market- driven changes that may reduce future selling prices.

| F-16 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

3.

MANAGEMENT JUDGEMENT AND ASSUMPTIONS (CONT’D)

Investmentsin Private companies

Where the fair value of investments in private companies recorded on the consolidated statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data is not available, judgment is required to establish fair value and this value may not be indicative of the eventual recoverable value.

Expectedcredit losses on trade receivables and notes receivable

When determining expected credit losses (“ECLs”), the Company considers the historic credit losses observed by the Company, customer-specific payment history and economic conditions. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL’s, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience, informed credit assessment and forward-looking information.

Usefullives of equipment and intangible assets

Estimates of the useful lives of equipment and intangible assets are based on the period over which the assets are expected to be available for use. The estimated useful lives are reviewed annually and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence, and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of the relevant assets may be based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the equipment would increase the recorded expenses and decrease the non-current assets.

Significantjudgments

The preparation of consolidated financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments applied to the Company’s consolidated financial statements include:

−	The assessment<br> of the Company’s ability to continue as a going concern and whether there are events or conditions that may give rise to significant<br> uncertainty;
−	the classification of financial<br> instruments;
−	the assessment of revenue<br> recognition using the five-step approach under IFRS 15; and
−	the determination of the<br> functional currency of each entity in the group.

4.

RECEIVABLES

SCHEDULE

OF AMOUNTS RECEIVABLE

As at	December 31, 2024		December 31, 2023
Trade accounts receivable	$	674,998	$	610,443
Sales tax receivable		54,592		39,169
Trade and<br> other receivables, gross	$	729,590	$	649,612
Current portion	$	573,390	$	649,612
Long term portion		156,200		-
Trade and other receivables	$	729,590	$	649,612

Provisionfor doubtful accounts

---

SCHEDULE

OF PROVISION FOR DOUBTFUL ACCOUNTS

Balance at December 31, 2022		73,257
Increase during the year		216,238
Balance at December 31, 2023		289,495
Increase during the year		140,011
Balance at December 31, 2024	$	429,506

During

the year ended December 31, 2024 the Company recorded a provision for doubtful accounts of $140,011 (2023 - $216,238).

The long-term receivable represents a refundable deposit that the Company has asked to have returned. The agreement allows for a two-year repayment term once the request has been made. Funds were requested in April of 2024.

The Company applies a direct customer analysis approach to measure expected credit losses. The Company assesses collectability of receivables of each customer on an individual basis using quantitative and qualitative information available to management. The historical loss rates are adjusted to reflect the current and forward-looking information on economic factors affecting the ability of the customers to make regular monthly payments on the receivables.

Receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include business closure and/or the failure to make monthly contractual payments.

| F-17 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

5.

INVENTORY

SCHEDULE

OF INVENTORIES

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
Finished<br> goods	$	954,453	$	904,858
Parts		577,810		691,678
Inventories	$	1,532,263	$	1,596,536

During

the year ended December 31, 2024, $4,529,655 (2023 - $3,738,980; 2022 – $6,048,348) of inventory was recognized in cost of sales including an allowance for obsolete and slow-moving inventory of $627,106 (2023 - $331,671; 2022 - $1,976,514).

Cost of sales consist of the following:

SCHEDULE

OF COST OF SALES

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023		December<br> 31,<br><br> 2022
Inventory	$	4,529,655	$	3,738,980	$	6,048,348
Consulting<br> and services		451,984		549,448		730,170
Other		181,212		202,300		35,866
Cost<br> of sales	$	5,162,851	$	4,490,728	$	6,814,384

6.

PREPAIDS AND DEPOSITS

SCHEDULE

OF PREPAID EXPENSES AND DEPOSITS

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
Insurance	$	370,609	$	838,445
Prepaid<br> other		112,439		142,124
Deposits		241,465		361,646
Prepaid<br> expenses and deposits	$	724,513	$	1,342,215

7.

INVESTMENTS

SCHEDULE OF INVESTMENTS

Balance<br> at December 31, 2022		192,583
Change<br> in fair value		(3,180	)
Balance<br> at December 31, 2023		189,403
Change<br> in fair value		(175,117	)
Balance<br> at December 31, 2024	$	14,286

Fair value of investments is comprised of:

SCHEDULE

OF FAIR VALUE OF INVESTMENT

Public<br> company shares	$	14,286
Private<br> company shares		-
Balance<br> at December 31, 2024	$	14,286
Public<br> company shares	$	57,143
Private<br> company shares		132,260
Balance<br> at December 31, 2023	$	189,403

| F-18 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

7.

INVESTMENTS (CONT’D)

The Company holds 1,428,571 common shares (2023 – 1,428,571) and nil (2023 – 1,428,571) warrants of Windfall Geotek Inc. a publicly traded company. At December 31, 2024 the fair value of the shares was based on the quoted price of $0.01 (2023 - $0.04). As of the issue date of these consolidated financial statements the quoted price of the shares was $0.015. The warrants expired on March 17, 2023. The fair values of the warrants as of December 31, 2022 were estimated using the Black-Scholes Option Pricing Model with the following assumptions:

SCHEDULE OF WEIGHTED AVERAGE ASSUMPTION FOR FAIR VALUES WARRANTS

	December<br> 31,<br><br> 2022
Risk<br> free interest rate		4.07	%
Expected<br> volatility		116.00	%
Expected<br> life		0.21 years
Expected<br> dividend yield		0	%

SCHEDULE

OF INVESTMENT PROPERTY

	Patents		Customer Relationships			****<br><br>Software		Total
Cost
Balance at December 31, 2022	$	41,931	$	197,000		$	123,683	$	362,614
Impairment		-		(87,415	)		-		(87,415	)
Balance at December 31, 2023	$	41,931	$	109,585		$	123,683	$	275,199
Cost, beginning balance	$	41,931	$	109,585		$	123,683	$	275,199
Impairment		-		-			-		-
Balance at December 31, 2024	$	41,931	$	109,585		$	123,683	$	275,199
Cost,<br> ending balance	$	41,931	$	109,585		$	123,683	$	275,199
Accumulated amortization
Balance at December 31, 2022	$	41,931	$	87,731		$	53,151	$	182,813
Charge for the year		-		21,854			14,106		35,960
Balance at December 31, 2023	$	41,931	$	109,585		$	67,257	$	218,773
Accumulated amortization, beginning balance		41,931		109,585			67,257		218,773
Charge for the year		-		-			11,285		11,285
Balance at December 31, 2024	$	41,931	$	109,585		$	78,542	$	230,058
Accumulated amortization, ending balance	$	41,931	$	109,585		$	78,542	$	230,058
Net book value:
December 31, 2023	$	-	$	-		$	56,426	$	56,426
December 31, 2024	$	-	$	-		$	45,141	$	45,141
Net book value	$	-	$	-		$	45,141	$	45,141

On October 27, 2021, the Company purchased 50,000 common shares of a private company for USD$100,000. In determining the fair value of the investment (classified at level 3 in the fair value hierarchy), the Company considers if observable market data exists on a quarterly basis to value the investment. In September 2024 the state of Pennsylvania filed a law suit against this private company for non-performance at a value that would bring into question any future value of the investment. The Company determined the fair value of the investment was $nil at December 31, 2024.

8.

EQUIPMENT

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

	Computer<br> Equipment			Furniture<br> and Equipment			Leasehold<br> Improvements		Software		Vehicles		Total
Cost
Balance<br> at December 31, 2022	$	95,662		$	834,453		$	-	$	-	$	36,033	$	966,148
Additions		58,611			320,943			86,530		-		24,310		490,394
Disposals		(21,000	)		(115,204	)		-		-		-		(136,204	)
Balance<br> at December 31, 2023	$	133,273		$	1,040,192		$	86,530	$	-	$	60,343	$	1,320,338
Property, plant and equipment, beginning balance	$	133,273		$	1,040,192		$	86,530	$	-	$	60,343	$	1,320,338
Additions		6,876			137,562			2,359		-		-		146,797
Disposals		(9,821	)		(180,338	)		-		-		-		(190,159	)
Balance<br> at December 31, 2024	$	130,328		$	997,416		$	88,889	$	-	$	60,343	$	1,276,976
Property, plant<br> and equipment, ending balance	$	130,328		$	997,416		$	88,889	$	-	$	60,343	$	1,276,976
Accumulated<br> depreciation
Balance<br> at December 31, 2022	$	41,998		$	502,790		$	-	$	-	$	16,669	$	561,457
Charge<br> for the year		22,762			112,361			6,790		-		12,497		154,410
Disposals		(6,582	)		(69,748	)		-		-		-		(76,330	)
Balance<br> at December 31, 2023	$	58,178		$	545,403		$	6,790	$	-	$	29,166	$	639,537
Accumulated depreciation<br> Property, plant and equipment, beginning balance	$	58,178		$	545,403		$	6,790	$	-	$	29,166	$	639,537
Charge<br> for the year		37,881			143,885			17,845		-		9,354		208,965
Disposals		(3,383	)		(97,685	)				-		-		(101,068	)
Balance<br> at December 31, 2024	$	92,676		$	591,603		$	24,635	$	-	$	38,520	$	747,434
Accumulated<br> depreciation Property, plant and equipment, ending balance	$	92,676		$	591,603		$	24,635	$	-	$	38,520	$	747,434
Net<br> book value:
December<br> 31, 2023	$	75,095		$	494,789		$	79,740	$	-	$	31,177	$	680,801
December<br> 31, 2024	$	37,652		$	405,813		$	64,254	$	-	$	21,823	$	529,542
Property, plant<br> and equipment	$	37,652		$	405,813		$	64,254	$	-	$	21,823	$	529,542

| F-19 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

9.

INTANGIBLE ASSETS

10.

RIGHT OF USE ASSETS

---

SCHEDULE

OF RIGHT OF USE ASSETS

	Total
Cost
Balance<br> at 2022	$	683,117
Additions		740,355
Balance<br> at December 31, 2023	$	1,423,472
Foreign<br> exchange		31,567
Balance<br> at December 31, 2024	$	1,455,039
Accumulated<br> depreciation
Balance<br> at December 31, 2022	$	338,371
Charge<br> for the year		363,086
Foreign<br> exchange		328
Balance<br> at December 31, 2023	$	701,785
Charge<br> for the year		356,841
Foreign<br> exchange		24,069
Balance<br> at December 31, 2024	$	1,082,695
Net<br> book value:
December<br> 31, 2023	$	721,687
December<br> 31, 2024	$	372,344

| F-20 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

10.

RIGHT OF USE ASSETS (CONT’D)

The consolidated statement of financial position shows the following amounts related to leases:

SCHEDULE OF RIGHT OF USE ASSETS RELATED TO LEASES

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
Buildings	$	372,344	$	721,687

Additions to the right of the assets during the 2024 financial year were $nil (2023 - $740,355).

11.

LEASE LIABILITIES

The Company leases certain assets under lease agreements. The lease liabilities consist of leases of facilities and vehicles with terms ranging from one to five years. The leases are calculated using incremental borrowing rates ranging from 11.7% to 13.3%.

SCHEDULE OF OPERATING LEASE LIABILITIES

	Total
Balance<br> at December 31, 2022	$	378,643
Additions		734,903
Interest<br> expense		96,423
Lease<br> payments		(423,410	)
Foreign<br> exchange		3,464
Balance<br> at December 31, 2023	$	790,023
Interest<br> expense		65,378
Lease<br> payments		(423,157	)
Foreign<br> exchange		(4,223	)
Balance<br> at December 31, 2024	$	428,021

Which consists of:

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
Current<br> lease liability	$	154,147	$	362,001
Non-current<br> lease liability		273,874		428,022
Ending<br> balance	$	428,021	$	790,023

SCHEDULE OF OPERATING MATURITY ANALYSIS

Maturity<br> analysis	December<br> 31,<br><br> 2024			December<br> 31,<br><br> 2023
Less<br> than one year	$	190,856		$	429,948
One<br> to three years		282,419			355,879
Four<br> to five years		71,836			141,519
Total<br> undiscounted lease liabilities		545,111			927,346
Amount<br> representing interest		(117,090	)		(137,323	)
Lease<br> liability	$	428,021		$	790,023

Variable

lease payments of $77,626 (2023 - $43,542) have been recognized in profit and loss.

| F-21 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

12. TRADE PAYABLES AND ACCRUED LIABILITIES

SCHEDULE

OF TRADE PAYABLES AND ACCRUED LIABILITIES

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
Trade<br> accounts payable	$	609,869	$	1,259,623
Accrued<br> liabilities		1,789,318		1,345,649
Government<br> grant payable		-		33,709
Trade<br> payables and accrued liabilities	$	2,399,187	$	2,638,981

13.

DEFERRED INCOME

At times, the Company may take payment in advance for services to be rendered. These amounts are held and recognized as the services are rendered.

SCHEDULE

OF DEFERRED INCOME

	December<br> 31,<br><br> 2024			December<br> 31,<br><br> 2023
Deferred,<br> revenue beginning	$	107,674		$	63,690
Revenue<br> recognized		(21,852	)		(64,816	)
Unearned<br> revenues received		1,744			108,800
Foreign<br> exchange		(885	)		-
Deferred<br> income gross	$	86,681		$	107,674
Current<br> portion	$	18,542		$	12,112
Long<br> term portion		68,139			95,562
Deferred<br> Income net	$	86,681		$	107,674

Deferred

revenue of $18,542 as of December 31, 2024 is expected to be recognized as revenue within one year. The remaining is related to a long-term support and maintenance arrangement and will be recognized according to the terms of that arrangement over the next 5 years.

14.

LOANS PAYABLE

SCHEDULE

OF LOANS PAYABLE

	December<br> 31,<br><br> 2024			December<br> 31,<br><br> 2023
Opening<br> balance	$	85,058		$	86,571
Repayment<br> of loans payable		(85,058	)		(6,747	)
Accretion<br> expense		-			5,234
Ending<br> balance	$	-		$	85,058

SCHEDULE OF LOANS

	Start<br> Date	Maturity<br> Date	Rate			Carrying<br> Value December 31, 2024		Carrying<br> Value December 31, <br>2023
CEBA	2020-05-19	2024-03-28		0	%	$	-	$	40,000
CEBA	2021-04-23	2024-03-28		0	%		-		40,000
Vehicle<br> loan	2019-08-30	2024-09-11		6.99	%		-		5,058
Total						$	-	$	85,058

| F-22 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

14.

LOANS PAYABLE (CONT’D)

On

May 19, 2020, Dronelogics received a $40,000 CEBA loan. This loan was interest-free and 25% of the loan, up to $10,000, was forgivable if the loan was repaid on or before January 18, 2024. The repayment date was extended by the Government of Canada to March 28, 2024 and was fully repaid by the due date.

On

April 23, 2021, Draganfly Innovations Inc. received a $60,000 CEBA loan. This loan is currently interest free and up to $20,000 is forgivable if the loan is repaid on or before January 18, 2024. The repayment date was extended by the Government of Canada to March 28, 2024 and was fully repaid by the due date.

The CEBA loans were unsecured, and the vehicle loan was secured by the vehicle.

15.

SHARE CAPITAL

Authorizedshare capital

Unlimited number of common shares without par value.

Issuedshare capital

During the year ended December 31, 2024,

●	The<br> Company issued 25,353 common shares for the vesting of restricted share units.
●	The<br> Company issued 1,991,668 common shares for the exercise of warrants
●	On<br> February 26, 2024, the Company issued 448,000 units consisting of one common share and one<br> warrant and 88,000 units consisting of one prefunded warrant and one warrant in a financing<br> for $4,877,475 with share issuance costs of $752,498 for net proceeds of $4,124,977. Of the<br> total share issuance costs $441,166 was expensed in other income (expense). The value of<br> the issuance was allocated $2,017,966 to the shares, and $2,859,509 to the warrants, including<br> $431,084 allocated to prefunded warrants. The prefunded warrants were exercised on the date<br> of issue. On March 27, 2024, the exercise price of the warrants was amended to US$0.1761<br> from the original exercise price of USD $0.36 due to a one time exercise price reset Post<br> share consolidation, the new exercise price is US$4.4025.
●	36,000<br> shares were returned to treasury that were held in escrow related to the Vital Intelligence<br> Inc. acquisition for failure to meet required milestones. The shares had a carrying value of $nil on cancellation.
●	On<br> April 29, 2024, the Company issued 282,541 units consisting of one common share and one warrant<br> and 258,000 units consisting of one prefunded warrant and one warrant in a financing for<br> $4,882,168 with share issuance costs of $779,615 for net proceeds of $4,102,553. Of the total<br> share issuance costs $671,747 was expensed in other income (expense). The value of the issuance<br> was allocated $396,137 to the shares, and $4,422,815 to the warrants, including $1,248,343<br> allocated to prefunded warrants.
●	On<br> August 21, 2024, the Company issued 346,667 units consisting of one common share and one<br> warrant, and 320,000 units consisting of one prefunded warrant and one warrant in a financing<br> for $2,720,050 with share issue costs of $343,676 for net proceeds of $2,376,374. The value<br> of the issuance was allocated $160,076 to the shares, and $2,559,974 to the warrants including<br> $591,265 allocated to prefunded warrants.
●	On<br> November 19, 2024 the Company issued 400,000 units consisting of one common share and one<br> warrant and 1,200,000 units consisting of one prefunded warrant and one warrant in a financing<br> for $5,272,234 with share issue costs of $755,387 for net proceeds of $4,516,837. The value<br> of the issuance was allocated $329,515 to the shares and $4,942,719 to the warrants including<br> $1,977,088 allocated to the prefunded warrants.

| F-23 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

15.

SHARE CAPITAL (CONT’D)

During the year ended December 31, 2023,

●	The<br> Company issued 60,332 common shares for the vesting of restricted share units.
●	The<br> Company issued 320,000 common shares in a financing for $10,856,166 with share issuance costs<br> of $1,953,032 for net proceeds of $8,903,134.
●	The<br> Company issued 26,030 common shares in an ATM (“At – the - market”) financing<br> for $1,748,946 with share issuance costs of $222,136 for net proceeds of $1,526,810.
●	The<br> Company issued 192,000 common shares in a financing for proceeds of $4,858,995 with share<br> issuance costs of $913,833 for net proceeds of $3,945,162. Of the total share issuance costs<br> $793,979 were expensed in other income (expense). Value of the issuance was allocated $520,064<br> to the shares and $4,338,931 to derivative liability

Shareconsolidation

On September 5, 2024 the Company effected a 25:1 share consolidation. All share, warrant, option and RSU numbers in these financial statements are shown post consolidation, including exercise prices, unless otherwise noted.

StockOptions

The Company has adopted an incentive share compensation plan, which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the CSE requirements, grant to directors, officers, employees, and technical consultants to the Company, non-transferable stock options to purchase common shares. The total number of common shares reserved and available for grant and issuance pursuant to this plan shall not exceed 15% (in the aggregate) of the issued and outstanding common shares from time to time. The number of options awarded and underlying vesting conditions are determined by the Board of Directors in its discretion.

As at December 31, 2024, the Company had the following options outstanding and exercisable:

SCHEDULE

OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Grant<br> Date	Expiry<br> Date	Exercise<br> Price		Remaining<br> Contractual Life (years)		Number<br> of Options Outstanding		Number<br> of Options Exercisable
October<br> 30, 2019	October<br> 30, 2029	$	62.50		4.82		11,130		11,130
November<br> 19, 2019	November<br> 19, 2029	$	62.50		4.87		2,000		2,000
April<br> 30, 2020	April<br> 30, 2030	$	62.50		5.32		320		320
April<br> 30, 2020	April<br> 30, 2030	$	96.25		5.32		4,400		4,400
July<br> 3, 2020	July<br> 3, 2025	$	80.00		0.50		4,000		4,000
November<br> 24, 2020	November<br> 24, 2030	$	62.50		5.89		1,280		1,280
February<br> 2, 2021	February<br> 2, 2031	$	330.00		6.08		1,200		1,200
March<br> 8, 2021	March<br> 8, 2026	$	347.50		1.18		400		400
April<br> 27, 2021	April<br> 27, 2031	$	253.75		6.31		4,640		4,640
September<br> 9, 2021	September<br> 9, 2026	$	121.00		1.69		1,034		1,034
November<br> 9, 2023	November<br> 9, 2033	$	15.75		8.84		1,200		800
							31,604		31,204

| F-24 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

15.

SHARE CAPITAL (CONT’D)

SCHEDULE

OF STOCK OPTIONS OUTSTANDING

	Number<br> of Options			Weighted<br> Average Exercise Price
Outstanding,<br> December 31, 2022		35,154		$	115.00
Exercised		(400	)		53.75
Issued		1,200			15.65
Outstanding,<br> December 31, 2023		35,954		$	112.00
Forfeited		(4,350	)		106.83
Outstanding,<br> December 31, 2024		31,604		$	112.05

No options were granted by the Company for the year ended December 31, 2024.

During the year ended December 31, 2023,

●	The<br> Company granted 1,200 options to an advisor to the board. Each option is exercisable at $15.75<br> per share for 10 years.

During

the year ended December 31, 2024, the Company recorded $60,803 (2023- $151,174) in stock-based compensation in relation to the vesting of stock options. The fair values of stock options granted were estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions:

SCHEDULE

OF WEIGHTED AVERAGE ASSUMPTIONS

Year<br> ended December 31,	December 31, 2024		December<br> 31,<br><br> 2023
Risk<br> free interest rate		-		4.58	%
Expected<br> volatility		-		115.1	%
Expected<br> life		-		10
Expected<br> dividend yield		-		0	%
Exercise<br> price	$	-	$	15.75

RestrictedShare Units

The Company has adopted an incentive share compensation plan, which provides that the Board of Directors of the Company in its discretion and in accordance with the Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, restricted stock units (RSUs). RSUs will have a 3-year vesting period following the award date. The total number of common shares reserved and available for grant and issuance pursuant to this plan, and the total number of Restricted Share Units that may be awarded pursuant to this plan, shall not exceed 20% (in the aggregate) of the issued and outstanding common shares from time to time.

As at December 31, 2024, the Company had the following RSUs outstanding:

SUMMARY

OF CHANGES IN RESTRICTED STOCK UNITS

	Number<br> of RSU’s
Outstanding,<br> December 31, 2022		47,982
Vested		(60,331	)
Issued		67,413
Forfeited		(10,519	)
Outstanding,<br> December 31, 2023		44,545
Vested		(25,353	)
Issued		185,240
Forfeited		(16,332	)
Outstanding,<br> December 31, 2024		188,100

| F-25 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

15.

SHARE CAPITAL (CONT’D)

During

the year ended December 31, 2024, 25,353 RSU’s fully vested according to the terms and the Company granted 185,240 RSUs to employees and consultants of the Company with each RSU exercisable into one common share of the Company upon the vesting conditions being met for a period of eighteen months to 3 years from the grant date. In addition, 16,326 RSU’s were forfeited by employees who have left the Company.

During

the year ended December 31, 2023, 60,331 RSU’s fully vested according to the terms and the Company granted 72,839 RSUs to employees and consultants of the Company with each RSU exercisable into one common share of the Company upon the vesting conditions being met for a period of eighteen months from the grant date. In addition, 10,519 RSU’s were forfeited by employees who have left the Company.

During

the year ended December 31, 2024, the Company recorded share-based payment expense of $1,121,815 (2023: $1,866,490) for RSU’s, based on the fair values of RSU’s granted which are calculated using the closing price of the Company’s stock on the day prior to grant.

Warrants

During the year ended December 31, 2024 and the year ended December 31, 2023, the Company issued pre-funded warrants (“USD pre-funded Warrants”) where a portion of the funds related to the eventual exercise have already been received with the remaining exercise price in USD. As part of these same issuances, shares with warrants attached were issued. Being in a foreign currency that is not the Company’s functional currency and these pre-funded warrants were not issued in exchange for services, the value related to the future exercise price of the USD pre-funded Warrants are required to be recorded as a financial liability and not as equity. As a financial liability, the portion of the USD pre-funded Warrants related to the future exercise price will be revalued on a quarterly basis to fair market value with the change in fair value being recorded in profit or loss. The warrants issued with the shares are also in USD so are also accounted for as a liability. In addition, the Company also issued pre-funded warrants with an exercise price in Canadian dollars (“Pre-funded Warrants”). These are also treated as a liability as the agreement contains clauses that do not meet the fixed for fixed test. As a financial liability, the portion of the Pre-funded Warrants related to the future exercise price will be revalued on a quarterly basis to fair market value with the change in fair value being recorded in profit or loss. The warrants issued with the shares are also accounted for as a liability as these also contain clauses that do not meet the fixed for fixed test.

On August 7, 2024, the exercise price of the April 29, 2024 warrants were amended to CAD $0.2250 or CAD $5.625 on a post share consolidation basis. The exercise price of the October Warrants was reduced twice and converted to Canadian dollars for a new exercise price of CAD $5.6925. For the October 2023 issuance and the April 2024 issuance, the warrant agreements were further amended as of August 7, 2024 to remove the cashless exercise feature and any anti-dilution clauses that would lead to variability in settlement so they now meet the requirement for equity classification. The warrants were fair valued on August 7, 2024 and transferred to equity.

On November 19, 2024 the exercise prices of the April 2024 warrants and the October 2023 warrants were amended to CAD$3.3086 from CAD$5.625 and CAD$5.6925 respectively.

The warrants issued as part of the August 2024 issuance and the November 2024 issuance were issued with a CAD exercise price, no cashless exercise feature and no anti-dilution clauses that would lead to variability in settlement.

To determine the a fair value of the warrants, a Black Scholes calculation is used, calculated in USD for those with a USD exercise price and in CAD for those with a Canadian exercise price. The Black Scholes value per warrant is then multiplied by the number of outstanding warrants and then multiplied by the foreign exchange rate at the end of the period for those denominated in USD.

| F-26 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

15.

SHARE CAPITAL (CONT’D)

SCHEDULE

OF ISSUE DATE FAIR VALUE INPUTS OF WARRANTS

	February<br> Issuance						April<br> Issuance						August<br> Issuance			November<br> Issuance
	Warrants			Broker			Warrants			Broker			Broker			Broker
Volatility		119.23	%		107.8	%		119.80	%		108.67	%		118.87	%		115.27	%
Risk<br> free rate		4.33	%		4.48	%		4.65	%		4.62	%		3.74	%		4.24	%
Expected<br> life		5<br> years			3<br> years			5<br> years			3<br> years			3<br> years			3<br> years
Expected<br> dividend yield		0	%		0	%		0	%		0	%		0	%		0	%

Warrant Derivative Liability

SCHEDULE

OF WARRANT DERIVATIVE LIABILITY

Balance<br> at December 31, 2022	$	-
Warrants<br> issued		3,985,015
Change<br> in fair value of warrants outstanding		211,110
Balance<br> at December 31, 2023	$	4,196,125
Warrants<br> issued		7,282,325
Exercised		(3,661,283	)
Change<br> in fair value of warrants outstanding		(1,842,618	)
Reclassify<br> to equity		(3,776,428	)
Balance<br> at December 31, 2024	$	2,198,121

Details of liability warrants and their fair values are as follows:

SCHEDULE

OF WARRANT AND FAIR VALUE OUTSTANDING

Issue<br> Date	Exercise<br> Price		Number<br> of Warrants Outstanding at December 31, 2024		Fair<br> Value at December 31, 2024		Number<br> of Warrants Outstanding at December 31, 2023		Fair<br> Value at December 31, 2023
Derivative<br> Liability
February<br> 26, 2024 (1)	US$	4.4025		474,332	$	2,198,121		-	$	-
October<br> 30, 2023 (2)	CAD$	5.6925		-		-		256,000		3,180,543
October<br> 30, 2023 (3)	US$	0.003		-		-		64,000		1,015,582
				474,332	$	2,198,121		320,000	$	4,196,125
1)	The<br> warrants expire February 26, 2029.
---	---
2)	The<br> warrant terms were amended and warrants were reclassified to equity August 7,2024
3)	The<br> warrants have no expiry date. They were exercised January 5, 2024.

| F-27 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

15.

SHARE CAPITAL (CONT’D)

Warrants

SCHEDULE

OF DETAILS OF THE WARRANTS

	Exercise<br> Price		Number<br> of Warrants Outstanding at December 31, 2024		Number<br> of Warrants Outstanding at December 31, 2023
October<br> 30, 2023 (1)	CAD$	3.3086		256,000		-
April<br> 29, 2024 (2)	CAD$	3.3086		540,541		-
August<br> 21, 2024 (3)	CAD$	5.12		666,667		-
November<br> 19, 2024 (4)	CAD$	3.3086		1,600,000		-
				3,063,208		-
1)	The<br> warrants expire October 30, 2028. These were moved from derivative liability August 7, 2024.
---	---
2)	The<br> warrants expire April 29, 2029. These were moved from derivative liability August 7, 2024.
3)	The<br> warrants expire August 21, 2029.
4)	The<br> warrants expire November 19, 2029

The fair values of the derivative warrants were estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions:

SCHEDULE OF WEIGHTED AVERAGE ASSUMPTION FOR WARRANTS

	December<br> 31,<br><br> 2024			December<br> 31,<br><br> 2023
Risk<br> free interest rate		4.38	%		3.84	%
Expected<br> volatility		124.06	%		113.78	%
Expected<br> life		4.16 years			4.8<br> years
Expected<br> dividend yield		0	%		0	%

SUMMARY

OF CHANGES IN WARRANTS

	Number<br> of Warrants			Weighted<br> Average Exercise Price
Outstanding,<br> December 31, 2022		316,672		$	147.53
Exercised		(306,480	)		20.66
Issued		332,800			153.52
Outstanding,<br> December 31, 2023		342,992		$	15.75
Issued		5,376,370			3.35
Exercised		(1,991,668	)		0.9596
Expired		(10,192	)		125.00
Outstanding<br> December 31, 2024		3,717,502		$	5.16

| F-28 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

15.

SHARE CAPITAL (CONT’D)

As at December 31, 2024, the Company had the following warrants outstanding:

SCHEDULE

OF WARRANTS OUTSTANDING

Date<br> issued	Expiry<br> date	Exercise<br> price		Number<br> of warrants outstanding
October<br> 30, 2023	October<br> 30, 2026	CAD$	23.20		12,800
October<br> 30, 2023	October<br> 30, 2028	CAD$	3.3086		256,000
February<br> 26, 2024	February<br> 26, 2027	US$	8.44		26,800
February<br> 26, 2024	February<br> 26, 2029	US$	4.4025		474,332
April<br> 29, 2024	April<br> 29, 2029	CAD$	3.3086		540,541
April<br> 29, 2024	April<br> 29, 2024	CAD$	11.06		27,028
August<br> 21, 2024	August<br> 21, 2027	CAD$	5.12		33,334
August<br> 21, 2024	August<br> 21, 2029	CAD$	5.12		666,667
November<br> 19, 2024	November<br> 19, 2029	CAD$	3.3086		1,600,000
November<br> 19, 2024	November<br> 19, 2027	CAD$	4.1357		80,000
					3,717,502

The

weighted average remaining contractual life of warrants outstanding as of December 31, 2024, was 4.50 years (December 31, 2023 – 4.63 years).

16.

SEGMENTED INFORMATION

As at and for the year ended December 31, 2024 the Company operates in 2 reportable segments (as at and for the year ended December 21, 2023 – 3). The Company organizes its two segments based on its product line as well as a corporate segment. The two segments are Drones and Corporate. The Drones segment derives its revenue from products and services related to the sale of unmanned aerial vehicles (UAV) while the Corporate segment includes all costs not directly associated with the Drone segment. The Company aggregates the information for the segments by analyzing the revenue stream and allocating direct costs to that respective segment. The Corporate segment is aggregated by relying on the entity that includes corporate costs (Draganfly Inc.). The Vital segment derived its revenue from the sale of products that measure vitals to help detect symptoms from large groups of people from a distance and will no longer be an operating segment going forward. The Vital product was developed to address COVID-19 during the pandemic which has since waned and as a result, is no longer a core focus of the Company.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The board of the Company relies on executive management which assesses the financial performance and position of the group and makes strategic decisions. Executive management, which has been identified as being the chief operating decision maker, consists of the chief executive officer, chief operating officer and chief financial officer.

| F-29 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

16.

SEGMENTED INFORMATION (CONT’D)

SCHEDULE

OF SEGMENTED INFORMATION

December<br> 31, 2024	Drones		Vital			Corporate		Total
Sales<br> of goods	$	5,368,476	$	-		$	-	$	5,368,476
Provision<br> of services		1,171,861		20,718			-		1,192,579
Total<br> revenue	$	6,540,337	$	20,718		$	-	$	6,561,055
Segment<br> loss	$	5,975,503	$	(20,718	)	$	4,728,628	$	10,683,413
Finance<br> and other costs		107,225		-			-		107,225
Depreciation		551,117		-			14,689		565,806
Amortization		11,285		-			-		11,285
Impairment<br> of goodwill and intangibles
Change<br> in fair value of derivative liability		-		-			1,842,618		1,842,618
Loss<br> (recovery) on write-off of notes receivable		-		-			40,020		40,020
Loss<br> on write down of inventory		627,106		-			-		627,106
Write<br> down of deposit
Net<br> loss for the year	$	7,272,236	$	(20,718	)	$	6,625,955	$	13,877,473
December<br> 31, 2023	Drones			Vital			Corporate			Total
---	---	---	---	---	---	---	---	---	---	---	---	---
Sales<br> of goods	$	4,905,417		$	381,676		$	-		$	5,287,093
Provision<br> of services		1,267,749			-			-			1,267,749
Total<br> revenue	$	6,173,166		$	381,676		$	-		$	6,554,842
Segment<br> loss	$	14,743,176		$	(140,366	)	$	8,323,731		$	22,926,541
Finance<br> and other costs		(80,211	)		-			(3,069	)		(83,280	)
Depreciation		499,530			-			11,147			510,677
Amortization		35,960			-			-			35,960
Change<br> in fair value of derivative liability		-			-			(211,110	)		(211,110	)
Loss<br> on write-off of notes receivable		-			-			101,351			101,351
Loss<br> on write down of inventory		331,671			-			-			331,671
Net<br> loss for the year	$	15,530,126		$	(140,366	)	$	8,222,050		$	23,611,810
December<br> 31, 2022	Drones			Vital		Corporate			Total
---	---	---	---	---	---	---	---	---	---	---	---
Sales<br> of goods	$	5,388,262		$	162,170	$	-		$	5,550,432
Provision<br> of services		2,054,627			-		-			2,054,627
Total<br> revenue	$	7,442,889		$	162,170	$	-		$	7,605,059
Segment<br> loss	$	9,929,789		$	602,580	$	12,926,884		$	23,459,253
Finance<br> and other costs		(3,529	)		-		(40,816	)		(44,345	)
Depreciation		586,185			-		7,092			593,277
Amortization		179,482			-		-			179,482
Impairment<br> of goodwill and intangibles		2,166,563			4,288,351		-			6,454,914
Change<br> in fair value of derivative liability		-			-		(5,502,688	)		(5,502,688	)
Loss<br> on write-off of notes receivable		1,080,645			-		(771,260	)		309,385
Loss<br> on write down of inventory		251,754			1,724,760		-			1,976,514
Write<br> down of deposit		-			228,572		-			228,572
Net<br> loss for the year	$	14,190,889		$	6,844,263	$	6,619,212		$	27,654,364

| F-30 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

16.

SEGMENTED INFORMATION (CONT’D)

SCHEDULE

OF GEOGRAPHIC REVENUE

	2024		2023		2022
Geographic<br> segmentation is as follows:	For<br> the years ended December 31,
	2024		2023		2022
Non-current<br> assets
Canada	$	1,117,513	$	1,441,701	$	1,121,821
United<br> States		-		206,616		-
	$	1,117,513	$	1,648,317	$	1,121,821
Revenue
Canada	$	6,523,341	$	6,162,672	$	6,919,038
United<br> States		37,714		392,170		686,021
Revenue	$	6,561,055	$	6,554,842	$	7,605,059

Geographic revenue is measured by aggregating sales based on the country and the entity where the sale was made.

17.

OFFICE AND MISCELLANEOUS

---

SCHEDULE OF OFFICE AND MISCELLANEOUS EXPENSES

	2024		2023		2022
	For the years ended December 31,
	2024		2023		2022
Advertising,<br> Marketing, and Investor Relations	$	710,821	$	4,243,432	$	4,431,818
Compliance<br> fees		286,472		193,250		152,826
Contract<br> Work		-		772,003		441,798
Other		856,285		1,095,194		371,519
Office<br> and Miscellaneous Expenses	$	1,853,578	$	6,303,879	$	5,397,961

18.

OTHER EXPENSE

SCHEDULE OF OTHER EXPENSES

	2024		2023			2022
	For the years ended December 31,
	2024		2023			2022
Share<br> issue costs	$	1,254,629	$	793,979		$	-
Write<br> off of accounts receivable		140,011		187,942			-
Gain<br> on settlement of debt		-		(33,004	)
Other		13,169		(5,674	)		35,371
Total Other expenses	$	1,407,809	$	943,243		$	35,371

19.

RELATED PARTY TRANSACTIONS

On August 1, 2019, the Company entered in a business services agreement (the “Agreement”) with Business Instincts Group (“BIG”), a company that Cameron Chell, CEO and director has a material interest in that he previously controlled, to provide: corporate development and governance, strategic facilitation and management, general business services, office space, corporate business development video content, website redesign and management, and online visibility management at fees set out in the Agreement. For the year ended December 31, 2024, the Company incurred fees of $273,475 (December 31, 2023 - $429,766) which are included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $nil (December 31, 2023 - $3,780).

On October 1, 2019, the Company entered into an independent consultant agreement (“Consultant Agreement”) with 1502372 Alberta Ltd, a company controlled by Cameron Chell, CEO and director, to provide executive consulting services to the Company and all fees are set in the Consultant Agreement. For the year ended December 31, 2024, the Company incurred fees of $487,688 (December 31, 2023 - $592,500) included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $nil (December 31, 2023 - $35,417).

| F-31 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

19.

RELATED PARTY TRANSACTIONS (CONT’D)

On

July 3, 2020, the Company entered into an executive consultant agreement (“Executive Agreement”) with Scott Larson, a director of the Company, to provide executive consulting services, as President, to the Company. On May 9, 2022, Scott Larson ceased to be President of the Company and entered into an agreement to provide executive consulting services to the Company and all fees are set in the consulting agreement. For the year ended December 31, 2024, the Company incurred fees of $116,266 (December 31, 2023

• $215,019) included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $23,931 (December 31, 2023 - $9,287).

Tradereceivables/payables and accrued receivables/payables:

As

at December 31, 2024, the Company had $208,963 (December 31, 2023 - $190,664) payable to related parties that was included in accounts payable. The balances outstanding are unsecured, non-interest bearing and due on demand.

Keymanagement compensation

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. Compensation awarded to key management for the year ended December 31, 2024 and 2023 included:

SCHEDULE OF KEY COMPENSATION AWARDS

	2024		2023		2022
	For<br> the years ended December 31,
	2024		2023		2022
Director<br> fees	$	504,619	$	600,933	$	522,349
Salaries		998,951		979,154		843,917
Share-based<br> payments		768,228		1,109,232		2,106,906
Total	$	2,271,798	$	2,689,319	$	3,473,172

Otherrelated party transactions

SCHEDULE OF KEY MANAGEMENT TRANSACTIONS

	2024		2023		2022
	For the years ended December 31,
	2024		2023		2022
Management<br> fees paid to a company controlled by CEO and director	$	487,688	$	592,500	$	566,487
Management<br> fees paid to a company that the CEO holds an economic interest in		273,475		429,766		442,485
Management<br> fees paid to a company controlled by a director		116,266		215,019		383,288
Management fees paid<br> to a company, total	$	877,429	$	1,237,285	$	1,392,260

20.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Creditrisk

Credit risk is the risk of an unexpected loss if a customer or third party fails to meet its contractual obligations.

The Company is subject to credit risk on its cash and receivables. The Company limits its exposure to credit loss on cash by placing its cash with a high-quality financial institution. The Company performs credit evaluations of its customers.

| F-32 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

20.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONT’D)

Receivables

Receivables primarily consist of trade receivables, accrued receivables and taxes receivable. The Company provides credit in the normal course of business in the form of payment terms and has an established process for determining terms to offer customers to mitigate credit risk. Receivables are shown net of any provision made for impairment of the receivables. Due to this factor, the Company believes that no additional credit risk, beyond amounts provided for collection loss, is inherent in receivables.

Expected credit loss (“ECL”) analysis is performed at each reporting date using an objective approach to measure expected credit losses. The provision amounts are based on direct management interface with the customer. The calculations reflect the probability-weighted outcome, the time value of money and reasonable supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, business failure, the failure of a debtor to engage in a repayment plan, and a failure to make contractual payments over the negotiated contract period.

The Company’s aging of receivables was as follows:

SCHEDULE

OF AGING OF RECEIVABLES

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
0<br> – 30 days	$	346,979	$	271,622
31<br> – 60 days		150,575		109,928
61<br> – 90 days		32,002		64,259
91<br> + days		197,153		203,803
Total<br> receivables	$	726,709	$	649,612

Liquidityrisk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

The following is an analysis of the contractual maturities of the Company’s financial liabilities at December 31, 2024:

SCHEDULE

OF CONTRACTUAL MATURITIES OF FINANCIAL LIABILITIES

	1<br> year		1<br> – 5 years		Total
Trade<br> payables and accrued liabilities	$	2,399,187	$	-	$	2,399,187
Customer<br> deposits		466,295		-		466,295
Deferred<br> income		18,542		68,139		86,681
Derivative<br> liability		2,198,121		-		2,198,121
Lease<br> liability		154,147		273,874		428,021
Financial<br> liabilities	$	5,236,292	$	342,013	$	5,578,305

| F-33 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

20.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONT’D)

Foreignexchange risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company does not hedge its exposure to fluctuations in foreign exchange rates.

The following table summarizes the sensitivity of the fair value of the Company’s risk to foreign exchange rates, with all other variables held constant. Fluctuations of 10 percent in the foreign exchange rate between US dollars and Canadian dollars could have resulted in a change impacting net loss upon consolidation as follows:

SCHEDULE OF CHANGES IN FOREIGN EXCHANGE RATES

	December<br> 31,<br><br> 2024		December<br> 31,<br><br> 2023
Effect of a 10% change in USD	$	429,160	$	530,758

Fairvalue

A number of the Company’s accounting policies and disclosures require the measurement of fair values for financial assets and liabilities. The Company has established a control framework with respect to the measurement of fair values. Fair values are categorized into different levels of a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

Equity securities in investee companies and warrants are measured at fair value. The financial assets and liabilities measured at fair value by hierarchy are shown in the table below. The amounts shown are based on the amounts recognized in the consolidated statements of financial position. These financial assets are measured at fair value through profit and loss.

SCHEDULE OF FINANCIAL ASSETS MEASURED FAIR VALUE THROUGH PROFIT AND LOSS

December<br> 31, 2024	Level<br> 1		Level<br> 2		Level<br> 3			Total
Equity<br> securities in investee companies	$	14,286	$	-	$	-		$	14,286
Derivative<br> liability		-		-		(2,198,121	)		(2,198,121	)
Total	$	14,286	$	-	$	(2,198,121	)	$	(2,183,835	)
December<br> 31, 2023	Level<br> 1		Level<br> 2		Level<br> 3			Total
---	---	---	---	---	---	---	---	---	---	---
Equity<br> securities in investee companies	$	57,143	$	-	$	132,260		$	189,403
Derivative<br> liability		-		-		(4,196,125	)		(4,196,125	)
Total	$	57,143	$	-	$	(4,063,865	)	$	(4,006,722	)

The following table shows the valuation techniques used in measuring Level 3 fair values for the derivative liability as well as the significant unobservable inputs used.

Type	Valuationtechnique	Keyinputs	Inter-relationship between significant inputs and fair value measurement
Warrant<br> derivative liability	The<br> fair value of the warrants derivative liability at initial recognition and at year end has been calculated using the Black Scholes<br> Option Pricing Model	Key<br> observable inputs<br><br> <br>●<br> Share price<br><br> <br>●<br> Risk free interest rate<br><br> <br>●<br> Dividend yield<br><br> <br>Key<br> unobservable inputs<br><br> <br>●<br> Expected volatility	The<br> estimated fair value would increase (decrease) if:<br><br> <br>●<br> The price was higher (lower)<br><br> <br>●<br> The risk-free rate was higher (lower)<br><br> <br>●<br> The dividend yield was lower (higher)<br><br> <br>●<br> The expected volatility was higher (lower)

| F-34 |

| --- |

DraganflyInc.

Notesto the Consolidated Financial Statements

Forthe Year Ended December 31, 2024

Expressedin Canadian Dollars

20.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONT’D)

For the fair value of the derivative liability, reasonable possible changes to the expected volatility, the most significant unobservable input would have the following effects:

SCHEDULE

OF FAIR VALUE FOR DERIVATIVE LIABILITY

Unobservable<br> Inputs	Change			Impact<br> on comprehensive loss
				Year<br> ended December 31, 2024		Year<br> ended December 31, 2023
Volatility		20	%	$	201,109	$	291,149

CapitalManagement

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of shareholders’ equity.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its board of directors, will balance its overall capital structure through new equity issuances or by undertaking other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2023.

21.

INCOME TAXES

The following table reconciles the expected income taxes at the Canadian statutory income tax rates to the amounts recognized in the consolidated statements of comprehensive loss for the years ended December 31, 2024, 2023 and 2021:

SCHEDULE OF INCOME TAX

	December<br> 31,<br><br> 2024			December<br> 31,<br><br>2023			December<br> 31,<br><br> 2022
Loss<br> before income taxes	$	13,877,473		$	23,611,810		$	27,654,364
Canadian<br> statutory rates		27	%		27	%		27	%
Expected<br> income tax recovery		3,725,300			6,330,400			7,338,900
Impact<br> of different foreign statutory tax rates		-			-			-
Non-deductible<br> items		(99,400	)		(509,800	)		(1,214,400	)
Share<br> issue costs		779,600			773,400			1,400
Adjustments<br> to prior years provision versus statutory tax returns		258,200			(87,600	)		(742,400	)
Differences<br> between prior year provision and final tax return		-			(153,400	)		867,500
Change<br> in deferred tax asset not recognized		(4,663,700	)		(6,353,000	)		(6,251,000	)
Income<br> tax	$	-		$	-		$	-

The Company’s unrecognized deductible temporary differences and unused tax losses for which no deferred tax asset is recognized consist of the following amounts:

SCHEDULE

OF DEFERRED TAXES

	December<br> 31,<br><br> 2024			December<br> 31,<br><br> 2023			December<br> 31,<br><br> 2022
Deferred<br> income tax assets (liabilities):
Share<br> issuance costs	$	1,736,000		$	995,000		$	568,000
Non-capital<br> losses		24,055,000			20,377,000			14,602,000
Property<br> and equipment		457,000			1,115,000			962,000
Capital<br> gain reserve		-			-			-
Scientific<br> Research and Experimental Development		377,000			365,000			367,000
Total<br> deferred income tax assets	$	26,625,000		$	22,852,000			16,499,000
Deferred<br> income tax not recognized		(26,625,000	)		(22,852,000	)		(16,499,000	)
Net<br> deferred tax assets	$	-		$	-		$	-

The

Company has non-capital loss carry forward of approximately $80,922,670 which may be carried forward to apply against future year income tax for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring in the years 2030 to 2044. The Company has non-capital loss carry forward of $8,662,723 CAD ($6,468,141 USD) which may be carried forward to apply against future year income tax for tax purposes in the United States, subject to the final determination by the tax authorities, expiring in the years 2040 to 2044.

| F-35 |

| --- |

Exhibit4.15

---

COMMONSHARE PURCHASE WARRANT

---

DraganflyInc.

Warrant Certificate No.: DPROWT.82129001

Warrant Shares: 16,666,666	Initial Exercise Date: August 21, 2024

THIS COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Armistice Capital Master Fund Ltd. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on August 21, 2029 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Draganfly Inc. a company incorporated under the Business Corporations Act (British Columbia) (the “Company”), up to 16,666,666 Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant shall be issued in certificated form.

Section

1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed or quoted for trading on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or the City of Vancouver, British Columbia, Canada are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York and the City of Vancouver, British Columbia, Canada generally are open for use by customers on such day.

| 2 |

| --- |

“Commission” means the United States Securities and Exchange Commission.

“Common Shares” means the common shares of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Registration Statement” means the Company’s registration statement on Form F-10 (File No. 333-258074), as amended, or such other replacement registration statement on the applicable Form that has been declared effective by the Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the Common Shares are traded on the principal Trading Market.

“Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Transfer Agent” means Endeavor Trust Corporation, the current transfer agent of the Company, with a mailing address of #702 777 Hornby Street, Vancouver, BC, V6Z 1S4 Canada, and an email address of admin@endeavortrust.com, and any successor transfer agent of the Company.

| 3 |

| --- |

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Warrants” means this Warrant and other Common Share purchase warrants issued by the Company pursuant to the Registration Statement.

Section 2. Exercise.

a)

Exercise of<br>Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or<br>after the Initial Exercise Date and on or before the Termination Date, or by delivery to the Company of a duly executed PDF copy submitted<br>by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).<br>Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined<br>in Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the<br>Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a Canadian bank or a<br>United States bank if such cashier’s check is denominated in Canadian dollars. No ink-original Notice of Exercise shall be required,<br>nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding<br>anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder<br>has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall<br>surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise<br>is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares<br>available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal<br>to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant<br>Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading<br>Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason ofthe provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares availablefor purchase hereunder at any given time may be less than the amount stated on the face hereof.

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| --- | | b) | Exercise Price.<br>The exercise price per Common Share under this Warrant shall be CAD$0.2048 (Canadian equivalent, based on an exchange rate of CAD$1.3651<br>to USD$0.15) subject to adjustment hereunder (the “Exercise Price”). | | --- | --- | | c) | Mechanics of<br>Exercise. | | --- | --- | | i. | Delivery of<br>Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent<br>to the Holder by (A) crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company<br>through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system<br>and there is an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by<br>the Holder or (B) by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or<br>its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by<br>the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company of<br>the Notice of Exercise, (ii) five (5) Trading Day after delivery of the aggregate Exercise Price (if applicable) to the Company and (iii)<br>the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such<br>date, the “Warrant Share Delivery Date”). Upon delivery of the completed and correct Notice of Exercise and payment<br>of the aggregate Exercise Price (if applicable), the Holder shall be deemed for all corporate purposes to have become the holder of record<br>of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares,<br>provided that payment of the aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii) the number of<br>Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason<br>to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay<br>to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based<br>on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading<br>Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until<br>such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant<br>in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”<br>means the standard settlement period, expressed in a number of Trading Days (including no Trading Days if the settlement date is the<br>trade date), on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of<br>the Notice of Exercise. | | --- | --- |

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

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vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with or furnished to the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st^ day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

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Section 3. Certain Adjustments.

a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Common Shares under which such holders are entitled to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares, where:

i.	the<br> right to subscribe for or purchase Common Shares or other securities expires not more than<br> 45 days after the record date for such issue (the period from the record date to the date<br> of expiry being herein in this Section 3(b) called the “Rights Period”);<br> and
ii.	the<br> cost per Common Share during the Rights Period (inclusive of any cost of acquisition of securities<br> exchangeable for or convertible into Common Shares in addition to any direct cost of Common<br> Shares) (herein in this Section 2(the “Per Common Share Cost”) is less<br> than 95% of the Current Market Price of the Common Shares on the record date;
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(any of such events being called a “Subsequent Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(A)	the<br> numerator of which is the aggregate of:

(1) the number of Common Shares outstanding as of the record date for the Subsequent Rights Offering; and

(2) a number determined by dividing the product of the Per Common Share Cost and:

a)	where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase additional Common Shares, the number of Common Shares so subscribed for or<br> purchased during the Rights Period; or

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| --- | | b) | where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase securities exchangeable for or convertible into Common Shares, the number<br> of Common Shares for which those securities so subscribed for or purchased during the Rights<br> Period could have been exchanged or into which they could have been converted during the<br> Rights Period, by the Current Market Price of the Common Shares as of the record date for<br> the Subsequent Rights Offering; and | | --- | --- | | (B) | the<br> denominator of which is: | | --- | --- |

(1) in the case described Section 3(b)(ii)(A)(2)(I), the number of Common Shares outstanding; or

(2) in the case described in Section 3(b)(ii)(A)(2)(II), the number of Common Shares that would be outstanding if all the Common Shares described in subsection 3(b)(ii)(A)(2)(II) had been issued, as at the end of the Rights Period.

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

If by the terms of the rights, options or warrants referred to in this Section 3(b), there is more than one purchase, conversion or exchange price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:

(I) the lowest purchase, conversion or exchange price per Common Share, as the case may be, if such price is applicable to all Common Shares which are subject to the rights, options or warrants, and

(II) the average purchase, conversion or exchange price per Common Share, as the case may be, if the applicable price is determined by reference to the number of Common Shares acquired.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this Section 3(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Common Shares actually issued and remaining issuable as a result of the event described in this Section 3(b) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

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If the Holder has exercised this Warrant in accordance herewith during the period beginning immediately after the record date for a Subsequent Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Common Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the difference between (a) the result obtained when the Exercise Price in effect immediately prior to the end of such Subsequent Rights Offering pursuant to this subsection is multiplied by the number of Common Shares received upon the exercise of this Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Subsequent Rights Offering pursuant to this subsection, and (b) the number of Common Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 2(c)(v) will be applicable to any fractional interest in a Common Share to which such Holder might otherwise be entitled. Such additional Common Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period.

For purposes of this Section 3(b) and of Section 3(c) the “Current Market Price” on any date, shall mean the price per Common Share equal to the weighted average of the sale prices per Common Share at which the Common Shares have traded (i) on the Trading Market, or (ii) if the Common Shares are not listed on the Trading Market, on such other stock exchange on which such shares are listed as may be selected for such purpose by the board of directors of the Company, or (iii) if the Common Shares are not listed on any stock exchange, then on the over-the-counter market, during the period of any five (5) consecutive Trading Days selected by the Company commencing not earlier than twenty (20) Trading Days and ending no later than three (3) Trading Days before such date; provided, however, if the Common Shares are not listed on any exchange or on the over- the counter market, the Current Market Price shall be as determined by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale price for any period shall be determined by dividing the aggregate sale prices per Common Share during such period by the total number of Common Shares sold during such period, provided that “Current Market Price” shall be converted into United States dollars using the applicable closing daily exchange rate published by the Bank of Canada on the Business Day before the day the Current Market Price is calculated, and provided further, that if no such rate was published on such date, the next preceding closing daily exchange rate published by the Bank of Canada be used.

c) Special Distributions. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding:

i.	capital<br> stock of the Company of any class other than Common Shares;

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| --- | | ii. | rights,<br> options or warrants to acquire Common Shares or securities exchangeable for or convertible<br> into Common Shares (other than rights, options or warrants issued to the holders of all or<br> substantially all of the outstanding Common Shares pursuant to which such holders are entitled<br> to subscribe for or purchase Common Shares at a price per share (or in the case of securities<br> exchangeable for or convertible into Common Shares at an exchange or conversion price per<br> Common Share at the date of issue of such securities) of at least 95% of the Current Market<br> Price of the Common Shares on such record date); | | --- | --- | | iii. | indebtedness<br> of the Company; or | | --- | --- | | iv. | any<br> property or other assets of the Company, and if such issue or distribution does not constitute<br> (A) an action of the Company under clauses (ii), (iii) or (iv) of Section 3(a), or 3(b) a<br> Subsequent Rights Offering (any of such nonexcluded events being called a “Special<br> Distribution”),the Exercise Price will be adjusted effective immediately after<br> such record date to a price determined by multiplying the Exercise Price in effect on such<br> record date by a fraction: | | --- | --- | | (C) | the<br> numerator of which is the difference between: | | --- | --- | | 1. | the<br> product of the number of Common Shares outstanding on such record date and the Current Market<br> Price of the Common Shares on such record date; and | | --- | --- | | 2. | the<br> aggregate fair market value (as determined in good faith by action of the board of directors<br> of the Company, subject, however, to the prior written consent of the Trading Market or any<br> other stock exchange or market on which the Common Shares are traded, where required) to<br> the holders of the Common Shares of such securities, evidence of indebtedness or property<br> or other assets to be issued or distributed in the Special Distribution; and | | --- | --- | | (D) | the<br> denominator of which is the product obtained by multiplying the number of Common Shares outstanding<br> on such record date by the Current Market Price of the Common Shares on such record date. | | --- | --- |

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this Section 3(c), the Exercise Price will be readjusted immediately after the expiration of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined on the basis of the number of Common Shares actually issued and the number of Common Shares remaining issuable, as a result of the issue or distribution referred to in this Section 3(c) immediately after such expiration, and will be further readjusted in such manner upon the expiration of any further such right.

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c) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company or any Subsidiary, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or more that 50% of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a fair and commercially reasonable manner reflecting the relative value of any different components of the Alternate Consideration in accordance with standard valuation practices for transactions of that type. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.

d) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

e) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

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ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special non-recurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 5 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice, and provided that no notice shall be required if the information is disseminated in a press release or document filed with the Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file or furnish such notice with the Commission pursuant to a Current Report on Form 8-K or a Report on Form 6-K, as applicable. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with all applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

a) No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv), in no event shall the Company be required to net cash settle an exercise of this Warrant.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or share certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

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d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2108 St. George Avenue Saskatoon, Saskatchewan S7M 0K7 Canada, Attention: Paul Sun, email address: Paul.Sun@draganfly.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

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i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Warrant Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

o) Currency. All references to currency herein are to lawful money of Canada.

p) Signature. The Warrant certificate may be signed by facsimile or other electronic means, which shall be deemed to be an original and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature.

********************

(SignaturePage Follows)

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

draganfly inc.
By:
Name:
Title:

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NOTICEOF EXERCISE

To:	draganfly<br>inc.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall be accepted in lawful money of Canada.

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signatureof Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

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ASSIGNMENTFORM

(Toassign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please<br> Print)
Address:
	(Please<br> Print)
Phone<br> Number:
Email<br> Address:
Dated:<br> _______________ __, ______
Holder’s<br> Signature: _______________________________
Holder’s<br> Address: _______________________________

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Exhibit4.16

PRE-FUNDEDCOMMON SHARE PURCHASE WARRANT

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DraganflyInc.

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Warrant Certificate No.: DPFWT3.1

Warrant<br> Shares: 8,000,000	Initial Exercise Date: August 21, 2024

THIS PRE-FUNDED COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Armistice Capital Master Fund Ltd. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) until this Warrant is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase from Draganfly Inc. a company incorporated under the Business Corporations Act (British Columbia) (the “Company”), up to 8,000,000 Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant shall be issued in certificated form.

Section

1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed or quoted for trading on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or the City of Vancouver, British Columbia, Canada are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York and the City of Vancouver, British Columbia, Canada generally are open for use by customers on such day.

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“Commission” means the United States Securities and Exchange Commission.

“Common Shares” means the common shares of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Registration Statement” means the Company’s registration statement on Form F-10 (File No. 333-258074), as amended, or such other replacement registration statement on the applicable Form that has been declared effective by the Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the Common Shares are traded on the principal Trading Market.

“Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Transfer Agent” means Endeavor Trust Corporation, the current transfer agent of the Company, with a mailing address of #702 777 Hornby Street, Vancouver, BC, V6Z 1S4 Canada, and an email address of admin@endeavortrust.com, and any successor transfer agent of the Company.

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“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Warrants” means this Pre-Funded Warrant issued by the Company pursuant to the Registration Statement.

Section 2. Exercise.

a)

Exercise<br> of Warrant. Exercise of the purchase rights represented by this Warrant may be made,<br> in whole or in part, at any time or times on or after the Initial Exercise Date and on or<br> before the Termination Date, or by delivery to the Company of a duly executed PDF copy submitted<br> by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the<br> “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and<br> (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in<br> Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver<br> the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of<br> Exercise by wire transfer or cashier’s check drawn on a Canadian bank or a United States<br> bank if such cashier’s check is denominated in Canadian dollars. No ink-original Notice<br> of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee<br> or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to<br> the contrary, the Holder shall not be required to physically surrender this Warrant to the<br> Company until the Holder has purchased all of the Warrant Shares available hereunder and<br> the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant<br> to the Company for cancellation within three (3) Trading Days of the date on which the final<br> Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting<br> in purchases of a portion of the total number of Warrant Shares available hereunder shall<br> have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder<br> in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the<br> Company shall maintain records showing the number of Warrant Shares purchased and the date<br> of such purchases. The Company shall deliver any objection to any Notice of Exercise within<br> one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

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| --- | | b) | Exercise<br> Price. The aggregate exercise price of this Warrant, except for a nominal exercise price<br> of CA$0.00014 (Canadian equivalent, based on an exchange rate of CA$0.00014, to USD$0.0001)<br> per Warrant Share, was pre-funded to the Company on or prior to the Initial Exercise Date<br> and, consequently, no additional consideration (other than the nominal exercise price of<br> CA$0.00014 (Canadian equivalent of USD$0.0001) per Warrant Share) shall be required to be<br> paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall<br> not be entitled to the return or refund of all or any portion of such pre-paid aggregate<br> exercise price under any circumstance or for any reason whatsoever. The remaining unpaid<br> exercise price per share of the Common Share under this Warrant shall be CA$0.00014 (Canadian<br> equivalent of USD$0.0001) subject to adjustment hereunder (the “Exercise Price”). | | --- | --- | | c) | Mechanics<br> of Exercise. | | --- | --- | | i. | Delivery<br> of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased<br> hereunder to be transmitted by the Transfer Agent to the Holder by (A) crediting the account<br> of the Holder’s or its designee’s balance account with The Depository Trust Company<br> through its Deposit or Withdrawal at Custodian system (“DWAC”) if the<br> Company is then a participant in such system and there is an effective Registration Statement<br> permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder<br> or (B) by physical delivery of a certificate, registered in the Company’s share register<br> in the name of the Holder or its designee, for the number of Warrant Shares to which the<br> Holder is entitled pursuant to such exercise to the address specified by the Holder in the<br> Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the<br> delivery to the Company of the Notice of Exercise, (ii) five (5) Trading Day after delivery<br> of the aggregate Exercise Price (if applicable) to the Company and (iii) the number of Trading<br> Days comprising the Standard Settlement Period after the delivery to the Company of the Notice<br> of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery<br> of the completed and correct Notice of Exercise and payment of the aggregate Exercise Price<br> (if applicable), the Holder shall be deemed for all corporate purposes to have become the<br> holder of record of the Warrant Shares with respect to which this Warrant has been exercised,<br> irrespective of the date of delivery of the Warrant Shares, provided that payment of the<br> aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii)<br> the number of Trading Days comprising the Standard Settlement Period following delivery of<br> the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the<br> Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company<br> shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000<br> of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the<br> date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading<br> Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day<br> after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder<br> rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant<br> in the FAST program so long as this Warrant remains outstanding and exercisable. As used<br> herein, “Standard Settlement Period” means the standard settlement period,<br> expressed in a number of Trading Days (including no Trading Days if the settlement date is<br> the trade date), on the Company’s primary Trading Market with respect to the Common<br> Shares as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the<br> foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m.<br> (New York City time) on the Initial Exercise Date, which may be delivered at any time after<br> the time of execution of the Underwriting Agreement, the Company agrees to deliver the Warrant<br> Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise<br> Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes<br> hereunder, provided that payment of the aggregate Exercise Price (other than in the case<br> of a cashless exercise) is received by such Warrant Share Delivery Date. | | --- | --- |

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

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d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with or furnished to the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st^ day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

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Section 3. Certain Adjustments.

a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Common Shares under which such holders are entitled to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares, where:

i.	the<br> right to subscribe for or purchase Common Shares or other securities expires not more than<br> 45 days after the record date for such issue (the period from the record date to the date<br> of expiry being herein in this Section 3(b) called the “Rights Period”);<br> and
ii.	the<br> cost per Common Share during the Rights Period (inclusive of any cost of acquisition of securities<br> exchangeable for or convertible into Common Shares in addition to any direct cost of Common<br> Shares) (herein in this Section 2(the “Per Common Share Cost”) is less<br> than 95% of the Current Market Price of the Common Shares on the record date;
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(any of such events being called a “Subsequent Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(A)	the<br> numerator of which is the aggregate of:

(1) the number of Common Shares outstanding as of the record date for the Subsequent Rights Offering; and

(2) a number determined by dividing the product of the Per Common Share Cost and:

(I)	where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase additional Common Shares, the number of Common Shares so subscribed for or<br> purchased during the Rights Period; or
(II)	where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase securities exchangeable for or convertible into Common Shares, the number<br> of Common Shares for which those securities so subscribed for or purchased during the Rights<br> Period could have been exchanged or into which they could have been converted during the<br> Rights Period, by the Current Market Price of the Common Shares as of the record date for<br> the Subsequent Rights Offering; and
---	---
(B)	the<br> denominator of which is:
---	---

(1) in the case described Section 3(b)(ii)(A)(2)(I), the number of Common Shares outstanding; or

(2) in the case described in Section 3(b)(ii)(A)(2)(II), the number of Common Shares that would be outstanding if all the Common Shares described in subsection 3(b)(ii)(A)(2)(II) had been issued, as at the end of the Rights Period.

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

If by the terms of the rights, options or warrants referred to in this Section 3(b), there is more than one purchase, conversion or exchange price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:

(I) the lowest purchase, conversion or exchange price per Common Share, as the case may be, if such price is applicable to all Common Shares which are subject to the rights, options or warrants, and

(II) the average purchase, conversion or exchange price per Common Share, as the case may be, if the applicable price is determined by reference to the number of Common Shares acquired.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this Section 3(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Common Shares actually issued and remaining issuable as a result of the event described in this Section 3(b) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

If the Holder has exercised this Warrant in accordance herewith during the period beginning immediately after the record date for a Subsequent Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Common Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the difference between (a) the result obtained when the Exercise Price in effect immediately prior to the end of such Subsequent Rights Offering pursuant to this subsection is multiplied by the number of Common Shares received upon the exercise of this Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Subsequent Rights Offering pursuant to this subsection, and (b) the number of Common Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 2(c)(v) will be applicable to any fractional interest in a Common Share to which such Holder might otherwise be entitled. Such additional Common Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period.

For purposes of this Section 3(b) and of Section 3(c) the “Current Market Price” on any date, shall mean the price per Common Share equal to the weighted average of the sale prices per Common Share at which the Common Shares have traded (i) on the Trading Market, or (ii) if the Common Shares are not listed on the Trading Market, on such other stock exchange on which such shares are listed as may be selected for such purpose by the board of directors of the Company, or (iii) if the Common Shares are not listed on any stock exchange, then on the over-the-counter market, during the period of any five (5) consecutive Trading Days selected by the Company commencing not earlier than twenty (20) Trading Days and ending no later than three (3) Trading Days before such date; provided, however, if the Common Shares are not listed on any exchange or on the over- the counter market, the Current Market Price shall be as determined by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale price for any period shall be determined by dividing the aggregate sale prices per Common Share during such period by the total number of Common Shares sold during such period, provided that “Current Market Price” shall be converted into United States dollars using the applicable closing daily exchange rate published by the Bank of Canada on the Business Day before the day the Current Market Price is calculated, and provided further, that if no such rate was published on such date, the next preceding closing daily exchange rate published by the Bank of Canada be used.

c. Special Distributions. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding:

i.	capital stock of the Company of any class other than Common<br>Shares;
ii.	rights,<br> options or warrants to acquire Common Shares or securities exchangeable for or convertible<br> into Common Shares (other than rights, options or warrants issued to the holders of all or<br> substantially all of the outstanding Common Shares pursuant to which such holders are entitled<br> to subscribe for or purchase Common Shares at a price per share (or in the case of securities<br> exchangeable for or convertible into Common Shares at an exchange or conversion price per<br> Common Share at the date of issue of such securities) of at least 95% of the Current Market<br> Price of the Common Shares on such record date);
---	---
iii.	indebtedness<br> of the Company; or
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iv.	any<br> property or other assets of the Company, and if such issue or distribution does not constitute<br> (A) an action of the Company under clauses (ii), (iii) or (iv) of Section 3(a), or 3(b) a<br> Subsequent Rights Offering (any of such nonexcluded events being called a “Special<br> Distribution”),the Exercise Price will be adjusted effective immediately after<br> such record date to a price determined by multiplying the Exercise Price in effect on such<br> record date by a fraction:
---	---

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| --- | | (A) | the<br> numerator of which is the difference between: | | --- | --- | | 1. | the<br> product of the number of Common Shares outstanding on such record date and the Current Market<br> Price of the Common Shares on such record date; and | | --- | --- | | 2. | the<br> aggregate fair market value (as determined in good faith by action of the board of directors<br> of the Company, subject, however, to the prior written consent of the Trading Market or any<br> other stock exchange or market on which the Common Shares are traded, where required) to<br> the holders of the Common Shares of such securities, evidence of indebtedness or property<br> or other assets to be issued or distributed in the Special Distribution; and | | --- | --- | | (B) | the<br> denominator of which is the product obtained by multiplying the number of Common Shares outstanding<br> on such record date by the Current Market Price of the Common Shares on such record date. | | --- | --- |

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this Section 3(c), the Exercise Price will be readjusted immediately after the expiration of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined on the basis of the number of Common Shares actually issued and the number of Common Shares remaining issuable, as a result of the issue or distribution referred to in this Section 3(c) immediately after such expiration, and will be further readjusted in such manner upon the expiration of any further such right.

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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company or any Subsidiary, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or more that 50% of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a fair and commercially reasonable manner reflecting the relative value of any different components of the Alternate Consideration in accordance with standard valuation practices for transactions of that type. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

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f) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special non-recurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 5 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice, and provided that no notice shall be required if the information is disseminated in a press release or document filed with the Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file or furnish such notice with the Commission pursuant to a Current Report on Form 8-K or a Report on Form 6-K, as applicable. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

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Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with all applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

a) No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv), in no event shall the Company be required to net cash settle an exercise of this Warrant.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or share certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

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h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2108 St. George Avenue Saskatoon, Saskatchewan S7M 0K7 Canada, Attention: Paul Sun, email address: Paul.Sun@draganfly.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Warrant Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

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l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

o) Currency. All references to currency herein are to lawful money of Canada.

p) Signature. The Warrant certificate may be signed by facsimile or other electronic means, which shall be deemed to be an original and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature.

********************

(SignaturePage Follows)

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

draganfly inc.
By:
Name:
Title:

NOTICEOF EXERCISE

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To: draganfly inc.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall be accepted in lawful money of Canada.

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signatureof Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENTFORM

---

(Toassign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please<br> Print)
Address:
	(Please<br> Print)
Phone<br> Number:
Email<br> Address:
Dated:<br> _______________ __, ______
Holder’s<br> Signature:___________________________
Holder’s<br> Address: ___________________________

Exhibit4.17

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COMMONSHARE PURCHASE WARRANT

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DraganflyInc.

Warrant Certificate No.: DPROWT.111929001

Warrant Shares: 1,600,000	Initial Exercise Date: November 19, 2024

THIS COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Armistice Capital Master Fund Ltd. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on November 19, 2029 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Draganfly Inc. a company incorporated under the Business Corporations Act (British Columbia) (the “Company”), up to 1,600,000 Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant shall be issued in certificated form.

Section

1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed or quoted for trading on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or the City of Vancouver, British Columbia, Canada are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York and the City of Vancouver, British Columbia, Canada generally are open for use by customers on such day.

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“Commission” means the United States Securities and Exchange Commission.

“Common Shares” means the common shares of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Registration Statement” means the Company’s registration statement on Form F-10 (File No. 333-258074), as amended, or such other replacement registration statement on the applicable Form that has been declared effective by the Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the Common Shares are traded on the principal Trading Market.

“Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Transfer Agent” means Endeavor Trust Corporation, the current transfer agent of the Company, with a mailing address of #702 777 Hornby Street, Vancouver, BC, V6Z 1S4 Canada, and an email address of admin@endeavortrust.com, and any successor transfer agent of the Company.

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“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Warrants” means this Warrant and other Common Share purchase warrants issued by the Company pursuant to the Registration Statement.

Section 2. Exercise.

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, or by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a Canadian bank or a United States bank if such cashier’s check is denominated in Canadian dollars. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason ofthe provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares availablefor purchase hereunder at any given time may be less than the amount stated on the face hereof.

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b) Exercise Price. The exercise price per Common Share under this Warrant shall be CAD$3.3086 (Canadian equivalent, based on an exchange rate of CAD$1.4079 to USD$2.35) subject to adjustment hereunder (the “Exercise Price”).

c) Mechanics of Exercise.

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by (A) crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and there is an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company of the Notice of Exercise, (ii) five (5) Trading Day after delivery of the aggregate Exercise Price (if applicable) to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the completed and correct Notice of Exercise and payment of the aggregate Exercise Price (if applicable), the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days (including no Trading Days if the settlement date is the trade date), on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of the Notice of Exercise.

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

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vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with or furnished to the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st^ day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

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Section 3. Certain Adjustments.

a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Common Shares under which such holders are entitled to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares, where:

i.	the<br> right to subscribe for or purchase Common Shares or other securities expires not more than<br> 45 days after the record date for such issue (the period from the record date to the date<br> of expiry being herein in this Section 3(b) called the “Rights Period”);<br> and
ii.	the<br> cost per Common Share during the Rights Period (inclusive of any cost of acquisition of securities<br> exchangeable for or convertible into Common Shares in addition to any direct cost of Common<br> Shares) (herein in this Section 2(the “Per Common Share Cost”) is less<br> than 95% of the Current Market Price of the Common Shares on the record date;
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(any of such events being called a “Subsequent Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(A)	the<br> numerator of which is the aggregate of:

(1) the number of Common Shares outstanding as of the record date for the Subsequent Rights Offering; and

(2) a number determined by dividing the product of the Per Common Share Cost and:

a)	where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase additional Common Shares, the number of Common Shares so subscribed for or<br> purchased during the Rights Period; or

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| --- | | b) | where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase securities exchangeable for or convertible into Common Shares, the number<br> of Common Shares for which those securities so subscribed for or purchased during the Rights<br> Period could have been exchanged or into which they could have been converted during the<br> Rights Period, by the Current Market Price of the Common Shares as of the record date for<br> the Subsequent Rights Offering; and | | --- | --- | | (B) | the<br> denominator of which is: | | --- | --- |

(1) in the case described Section 3(b)(ii)(A)(2)(I), the number of Common Shares outstanding; or

(2) in the case described in Section 3(b)(ii)(A)(2)(II), the number of Common Shares that would be outstanding if all the Common Shares described in subsection 3(b)(ii)(A)(2)(II) had been issued, as at the end of the Rights Period.

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

If by the terms of the rights, options or warrants referred to in this Section 3(b), there is more than one purchase, conversion or exchange price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:

(I) the lowest purchase, conversion or exchange price per Common Share, as the case may be, if such price is applicable to all Common Shares which are subject to the rights, options or warrants, and

(II) the average purchase, conversion or exchange price per Common Share, as the case may be, if the applicable price is determined by reference to the number of Common Shares acquired.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this Section 3(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Common Shares actually issued and remaining issuable as a result of the event described in this Section 3(b) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

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If the Holder has exercised this Warrant in accordance herewith during the period beginning immediately after the record date for a Subsequent Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Common Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the difference between (a) the result obtained when the Exercise Price in effect immediately prior to the end of such Subsequent Rights Offering pursuant to this subsection is multiplied by the number of Common Shares received upon the exercise of this Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Subsequent Rights Offering pursuant to this subsection, and (b) the number of Common Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 2(c)(v) will be applicable to any fractional interest in a Common Share to which such Holder might otherwise be entitled. Such additional Common Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period.

For purposes of this Section 3(b) and of Section 3(c) the “Current Market Price” on any date, shall mean the price per Common Share equal to the weighted average of the sale prices per Common Share at which the Common Shares have traded (i) on the Trading Market, or (ii) if the Common Shares are not listed on the Trading Market, on such other stock exchange on which such shares are listed as may be selected for such purpose by the board of directors of the Company, or (iii) if the Common Shares are not listed on any stock exchange, then on the over-the-counter market, during the period of any five (5) consecutive Trading Days selected by the Company commencing not earlier than twenty (20) Trading Days and ending no later than three (3) Trading Days before such date; provided, however, if the Common Shares are not listed on any exchange or on the over- the counter market, the Current Market Price shall be as determined by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale price for any period shall be determined by dividing the aggregate sale prices per Common Share during such period by the total number of Common Shares sold during such period, provided that “Current Market Price” shall be converted into United States dollars using the applicable closing daily exchange rate published by the Bank of Canada on the Business Day before the day the Current Market Price is calculated, and provided further, that if no such rate was published on such date, the next preceding closing daily exchange rate published by the Bank of Canada be used.

c) Special Distributions. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding:

i.	capital<br> stock of the Company of any class other than Common Shares;

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| --- | | ii. | rights,<br> options or warrants to acquire Common Shares or securities exchangeable for or convertible<br> into Common Shares (other than rights, options or warrants issued to the holders of all or<br> substantially all of the outstanding Common Shares pursuant to which such holders are entitled<br> to subscribe for or purchase Common Shares at a price per share (or in the case of securities<br> exchangeable for or convertible into Common Shares at an exchange or conversion price per<br> Common Share at the date of issue of such securities) of at least 95% of the Current Market<br> Price of the Common Shares on such record date); | | --- | --- | | iii. | indebtedness<br> of the Company; or | | --- | --- | | iv. | any<br> property or other assets of the Company, and if such issue or distribution does not constitute<br> (A) an action of the Company under clauses (ii), (iii) or (iv) of Section 3(a), or 3(b) a<br> Subsequent Rights Offering (any of such nonexcluded events being called a “Special<br> Distribution”),the Exercise Price will be adjusted effective immediately after<br> such record date to a price determined by multiplying the Exercise Price in effect on such<br> record date by a fraction: | | --- | --- | | (C) | the<br> numerator of which is the difference between: | | --- | --- | | 1. | the<br> product of the number of Common Shares outstanding on such record date and the Current Market<br> Price of the Common Shares on such record date; and | | --- | --- | | 2. | the<br> aggregate fair market value (as determined in good faith by action of the board of directors<br> of the Company, subject, however, to the prior written consent of the Trading Market or any<br> other stock exchange or market on which the Common Shares are traded, where required) to<br> the holders of the Common Shares of such securities, evidence of indebtedness or property<br> or other assets to be issued or distributed in the Special Distribution; and | | --- | --- | | (D) | the<br> denominator of which is the product obtained by multiplying the number of Common Shares outstanding<br> on such record date by the Current Market Price of the Common Shares on such record date. | | --- | --- |

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this Section 3(c), the Exercise Price will be readjusted immediately after the expiration of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined on the basis of the number of Common Shares actually issued and the number of Common Shares remaining issuable, as a result of the issue or distribution referred to in this Section 3(c) immediately after such expiration, and will be further readjusted in such manner upon the expiration of any further such right.

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c) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company or any Subsidiary, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or more that 50% of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a fair and commercially reasonable manner reflecting the relative value of any different components of the Alternate Consideration in accordance with standard valuation practices for transactions of that type. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.

d) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

e) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

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ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special non-recurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 5 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice, and provided that no notice shall be required if the information is disseminated in a press release or document filed with the Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file or furnish such notice with the Commission pursuant to a Current Report on Form 8-K or a Report on Form 6-K, as applicable. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with all applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

a) No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv), in no event shall the Company be required to net cash settle an exercise of this Warrant.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or share certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

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d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2108 St. George Avenue Saskatoon, Saskatchewan S7M 0K7 Canada, Attention: Paul Sun, email address: Paul.Sun@draganfly.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

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i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Warrant Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

o) Currency. All references to currency herein are to lawful money of Canada.

p) Signature. The Warrant certificate may be signed by facsimile or other electronic means, which shall be deemed to be an original and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature.

********************

(SignaturePage Follows)

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

draganfly inc.
By:
Name:
Title:

---

NOTICEOF EXERCISE

To:	draganfly<br>inc.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall be accepted in lawful money of Canada.

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signatureof Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

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ASSIGNMENTFORM

(Toassign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please<br> Print)
Address:
	(Please<br> Print)
Phone<br> Number:
Email<br> Address:
Dated:<br> _______________ __, ______
Holder’s<br> Signature: _______________________________
Holder’s<br> Address: _______________________________

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Exhibit4.18

PRE-FUNDEDCOMMON SHARE PURCHASE WARRANT

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DraganflyInc.

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Warrant Certificate No.: DPFWT4.2

(replaces and supersedes Warrant Certificate No. DPFWT4.1)

Warrant Shares: 751,000	Initial Exercise Date: November 19, 2024

THIS PRE-FUNDED COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Armistice Capital Master Fund Ltd. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) until this Warrant is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase from Draganfly Inc. a company incorporated under the Business Corporations Act (British Columbia) (the “Company”), up to 751,000 Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant shall be issued in certificated form.

Section

1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed or quoted for trading on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or the City of Vancouver, British Columbia, Canada are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York and the City of Vancouver, British Columbia, Canada generally are open for use by customers on such day.

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“Commission” means the United States Securities and Exchange Commission.

“Common Shares” means the common shares of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Registration Statement” means the Company’s registration statement on Form F-10 (File No. 333-258074), as amended, or such other replacement registration statement on the applicable Form that has been declared effective by the Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the Common Shares are traded on the principal Trading Market.

“Trading Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Transfer Agent” means Endeavor Trust Corporation, the current transfer agent of the Company, with a mailing address of #702 777 Hornby Street, Vancouver, BC, V6Z 1S4 Canada, and an email address of admin@endeavortrust.com, and any successor transfer agent of the Company.

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“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Warrants” means this Pre-Funded Warrant issued by the Company pursuant to the Registration Statement.

Section 2. Exercise.

a)

Exercise<br> of Warrant. Exercise of the purchase rights represented by this Warrant may be made,<br> in whole or in part, at any time or times on or after the Initial Exercise Date and on or<br> before the Termination Date, or by delivery to the Company of a duly executed PDF copy submitted<br> by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the<br> “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and<br> (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in<br> Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver<br> the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of<br> Exercise by wire transfer or cashier’s check drawn on a Canadian bank or a United States<br> bank if such cashier’s check is denominated in Canadian dollars. No ink-original Notice<br> of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee<br> or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to<br> the contrary, the Holder shall not be required to physically surrender this Warrant to the<br> Company until the Holder has purchased all of the Warrant Shares available hereunder and<br> the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant<br> to the Company for cancellation within three (3) Trading Days of the date on which the final<br> Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting<br> in purchases of a portion of the total number of Warrant Shares available hereunder shall<br> have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder<br> in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the<br> Company shall maintain records showing the number of Warrant Shares purchased and the date<br> of such purchases. The Company shall deliver any objection to any Notice of Exercise within<br> one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

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| --- | | b) | Exercise<br> Price. The aggregate exercise price of this Warrant, except for a nominal exercise price<br> of CA$0.00014 (Canadian equivalent, based on an exchange rate of CA$0.00014, to USD$0.0001)<br> per Warrant Share, was pre-funded to the Company on or prior to the Initial Exercise Date<br> and, consequently, no additional consideration (other than the nominal exercise price of<br> CA$0.00014 (Canadian equivalent of USD$0.0001) per Warrant Share) shall be required to be<br> paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall<br> not be entitled to the return or refund of all or any portion of such pre-paid aggregate<br> exercise price under any circumstance or for any reason whatsoever. The remaining unpaid<br> exercise price per share of the Common Share under this Warrant shall be CA$0.00014 (Canadian<br> equivalent of USD$0.0001) subject to adjustment hereunder (the “Exercise Price”). | | --- | --- | | c) | Mechanics<br> of Exercise. | | --- | --- | | i. | Delivery<br> of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased<br> hereunder to be transmitted by the Transfer Agent to the Holder by (A) crediting the account<br> of the Holder’s or its designee’s balance account with The Depository Trust Company<br> through its Deposit or Withdrawal at Custodian system (“DWAC”) if the<br> Company is then a participant in such system and there is an effective Registration Statement<br> permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder<br> or (B) by physical delivery of a certificate, registered in the Company’s share register<br> in the name of the Holder or its designee, for the number of Warrant Shares to which the<br> Holder is entitled pursuant to such exercise to the address specified by the Holder in the<br> Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the<br> delivery to the Company of the Notice of Exercise, (ii) five (5) Trading Day after delivery<br> of the aggregate Exercise Price (if applicable) to the Company and (iii) the number of Trading<br> Days comprising the Standard Settlement Period after the delivery to the Company of the Notice<br> of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery<br> of the completed and correct Notice of Exercise and payment of the aggregate Exercise Price<br> (if applicable), the Holder shall be deemed for all corporate purposes to have become the<br> holder of record of the Warrant Shares with respect to which this Warrant has been exercised,<br> irrespective of the date of delivery of the Warrant Shares, provided that payment of the<br> aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii)<br> the number of Trading Days comprising the Standard Settlement Period following delivery of<br> the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the<br> Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company<br> shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000<br> of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the<br> date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading<br> Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day<br> after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder<br> rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant<br> in the FAST program so long as this Warrant remains outstanding and exercisable. As used<br> herein, “Standard Settlement Period” means the standard settlement period,<br> expressed in a number of Trading Days (including no Trading Days if the settlement date is<br> the trade date), on the Company’s primary Trading Market with respect to the Common<br> Shares as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the<br> foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m.<br> (New York City time) on the Initial Exercise Date, which may be delivered at any time after<br> the time of execution of the Underwriting Agreement, the Company agrees to deliver the Warrant<br> Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise<br> Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes<br> hereunder, provided that payment of the aggregate Exercise Price (other than in the case<br> of a cashless exercise) is received by such Warrant Share Delivery Date. | | --- | --- |

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

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d) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with or furnished to the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61^st^ day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

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Section 3. Certain Adjustments.

a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding Common Shares under which such holders are entitled to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares, where:

i.	the<br> right to subscribe for or purchase Common Shares or other securities expires not more than<br> 45 days after the record date for such issue (the period from the record date to the date<br> of expiry being herein in this Section 3(b) called the “Rights Period”);<br> and
ii.	the<br> cost per Common Share during the Rights Period (inclusive of any cost of acquisition of securities<br> exchangeable for or convertible into Common Shares in addition to any direct cost of Common<br> Shares) (herein in this Section 2(the “Per Common Share Cost”) is less<br> than 95% of the Current Market Price of the Common Shares on the record date;
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(any of such events being called a “Subsequent Rights Offering”), then the Exercise Price will be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(A)	the<br> numerator of which is the aggregate of:

(1) the number of Common Shares outstanding as of the record date for the Subsequent Rights Offering; and

(2) a number determined by dividing the product of the Per Common Share Cost and:

(I)	where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase additional Common Shares, the number of Common Shares so subscribed for or<br> purchased during the Rights Period; or
(II)	where<br> the event giving rise to the application of this Section 3(b) was the issue of rights, options<br> or warrants to the holders of Common Shares under which such holders are entitled to subscribe<br> for or purchase securities exchangeable for or convertible into Common Shares, the number<br> of Common Shares for which those securities so subscribed for or purchased during the Rights<br> Period could have been exchanged or into which they could have been converted during the<br> Rights Period, by the Current Market Price of the Common Shares as of the record date for<br> the Subsequent Rights Offering; and
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(B)	the<br> denominator of which is:
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(1) in the case described Section 3(b)(ii)(A)(2)(I), the number of Common Shares outstanding; or

(2) in the case described in Section 3(b)(ii)(A)(2)(II), the number of Common Shares that would be outstanding if all the Common Shares described in subsection 3(b)(ii)(A)(2)(II) had been issued, as at the end of the Rights Period.

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

If by the terms of the rights, options or warrants referred to in this Section 3(b), there is more than one purchase, conversion or exchange price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment on the basis of:

(I) the lowest purchase, conversion or exchange price per Common Share, as the case may be, if such price is applicable to all Common Shares which are subject to the rights, options or warrants, and

(II) the average purchase, conversion or exchange price per Common Share, as the case may be, if the applicable price is determined by reference to the number of Common Shares acquired.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(b) as a result of the fixing by the Company of a record date for the distribution of rights, options or warrants referred to in this Section 3(b), the Exercise Price will be readjusted immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based upon the number of Common Shares actually issued and remaining issuable as a result of the event described in this Section 3(b) immediately after such expiration, and will be further readjusted in such manner upon expiration of any further such right.

If the Holder has exercised this Warrant in accordance herewith during the period beginning immediately after the record date for a Subsequent Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Common Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the difference between (a) the result obtained when the Exercise Price in effect immediately prior to the end of such Subsequent Rights Offering pursuant to this subsection is multiplied by the number of Common Shares received upon the exercise of this Warrant during such period, and the resulting product is divided by the Exercise Price as adjusted for such Subsequent Rights Offering pursuant to this subsection, and (b) the number of Common Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 2(c)(v) will be applicable to any fractional interest in a Common Share to which such Holder might otherwise be entitled. Such additional Common Shares will be deemed to have been issued to the Holder immediately following the end of the Rights Period.

For purposes of this Section 3(b) and of Section 3(c) the “Current Market Price” on any date, shall mean the price per Common Share equal to the weighted average of the sale prices per Common Share at which the Common Shares have traded (i) on the Trading Market, or (ii) if the Common Shares are not listed on the Trading Market, on such other stock exchange on which such shares are listed as may be selected for such purpose by the board of directors of the Company, or (iii) if the Common Shares are not listed on any stock exchange, then on the over-the-counter market, during the period of any five (5) consecutive Trading Days selected by the Company commencing not earlier than twenty (20) Trading Days and ending no later than three (3) Trading Days before such date; provided, however, if the Common Shares are not listed on any exchange or on the over- the counter market, the Current Market Price shall be as determined by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale price for any period shall be determined by dividing the aggregate sale prices per Common Share during such period by the total number of Common Shares sold during such period, provided that “Current Market Price” shall be converted into United States dollars using the applicable closing daily exchange rate published by the Bank of Canada on the Business Day before the day the Current Market Price is calculated, and provided further, that if no such rate was published on such date, the next preceding closing daily exchange rate published by the Bank of Canada be used.

c. Special Distributions. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding:

i.	capital stock of the Company of any class other than Common<br>Shares;
ii.	rights,<br> options or warrants to acquire Common Shares or securities exchangeable for or convertible<br> into Common Shares (other than rights, options or warrants issued to the holders of all or<br> substantially all of the outstanding Common Shares pursuant to which such holders are entitled<br> to subscribe for or purchase Common Shares at a price per share (or in the case of securities<br> exchangeable for or convertible into Common Shares at an exchange or conversion price per<br> Common Share at the date of issue of such securities) of at least 95% of the Current Market<br> Price of the Common Shares on such record date);
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iii.	indebtedness<br> of the Company; or
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iv.	any<br> property or other assets of the Company, and if such issue or distribution does not constitute<br> (A) an action of the Company under clauses (ii), (iii) or (iv) of Section 3(a), or 3(b) a<br> Subsequent Rights Offering (any of such nonexcluded events being called a “Special<br> Distribution”),the Exercise Price will be adjusted effective immediately after<br> such record date to a price determined by multiplying the Exercise Price in effect on such<br> record date by a fraction:
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| --- | | (A) | the<br> numerator of which is the difference between: | | --- | --- | | 1. | the<br> product of the number of Common Shares outstanding on such record date and the Current Market<br> Price of the Common Shares on such record date; and | | --- | --- | | 2. | the<br> aggregate fair market value (as determined in good faith by action of the board of directors<br> of the Company, subject, however, to the prior written consent of the Trading Market or any<br> other stock exchange or market on which the Common Shares are traded, where required) to<br> the holders of the Common Shares of such securities, evidence of indebtedness or property<br> or other assets to be issued or distributed in the Special Distribution; and | | --- | --- | | (B) | the<br> denominator of which is the product obtained by multiplying the number of Common Shares outstanding<br> on such record date by the Current Market Price of the Common Shares on such record date. | | --- | --- |

Any Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.

To the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(c) as a result of the fixing by the Company of a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares referred to in this Section 3(c), the Exercise Price will be readjusted immediately after the expiration of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined on the basis of the number of Common Shares actually issued and the number of Common Shares remaining issuable, as a result of the issue or distribution referred to in this Section 3(c) immediately after such expiration, and will be further readjusted in such manner upon the expiration of any further such right.

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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company or any Subsidiary, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or more that 50% of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a fair and commercially reasonable manner reflecting the relative value of any different components of the Alternate Consideration in accordance with standard valuation practices for transactions of that type. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the Initial Exercise Date.

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

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f) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special non-recurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 5 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice, and provided that no notice shall be required if the information is disseminated in a press release or document filed with the Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file or furnish such notice with the Commission pursuant to a Current Report on Form 8-K or a Report on Form 6-K, as applicable. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

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Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with all applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

a) No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv), in no event shall the Company be required to net cash settle an exercise of this Warrant.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or share certificate.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

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h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2108 St. George Avenue Saskatoon, Saskatchewan S7M 0K7 Canada, Attention: Paul Sun, email address: Paul.Sun@draganfly.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Warrant Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

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l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

o) Currency. All references to currency herein are to lawful money of Canada.

p) Signature. The Warrant certificate may be signed by facsimile or other electronic means, which shall be deemed to be an original and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature.

********************

(SignaturePage Follows)

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

draganfly inc.
By:
Name:
Title:

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NOTICEOF EXERCISE

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To: draganfly inc.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall be accepted in lawful money of Canada.

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signatureof Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENTFORM

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(Toassign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please<br> Print)
Address:
	(Please<br> Print)
Phone<br> Number:
Email<br> Address:
Dated:<br> _______________ __, ______
Holder’s<br> Signature:___________________________
Holder’s<br> Address: ___________________________

Exhibit8.1

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Listof Significant Subsidiaries

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Draganfly Innovations Inc., a company incorporated under the laws of the Province of British Columbia, all of the shares of which are beneficially owned by the Company.

Dronelogics Systems Inc., a company incorporated under the laws of the Province of British Columbia, all of the shares of which are beneficially owned by the Company.

Draganfly Innovations USA Inc., a company incorporated under the laws of Delaware, all of the shares of which are beneficially owned by the Company.

Exhibit12.1

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CERTIFICATION

PURSUANTTO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cameron Chell, certify that:

1.	I have reviewed this annual<br> report on Form 20-F of Draganfly Inc.;
2.	Based on my knowledge,<br> this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements<br> made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this<br> report;
---	---
3.	Based on my knowledge,<br> the financial statements, and other financial information included in this report, fairly present in all material respects the financial<br> condition, results of operations, and cash flows of the issuer as of, and for, the periods presented in this report;
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4.	The issuer’s other<br> certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange<br> Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:
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(a)	Designed such disclosure<br> controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material<br> information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,<br> particularly during the period in which this report is being prepared;
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(b)	Designed such internal<br> control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,<br> to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for<br> external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness<br> of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of<br> the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)	Disclosed in this report<br> any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual<br> report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial<br> reporting.
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5.	The issuer’s other<br> certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to<br> the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent<br> functions):
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(a)	All significant deficiencies<br> and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely<br> affect the issuer’s ability to record, process, summarize and report financial information; and
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(b)	Any fraud, whether or not<br> material, that involves management or other employees who have a significant role in the issuer’s internal control over financial<br> reporting.
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Date: March 27, 2025
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	/s/ Cameron Chell
Name:	Cameron Chell
Title:	Chief Executive Officer
	(principal executive officer)

Exhibit12.2

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CERTIFICATION

PURSUANTTO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Sun, certify that:

1.	I have reviewed this annual<br> report on Form 20-F of Draganfly Inc.;
2.	Based on my knowledge,<br> this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements<br> made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this<br> report;
---	---
3.	Based on my knowledge,<br> the financial statements, and other financial information included in this report, fairly present in all material respects the financial<br> condition, results of operations, and cash flows of the issuer as of, and for, the periods presented in this report;
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4.	The issuer’s other<br> certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange<br> Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:
---	---
(a)	Designed such disclosure<br> controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material<br> information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities,<br> particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal<br> control over financial reporting, or caused such internal control over financial reporting to be ‎designed under our supervision,<br> to provide reasonable assurance regarding the reliability of financial reporting and ‎the preparation of financial statements<br> for external purposes in accordance with generally accepted accounting ‎principles;‎
(c)	Evaluated the effectiveness<br> of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of<br> the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report<br> any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual<br> report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial<br> reporting.
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5.	The issuer’s other<br> certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to<br> the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent<br> functions):
---	---
(a)	All significant deficiencies<br> and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely<br> affect the issuer’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not<br> material, that involves management or other employees who have a significant role in the issuer’s internal control over financial<br> reporting.
---	---
Date: March 27, 2025
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	/s/ Paul Sun
Name:	Paul Sun
Title:	Chief Financial Officer
	(principal financial officer)

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Exhibit13.1

CERTIFICATION

PURSUANTTO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, as the Chief Executive Officer of Draganfly Inc. certifies that, to the best of his knowledge and belief, the annual report on Form 20-F for the fiscal year ended December 31, 2024, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the information contained in the annual report on Form 20-F for the fiscal year ended December 31, 2024 fairly presents, in all material respects, the financial condition and results of operations of Draganfly Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Date: March 27, 2025
/s/ Cameron Chell
Cameron Chell
Chief Executive Officer
(principal executive officer)

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Exhibit13.2

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CERTIFICATION

PURSUANTTO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, as the Chief Financial Officer of Draganfly Inc. certifies that, to the best of his knowledge and belief, the annual report on Form 20-F for the fiscal year ended December 31, 2024, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the information contained in the annual report on Form 20-F for the fiscal year ended December 31, 2024 fairly presents, in all material respects, the financial condition and results of operations of Draganfly Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Date: March 27, 2025
/s/ Paul Sun
Paul Sun
Chief Financial Officer
(principal executive officer)

Exhibit 15.1

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Management Discussion and Analysis

For the year ended December 31, 2024

DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

This Management’s Discussion and Analysis (“MD&A”) is presented and dated as of March 27, 2025, and should be read in conjunction the annual consolidated financial statements and related notes for the year ended December 31, 2024. The Company’s audited consolidated financial statements have been prepared on a “going concern” basis, which presumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

The operations of the Company have been primarily funded through its Regulation A+ Offering of units, its Nasdaq prospectus financing, internally generated cashflow and private placements of equity and convertible debentures. The continued operations of the Company are dependent on the Company’s ability to generate profitable operations in the future, develop and execute a sufficient financing plan for future operations and receive continued financial support from shareholders and other providers of finance.

The consolidated financial statements do not reflect the adjustments, if any, or changes in presentation that may be necessary should the Company not be able to continue on a going concern basis.

All currency amounts in the accompanying financial statements and this management discussion and analysis are in Canadian dollars unless otherwise noted.

Special Note Regarding Forward Looking Information

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This Management Discussion & Analysis (“MD&A”) is intended to provide readers with the information that management believes is required to gain an understanding of the current results of Draganfly Inc. (the “Company” or “Draganfly”) and to assess the Company’s future prospects. Accordingly, certain sections of this report, other than statements of historical fact, may contain forward-looking statements that are based on current plans and expectations and are subject to certain risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions.

The statements we make regarding the following matters are forward-looking by their nature and are based on certain of the assumptions noted below:

●	the<br> intentions, plans and future actions of the Company;
●	statements<br> relating to the business and future activities of the ‎Company;
●	anticipated<br> developments in operations of the Company;
●	market<br> position, ability to compete and future ‎financial or operating performance of the Company;
●	the<br> timing and amount of funding required to execute the ‎Company’s business plans;
●	capital<br> expenditures;
●	the<br> effect on the Company of any changes to existing or new ‎legislation or policy or government regulation;
●	‎the<br> availability of labor;
●	requirements<br> for additional capital;
●	goals,<br> strategies and future ‎growth;
●	the<br> adequacy of financial resources;
●	expectations<br> regarding revenues, ‎expenses and anticipated cash needs‎;
●	general<br> market conditions and macroeconomic trends driven by geopolitical conflicts, including supply chain disruptions, market volatility,<br> inflation, and labor challenges, among other factors.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions, and expectations of future performance, taking into account the information currently available to us. Furthermore, unless otherwise stated, the forward-looking statements contained in this Annual Report are made as of the date hereof, and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events, changes or otherwise, except as required by law.

These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These include, without limitation, the Company’s current and planned operations and the expected results of new operations and new clients. These risks and uncertainties include, but are not restricted to:

●	The<br> Company’s history of losses;
●	The<br> dilution of holdings in the Company’s securities;
●	Research<br> and development costs;
●	The<br> failure of new business models to produce financial returns;
●	Operational<br> risks for which the Company may not be adequately insured;
●	The<br> Company operates in an evolving market that makes it difficult to evaluate business and future prospects;
●	Competitive<br> market conditions and challenges from competitors;
●	The<br> pace of technological change and the Company’s ability to stay on top of market and technology changes;
●	The<br> failure to obtain necessary regulatory approvals and permits or limitations placed on the development, operation, and sale of unmanned<br> aerial vehicles (“UAVs”) by governments;
●	Risks<br> associated with any particular future acquisitions that would allow the company to provide additional product or service offerings;
●	The<br> Company’s ability to retain key employees and personnel and the Company’s ability to manage growth;
●	Adverse<br> economic changes;
●	Negative<br> macroeconomic and geopolitical trends that could restrict the Company’s ability to access capital;
●	Uncertainties<br> associated with operations in foreign countries;
●	Adverse<br> tax policies;
●	An<br> inability to access critical components or raw materials used to manufacture the Company’s products and supply chain disruptions;
●	Weather<br> and other natural outdoor conditions that can imperil the use of UAVs;
●	The<br> Company’s products may be subject to recalls or returns or defective products or services that could negatively affect the<br> Company’s operating results;
●	An<br> inability to secure adequate funding for research and development;
●	Export<br> controls or restrictions on the Company’s ability to deliver its product outside of Canada;
●	Consumer<br> perception regarding the use and safety of UAVs;
●	A<br> failure to successfully market the Company’s products;
●	Security<br> risks associated with electronic communications and IT infrastructure;
●	Inadequate<br> consumer protection and data privacy practices;
●	An<br> inability of our business partners to fulfill their obligations to us or to secure company information;
●	A<br> failure to protect the Company’s intellectual property, proprietary rights, and trade secrets, including through a failure<br> to adequately apply for or seek such protections;
●	Failure<br> to adhere to financial reporting obligations and mandates associated with being a public company;
●	The<br> Company’s limited experience operating as publicly traded corporation;
●	Changes<br> in accounting standards and subjective assumptions, estimates and judgments by management related to ‎complex accounting matters;
●	Write-downs<br> of goodwill or other intangible assets;
●	Legal<br> proceedings in which the Company may become involved;
●	Conflicts<br> of interests among our directors and officers;

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

●	Volatility<br> related to our share price;
●	A<br> failure to maintain an active trading market for our common shares;
●	The<br> Company may never pay dividends, and a return on an investment in the Company will depend upon an appreciation in the price of our<br> shares after purchase;
●	The<br> Company may be classified as a “passive foreign investment company” for U.S. federal income tax purposes;
●	United<br> States investors may not be able to obtain an enforcement of civil liabilities against the Company
●	The<br> Company’s status as an “emerging growth company”;
●	Increased<br> costs and compliance matters related to our status as a public company in the United States; and
●	The<br> Company’s status as a “foreign private issuer.”

Readers are cautioned to read more about the potential risks the Company faces under the heading “Business Risks” at the end of this MD&A.

Non-GAAPMeasures and Additional GAAP Measures

In this MD&A we describe certain income and expense items that are unusual or non-recurring. There are terms not defined by International Financial Reporting Standards (IFRS). Our usage of these terms may vary from the usage adopted by other companies. Specifically, Grossprofit, Gross margin and Cash flow from operations are undefined terms by IFRS that may be referenced herein. We provide this detail so that readers have a better understanding of the significant events and transactions that have had an impact on our results.

Throughout this document, reference is made to “gross profit,” “gross margin,” and “working capital”, which are non-IFRS measures. Management believes that gross profit, defined as revenue less operating expenses, is a useful supplemental measure of operations. Gross profit helps provide an understanding on the level of costs needed to create revenue. Gross margin illustrates the gross profit as a percentage of revenue. Management believes that working capital, defined as current assets less current liabilities, is an indicator of the Corporation’s liquidity and its ability to meet its current obligations. Readers are cautioned that these non-IFRS measures may not be comparable to similar measures used by other companies. Readers are also cautioned not to view these non-IFRS financial measures as an alternative to financial measures calculated in accordance with International Financial Reporting Standards (“IFRS”).

CoreBusiness and Strategy

Draganfly creates quality, cutting-edge unmanned and remote data collection and analysis platforms and systems that are designed to revolutionize the way companies do business. The Company is incorporated under the British Columbia Business Corporations Act and has its registered office located at suite 2700 - 1133 Melville Street, Vancouver, BC, V6E 4E5 with a head office at 235 103^rd^ St. E, Saskatoon, SK, S7N 1Y8.

Recognized as being at the forefront of UAV (“unmanned aerial vehicle”) technology for over two decades, Draganfly is an award-winning, industry-leading manufacturer, contract engineering, and product development company within the commercial UAV space serving the public safety, agriculture, industrial inspections, and mapping and surveying markets. Draganfly is a company driven by passion, ingenuity, and the need to provide efficient solutions and first-class services to its customers around the world with the goal of saving time, money, and lives.

Founded in 1998, Draganfly is recognized as one of the first commercial multi-rotor manufacturers and has a legacy for its innovation and superior customer service. The company has sold products and services to over 50 countries.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Draganfly can provide its customers with an entire suite of products and services that include quad-copters, fixed-wing aircrafts, ground based robots, handheld controllers, flight training, and software used for tracking, live streaming, data collection, and health monitoring. The integrated UAV system is equipped for automated take-offs and landings with altitude and return to home functions as well as in-house created survey software. Draganfly’s standard features combined with custom fit camera payloads ranging from multi-spectral, hyper-spectral, LIDAR, thermal, and infrared allows Draganfly to offer a truly unique solution to clients.

With 23 issued and one pending fundamental UAV patents in the portfolio, Draganfly will continue to expand and grow its intellectual property portfolio.

Historically, the main business of the Company was as a manufacturing company offering commercial UAVs directly to its customer base across various industry verticals. The Company has evolved to offer drone solutions, including continuing to sell and develop its own OEM products, providing engineering procurement, drone services, and reselling third party products.

Draganfly works with its customers to customize a product or platform from idea to research and development (R&D) to completion and testing. A work plan is created with timelines and budgets which includes materials, travel, testing, and engineering time. The work plan is approved by the customer before work begins. To date, the majority of this work is considered proprietary in nature and is protected by trade secrets and other intellectual property protections.

On November 19, 2024, the Company completed a public offering for 400,000 units consisting of one common share and one warrant and 1,200,000 units consisting of one prefunded warrant and one warrant. Each unit was sold at a price of USD $2.35 for gross proceeds of $3,759,880 million (CAD $5,272,234). Net proceeds of CAD $4,672,298 was received after share issue costs of $599,936. The prefunded warrants have an exercise price of CAD $0.00014 which are exercisable immediately with a term of 5 years. The remaining warrants have an exercise price of CAD $3.3086 and are exercisable immediately with a term of 5 years. As part of the transaction 80,000 warrants were issued to the underwriter with an exercise price of CAD $4.1357 and will have a term of 3 years.

On September 5, 2024 the Company effected a 25:1 share consolidation. All share, warrant, option and RSU numbers in these statements are shown post consolidation, including exercise prices, unless otherwise noted.

On August 21, 2024, the Company completed a public offering for 346,667 units consisting of one common share and one warrant and 320,000 units consisting of one prefunded warrant and one warrant. Each unit was sold at a price of USD $3.75 for gross proceeds of USD $1,999,199 million (CAD $2,720,050 million). Net proceeds of CAD $2,376,374 million was received after share issue costs of CAD $343,676. The prefunded warrants have an exercise price of CAD $0.035 which are exercisable immediately with a term of 5 years. The remaining warrants have an exercise price of CAD $5.12 and are exercisable immediately with a term of 5 years. On November 19, 2024 the warrant exercise price was amended to CAD $3.3086. As part of the transaction 33,334 warrants were issued to the underwriter with an exercise price of CAD $5.12 and will have a term of 3 years.

On April 29, 2024, the Company completed a public offering for 282,541 units consisting of one common share and one warrant and 258,000 units consisting of one pre-funded warrant and one warrant. Each unit was sold at a price of USD$6.47 for gross proceeds of USD $3,500,000 million (CAD $4,882,168 million). Net proceeds of CAD $4,102,553 million was received after share issue costs of CAD $779,615. The prefunded warrants had an exercise price of CAD $0.00014 pre-consolidation which are exercisable immediately with a term of 5 years. All prefunded warrants were exercised prior to the share consolidation. On August 7, 2024, the warrants were amended to allow for them to be treated as equity versus debt on the Company’s balance sheet and the exercise price of the warrants were amended to CAD $5.6250. On November 19, 2024 the warrant exercise price was further amended to CAD $3.3086. The warrants are exercisable immediately with a term of 5 years. As part of the transaction 27,028 warrants were issued to the underwriter with an exercise price of CAD $11.0625 and will have a term of 3 years.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Pursuant to a prior underwritten public offering, the Company issued 256,000 common share warrants (the “October Warrants”) with each warrant entitling the holder thereof to purchase one common share of the Company at an exercise price of USD $15.31, until October 28, 2028. In connection with the closing of the offering above, the Company and the holder of the October Warrants have entered into amendment agreements whereby the exercise price of the October Warrants was reduced twice and converted to Canadian dollars for a new exercise price of CAD $5.6925 and the warrants were amended to allow for them to be treated as equity versus debt on the Company’s balance sheet. As of November 19, 2024, the exercise price on these warrants was further amended to CAD $3.3086.

On February 26, 2024, the Company completed an underwritten share placement of 448 000 units with each unit consisting of one common share and one warrant to purchase one common share and 88,000 units consisting of one pre-funded warrant to purchase one common share and one warrant to purchase one common share. Each unit was sold at a price of USD $6.75 for gross proceeds of USD $3,617,780 million (CAD $4,877,475 million). Net proceeds of USD $3,055,765 million (CAD $4,124,977 million) was received after share issue costs of USD $326,814 (CAD $441,166). The pre-funded warrants had an exercise price of USD $0.0001 pre-consolidation and were exercised on the date of issue prior to the share consolidation. The remaining warrants have an exercise price of USD $9.00, subject to adjustment, and are exercisable immediately with a term of 5 years. On March 27, 2024 the exercise price on these warrants was updated to USD $4.4025 per the terms of the agreement allowing for a one-time adjustment to the exercise price. As part of this transaction 26,800 warrants were issued to the underwriter with an exercise price of USD $8.44 and will have a term of 3 years.

On October 30, 2023, the Company completed a public offering and issued 256,000 share units at an offering price of USD $13.75 per unit for gross proceeds of USD $3,520,000. The units were issued as follows: 192,000 units comprised of one share and one warrant and 64,000 units comprised of one pre-funded warrant with an exercise price of USD $0.0001 pre-consolidation and have no expiry date, and one warrant. All of the pre-funded warrants were exercised prior to the share consolidation. The warrants had an exercise price of USD $15.25 per share, are exercisable immediately and expire five years from the date of issuance.

On March 31, 2023 the Company closed an underwritten public offering of 320,000 common shares at a price of USD $25.00 per share for total gross proceeds of USD $8,000,000 (CAD $10,856,166 million) with share issue costs of USD $1,443,163 (CAD $1,953,032 million) for net proceeds of USD $6,556,837 (CAD $8,903,134 million).

On January 31, 2023, the Company entered into an equity distribution agreement. The agreement will allow the Company from time to time, to distribute in an at-the-market offering (“ATM”) up to USD $15,000,000 in common shares. Draganfly intends to use the net proceeds from the ATM for general corporate ‎purposes, including to fund ongoing operations, growth initiatives and/or ‎for working capital requirements ‎including the continuing development and marketing of the Company’s ‎core products, potential acquisitions and ‎research and development‎.

From February 1, 2023 to February 17, 2023, the Company distributed 26,030 ATM shares under the ATM offering at an average price of $67.25 per share for net proceeds of $1,526,810.

On July 30, 2021, the Company’s shares began trading on the Nasdaq Capital Market (the “Nasdaq”) under the symbol “DPRO”. The Company’s shares continue to trade on the Canadian Stock Exchange (the “CSE”), however, as of July 30, 2021 they now trade under the symbol “DPRO” on that exchange as well. The Company’s shares also trade on the Frankfurt Stock Exchange under the Symbol “3U8A”.

In order to become compliant with Nasdaq regulations, the company also underwent a stock consolidation. Effective July 29, 2021, the Company consolidated its issued and outstanding common shares on a 5 to 1 basis, which resulted in 27,045,909 common shares outstanding post-consolidation.

Additional information relating to the Company may be found at the Company’s website, www.draganfly.com.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

2024Highlights

●	2024 Total Revenues of $6,561,055 with Product Sales of $5,368,476

2024 revenues increased by $6,213 to $6,561,055 from $6,554,842 in 2023 with the bulk of this increase coming from provision of goods. Service revenue decreased by $75,170 from $1,267,749 in 2023 to $1,192,579 in 2024.

●	Gross Profit was $1,398,204 with a Gross Margin decrease of 10.2% in 2024 comparedto 2023.

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In 2024, the Company’s total gross margin was 21.3% compared to 31.5% in 2023. Gross margin excluding the non-cash write down of inventory of $627,105 (2023 - $331,671) would have been 30.9% (2023 - 36.5%).

●	Continued Diversification of its Product and Services Offering

Given the Company’s deep engineering talent, the Company continues to expand its product and services available to its customers. Doing this leverages the Company’s core skill set of innovation that tends to lead to future projects, bringing in more consistent revenue. The Company continues to increase its scope of products and service to include the sale of third-party manufactured UAVs and drone-as-a-service type work. Having a larger breadth of products and services, in part, mitigates some risk for the Company given its offering covers a broader market.

●	Functional Reorganization

The Company has undertaken an effort to reorganize its functions into departments such as Finance, Sales and Marketing, Operations, Human Resources, etc. with the key goal of obtaining efficiencies by streamlining processes and procedures at a corporate shared service level as opposed to segmenting departments at the subsidiary level.

●	Risks Related to Operations

The Company’s UAVs are sold in rapidly evolving markets. The commercial UAV market is in early stages of customer adoption. Accordingly, the Company’s business and prospects may be difficult to evaluate. The Company cannot accurately predict the extent to which demand for its products and services will increase, if at all. The challenges, risks and uncertainties frequently encountered by companies in rapidly evolving markets could impact the Company’s ability to do the following:

●	generate<br> sufficient revenue to maintain profitability;
●	acquire<br> and maintain market share;
●	achieve<br> or manage growth in operations;
●	develop<br> and renew contracts;
●	attract<br> and retain additional engineers and other highly qualified personnel;
●	successfully<br> develop and commercially market new products;
●	adapt<br> to new or changing policies and spending priorities of governments and government agencies; and
●	access<br> additional capital when required and on reasonable terms.

For further and more detailed risk disclosure, please reference “Business Risks” at the end of this MD&A.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Outlookand Guidance

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General

The Company believes that drone regulations are gradually evolving in favor of additional use cases, which could lead to more revenue opportunities from a greater pool of customers. The Company is positioned properly to take advantage of this dynamic given its legacy and ongoing innovative product development coupled with being publicly traded providing greater market awareness than its private competitors. The Company will increasingly focus on some of its growth initiatives beyond Canada and into the United States and abroad. All else being equal, accessing more capital will help the Company expand and diversify its engineering and drone services businesses. The Company has already built the infrastructure including human resources from an oversight, sales and engineering perspective. Further, the Company will continue to focus on innovation, product development, and expanding its hardware offerings opportunistically into niche segments of the UAV and related sectors. Finally, the Company has considered providing various other non-engineering services and it may make more sense to buy an existing industry player than to build out this offering. The Company expects to be active in this regard reviewing partnerships and acquisitions in the current fiscal year and the near future.

SelectedFinancial Information

The following selected financial data has been extracted from the unaudited condensed consolidated interim financial statements, prepared in accordance with International Financial Reporting Standards, for the fiscal years indicated and should be read in conjunction with the unaudited condensed consolidated interim financial statements. All earnings per share calculations are shown post-consolidation.

For the year<br> ended December 31,			2023			2022
Total revenues	6,561,055		$	6,554,842		$	7,605,059
Gross Profit (as a % of revenues)<br> (1)	21.3	%		31.5	%		10.4	%
Net (loss) income	(13,877,473	)		(23,611,810	)		(27,654,364	)
Net (loss) income per share ()
- Basic	(4.40	)		(14.58	)		(20.60	)
- Diluted	(4.40	)		(14.58	)		(20.60	)
Comprehensive (loss) income	(14,062,534	)		(23,709,851	)		(27,305,305	)
Comprehensive (loss) income per share ()
- Basic	(4.45	)		(14.64	)		(20.34	)
- Diluted	(4.45	)		(14.64	)		(20.34	)
Change in cash and cash<br> equivalents	3,158,797		$	(5,437,697	)	$	(15,180,932	)

All values are in US Dollars.

(1)	Gross<br> Profit (as a % of revenues) would have been 30.9% (2023 – 36.5%; 2022 – 36.4%)<br> not including a non-cash write down of inventory for $627,105 (2023 - $331,671; 2022 - $1,976,514)).

The net loss and comprehensive loss for the year ended December 31, 2024, includes non-cash changes comprised of a change in fair value of derivative liability of $1,842,618 (2023 - $211,110; 2022 - $5,502,688), a recovery of impairment of notes receivable of $40,020 (2023 - $101,351 expense; 2022 - $309,385 expense), a write down of inventory of $627,105 (2023 - $331,671; 2022 - $1,976,514), and an expense for goodwill and intangibles impairment of $nil (2023 - $87,415; 2022

• $6,454,914) and would otherwise have been a net loss of $15,133,006 (2023 - $23,302,483; 2022 – $24,416,239), and comprehensive loss of $15,318,067 (2023 - $23,400,524; 2022 - $24,067,180).

  8

DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

As<br> at	December 31,<br> <br>2024		December<br> 31, <br><br> 2023
Total assets	$	10,200,088	$	8,330,292
Working capital		3,846,283		(717,017	)
Total non-current liabilities		342,013		523,584
Shareholders’ equity	$	4,621,783	$	407,716
Number of shares outstanding		5,427,795		34,270,579

Shareholders’ equity and working capital as at December 31, 2024, includes a fair value of derivative liability of $2,198,121 (2023 – $4,196,125) and would otherwise be $6,819,904 (2023 - $4,603,841) and $6,044,404 (2023 - $3,479,108) respectively.

Resultsof Operations

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Revenue

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For the year<br> ended December 31,	2024		2023		2022
Product sales	$	5,368,476	$	5,287,093	$	5,550,432
Provision of services		1,192,579		1,267,749		2,054,627
Total<br> revenue	$	6,561,055	$	6,554,842	$	7,605,059

Total revenue for the year ended December 31, 2024, increased by $6,213 or 0.1% as compared to 2023. The increase in revenue is largely due to an increase in product sales in Dronelogics Systems Inc (“Dronelogics”).

Product sales increased $81,383 or 1.5% in 2024 as compared to 2023. The small increase in revenue is largely due to increased product sales from Dronelogics.

Services revenue decreased by $75,170 or 5.9% in 2024 as compared to 2023. The decrease was due primarily to fewer arrangements for services in Dronelogics and Draganfly Innovations, Inc. (“Innovations”).

Costsof Goods Sold/Gross Margin

For the year<br> ended December 31,	2024			2023			2022
Cost of goods sold^(1)^	$	(5,162,851	)	$	(4,490,728	)	$	(6,814,384	)
Gross profit	$	1,398,204		$	2,064,114		$	790,675
Gross margin (%)		21.3	%		31.5	%		10.4	%
(1)	Cost<br> of goods sold would have been $4,535,746 (2023 - $4,159,057; 2022 - $4,837,870)<br>not including a non-cash write down of inventory for $627,105 (2023 - $331,671; 2022 - $1,976,514).
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Gross profit is the difference between the revenue received and the direct cost of that revenue. Gross margin is gross profit divided by revenue and is often presented as a percent.

For the year ended December 31, 2024, the Company’s Gross Profit decreased by $665,910 or 32.3% compared to 2023. As a percentage of sales, gross margin decreased from 31.5% in 2023 to 21.3% in 2024.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

For the year ended December 31, 2024, not including the non-cash write down of inventory of $627,105 (2023 - $331,671) the Company’s Gross Profit decreased by $370,476 (2023 - $371,404) or 14.7% (2023 –18.5%) compared to 2023. As a percentage of sales, adjusted gross margin decreased from 36.5% in 2023 to 30.9% in 2024 (2023 – increase from 37.4% in 2022 to 36.5% in 2023).

Selling,General and Administrative

For the year<br> ended December 31,	2024		2023		2022
Insurance	$	1,111,052	$	1,825,137	$	3,722,237
Office and Miscellaneous		1,853,578		6,303,879		5,397,961
Professional Fees		3,016,594		4,145,586		6,821,583
Research and development		927,412		1,554,823		651,302
Share-based payments		1,182,618		2,021,664		3,311,024
Travel		231,432		704,994		396,388
Wages and salaries		6,733,303		6,976,792		6,105,020
Total	$	15,055,989	$	23,532,875	$	26,405,515

For the year ended December 31, 2024, SG&A expenses decreased by 36.0%, from $23,532,875 in 2023 to $15,055,989 in 2024. The largest contributors to the decrease are office and miscellaneous, professional fees expense, research and development and share-based payments.

Netand Comprehensive Income (Loss)

For the year<br> ended December 31,	2024			2023			2022
Loss from operations	$	(14,739,496	)	$	(22,616,331	)	$	(26,909,948	)
Change in fair value of derivative liability		1,842,618			211,110			5,502,688
Finance and other costs		107,225			83,280			44,345
Foreign exchange (loss) gain		268,537			(249,563	)		745,102
Gain (loss) on disposal of assets		11,432			(944	)		(10,755	)
Impairment of notes receivable		40,020			(101,351	)		(309,385	)
Impairment of goodwill		-			-			(6,454,914	)
Income from government assistance		-			5,232			2,446
Write down of deposit		-			-			(228,572	)
Other (loss) income		(1,407,809	)		(943,243	)		(35,371	)
Net<br> loss		(13,877,473	)		(23,611,810	)		(27,654,364	)
Cumulative translation differences		(9,944	)		(94,861	)		447,542
Unrealized gain on investments<br> available for sale		(175,117	)		(3,180	)		(98,483	)
Comprehensive<br> loss	$	(14,062,534	)	$	(23,709,851	)	$	(27,305,305	)

For the year ended December 31, 2024, the Company recorded a comprehensive loss of $14,062,534 compared to $23,709,851 in 2023.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

The net and comprehensive loss for the year ended December 31, 2024, includes non-cash changes comprised of a gain in fair value of derivative liability of $1,842,618, a recovery on impairment for notes receivable of $40,020, a write down of inventory of $627,105, and an expense for goodwill and intangibles impairment of $nil and would otherwise be losses of $15,133,006 and $15,318,067 respectively. The net and comprehensive loss the for the same period last year, includes non-cash changes comprised of a gain in fair value of derivative liability of $211,110, an expense on impairment for notes receivable of $101,351, a write down of inventory of $331,671, and an expense for intangibles impairment of $87,415 and would otherwise be losses of $23,302,483 and $23,400,524 respectively.

Authorizedshare capital

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Unlimited number of common shares without par value.

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Issuedshare capital

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During the year ended December 31, 2024,

●	The<br> Company issued 25,353 common shares for the vesting of restricted share units.
●	The<br> Company issued 1,991,668 common shares for the exercise of warrants
●	On<br> February 26, 2024, the Company issued 448,000 units consisting of one common share and one warrant and 88,000 units consisting of<br> one prefunded warrant and one warrant in a financing for $4,877,475 with share issuance costs of $752,498 for net proceeds of $4,124,977.<br> Of the total share issuance costs $441,166 was expensed in other income (expense). The value of the issuance was allocated $2,017,966<br> to the shares, and $2,859,509 to the warrants, including $431,084 allocated to prefunded warrants. The prefunded warrants were exercised<br> on the date of issue.  On March 27, 2024, the exercise price of the warrants was amended to US$0.1761 from the original<br> exercise price of USD $0.36 due to a one time exercise price reset Post share consolidation, the new exercise price is US$4.4025.
●	36,000<br> shares were returned to treasury that were held in escrow related to the Vital Intelligence Inc. acquisition for failure to meet<br> required milestones. All value that had been recorded related to these shares had been previously written off
●	On<br> April 29, 2024, the Company issued 282,541 units consisting of one common share and one warrant and 258,000 units consisting of one<br> prefunded warrant and one warrant in a financing for $4,882,168 with share issuance costs of $779,615 for net proceeds of $4,102,553.<br> Of the total share issuance costs $671,747 was expensed in other income (expense). The value of the issuance was allocated $396,137<br> to the shares, and $4,422,815 to the warrants, including $1,248,343 allocated to prefunded warrants.
●	On<br> August 21, 2024, the Company issued 346,667 units consisting of one common share and one warrant, and 320,000 units consisting of<br> one prefunded warrant and one warrant in a financing for $2,720,050 with share issue costs of $343,676 for net proceeds of $2,376,374.<br> The value of the issuance was allocated $160,076 to the shares, and $2,559,974 to the warrants including $591,265 allocated to prefunded<br> warrants.
●	On<br> November 19, 2024 the Company issued 400,000 units consisting of one common share and one warrant and 1,200,000 units consisting<br> of one prefunded warrant and one warrant in a financing for $5,272,234 with share issue costs of $755,387 for net proceeds of $4,516,837.<br> The value of the issuance was allocated $329,515 to the shares and $4,942,719 to the warrants including $1,977,088 allocated to the<br> prefunded warrants.

During the year ended December 31, 2023,

●	The<br> Company issued 60,332 common shares for the vesting of restricted share units.
●	The<br> Company issued 320,000 common shares in a financing for $10,856,166 with share issuance costs of $1,953,032 for net proceeds of $8,903,134.
●	The<br> Company issued 26,030 common shares in an ATM (“At – the - market”) financing for $1,748,946 with share issuance<br> costs of $222,136 for net proceeds of $1,526,810.
●	The<br> Company issued 192,000 common shares in a financing for proceeds of $4,858,995 with share issuance costs of $889,623 for net proceeds<br> of $3,969,372.  Of the total share issuance costs $793,979 were expensed in other income (expense). Value of the issuance<br> was allocated $520,064 to the shares and $4,338,931 to derivative liability

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Summaryof Quarterly Results

The following selected quarterly financial data has been extracted from the financial statements, prepared in accordance with International Financial Reporting Standards.

Total revenue for the three months ended December 31, 2024, increased by $696,863 or 76.1% as compared to the same period in 2023. The increase was due to higher product sales.

SG&A expenses increased 20.0% compared to the same period in 2023 due to higher office and miscellaneous, R&D, share based compensation, and wages costs. These are partially offset by a decrease in travel costs and insurance costs. The other income (expense) and comprehensive loss for the fourth quarter of 2024 includes non-cash changes comprised of a fair value derivative liability loss of $946,116, and would otherwise be an other income of $94,220 and comprehensive loss of $3,769,815, respectively.

Total revenue for the three months ended December 31, 2024, decreased by $272,160 or 14.4% as compared to the three months ended September 30, 2024. The primary decrease in revenue is due to the decrease in service sales. Product sales increased by $85,828 or 6.5% in the fourth quarter of 2024 as compared to the third quarter of 2024 primarily due to delayed timing of certain product orders from the previous quarter coupled with new customer demand. Service revenue decreased by $357,988 or 64.3% in the fourth quarter or 2024 as compared to the third quarter of 2024 primarily due to fewer service arrangements.

SG&A expenses decreased by $39,502 or 1.0% compared to the third quarter of 2024 due to decreased insurance, professional fees, research and development and share based payments partially offset by higher wage costs.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

The table below summarizes the quarterly results over the past eight fiscal quarters. All earnings per share calculations are shown post-consolidation.

	2024<br> Q4			2024<br> Q3			2024<br> Q2			2024<br> Q1
Revenue	$	1,613,162		$	1,885,322		$	1,732,990		$	1,329,581
Cost<br> of goods sold^(2)^	$	(1,397,422	)	$	(1,444,542	)	$	(1,271,317	)	$	(1,049,570	)
Gross profit^(3)^	$	215,740		$	440,780		$	461,673		$	280,011
Gross margin – percentage		13.4	%		23.4	%		26.6	%		21.1	%
Operating expenses	$	(4,085,766	)	$	(4,125,078	)	$	(4,395,923	)	$	(3,530,933	)
Operating income (loss)	$	(3,870,026	)	$	(3,684,298	)	$	(3,934,250	)	$	(3,250,922	)
Operating loss per share - basic	$	(0.91	)	$	(1.10	)	$	(1.38	)	$	(1.47	)
Operating loss per share - diluted	$	(0.91	)	$	(1.10	)	$	(1.38	)	$	(1.47	)
Other income (expense)	$	(851,896	)	$	3,484,104		$	(3,157,299	)	$	1,387,114
Change in fair value of<br> derivative liability ^(1)^	$	(946,116	)	$	3,575,559		$	(2,604,394	)	$	1,817,569
Other comprehensive<br> income (loss)	$	5,991		$	(164,355	)	$	(6,089	)	$	(20,608	)
Comprehensive income (loss)	$	(4,715,931	)	$	(364,549	)	$	(7,097,638	)	$	(1,884,416	)
Comprehensive income (loss) per share - basic	$	(1.11	)	$	(0.11	)	$	(2.51	)	$	(0.86	)
Comprehensive income (loss)<br> per share - diluted	$	(1.11	)	$	(0.11	)	$	(2.51	)	$	(0.86	)

---

	2023<br> Q4			2023<br> Q3			2023<br> Q2			2023<br> Q1
Revenue	$	916,299		$	2,138,018		$	1,899,039		$	1,601,486
Cost<br> of goods sold^(4)^	$	(657,420	)	$	(1,243,334	)	$	(1,431,922	)	$	(1,158,052	)
Gross profit^(5)^	$	258,879		$	894,684		$	467,117		$	443,434
Gross margin – percentage		28.3	%		41.8	%		24.6	%		27.7	%
Operating expenses	$	(3,482,142	)	$	(6,356,138	)	$	(7,234,034	)	$	(7,608,132	)
Operating loss	$	(3,223,263	)	$	(5,461,454	)	$	(6,766,917	)	$	(7,164,698	)
Operating loss per share - basic	$	(1.95	)	$	(3.14	)	$	(3.92	)	$	(5.16	)
Operating loss per share - diluted	$	(1.95	)	$	(3.14	)	$	(3.92	)	$	(5.16	)
Other income (expense)	$	(965,072	)	$	14,569		$	(142,046	)	$	97,073
Change in fair value of<br> derivative liability ^(1)^	$	153,798		$	-		$	-		$	57,312
Other comprehensive<br> income (loss)	$	(3,461	)	$	(83,363	)	$	18,152		$	(29,369	)
Comprehensive income (loss)	$	(4,191,796	)	$	(5,530,250	)	$	(6,890,811	)	$	(7,096,993	)
Comprehensive income (loss) per share -<br> basic	$	(2.41	)	$	(3.18	)	$	(3.99	)	$	(5.11	)
Comprehensive income<br> (loss) per share - diluted	$	(2.41	)	$	(3.18	)	$	(3.99	)	$	(5.11	)
(1)	Included<br> in other income (expense).
---	---
(2)	Cost<br> of goods sold includes non-cash inventory write downs of $148,760 in Q1 2024, $134,410 in Q2 2024, $176,422 in Q3 2024 and $167,515 in Q4 2024 and would have been $900,810 in Q1 2024, $1,136,907<br>in Q2, $1,268,120 in Q3, and $1,229,907 in Q4 2024 before these write downs.
(3)	Gross<br> profit would have been $428,771 in Q1 2024, $596,083 in Q2 2024, $617,202 in Q3 2024 and $383,255 in Q4 2024 without the write downs<br> in number 2 above.
(4)	Cost<br> of goods sold includes non-cash inventory write downs of $77,047 in Q1 2023, $122,600 in Q2 2023, $8,600 in Q3 2023 and $123,424<br> in Q4 2023 and would have been $1,081,005 in Q1 2023, $1,309,322 in Q2, $1,234,734 in Q3, and $533,996 in Q4 2023 before these write<br> downs.
(5)	Gross<br> profit would have been $520,481 in Q1 2023, $589,717 in Q2 2023, $903,283 in Q3 2023, $382,303 in Q4 2023 without the write downs<br> in number 4 above.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Liquidityand Capital Resources

---

The Company’s liquidity risk is derived from its loans, accounts payable, and accrued liabilities, as it may encounter difficulty discharging those obligations, but the Company endeavors to mitigate that risk through the careful management of its debt holders and the assertive pursuit of capital inflow for its operations. The Company’s working capital of $3,846,283 as at December 31, 2024, would be increased to $6,044,404, if the non-cash derivative liability was excluded. The Company’s working capital deficit as at December 31, 2023 was $(717,017).

The Company considers the items included in capital to include shareholders’ equity. The Company manages its capital structure and adjusts it in light of changes in economic and business conditions, financing environment, and the risk characteristics of the underlying assets. The Company does not have any contracted or committed capital expenditures as of the date of this MD&A. The Company utilizes its credit card facilities from time to time to make various purchases for their operations.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing and or achieve profitable operations in the future. These factors indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. Based on the Company’s existing operations, the Company will need to raise additional capital during the next twelve months and beyond to support its business plan.

On November 19, 2024, the Company completed a public offering for 400,000 units consisting of one common share and one warrant and 1,200,000 units consisting of one prefunded warrant and one warrant. Each unit was sold at a price of USD $2.35 for gross proceeds of $3,759,880 million (CAD $5,272,234). Net proceeds of CAD $4,672,298 was received after share issue costs of $599,936. The prefunded warrants have an exercise price of CAD $0.00014 which are exercisable immediately with a term of 5 years. The remaining warrants have an exercise price of CAD $3.3086 and are exercisable immediately with a term of 5 years. As part of the transaction 80,000 warrants were issued to the underwriter with an exercise price of CAD $4.1357 and will have a term of 3 years.

On September 5, 2024 the Company effected a 25:1 share consolidation. All share, warrant, option and RSU numbers in these statements are shown post consolidation, including exercise prices, unless otherwise noted.

On August 21, 2024, the Company completed a public offering for 346,667 units consisting of one common share and one warrant and 320,000 units consisting of one prefunded warrant and one warrant. Each unit was sold at a price of USD $3.75 for gross proceeds of USD $1,999,199 million (CAD $2,720,050 million). Net proceeds of CAD $2,376,374 million was received after share issue costs of CAD $343,676. The prefunded warrants have an exercise price of CAD $0.035 which are exercisable immediately with a term of 5 years. The remaining warrants have an exercise price of CAD $5.12 and are exercisable immediately with a term of 5 years. On November 19, 2024 the warrant exercise price was amended to CAD $3.3086. As part of the transaction 33,334 warrants were issued to the underwriter with an exercise price of CAD $5.12 and will have a term of 3 years.

On April 29, 2024, the Company completed a public offering for 282,541 units consisting of one common share and one warrant and 258,000 units consisting of one pre-funded warrant and one warrant. Each unit was sold at a price of USD$6.47 for gross proceeds of USD $3,500,000 million (CAD $4,882,168 million). Net proceeds of CAD $4,102,553 million was received after share issue costs of CAD $779,615. The prefunded warrants had an exercise price of CAD $0.00014 pre-consolidation which are exercisable immediately with a term of 5 years. All prefunded warrants were exercised prior to the share consolidation. On August 7, 2024, the warrants were amended to allow for them to be treated as equity versus debt on the Company’s balance sheet and the exercise price of the warrants were amended to CAD $5.6250. On November 19, 2024 the warrant exercise price was further amended to CAD $3.3086. The warrants are exercisable immediately with a term of 5 years. As part of the transaction 27,028 warrants were issued to the underwriter with an exercise price of CAD $11.0625 and will have a term of 3 years.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Pursuant to a prior underwritten public offering, the Company issued 256,000 common share warrants (the “October Warrants”) with each warrant entitling the holder thereof to purchase one common share of the Company at an exercise price of USD $15.31, until October 28, 2028. In connection with the closing of the offering above, the Company and the holder of the October Warrants have entered into amendment agreements whereby the exercise price of the October Warrants was reduced twice and converted to Canadian dollars for a new exercise price of CAD $5.6925 and the warrants were amended to allow for them to be treated as equity versus debt on the Company’s balance sheet. As of November 19, 2024, the exercise price on these warrants was further amended to CAD $3.3086.

On February 26, 2024, the Company completed an underwritten share placement of 448 000 units with each unit consisting of one common share and one warrant to purchase one common share and 88,000 units consisting of one pre-funded warrant to purchase one common share and one warrant to purchase one common share. Each unit was sold at a price of USD $6.75 for gross proceeds of USD $3,617,780 million (CAD $4,877,475 million). Net proceeds of USD $3,055,765 million (CAD $4,124,977 million) was received after share issue costs of USD $326,814 (CAD $441,166). The pre-funded warrants had an exercise price of USD $0.001 pre-consolidation and were exercised on the date of issue prior to the share consolidation. The remaining warrants have an exercise price of USD $9.00, subject to adjustment, and are exercisable immediately with a term of 5 years. On March 27, 2024 the exercise price on these warrants was updated to USD $4.4025 per the terms of the agreement allowing for a one-time adjustment to the exercise price. As part of this transaction 26,800 warrants were issued to the underwriter with an exercise price of USD $8.44 and will have a term of 3 years.

On October 30, 2023, the Company completed a public offering and issued 256,000 share units at an offering price of USD $13.75 per unit for gross proceeds of USD $3,520,000. The units were issued as follows: 192,000 units comprised of one share and one warrant and 64,000 units comprised of one pre-funded warrant with an exercise price of USD $0.001 pre-consolidation and have no expiry date, and one warrant. All of the pre-funded warrants were exercised prior to the share consolidation. The warrants had an exercise price of USD $15.25 per share, are exercisable immediately and expire five years from the date of issuance.

On March 31, 2023 the Company closed an underwritten public offering of 320,000 common shares at a price of USD $25.00 per share for total gross proceeds of USD $8,000,000 (CAD $10,856,166 million) with share issue costs of USD $1,443,163 (CAD $1,953,032 million) for net proceeds of USD $6,556,837 (CAD $8,903,134 million).

On January 31, 2023, the Company entered into an equity distribution agreement. The agreement will allow the Company from time to time, to distribute in an at-the-market offering (“ATM”) up to USD $15,000,000 in common shares. Draganfly intends to use the net proceeds from the ATM for general corporate ‎purposes, including to fund ongoing operations, growth initiatives and/or ‎for working capital requirements ‎including the continuing development and marketing of the Company’s ‎core products, potential acquisitions and ‎research and development‎.

From February 1, 2023 to February 17, 2023, the Company distributed 26,030 ATM shares under the ATM offering at an average price of $67.25 per share for net proceeds of $1,526,810.

Further, in order to maintain or adjust its capital structure, the Company may issue new shares, new debt, or scale back the size and nature of its operations. The Company is not subject to externally imposed capital requirements. As at December 31, 2024, shareholders’ equity was $4,534,502 and at December 31, 2023, shareholder’s equity was $407,716. The Company’s shareholder’s equity at December 31, 2024 would be $6,732,623 (2022 - $4,603,841) if the non-cash derivative liability was considered equity.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing and or achieve profitable operations in the future. These factors indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. Based on the Company’s existing operations, the Company will need to raise additional capital during the next twelve months and beyond to support its business plan.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

We expect, from time to time, to evaluate the acquisition of businesses, intellectual property, products and technologies for which a portion of the net proceeds may be used. There is always the potential that any acquisition or investment in a company or product has a negative impact on future cash flows of the Company.

Our plan of operations for the next year includes the following: (i) ensure production capacity is adequate to meet demand for products; (ii) continuing to hone existing product offerings; (iii) streamline workflow efficiencies; (iv) diversifying and expanding business lines organically and by potential acquisitions; (v) continuing to patent innovative ideas for new products; and (vi) developing and increasing current product offering to various niche industries that are not currently being served.

As of the date of the MD&A, we cannot predict with certainty all of the particular uses for the net proceeds received from the closing of past financings. The amounts and timing of our actual expenditures may very significantly depending on numerous factors.

Off-BalanceSheet Arrangements

The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on our results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources.

---

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---

DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

ContractualObligations

As of December 31, 2024, and as of the date of this MD&A, and in the normal course of business, the following is a summary of the Company’s material obligations to make future payments, representing contracts, and other commitments that are known and committed.

Rightof Use Asset

---

	Total
Cost
Balance at December 31, 2022	$	683,117
Additions		740,355
Balance at December 31, 2023	$	1,423,472
Foreign<br> exchange		31,567
Balance at December 31,<br> 2024		1,455,039
Accumulated depreciation
Balance at December 31, 2022	$	339,371
Charge for the year		363,086
Foreign<br> exchange		328
Balance at December 31, 2023	$	701,785
Charge<br> for the year		356,841
Foreign<br> exchange		24,069
Balance at December 31,<br> 2024	$	1,082,695
Net book value:
December 31, 2023	$	721,687
December 31, 2024	$	372,344

---

The statement of financial position shows the following amounts related to leases:

	2024		2023
Buildings	$	372,344	$	721,687

Additions to the right of the assets during the 2024 financial year were $nil (2023 - $740,355).

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---

DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

LeaseLiability

---

			Total
Balance at December 31, 2022			$	378,643
Additions				734,903
Interest expense				96,423
Lease payments				(423,410	)
Foreign<br> exchange				3,464
Balance at December<br> 31, 2023				790,023
Interest<br> expense				65,378
Lease<br> payments				(423,157	)
Foreign<br> exchange				(4,223	)
Balance<br> at December 31, 2024			$	428,021
Which consists of:
		December 31, 2024		December<br> 31, 2023
Current lease liability	$	154,147	$	362,001
Non-current lease liability		273,874		428,022
Ending<br> balance	$	428,021	$	790,023

---

Maturity<br> analysis	December<br> 31, 2024			December<br> 31, 2023
Less than one year	$	190,856		$	429,948
One to three years		282,419			355,879
Four to five years		71,836			141,519
Total undiscounted lease liabilities		545,111			927,346
Amount representing<br> interest		(117,090	)		(137,323	)
	$	428,021		$	790,023

Variable lease payments of $77,626 (2023 - $43,542) have been recognized in profit and loss.

RelatedParty Transactions

On August 1, 2019, the Company entered in a business services agreement (the “Agreement”) with Business Instincts Group

(“BIG”), a company that Cameron Chell, CEO and director has a material interest in that he previously controlled, to provide: corporate development and governance, strategic facilitation and management, general business services, office space, corporate business development video content, website redesign and management, and online visibility management at fees set out in the Agreement. For the year ended December 31, 2024, the Company incurred fees of $273,475 (December 31, 2023 - $429,766) which are included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $nil (December 31, 2023 - $3,780).

On October 1, 2019, the Company entered into an independent consultant agreement (“Consultant Agreement”) with 1502372 Alberta Ltd, a company controlled by Cameron Chell, CEO and director, to provide executive consulting services to the Company and all fees are set in the Consultant Agreement. For the year ended December 31, 2024, the Company incurred fees of $487,688 (December 31, 2023 - $592,500) included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $nil (December 31, 2023 - $35,417).

On July 3, 2020, the Company entered into an executive consultant agreement (“Executive Agreement”) with Scott Larson, a

director of the Company, to provide executive consulting services, as President, to the Company. On May 9, 2022, Scott Larson ceased to be President of the Company and entered into an agreement to provide executive consulting services to the Company and all fees are set in the consulting agreement. For the year ended December 31, 2024, the Company incurred fees of $116,266 (December 31, 2023 - $215,019) included in professional fees. As at December 31, 2024, the Company was indebted to this company in the amount of $23,931 (December 31, 2023 - $9,287).

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Tradereceivables/payables and accrued receivables/payables:

As at December 31, 2024, the Company had $208,963 (December 31, 2023 - $190,664) payable to related parties that was included in accounts payable. The balances outstanding are unsecured, non-interest bearing and due on demand.

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Keymanagement compensation

---

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. Compensation awarded to key management for the year ended December 31, 2024 and 2023 included:

	For<br> the years ended December 31,
	2024		2023		2022
Director fees	$	504,619	$	600,933	$	522,349
Salaries		998,951		979,154		843,917
Share-based payments		768,228		1,109,232		2,106,906
	$	2,271,798	$	2,689,319	$	3,473,172

Otherrelated parties

---

	For<br> the years ended December 31,
	2024		2023		2022
Management<br> fees paid to a company controlled by CEO and director	$	487,688	$	592,500	$	566,487
Management<br> fees paid to a company that the CEO holds an economic interest in		273,475		429,766		442,485
Management<br> fees paid to a company controlled by a director		116,266		215,019		383,288
	$	877,429	$	1,237,285	$	1,392,260

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ShareCapital

Commonshares issued

---

	Number<br> of Common Shares			Share<br> Capital
Balance, December 31, 2022		1,371,204		$	83,600,089
Shares issued for financing - ATM		26,030			1,748,946
Share issue costs		-			(222,136	)
Shares issued for financing		512,000			11,376,230
Share issue costs		-			(2,072,886	)
Shares issued for the exercise of RSU’s		60,332			2,640,733
Balance, December 31,<br> 2023		1,969,566			97,070,976
Shares issued for financing		1,477,208			10,384,145
Share issue costs		-			(1,632,871	)
Shares issued for the exercise of warrants		1,991,668			4,056,827
Shares returned to treasury		(36,000	)		-
Shares issued for the exercise of RSU’s		25,353			863,907
Balance, September 30,<br> 2024		5,427,795		$	110,742,984

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Stockoptions

The following is the summary of the Company’s stock option activity. Number of options and weighted average exercise prices in the table below are shown as they were outstanding, forfeited, granted, and exercised:

	Number<br> of Options			Weighted<br> Average Exercise Price
Outstanding, December 31, 2022		35,154		$	115.00
Exercised		(400	)		53.75
Issued		1,200			15.65
Outstanding, December 31, 2023		35,954		$	112.00
Forfeited		(4,350	)		106.83
Outstanding, December<br> 31, 2024		31,604		$	112.05

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RestrictedShare Units (RSUs)

The following is the summary of the Company’s RSU activity. Number of RSUs in the table below are shown as they were outstanding, exercised, forfeited, and granted:

	Number<br> of RSU’s
Outstanding, December 31, 2022		47,982
Vested		(60,331	)
Issued		67,413
Forfeited		(10,519	)
Outstanding, December 31, 2023		44,545
Vested		(25,353	)
Issued		185,240
Forfeited		(16,332	)
Outstanding,<br> December 31, 2024		188,100

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Warrants

During the year ended December 31, 2024 and the year ended December 31, 2023, the Company issued pre-funded warrants (“USD pre-funded Warrants”) where a portion of the funds related to the eventual exercise have already been received with the remaining exercise price in USD. As part of these same issuances, shares with warrants attached were issued. Being in a foreign currency that is not the Company’s functional currency and these pre-funded warrants were not issued in exchange for services, the value related to the future exercise price of the USD pre-funded Warrants are required to be recorded as a financial liability and not as equity. As a financial liability, the portion of the USD pre-funded Warrants related to the future exercise price will be revalued on a quarterly basis to fair market value with the change in fair value being recorded in profit or loss. The warrants issued with the shares are also in USD so are also accounted for as a liability. In addition, the Company also issued pre-funded warrants with an exercise price in Canadian dollars (“Pre-funded Warrants”). These are also treated as a liability as the agreement contains clauses that do not meet the fixed for fixed test. As a financial liability, the portion of the Pre-funded Warrants related to the future exercise price will be revalued on a quarterly basis to fair market value with the change in fair value being recorded in profit or loss. The warrants issued with the shares are also accounted for as a liability as these also contain clauses that do not meet the fixed for fixed test.

On August 7, 2024, the exercise price of the April 29, 2024 warrants were amended to CAD $0.2250 or CAD $5.625 on a post share consolidation basis. The exercise price of the October Warrants was reduced twice and converted to Canadian dollars for a new exercise price of CAD $5.6925. For the October 2023 issuance and the April 2024 issuance, the warrant agreements were further amended as of August 7, 2024 to remove the cashless exercise feature and any anti-dilution clauses that would lead to variability in settlement so they now meet the requirement for equity treatment of the warrants. The warrants were fair values on August 7, 2024 and transferred to equity.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

On November 19, 2024 the exercise prices of the April 2024 warrants and the October 2023 warrants were amended to CAD$3.3086 from CAD$5.625 and CAD$5.6925 respectively.

The warrants issued as part of the August 2024 issuance and the November 2024 issuance were issued with a CAD exercise price, no cashless exercise feature and no anti-dilution clauses that would lead to variability in settlement.

To reach a fair value of the warrants, a Black Scholes calculation is used, calculated in USD for those with a USD exercise price and in CAD for those with a Canadian exercise price. The Black Scholes value per warrant is then multiplied by the number of outstanding warrants and then multiplied by the foreign exchange rate at the end of the period for those denominated in USD.

	February<br> Issuance						April<br> Issuance						August Issuance			November<br> Issuance
	Warrants			Broker			Warrants			Broker			Broker			Broker
Volatility		119.23	%		107.8	%		119.80	%		108.67	%		118.87	%		115.27	%
Risk free rate		4.33	%		4.48	%		4.65	%		4.62	%		3.74	%		4.24	%
Expected life		5<br> years			3<br> years			5<br> years			3<br> years			3<br> years			3<br> years
Expected dividend yield		0	%		0	%		0	%		0	%		0	%		0	%

Warrant Derivative Liability

Balance at December 31, 2022	$	-
Warrants issued		3,985,015
Change in fair value of<br> warrants outstanding		211,110
Balance at December 31, 2023	$	4,196,125
Warrants issued		7,282,325
Exercised		(3,661,283	)
Change in fair value of<br> warrants outstanding		(1,842,618	)
Reclassify<br> to equity		(3,776,428	)
Balance at December 31,<br> 2024	$	2,198,121

Reserves - Warrants

Balance<br> at December 31, 2023	$	-
Reclassification<br> of amended warrants		3,776,428
Balance at December 31,<br> 2024	$	3,776,428

Details of liability warrants and their fair values are as follows:

Issue<br> Date	Exercise<br> Price		Number<br> of Warrants Outstanding at December 31, 2024		Fair<br> Value at December 31, 2024		Number<br> of Warrants Outstanding at December 31, 2023		Fair<br> Value at December 31, 2023
Derivative<br> Liability
February<br> 26, 2024 (1)	US$	4.4025		474,332	$	2,198,121		-	$	-
October<br> 30, 2023 (2)	CAD$	5.6925		-		-		256,000		3,180,543
October<br> 30, 2023 (3)	US$	0.003		-		-		64,000		1,015,582
				474,332	$	2,198,121		320,000	$	4,196,125
1)	The<br> warrants expire February 26, 2029.
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2)	The<br> warrant terms were amended and warrants were reclassified to equity August 7,2024
3)	The<br> warrants have no expiry date. They were exercised January 5, 2024.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

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Warrants

	Exercise<br> Price		Number<br> of Warrants Outstanding at December 31, 2024		Number<br> of Warrants Outstanding at December 31, 2023
October<br> 30, 2023 (1)	CAD$	3.3086		256,000		-
April<br> 29, 2024 (2)	CAD$	3.3086		540,541		-
August<br> 21, 2024 (3)	CAD$	5.12		666,667		-
November<br> 19, 2024 (4)	CAD$	3.3086		1,600,000		-
				3,063,208		-
1)	The<br> warrants expire October 30, 2028. These were moved from derivative liability August 7, 2024.
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2)	The<br> warrants expire April 29, 2029. These were moved from derivative liability August 7, 2024.
3)	The<br> warrants expire August 21, 2029.
4)	The<br> warrants expire November 19, 2029

The following is the summary of the Company’s warrant activity. Number of warrants and weighted average exercise prices in the table below are shown as they were outstanding, exercised, forfeited, and granted:

	Number<br> of Warrants			Weighted<br> Average Exercise Price
Outstanding, December 31, 2022		316,672		$	147.53
Exercised		(306,480	)		20.66
Issued		332,800			153.52
Outstanding, December 31, 2023		342,992		$	15.75
Issued		5,376,370			3.35
Exercised		(1,991,668	)		0.9596
Expired		(10,192	)		125.00
Outstanding December<br> 31, 2024		3,717,502		$	5.16

As at December 31, 2024, the Company had the following warrants outstanding:

Date<br> issued	Expiry<br> date	Exercise<br> price		Number<br> of warrants outstanding
October<br> 30, 2023	October<br> 30, 2026	CAD$	23.20		12,800
October<br> 30, 2023	October<br> 30, 2028	CAD$	3.3086		256,000
February<br> 26, 2024	February<br> 26, 2027	US$	8.44		26,800
February<br> 26, 2024	February<br> 26, 2029	US$	4.4025		474,332
April<br> 29, 2024	April<br> 29, 2029	CAD$	3.3086		540,541
April<br> 29, 2024	April<br> 29, 2024	CAD$	11.06		27,028
August<br> 21, 2024	August<br> 21, 2027	CAD$	5.12		33,334
August<br> 21, 2024	August<br> 21, 2029	CAD$	5.12		666,667
November<br> 19, 2024	November<br> 19, 2029	CAD$	3.3086		1,600,000
November<br> 19, 2024	November<br> 19, 2027	CAD$	4.1357		80,000
					3,717,502

The weighted average remaining contractual life of warrants outstanding as of December 31, 2024, was 4.50 years (December 31, 2023 – 4.63 years).

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

CriticalAccounting Policies and Estimates

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Newlyadopted policy

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The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units for equity treatment warrants, whereby the carrying amount of the warrants is determined based on any difference between gross proceeds and the estimated fair market value of the common shares. If the proceeds from the offering are less than or equal to the estimated fair market value of common shares issued, no value is assigned to the warrants. Warrants that are issued as payment to a finder or other transaction costs are accounted for as share-based payments.

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Significantestimates and assumptions

The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions about reported amounts at the date of the consolidated financial statements and in the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Share-basedpayments

The cost of share-based payment transactions with directors, officers and employees are measured by reference to the fair value of the equity instruments. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining and making assumptions about the most appropriate inputs to the valuation model including the expected life, volatility, risk-free interest rate, expected forfeiture rate and dividend yield.

Incometaxes

Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these income tax provisions at the end of each reporting period. However, it is possible that at some future date an additional liability could result from audits by tax authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made. Deferred tax assets are recognized when it is determined that the Company is likely to recognize their recovery from the generation of taxable income.

Inventory

Inventory is valued at the lower of cost and net realizable value. Net realizable value is determined with reference to the estimated selling price less costs to sell. The Company estimates selling price based upon assumptions about future demand and current and anticipated retail market conditions. The future realization of these inventories may be affected by future technology or other market- driven changes that may reduce future selling prices.

Investmentsin Private companies

Where the fair value of investments in private companies recorded on the consolidated statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data is not available, judgment is required to establish fair value and this value may not be indicative of the eventual recoverable value.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Expectedcredit losses on trade receivables and notes receivable

When determining expected credit losses (“ECLs”), the Company considers the historic credit losses observed by the Company, customer-specific payment history and economic conditions. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL’s, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience, informed credit assessment and forward-looking information.

Usefullives of equipment and intangible assets

Estimates of the useful lives of equipment and intangible assets are based on the period over which the assets are expected to be available for use. The estimated useful lives are reviewed annually and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence, and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of the relevant assets may be based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the equipment would increase the recorded expenses and decrease the non-current assets.

OtherSignificant judgements

The preparation of consolidated financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments applied to the Company’s consolidated financial statements include:

●	The<br> assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that may give<br> rise to significant uncertainty;
●	the<br> classification of financial instruments;
●	the<br> assessment of revenue recognition using the five-step approach under IFRS 15 and the collectability of amounts receivable;
●	the<br> determination of whether a set of assets acquired and liabilities assumed constitute a business; and
●	the<br> determination of the functional currency of each entity in the group.

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Foreigncurrency translation

Transactions in foreign currencies are translated into the functional currency at rates of exchange at the time of such transactions. Monetary assets and liabilities are translated at the reporting period rate of exchange. Non-monetary assets and liabilities are translated at historical exchange rates. Gains and losses resulting from foreign exchange adjustments are included in profit or loss.

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The functional currencies of the parent company and each subsidiary are as follows:

Draganfly Inc.	Canadian Dollar
Draganfly Innovations Inc.	Canadian Dollar
Draganfly Innovations USA, Inc.	US Dollar
Dronelogics Systems Inc.	Canadian Dollar

Financial statements of subsidiaries for which the functional currency is not the Canadian dollar are translated into Canadian dollars as follows: all asset and liability accounts are translated at the year-end exchange rate and all revenue and expense accounts and cash flow statement items are translated at average exchange rates for the year. The resulting translation gains and losses are recorded as exchange differences on translation of foreign operations in other comprehensive loss.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Share-basedpayments

The Company may grant stock options or restricted share units (“RSU’s”) to its directors, officers, employees and consultants. The Company records share-based compensation related to stock options using the Black-Scholes Option Pricing Model.

The RSU’s granted entitle an employee, director or officer to either the issuance of common shares or cash payments payable upon vesting with terms determined by the Company’s Board of Directors at the time of the grant. If on the grant date it is determined there is an obligation to settle in cash, the RSU’s are accounted for as liabilities, with the fair value remeasured at the end of each reporting period and on the settlement date. Changes in fair value are recognized in profit and loss. Expense is recognized over the vesting period.

The Company has a present obligation to settle in cash if the choice of settlement in shares has no commercial substance, or the Company has a past practice or a stated policy of setting in cash, or generally settles in cash whenever the counterparty asks for cash settlement. If no such obligation exists, RSUs are accounted for as equity settled share-based payments and are valued using the share price on grant date. Upon settlement:

a)	If<br> the Company elects to settle in cash, the cash payment is accounted for as the repurchase of an equity interest (i.e. as a deduction<br> from equity), except as noted in (c) below.
b)	If<br> the Company elects to settle by issuing shares, the value of RSUs initially recognized in reserves is reclassified to share capital,<br> except as noted in (c) below.
c)	If<br> the Company elects the settlement alternative with the higher fair value, as at the date of settlement, the Company recognizes an<br> additional expense for the excess value given (i.e. the difference between the cash paid and the fair value of shares that would<br> otherwise have been issued, or the difference between the fair value of the shares and the amount of cash that would otherwise have<br> been paid, whichever is applicable).

The aggregate sales price or amount of common shares issued during any consecutive 12-month period will not exceed the greatest of the following: (i) USD $1,000,000; (ii) 15% of the total assets of the Company, measured at the Company’s most recent balance sheet date; or (iii) 15% of the outstanding amount of the common shares of the Company, measured at the Company’s most recent balance sheet date. At the election of the Board of Directors, upon each vesting date, participants receive (a) the issuance of common shares from treasury equal to the number of RSUs vesting, or (b) a cash payment equal to the number of vested RSUs multiplied by the fair market value of a common share, calculated as the closing price of the common shares on the CSE for the trading day immediately preceding such payment date; or (c) a combination of (a) and (b).

In conjunction with private placements or brokered financings, the Company may issue compensatory warrants to agents as consideration for services provided. Awards of grants are accounted for in accordance with the fair value method of accounting and result in an increase in share issue costs and a credit to warrants within shareholders’ equity when warrants are issued.

Lossper share

Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the year.

Diluted income per share is calculated by dividing the profit attributable to common shareholders of the parent by the weighted average number of common shares outstanding during the year plus the weighted average number of common shares that would be issued on the conversion of all the dilutive potential common shares into common shares. The Company had 3,717,502 warrants, 31,204 options and 188,100 RSU’s that would be potentially dilutive if the Company were not in a loss position and were to calculate diluted income per share.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

FinancialInstruments

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Financial instruments are accounted for in accordance with IFRS 9 Financial Instruments: Classification and Measurement. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

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Financial assets/liabilities	Classification
Cash<br> and cash equivalents	Fair<br> value through profit or loss
Receivables	Amortized<br> cost
Notes<br> receivable	Fair<br> value through profit or loss
Investments	Fair<br> value through other comprehensive income
Trade<br> payables	Amortized<br> cost
Customer<br> deposits	Amortized<br> cost
Loans<br> payable	Amortized<br> cost
Derivative<br> liability	Fair<br> value through profit or loss

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a)Financial assets

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Classificationand measurement

The Company classifies its financial assets in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) or at amortized cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

The classification of debt instruments is driven by the business model for managing the financial assets and their contractual cash flow characteristics. Debt instruments are measured at amortized cost if the business model is to hold the instrument for collection of contractual cash flows and those cash flows are solely principal and interest. If the cash flows are not solely principal and interest, it is classified as FVTPL. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payments of principal and interest.

Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL, for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument by-instrument

basis) to designate them as at FVTOCI.

Financialassets at FVTPL

Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are recorded to profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of financial assets held at FVTPL are included in the profit or loss in the period in which they arise. Derivatives are also categorized as FVTPL unless they are designated as hedges.

Financialassets at FVTOCI

Financial assets carried at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.

Financialassets at amortized cost

Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Impairmentof financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the loss allowance is measured for the financial asset at an amount equal to twelve month expected credit losses. For trade receivables the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

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Derecognitionof financial assets

Financial assets are derecognized when the risks and rewards of ownership have been transferred. Gains and losses on derecognition of financial assets classified as FVTPL or amortized cost are recorded to profit or loss. Gains or losses on financial assets classified as FVTOCI remain within accumulated other comprehensive loss.

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b)Financial liabilities

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The Company classifies its financial liabilities into one of two categories as follows:

FVTPL

• This category comprises derivatives and financial liabilities incurred principally for the purpose of selling or repurchasing in the near term. They are carried at fair value with changes in fair value recognized in profit or loss.

Other financial liabilities - This category consists of liabilities carried at amortized cost using the effective interest method. Trade payables, customer deposits and loans payable are included in this category.

Derecognitionof financial liabilities

Financial liabilities are derecognized when its contractual obligations are discharged, cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and/or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. Gains and losses on derecognition are recognized in profit or loss.

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Impairmentof non-financial assets

The carrying amounts of the non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If indicators exist, then the asset’s recoverable amount is estimated. The recoverable amounts of the following types of intangible assets are measured annually, whether or not there is any indication that it may be impaired:

●	an<br> intangible asset with an indefinite useful life; and
●	an<br> intangible asset not yet available for use;

The recoverable amount of an asset or cash-generating unit (“CGU”) is the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

In respect of assets other than goodwill and intangible assets that have indefinite useful lives, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed in a subsequent period when there has been an increase in the recoverable amount of a previously impaired asset or CGU. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Incometaxes

Currentincome tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income taxes relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferredincome tax

Deferred income tax is recognized, using the asset and liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Inventory

Inventory consists of raw materials and finished goods for manufacturing of multi-rotor helicopters, industrial areal video systems, civilian small unmanned aerial systems or vehicles, health monitoring equipment, and wireless video systems. Inventory is initially valued at cost and subsequently at the lower of cost and net realizable value. Cost is determined using the first-in-first-out method. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The costs of purchase include the purchase price, import duties and non-recoverable taxes and transport, handling and other costs directly attributable to the acquisition of finished goods, materials or services. The costs of conversion include direct materials and labour costs and a systematic allocation of fixed and variable overheads incurred in converting materials into finished goods. The Company reviews inventory for obsolete and slow-moving goods and any such inventory is written-down to net realizable value.

Revenuerecognition

Revenue comprises the fair value of consideration received or receivable for the sale of goods and consulting services in the ordinary course of the Company’s business. Revenue is shown net of return allowances and discounts.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Salesof goods

The Company manufactures and sells a range of multi-rotor helicopters, industrial aerial video systems, and civilian small unmanned aerial systems or vehicles. Sales are recognized at a point-in-time when control of the products has transferred. The control transfer occurs in proximity to shipping. Revenue is recognized when the transfer of control has occurred.

Revenue from these sales is recognized based on the price specified in the contract, net of the estimated discounts and returns. Accumulated experience is used to estimate and provide for the discounts and returns, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. To date, returns have not been significant. No element of financing is deemed present as the sales are made with a credit term of 30 to 60 days, which is consistent with market practice.

Revenue from these sales is recognized based on the price specified in the contract, net of the estimated discounts and returns. Accumulated experience is used to estimate and provide for the discounts and returns, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. To date, returns have not been significant. No element of financing is deemed present as the sales are made with a credit term of 30 days, which is consistent with market practice.

Some contracts include multiple performance obligations, such as the sale of hardware and support or maintenance. Where support or maintenance is performed by another party and does not include an integration service it is accounted for as a separate performance obligation. In this case, the transaction price will be allocated to each performance obligation based on stand-alone selling price. Where the stand-alone selling price is not directly observable, the price is estimated based on expect cost plus margin. Where the support or maintenance is provided by the Company, the contract is analyzed to identify the performance obligations and transaction price. The price is then allocated across the obligations identified in the contract. Revenue is recognized when the Company satisfies a performance obligation.

Services

The Company provides consulting, custom engineering, drones as a service, and investigating and solving on a project-by-project basis under fixed-price and variable price contracts. Revenue from providing services is recognized over time as the services are rendered.

The Company provides rental of equipment which is measured based on rates through contracts or other written agreements with customers. Revenue is recognized in the period when services are performed and only when there is reasonable assurance that the revenue will be collected.

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DeferredIncome

A payment received is included as deferred revenue when products have yet be shipped to the customers as of the period end or there are unfulfilled obligations related to the revenue received. The amount to be recognized within twelve months following the year-end date is classified as current.

Costof Goods Sold

Cost of sales includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight costs, as well as provisions for reserves related to product shrinkage, or lower of cost and net realizable value adjustments as required.

IntangibleAssets

An intangible asset is an identifiable asset without physical substance. An asset is identifiable if it is separable, or arises from contractual or legal rights, regardless of whether those rights are transferrable or separable from the Company or from other rights and obligations. Intangible assets include intellectual property, which consists of patent and trademark applications, brands and software.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Intangible assets acquired externally are measured at cost less accumulated amortization and impairment losses. The cost of a group of intangible assets acquired is allocated to the individual intangible assets based on their relative fair values. The cost of intangible assets acquired externally comprises its purchase price and any directly attributable cost of preparing the asset for its intended use. Research and development costs incurred subsequent to the acquisition of externally acquired intangible assets and on internally generated intangible assets are accounted for as research and development costs.

Intangible assets with finite useful lives are amortized on a straight-line basis over the expected life of each intellectual property to write off the cost of the assets from the date they are available for use.

Class of intangible asset	Useful live
Customer<br> relationship	5<br> years
Brand	5<br> years
Software	5<br> years
Patents	5<br> years

Goodwill represents the excess of the value of the consideration transferred over the fair value of the net identifiable assets and liabilities acquired in a business combination. Goodwill is allocated to the cash generating unit to which it relates.

Equipment

January 1, 2024, there was change in estimate related to the useful lives of computer equipment and furniture and equipment with the depreciation changing from 30% declining balance to 3 year straight line for computer equipment and from 20% declining balance to 5 year straight line for furniture and equipment. The impact of this change in estimate in 2024 resulted in an increase in depreciation of $54, 220. It is not practical to quantify the impact on future years, but the change in estimate will result in the assets currently on the books related to this change in estimate depreciating faster over a shorter time frame.

Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the consolidated statement of comprehensive loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the consolidated statement of comprehensive loss.

Depreciation is generally calculated on a straight-line balance method with the exception of vehicles that are on a declining balance method to write off the cost of the assets to their residual values over their estimated useful lives. Depreciation for leasehold improvements is fully expensed over the expected term of the lease. The depreciation rates applicable to each category of equipment are as follows:

Class of equipment	Depreciation rate
Computer<br> equipment	3<br> years – straight line
Furniture<br> and equipment	5<br> years – straight line
Leasehold<br> improvements	Expected<br> lease term
Vehicles	30%<br> - declining balance

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Researchand development expenditures

Expenditures on research are expensed as incurred. Research activities include formulation, design, evaluation and final selection of possible alternatives, products, processes, systems or services. Development expenditures are expensed as incurred unless the Company can demonstrate all of the following:

(i)	the<br> technical feasibility of completing the intangible asset so that it will be available for use or sale;
(ii)	its<br> intention to complete the intangible asset and use or sell it;
(iii)	its<br> ability to use or sell the intangible asset;
(iv)	how<br> the intangible asset will generate probable future economic benefits. The Company can also demonstrate the existence of a market<br> for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible<br> asset;
(v)	the<br> availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;<br> and
(vi)	its<br> ability to measure reliably the expenditure attributable to the intangible asset during its development.

Governmentassistance

Government grants are recognized when there is reasonable assurance that the grant will be received and all attached

conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the period that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the cost of the asset is reduced by the amount of the grant and the grant is recognized as income in equal amounts over the expected useful life of the asset.

Leases

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the commencement date, the lease liability is recognized at the present value of the future lease payments and discounted using the interest rate implicit in the lease or the Company’s incremental borrowing rate. A corresponding right-of-use (“ROU”) asset will be recognized at the amount of the lease liability, adjusted for any lease incentives received and initial direct costs incurred. Over the term of the lease, financing expense is recognized on the lease liability using the effective interest rate method and charged to net income, lease payments are applied against the lease liability and depreciation on the ROU asset is recorded by class of underlying asset.

The lease term is the non-cancellable period of a lease and includes periods covered by an optional lease extension option if reasonably certain the Company will exercise the option to extend. Conversely, periods covered by an option to terminate are included if the Company does not expect to end the lease during that time frame. Leases with a term of less than twelve months or leases for underlying low value assets are recognized as an expense in net income on a straight-line basis over the lease term.

A lease modification will be accounted for as a separate lease if it materially changes the scope of the lease. For a modification that is not a separate lease, on the effective date of the lease modification, the Company will remeasure the lease liability and corresponding ROU asset using the interest rate implicit in the lease or the Company’s incremental borrowing rate. Any variance between the remeasured ROU asset and lease liability will be recognized as a gain or loss in net income to reflect the change in scope.

Newly adopted accounting standards

On January 1, 2024 the Company adopted amendments to IAS 1, Presentation of Financial Statements, issued by IASB. The amendment is to clarify the classification of a liability as either current or non-current based on the Company’s right at the end of the reporting period. There is no material impact on the disclosures or amounts reported in the consolidated financial statements.

New accounting standards issued not yet effective

In April 2024, the IASB issued IFRS 18, Presentation and Disclosures in Financial Statements, to replace IAS 1, Presentation of Financial Statements, effective January 1, 2027, with early adoption permitted. The new standard is aimed to set out overall requirements for presentation and disclosures in the financial statements. Management is reviewing the impact the standard will have on the consolidated financial statements.

In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures to address the classification and measurement of financial instruments, with an emphasis to clarify the date of recognition and derecognition of financial asset and liabilities, effective January 1, 2026, with early adoption permitted. Management is reviewing the impact of these amendments, but they are not expected to have a material impact on the consolidated financial statements.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

BusinessRisks

The Company does engage in significant transactions and activities in currencies other than its functional currency. Depending on the timing of the transactions and the applicable currency exchange rates such conversions may positively or negatively impact the Company.

An investment in the Company’s Common Shares is highly speculative and involves significant risks. In addition to the other ‎informationcontained in this MD&A and the documents incorporated by ‎reference herein and therein, you should review and carefully considerthe risks described herein. The risks described herein are not the only risk factors facing us and should not be ‎considered exhaustive. Additional risks and uncertainties not currently known to us, or that we currently ‎consider immaterial, may also materially and adversely affect our business, operations and condition, financial ‎or otherwise.‎

RisksRelated to the Company, its Business and Industry

TheCompany has a history of losses.

The Company has incurred net losses since its inception. The Company cannot assure that it can ‎become profitable or avoid net losses in the future or that there will be any earnings or revenues in any ‎future quarterly or other periods. The Company expects that its operating expenses will increase as it ‎grows its business, including expending substantial resources for research, development and marketing. ‎As a result, any decrease or delay in generating revenues could result in material operating losses.‎

Ashareholder’s holding in the Company may be diluted if the Company issues additional Common ‎Shares or other securities inthe future.‎

‎The Company may issue additional Common Shares or other securities in the future, which may dilute a ‎‎shareholder’s holding in the Company. ‎The Company’s articles permit the issuance of an unlimited ‎‎number of Common Shares, and shareholders have no pre-emptive rights in connection with further ‎‎issuances of any securities. The directors of the Company have the discretion to ‎determine if an ‎‎issuance of Common Shares or other securities is warranted, the price at which any such securities are ‎‎issued and the other ‎terms of issue of Common Shares or securities.

In addition, the Company may ‎‎issue additional Common Shares upon the exercise of incentive stock options to ‎acquire Common ‎‎Shares under its share compensation plan or upon the exercise or conversion of other outstanding ‎convertible securities of the Company, which will result in further dilution to shareholders. In addition, ‎the ‎issuance of Common Shares or other securities in any potential ‎future acquisitions, if any, may also ‎‎result in further dilution to shareholder interests.‎‎

TheCompany expects to incur substantial research and development costs and devote significant resources to ‎identifying and commercializingnew products and services, which could significantly reduce its profitability and ‎may never result in revenue to the Company.‎

‎The Company’s future growth depends on penetrating new markets, adapting existing products to new ‎applications, ‎and introducing new products and services that achieve market acceptance. The Company ‎plans to incur ‎substantial research and development costs as part of its efforts to design, develop and ‎commercialize new ‎products and services and enhance its existing products. The Company believes that ‎there are significant opportunities in a number of business areas. Because the Company accounts for ‎research and development costs as ‎operating expenses, these expenditures will adversely affect its ‎earnings in the future. Further, the Company’s ‎research and development programs may not produce ‎successful results, and its new products and services may not ‎achieve market acceptance, create any ‎additional revenue or become profitable, which could materially harm the ‎Company’s business, ‎prospects, financial results and liquidity.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Shortfallsin available external research and development funding could adversely affect the Company.‎

‎The Company depends on its research and development activities to develop the core technologies ‎used in its UAV ‎products and for the development of the Company’s future products. A portion of the ‎Company’s research and ‎development activities can depend on funding by commercial companies and ‎the Canadian government. Canadian ‎government and commercial spending levels can be impacted by a ‎number of variables, including general ‎economic conditions, specific companies’ financial performance ‎and competition for Canadian government ‎funding with other Canadian government-sponsored programs ‎in the budget formulation and appropriation ‎processes. Moreover, the Canadian, federal and provincial ‎governments provide energy rebates and incentives to ‎commercial companies, which directly impact the ‎amount of research and development that companies ‎appropriate for energy systems. To the extent that ‎these energy rebates and incentives are reduced or eliminated, ‎company funding for research and ‎development could be reduced. Any reductions in available research and ‎development funding could ‎harm the Company’s business, financial condition and operating results.‎

TheCompany’s adoption of new business models could fail to produce any financial returns.‎

‎Forecasting the Company’s revenues and profitability for new business models is inherently uncertain ‎and ‎volatile. The Company’s actual revenues and profits for its business models may be significantly ‎less ‎than the Company’s forecasts. Additionally, the new business models could fail for one or more of ‎the ‎Company’s products and/or services, resulting in the loss of Company’s investment in the ‎development and ‎infrastructure needed to support the new business models, and the opportunity cost of ‎diverting management and ‎financial resources away from more successful businesses.‎

TheCompany will be affected by operational risks and may not be adequately insured for certain risks.‎

‎ The Company will be affected by a number of operational risks and the Company may not be adequately ‎insured ‎for certain risks, including: labour disputes; catastrophic accidents; fires; blockades or other ‎acts of social activism; ‎changes in the regulatory environment; impact of non-compliance with laws and ‎regulations; natural phenomena, ‎such as inclement weather conditions, floods, earthquakes and ground ‎movements. There is no assurance that the ‎foregoing risks and hazards will not result in damage to, or ‎destruction of, the Company’s technologies, personal ‎injury or death, environmental damage, adverse ‎impacts on the Company’s operation, costs, monetary losses, ‎potential legal liability and adverse ‎governmental action, any of which could have an adverse impact on the ‎Company’s future cash flows, ‎earnings and financial condition. Also, the Company may be subject to or affected ‎by liability or sustain ‎loss for certain risks and hazards against which the Company cannot insure or which the ‎Company may ‎elect not to insure because of the cost. This lack of insurance coverage could have an adverse ‎impact ‎on the Company’s future cash flows, earnings, results of operations and financial condition.‎

TheCompany operates in evolving markets, which makes it difficult to evaluate the Company’s business and ‎future prospects.‎

‎The Company’s unmanned aerial vehicles (“UAVs”) are sold in rapidly evolving markets. The commercial UAV market is in early stages of ‎customer adoption. Accordingly, the Company’s business and future prospects may be difficult to evaluate. The ‎Company cannot accurately predict the extent to which demand for its products and services will increase, if at all. ‎The challenges, risks and uncertainties frequently encountered by companies in rapidly evolving markets could ‎impact the Company’s ability to do the following:‎

●	generate<br> sufficient revenue to reach and maintain profitability;
●	acquire<br> and maintain market share;‎
●	achieve<br> or manage growth in operations;‎
●	develop<br> and renew contracts;‎
●	attract<br> and retain additional engineers and other highly-qualified personnel;‎
●	successfully<br> develop and commercially market new products;‎
●	adapt<br> to new or changing policies and spending priorities of governments and government agencies; and
●	access<br> additional capital when required and on reasonable terms.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

If the Company fails to address these and other challenges, risks and uncertainties successfully, its business, results ‎of operations and financial condition would be materially harmed.‎

TheCompany operates in a competitive market.

The Company faces competition and new competitors will continue to emerge throughout the world. ‎Services offered by the Company’s competitors may take a larger share of consumer spending than ‎anticipated, which could cause revenue generated from the Company’s products and services to fall ‎below expectations. It is expected that competition in these markets will intensify.

‎If competitors of the Company develop and market more successful products or services, offer ‎competitive products or services at lower price points, or if the Company does not produce consistently ‎high-quality and well-received products and services, revenues, margins, and profitability of the ‎Company will decline.‎

‎The Company’s ability to compete effectively will depend on, among other things, the Company’s pricing ‎of services and equipment, quality of customer service, development of new and enhanced products ‎and services in response to customer demands and changing technology, reach and quality of sales and ‎distribution channels and capital resources. Competition could lead to a reduction in the rate at which the ‎Company adds new customers, a decrease in the size of the Company’s market share and a decline in ‎its customers. Examples include but are not limited to competition from other companies in the UAV ‎industry.‎

In addition, the Company could face increased competition should there be an award of additional ‎licenses in jurisdictions in which the Company operates in.‎

Themarkets in which the Company competes are characterized by rapid technological change, which requires ‎the Company to develop newproducts and product enhancements and could render the Company’s existing ‎products obsolete. ‎

‎Continuing technological changes in the market for the Company’s products could make its products ‎less ‎competitive or obsolete, either generally or for particular applications. The Company’s future ‎success will depend ‎upon its ability to develop and introduce a variety of new capabilities and ‎enhancements to its existing product and ‎service offerings, as well as introduce a variety of new product ‎offerings, to address the changing needs of the ‎markets in which it offers products.

Delays in ‎introducing new products and enhancements, the failure to choose ‎correctly among technical alternatives ‎or the failure to offer innovative products or enhancements at competitive ‎prices may cause existing and ‎potential customers to purchase the Company’s competitors’ products.‎

If the Company is unable to devote adequate resources to develop new products or cannot otherwise ‎successfully ‎develop new products or enhancements that meet customer requirements on a timely basis, ‎its products could lose ‎market share, its revenue and profits could decline, and the Company could ‎experience operating losses.‎

Failureto obtain necessary regulatory approvals from Transport Canada or other governmental agencies, or ‎limitations put on the use ofsmall UAV in response to public privacy concerns, may prevent the Company from ‎expanding sales of its small UAV to non-militarycustomers in Canada.‎

‎Transport Canada is responsible for establishing, managing, and developing safety and security ‎standards and regulations for civil aviation in Canada, and includes unmanned civil aviation ‎‎(drones). Civil operations include law enforcement, scientific research, or use by private sector ‎companies for commercial purposes. The Canadian Aviation Regulations (“CARs”) govern civil ‎aviation safety and security in Canada, and by extension govern operation of drones in Canada ‎to an acceptable level of safety.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

While Transport Canada has been a leader in the development of regulations for the commercial ‎use of remotely piloted aircraft systems (“RPAS”) and continues to move forward rapidly with its regulatory development, it has ‎acknowledged the challenge of regulations keeping pace with the rapid development in ‎technology and the growing demand for commercial RPAS use, particularly in the beyond visual ‎line-of-sight environment. In 2012, the Canadian Aviation Regulation Advisory Council UAS ‎working group released its Phase 2 report which outlined a proposed set of revision to the CARs ‎to permit beyond visual line of sight operations. This report was the basis for the recently released Notice of Proposed Amendment (“NPA”) by Transport Canada on lower ‎risk beyond visual line-of-sight.‎

Failure to obtain necessary regulatory approvals from Transport Canada or other governmental ‎agencies, including the granting of certain Special Flight Operations Certificates (“SFOCs”), or limitations put on the use of RPAS in ‎response to public safety concerns, may prevent the Company from testing or operating its ‎aircraft and/or expanding its sales which could have an adverse impact on the Company’s ‎business, prospects, results of operations and financial condition.‎

Thereare risks associated with the regulatory regime and permitting requirements of the Company’s business.‎

‎A significant portion of the Company’s business is based on the operation of RPAS. The operation of ‎‎RPAS poses a risk or hazard to airspace users as well as personnel on the ground. As ‎the RPAS ‎‎industry is rapidly developing, the regulatory environment for RPAS is constantly evolving to keep pace. ‎‎‎As such, whenever a policy change with respect to operating regulations occurs, there is a risk that the ‎‎Company ‎could find itself to be in non-compliance with these new regulations. While the Company ‎‎endeavours to take all ‎necessary action to reduce the risks associated with the operations of RPAS and ‎‎to remain well-informed and up-‎to-date on any addendums and changes to the applicable regulations, ‎‎there is no assurance that an incident ‎involving an RPAS or the Company’s non-compliance would not ‎‎create a significant current or future liability for ‎the company.‎

The regulation of RPAS operations within the Canadian Domestic Airspace (“CDA”) is still evolving and is expected ‎to continue to change ‎with the proliferation of RPAS, advancements in technology, and standardization within the ‎industry. ‎Changes to the regulatory regime may be disruptive and result in the Company needing to adopt ‎‎significant changes in its operations and policies, which may be costly and time-consuming, and may ‎materially ‎adversely affect the Company’s ability to manufacture and make delivery of its products and ‎services in a timely ‎fashion.‎

The Company’s business and research and development activities are subject to oversight by Transport ‎‎Canada, the federal ‎institution responsible for transportation policies and programs, including the rules in ‎‎the CARs. Currently, Transport Canada requires that any non-recreational operators of RPAS have a ‎‎‎SFOC. The Company’s ability to develop, test, demonstrate, and sell products and ‎services depends on ‎‎its ability to acquire and maintain a valid SFOC.‎

‎In addition, there exists public concern regarding the privacy implications of Canadian commercial and ‎‎law ‎enforcement use of small UAV. This concern has included calls to develop explicit written policies ‎‎and procedures ‎establishing UAV usage limitations. There is no assurance that the response from ‎‎regulatory agencies, customers and ‎privacy advocates to these concerns will not delay or restrict the ‎‎adoption of small UAV by prospective non-military customers‎.‎

TheCompany may be subject to the risks associated with future acquisitions.

As part of the Company’s overall business strategy, the Company may pursue select strategic ‎acquisitions that would provide additional product or service offerings, additional industry expertise, and ‎a stronger industry presence in both existing and new jurisdictions. Any such future acquisitions, if ‎completed, may expose the Company to additional potential risks, including risks associated with: (a) ‎the integration of new operations, services and personnel; (b) unforeseen or hidden liabilities; (c) the ‎diversion of resources from the Company’s existing business and technology; (d) potential inability to ‎generate sufficient revenue to offset new costs; (e) the expenses of acquisitions; or (f) the potential loss ‎of or harm to relationships with both employees and existing users resulting from its integration of new ‎businesses. In addition, any proposed acquisitions may be subject to regulatory approval.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

TheCompany’s inability to retain management and key employees could impair the future success of the Company.

The Company’s future success depends substantially on the continued services of its executive officers ‎and its key development personnel. If one or more of its executive officers or key development ‎personnel were unable or unwilling to continue in their present positions, the Company might not be able ‎to replace them easily or at all. In addition, if any of its executive officers or key employees joins a ‎competitor or forms a competing company, the Company may lose experience, know-how, key ‎professionals and staff members as well as business partners. These executive officers and key ‎employees could develop drone technologies that could compete with and take customers and market ‎share away from the Company.‎

TheCompany faces uncertainty and adverse changes in the economy.‎

Adverse changes in the economy could negatively impact the Company’s business. Future economic ‎distress may ‎result in a decrease in demand for the Company’s products, which could have a material ‎adverse impact on the ‎Company’s operating results and financial condition. Uncertainty and adverse ‎changes in the economy could also ‎increase costs associated with developing and publishing products, ‎increase the cost and decrease the availability of ‎sources of financing, and increase the Company’s ‎exposure to material losses from bad debts, any of which could ‎have a material adverse impact on the ‎financial condition and operating results of the Company.‎

TheCompany is subject to certain market-based financial risks associated with its operations.

The Company could be subject to interest rate risks, which is the risk that the value of a financial ‎instrument might be adversely affected by a change in the interest rates. In seeking to minimize the risks ‎from interest rate fluctuations, the Company manages exposure through its normal operating and ‎financing activities, however market fluctuations could increase the costs at which the Company can ‎access capital and its ability to obtain financing and the Company’s cash balances carry a floating rate ‎of interest. In addition, the Company engages in transactions in currencies other than its functional ‎currency. Depending on the timing of these transactions and the applicable currency exchange rates, ‎conversions to the Company’s functional currency may positively or negatively impact the Company.‎

Negativemacroeconomic and geopolitical trends could affect demand for the Company’s products and its ability ‎to access sources of‎capital.‎

‎‎There can be no assurance that the Company’s business and corresponding financial performance will not be ‎adversely affected by general negative economic or consumer trends or events, including pandemics, public health ‎crises, weather catastrophes, acts of terrorism, war, and political instability. In particular, global economic markets ‎have seen extensive volatility over the past few years owing to the outbreak of the COVID-19 pandemic, the war ‎between Russia and Ukraine, and the war between Israel and Hamas, the closing of certain financial institutions by ‎regulators in March 2023, and political instability. These events have created, and may continue to create, ‎significant disruption of the global economy, supply chains and distribution channels, and financial and labor ‎markets. If such conditions continue, recur or worsen, this may have a material adverse effect on the Company’s ‎business, financial condition and results of operations as consumer demand and its ability to access capital on ‎favorable terms, or at all, could be negatively impacted as a result of such conditions and consequences. ‎Furthermore, such economic conditions have produced downward pressure on share prices and on the availability ‎of credit for financial institutions and corporations while also driving up interest rates, further complicating ‎borrowing and lending activities. If current levels of market disruption and volatility continue or increase, the ‎Company might experience reductions in business activity, increases in funding costs, decreases in asset values, ‎additional write-downs and impairment charges and lower profitability.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

TheCompany may be subject to the risks associated with foreign operations in other countries.

The Company’s primary revenues are expected to be achieved in Canada and the US. However, the ‎Company may expand to markets outside of North America and become subject to risks normally ‎associated with conducting business in other countries. As a result of such expansion, the Company ‎may be subject to the legal, political, social and regulatory requirements and economic conditions of ‎foreign jurisdictions. The Company cannot predict government positions on such matters as foreign ‎investment, intellectual property rights or taxation. A change in government positions on these issues ‎could adversely affect the Company’s business.‎

If the Company expands its business to foreign markets, it will need to respond to rapid changes in ‎market conditions, including differing legal, regulatory, economic, social and political conditions in these ‎countries. If the Company is not able to develop and implement policies and strategies that are effective ‎in each location in which it does business, then the Company’s business, prospects, results of ‎operations and financial condition could be materially and adversely affected.‎

Thereare tax risks the Company may be subject to in carrying on business in Canada.

The Company is a resident of Canada for purposes of the Income ‎Tax Act (Canada) (the “Tax Act”). Since the ‎Company ‎is operating in a new and developing industry there is a risk that ‎foreign governments may look to ‎‎increase their tax revenues or levy additional taxes to level the playing ‎field for perceived disadvantages ‎to ‎traditional brick and mortar businesses. There is no guarantee that ‎governments will not impose such ‎additional ‎adverse taxes in the future‎.‎

Ifcritical components or raw materials used to manufacture the Company’s products become scarce or ‎unavailable, then the Companymay incur delays in manufacturing and delivery of its products, which could ‎damage its business.‎

‎The Company obtains hardware components, various subsystems and systems from a limited group of ‎suppliers. ‎The Company does not have long-term agreements with any of these suppliers that obligate it ‎to continue to sell ‎components, subsystems, systems or products to the Company. The Company’s ‎reliance on these suppliers ‎involves significant risks and uncertainties, including whether its suppliers will ‎provide an adequate supply of ‎required components, subsystems, or systems of sufficient quality, will ‎increase prices for the components, ‎subsystems or systems and will perform their obligations on a ‎timely basis.‎

‎The global supply chain has experienced significant disruptions recently, caused by the COVID-19 ‎pandemic and ‎by geopolitical conflict, including the wars in Ukraine and Gaza, and the possibility of widening conflict in the ‎Middle East. These disruptions have impacted a ‎variety of products and goods and have had various downstream ‎effects, making it more difficult to ‎reliably and timely source and supply goods and has also resulted in shortages of ‎labor and equipment. ‎The macroeconomic impacts of the COVID-19 pandemic and global conflicts, including the ‎disruption of global shipping lanes in the Middle East, have contributed to ‎inflationary pressure, rising interest rates, ‎and increased market volatility, adding additional pricing uncertainty. These ‎conditions, if not mitigated or ‎remedied in a timely manner, could delay or preclude delivery of raw ‎materials needed to manufacture the ‎Company’s products or delivery of its products to customers, ‎particularly in international markets. If the ‎Company ‎is unable to obtain components from third-party ‎suppliers in the quantities and of the quality that it ‎requires, on a ‎timely basis and at acceptable prices, ‎then it may not be able to deliver its products on a timely or ‎cost-effective ‎basis to its customers, or at ‎all, which could cause customers to terminate their contracts with the Company, ‎‎increase the Company’s ‎costs and seriously harm its business, results of operations and financial condition. ‎‎Moreover, if any of ‎the Company’s suppliers become financially unstable, then it may have to find new suppliers. ‎‎It may take ‎several months to locate alternative suppliers, if required, or to redesign the Company’s products to ‎‎‎accommodate components from different suppliers. The Company may experience significant delays in ‎‎‎manufacturing and shipping its products to customers and incur additional development, manufacturing ‎and other ‎‎costs to establish alternative sources of supply if the Company loses any of these sources or ‎is required to redesign ‎‎its products. The Company cannot predict if it will be able to obtain replacement ‎components within the time ‎‎frames that it requires at an affordable cost, if at all.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Naturaloutdoor elements such as wind and precipitation may have a material adverse effect on the ‎use and effectiveness of the Company’sproducts.

The Company’s business will involve the operation and flying of UAVs, a technology-based product ‎‎used outside. As such, the business is subject to various risks inherent in a technology-based ‎‎businesses operated in outdoor conditions, including faulty parts, breakdowns and crashes. Although ‎‎the Company anticipates the use of its UAVs in good climactic conditions and that adequate flying ‎‎conditions will be monitored by trained personnel, there can be no assurance that unpredictable natural ‎‎outdoor elements, which could be exacerbated due to risks associated with climate change, will not have a material adverse effect on the use and effectiveness of its products.‎

TheCompany’s products may be subject to recall or return.

Manufacturers and distributors of products are sometimes subject to the recall or return of their products ‎‎‎for a variety of reasons, including product defects, safety concerns, packaging issues and inadequate ‎‎or inaccurate ‎labeling disclosure. If any of the Company’s equipment were to be recalled due to an ‎‎alleged product ‎defect, safety concern or for any other reason, the Company could be required to incur ‎‎unexpected expenses of the recall ‎and any legal proceedings that might arise in connection with the ‎‎recall. The Company may lose a significant ‎amount of sales and may not be able to replace those sales ‎‎at an acceptable margin or at all. In ‎addition, a product recall may require significant management time ‎‎and attention. Additionally, product recalls may lead to ‎increased scrutiny of the Company’s operations ‎‎by Transport Canada or other regulatory agencies, requiring ‎further management time and attention and ‎‎potential legal fees, costs and other expenses.‎‎

‎‎Ifthe Company releases defective products or services, its operating results could suffer.‎

‎Products and services designed and released by the Company involve extremely complex software ‎‎programs and ‎are difficult to develop and distribute. While the Company has quality controls in place to ‎‎detect and prevent defects in its ‎products and services before they are released, these quality controls ‎‎are subject to human error, ‎overriding, and reasonable resource constraints. Therefore, these quality ‎‎controls and preventative measures may ‎not be effective in detecting and preventing defects in the ‎‎Company’s products and services before they have been released into ‎the marketplace. In such an ‎‎event, the Company could be required, or decide voluntarily, to suspend the availability of the product or ‎‎services, which could significantly harm its business and operating results‎.‎

‎TheCompany’s products and services are complex and could have unknown defects or errors, which may give ‎rise to legal claimsagainst the Company, diminish its brand or divert its resources from other purposes.‎

The Company’s UAVs rely on complex avionics, sensors, user-friendly interfaces and tightly integrated, ‎‎electromechanical designs to accomplish their missions. Despite testing, the Company’s products have ‎contained ‎defects and errors and may in the future contain defects, errors or performance problems ‎when first introduced, ‎when new versions or enhancements are released, or even after these products ‎have been used by the Company’s ‎customers for a period of time. These problems could result in ‎expensive and time-consuming design modifications ‎or warranty charges, delays in the introduction of ‎new products or enhancements, significant increases in the ‎Company’s service and maintenance costs, ‎exposure to liability for damages, damaged customer relationships and ‎harm to the Company’s ‎reputation, any of which could materially harm the Company’s results of operations and ‎ability to achieve ‎market acceptance. In addition, increased development and warranty costs could be substantial ‎and ‎could significantly reduce the Company’s operating margins.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

‎The existence of any defects, errors, or failures in the Company’s products or the misuse of the ‎Company’s ‎products could also lead to product returns, recalls, or liability claims or lawsuits against it. A defect, error or ‎failure in one of the ‎Company’s UAV could result in injury, death or property damage and significantly ‎damage the Company’s ‎reputation and support for its UAV in general. The Company anticipates this risk ‎will grow as its UAV begins to be ‎used in Canadian domestic airspace and urban areas. The Company’s ‎UAV test systems also have the potential to ‎cause injury, death or property damage in the event that ‎they are misused, malfunction or fail to operate properly ‎due to unknown defects or errors.‎ Although the ‎Company maintains insurance policies, it cannot provide any assurance that this insurance will be ‎‎adequate to protect the Company from all material judgments and expenses related to potential future ‎claims or ‎that these levels of insurance will be available in the future at economical prices or at all. A ‎successful product ‎liability claim could result in substantial cost to us. Even if the Company is fully ‎insured as it relates to a particular claim, the ‎claim could nevertheless diminish the Company’s brand and ‎divert management’s attention and resources, which ‎could have a negative impact on the Company’s ‎business, financial condition and results of operations.‎

TheCompany could be prohibited from shipping its products to certain countries if it is unable to obtain ‎Canadian government authorizationregarding the export of its products, or if current or future export laws limit ‎or otherwise restrict the Company’s business.‎

The Company must comply with Canadian federal and provincial laws regulating the export of its ‎products. In ‎some cases, explicit authorization from the Canadian government is needed to export its ‎products. The export ‎regulations and the governing policies applicable to the Company’s business are ‎subject to change. The Company ‎cannot provide assurance that such export authorizations will be ‎available for its products in the future. ‎Compliance with these laws has not significantly limited the ‎Company’s operations or sales in the recent past, but ‎could significantly limit them in the future. Non-‎compliance with applicable export regulations could potentially ‎expose the Company to fines, penalties ‎and sanctions. If the Company cannot obtain required government ‎approvals under applicable ‎regulations, the Company may not be able to sell its products in certain international ‎jurisdictions, which ‎could adversely affect the Company’s financial condition and results of operations.‎

Negativeconsumer perception regarding the Company’s products‎ could have a material adverse effect on the demand for the Company’s‎products and the business, results of operations, financial condition and cash flows of the Company.

The Company believes the UAV industry is highly dependent upon consumer perception regarding the ‎‎safety, efficacy, and quality of the UAV used. Consumer perception of these products can be ‎‎significantly influenced by scientific research or findings, regulatory investigations, litigation, media ‎attention, ‎and other publicity regarding the use of UAV. There can be no assurance that future scientific ‎research, ‎findings, regulatory proceedings, litigation, media attention, or other research findings or ‎publicity will be ‎favourable to the UAV market. Future research reports, findings, regulatory proceedings, ‎litigation, media ‎attention or other publicity that are perceived as less favourable than, or that question, ‎earlier research ‎reports, findings or publicity could have a material adverse effect on the demand for the ‎Company’s ‎products and the business, results of operations, financial condition and cash flows of the ‎Company.

The ‎dependence upon consumer perceptions means that adverse scientific research reports, ‎findings, ‎regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or ‎with merit, ‎could have a material adverse effect on the Company, the demand for the Company’s ‎products, and the ‎business, results of operations, financial condition and cash flows of the Company. ‎Further, adverse ‎publicity reports or other media attention regarding the safety, the efficacy, and quality ‎of UAV based surveys in general, or the Company’s products specifically, ‎could have a material adverse ‎effect.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Ifthe Company fails ‎‎to successfully promote its product brand, this could have a material adverse ‎effect on the Company’sbusiness, prospects, ‎‎financial condition and results of operations‎.

The Company believes that brand recognition is an important factor to its success. If the Company fails ‎‎‎to promote its brands successfully, or if the expenses of doing so are disproportionate to any increased ‎‎‎net sales it achieves, it would have a material adverse effect on the Company’s business, prospects, ‎‎‎financial condition and results of operations. This will depend largely on the Company’s ability to ‎‎‎maintain trust, be a technology leader, and continue to provide high-quality and secure technologies, ‎‎‎products and services. Any negative publicity about the Company or its industry, the quality and ‎reliability of the Company’s technologies, products and services, the Company’s risk management ‎‎‎processes, changes to the Company’s technologies, products and services, its ability to effectively ‎‎‎manage and resolve customer complaints, its privacy and security practices, litigation, regulatory ‎activity, and the experience of sellers and buyers with the Company’s products or services, could ‎adversely affect the Company’s reputation and the confidence in and use of the ‎‎Company’s ‎technologies, products and services. Harm to the Company’s brand can arise from ‎‎many sources, ‎including; failure by the Company or its partners to satisfy expectations of service and quality; ‎inadequate protection of sensitive information; compliance failures and claims; litigation and ‎‎other ‎claims; employee misconduct; and misconduct by the Company’s partners, service ‎‎providers, or other ‎counterparties. If the Company does not successfully maintain a strong and trusted brand, its business ‎could be materially and adversely affected.‎ ‎

TheCompany may be subject to electronic communication security risks.

A significant potential vulnerability of electronic communications is the security of transmission of ‎confidential ‎information over public networks. Cyberattacks could result in unauthorized access to the ‎Company’s computer ‎systems or its third-party IT service provider’s systems and, if successful, ‎misappropriate personal or confidential ‎information. Anyone who is able to circumvent the Company’s ‎security measures could misappropriate proprietary ‎information or cause interruptions in its operations. ‎The Company may be required to expend capital and other ‎resources to protect against such security ‎breaches or to alleviate problems caused by such breaches.‎

‎The last few years have seen an increase in the volume and sophistication ‎of targeted cyber-attacks. A failure of ‎the Company’s IT ‎infrastructure could severely limit the Company’s ability ‎to conduct ordinary operations or ‎expose the ‎Company to liability. To date, the Company’s systems have functioned capably, and it has not ‎‎experienced a material impact to its ‎operations as a result of an IT infrastructure issue. Data security breaches ‎suffered by well-known companies and institutions have attracted a substantial amount of media attention, ‎prompting new foreign, federal, provincial and state laws and legislative proposals addressing data privacy and ‎security. As a result, the Company may become subject to more extensive requirements to protect the customer ‎information that it processes in connection with the purchase of its products, resulting in increased compliance ‎costs.‎

While the Company has taken measures to protect against cyberattacks, even the most well-protected IT networks, ‎systems and facilities remain potentially vulnerable because ‎the techniques used in attempted security breaches are ‎continually evolving and generally are not ‎recognized until launched against a target or, in some cases, are designed ‎not to be detected and, in ‎fact, may not be detected. Any such compromise of the Company’s or its third party’s IT ‎service ‎providers’ data security and access, public disclosure, or loss of personal or confidential business ‎‎information, could result in legal claims and proceedings, liability under laws to protect privacy of ‎personal ‎information, and regulatory penalties, and could disrupt the Company’s operations, require significant ‎‎management attention and resources to remedy any damages that result, and damage its reputation and ‎customers ‎willingness to transact business with us, any of which could adversely affect our business.‎ ‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

TheCompany’s business could be adversely affected if its consumer protection and data privacy practices are not ‎perceived asadequate or there are breaches of its security measures or unintended disclosures of its consumer data.‎

‎The rate of privacy law-making is accelerating globally and interpretation and application of consumer ‎protection ‎and data privacy laws in Canada, the United States, Europe and elsewhere are often uncertain, ‎contradictory and in ‎flux. As business practices are being challenged by regulators, private litigants, and ‎consumer protection agencies ‎around the world, it is possible that these laws may be interpreted and ‎applied in a manner that is inconsistent with ‎the Company’s data and/or consumer protection practices. If ‎so, this could result in increased litigation government ‎or court-imposed fines, judgments or orders ‎requiring that the Company change its practices, which could have an ‎adverse effect on its business and ‎reputation. Complying with these various laws could cause the Company to incur ‎substantial costs or ‎require it to change its business practices in a manner adverse to its business.‎

TheCompany relies on its business partners, and they may be given access to sensitive and proprietary ‎information in order to provideservices and support to the Company’s teams.‎

‎The Company relies on various business partners, including third-party service providers, vendors, ‎licensing partners, ‎development partners, and licensees, among others, in some areas of the Company’s ‎business. In some cases, these ‎third parties are given access to sensitive and proprietary information in ‎order to provide services and support to the ‎Company’s teams. These third parties may misappropriate ‎the Company’s information and engage in ‎unauthorized use of it. The failure of these third parties to ‎provide adequate services and technologies, or the failure ‎of the third parties to adequately maintain or ‎update their services and technologies, could result in a disruption to ‎the Company’s business ‎operations. Further, disruptions in the financial markets and economic downturns may ‎adversely affect ‎the Company’s business partners and they may not be able to continue honoring their obligations ‎to the ‎Company. Alternative arrangements and services may not be available to the Company on commercially ‎‎reasonable terms or the Company may experience business interruptions upon a transition to an ‎alternative partner ‎or vendor. If the Company loses one or more significant business partners, the ‎Company’s business could be ‎harmed.‎

Ifthe Company fails to protect, or incurs significant costs in defending, its intellectual property and other ‎proprietary rights,the Company’s business, financial condition, and results of operations could be materially ‎harmed.‎

‎The Company’s success depends, in large part, on its ability to protect its intellectual property and other ‎proprietary ‎rights. The Company relies primarily on patents, trademarks, copyrights, trade secrets and ‎unfair competition laws, ‎as well as license agreements and other contractual provisions, to protect the ‎Company’s intellectual property and ‎other proprietary rights. However, a portion of the Company’s ‎technology is not patented, and the Company may ‎be unable or may not seek to obtain patent ‎protection for this technology. Moreover, existing Canadian legal ‎standards relating to the validity, ‎enforceability and scope of protection of intellectual property rights offer only ‎limited protection, may ‎not provide the Company with any competitive advantages, and may be challenged by ‎third parties. The ‎laws of countries other than Canada may be even less protective of intellectual property rights. ‎‎Accordingly, despite its efforts, the Company may be unable to prevent third parties from infringing ‎upon or ‎misappropriating its intellectual property or otherwise gaining access to the Company’s ‎technology. Unauthorized ‎third parties may try to copy or reverse engineer the Company’s products or ‎portions of its products or otherwise ‎obtain and use the Company’s intellectual property. Moreover, ‎many of the Company’s employees have access to ‎the Company’s trade secrets and other intellectual ‎property. If one or more of these employees leave to work for ‎one of the Company’s competitors, then ‎they may disseminate this proprietary information, which may as a result ‎damage the Company’s ‎competitive position. If the Company fails to protect its intellectual property and other ‎proprietary rights, ‎then the Company’s business, results of operations or financial condition could be materially ‎harmed. ‎From time to time, the Company may have to initiate lawsuits to protect its intellectual property and other ‎‎proprietary rights. Pursuing these claims is time consuming and expensive and could adversely impact ‎the ‎Company’s results of operations.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

‎In addition, affirmatively defending the Company’s intellectual property rights and investigating whether ‎the ‎Company is pursuing a product or service development that may violate the rights of others may ‎entail significant ‎expense. Any of the Company’s intellectual property rights may be challenged by others ‎or invalidated through ‎administrative processes or litigation. If the Company resorts to legal proceedings ‎to enforce its intellectual property ‎rights or to determine the validity and scope of the intellectual property ‎or other proprietary rights of others, then the ‎proceedings could result in significant expense to the ‎Company and divert the attention and efforts of the ‎Company’s management and technical employees, ‎even if the Company prevails.‎

Obtainingand maintaining the Company’s patent protection depends on compliance with various procedural, document ‎submission, fee payment,and other requirements imposed by governmental patent agencies, and its patent ‎protection could be reduced or eliminated for non-compliancewith these requirements.‎

‎The Canadian Intellectual ‎Property Office (“CIPO”), the United States Patent and ‎Trademark Office (“USPTO”) and various foreign national or international patent agencies ‎require compliance with a number of procedural, documentary, fee payment, and other similar provisions during ‎the patent application process. Periodic maintenance fees on any issued patent are due to be paid to the CIPO, the USPTO and ‎various foreign national or international patent agencies in several stages over the lifetime of the patent. While an ‎inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the ‎applicable rules, there are situations in which non-compliance can result in abandonment or lapse of the patent or ‎patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance ‎events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file ‎national and regional stage patent applications based on the Company’s international patent application, failure to respond to ‎official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit ‎formal documents. If the Company fails to maintain the patents and patent applications covering its product candidates, its ‎competitors might be able to enter the market, which would have a material adverse effect on the Company’s business. ‎

While a patent may be granted by a national patent office, there is no guarantee that the granted patent ‎is valid. ‎Options exist to challenge the validity of a patent which, depending upon the jurisdiction, may ‎include re-‎examination, opposition proceedings before the patent office, and/or invalidation proceedings ‎before the relevant ‎court. Patent validity may also be the subject of a counterclaim to an allegation of ‎patent infringement.‎

Pending patent applications may be challenged by third parties in protest or similar proceedings. Third ‎parties can ‎typically submit prior art material to patentability for review by the patent examiner. Regarding ‎Patent Cooperation ‎Treaty applications, a positive opinion regarding patentability issued by the ‎International Searching Authority does ‎not guarantee allowance of a national application derived from the ‎Patent Cooperation Treaty application. The ‎coverage claimed in a patent application can be significantly ‎reduced before the patent is issued, and the patent’s ‎scope can be modified after issuance. It is also ‎possible that the scope of claims granted may vary from jurisdiction ‎to jurisdiction.‎

The grant of a patent does not have any bearing on whether the invention described in the patent ‎application would ‎infringe the rights of earlier filed patents. It is possible to both obtain patent protection ‎for an invention and yet still ‎infringe the rights of an earlier granted patent.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

TheCompany may be sued by third parties for alleged infringement of their proprietary rights, which could be ‎costly, time-consumingand limit the Company’s ability to use certain technologies in the future.‎

‎The Company may become subject to claims that its technologies infringe upon the intellectual property ‎or other ‎proprietary rights of third parties. Any claims, with or without merit, could be time-consuming ‎and expensive, and ‎could divert the Company’s management’s attention away from the execution of its ‎business plan. Moreover, any ‎settlement or adverse judgment resulting from these claims could require ‎the Company to pay substantial amounts ‎or obtain a license to continue to use the disputed technology, ‎or otherwise restrict or prohibit the Company’s use of ‎the technology. The Company cannot assure that it ‎would be able to obtain a license from the third party asserting ‎the claim on commercially reasonable ‎terms, if at all, that the Company would be able to develop alternative ‎technology on a timely basis, if at ‎all, or that the Company would be able to obtain a license to use a suitable ‎alternative technology to ‎permit the Company to continue offering, and the Company’s customers to continue ‎using, the ‎Company’s affected product. An adverse determination also could prevent the Company from offering ‎‎its products to others. Infringement claims asserted against the Company may have a material adverse ‎effect on its ‎business, results of operations or financial condition.‎

‎TheCompany may not be able to protect its intellectual property rights throughout the world.‎

‎Filing, prosecuting, and defending patents on all of the Company’s product candidates throughout the world would be ‎prohibitively expensive. Therefore, the Company has filed applications and/or obtained patents only in key markets ‎including the United States and Canada. Competitors may use the Company’s technologies in jurisdictions where it has not ‎obtained patent protection to develop their own products and their products may compete with products of the Company.‎‎

‎Ifthe Company is required to write down goodwill and other intangible assets, the Company’s financial ‎condition and resultscould be negatively affected. ‎

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Goodwill impairment arises when there is deterioration in the capabilities of acquired assets to generate ‎cash flows, ‎and the fair value of the goodwill dips below its book value. The Company is required to ‎review its goodwill for ‎impairment at least annually. Events that may trigger goodwill impairment include ‎deterioration in economic ‎conditions, increased competition, loss of key personnel, and regulatory ‎action. Should any of these occur, an impairment of ‎goodwill relating to the acquisition of Dronelogics ‎Systems Inc. could have a negative effect on the assets of the ‎Company.‎

Fromtime to time, the Company may become involved in legal proceedings, which could adversely affect the ‎Company.‎

‎The Company may, from time to time in the future, become subject to legal proceedings, claims, ‎litigation and ‎government investigations or inquiries, which could be expensive, lengthy, and disruptive ‎to normal business ‎operations. In addition, the outcome of any legal proceedings, claims, litigation, ‎investigations or inquiries may be ‎difficult to predict and could have a material adverse effect on the ‎Company’s business, operating results, or ‎financial condition.‎

TheCompany’s directors and officers may have conflicts of interest in conducting their duties.

Because directors and officers of the Company are or may become directors or officers of other ‎‎reporting companies or have significant shareholdings in other technology companies, the directors and ‎‎officers of the Company may have conflicts of interest in conducting their duties. The Company and its ‎‎directors and officers will attempt to minimize such conflicts. In the event that such a conflict of interest ‎‎arises at a meeting of the directors of the Company, a director who has such a conflict will abstain from ‎‎voting for or against a particular matter in which the director has the conflict. In appropriate cases, the ‎‎Company will establish a special committee of independent directors to review a particular matter in ‎‎which several directors, or officers, may have a conflict. In determining whether or not the Company will ‎‎participate in a particular program and the interest therein to be acquired by it, the directors will primarily ‎‎consider the potential benefits to the Company, the degree of risk to which the Company may be ‎‎exposed and its financial position at that time. Other than as indicated, the Company has no other ‎‎procedures or mechanisms to deal with conflicts of interest.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

‎The Company’s Articles ‎provide that the Company must indemnify a director or former director against all judgments, ‎penalties ‎or fines to which such person is or may be liable by reason of such person being or having ‎been a director of the ‎Company and the executive officers and directors may also have rights to ‎indemnification from the Company, ‎including ‎pursuant to directors’ and officers’ liability insurance ‎policies, that will survive termination of their ‎‎agreements‎.‎

Changesin accounting standards and subjective assumptions, estimates and judgments by ‎management ‎related to ‎complex accountingmatters could significantly affect the Company’s ‎reported financial results ‎or financial condition.‎

Changes in accounting standards and subjective assumptions, estimates and judgments by ‎management ‎related to ‎complex accounting matters could significantly affect the Company’s ‎reported financial results ‎or financial condition. ‎Generally accepted accounting principles and related accounting pronouncements, implementation ‎‎guidelines and ‎interpretations with regard to a wide range of matters that are relevant to the Company’s ‎‎business, including but not limited to ‎revenue recognition, impairment of goodwill and intangible assets, ‎‎inventory, income taxes and litigation, are highly ‎complex and involve many subjective assumptions, ‎‎estimates and judgments. Changes in these rules or their ‎interpretation or changes in underlying ‎‎assumptions, estimates or judgments could significantly change the Company’s reported ‎financial ‎‎performance or financial condition in accordance with generally accepted accounting principles.‎

RisksRelated to Our Common Shares

Themarket price of the Common Shares may be highly volatile.

The market price of the Common Shares is highly volatile and has been subject to wide fluctuations ‎in response to a number of factors that are beyond the Company’s control, including but not limited ‎to‎

●	revenue<br> or results of operations in any quarter failing to meet the expectations, published or otherwise, of ‎the investment community;‎
●	actual<br> or anticipated changes or fluctuations in its results of operations;‎
●	announcements<br> by us or the Company’s competitors of new products or new or terminated significant contracts, ‎commercial relationships<br> or capital commitments;‎
●	rumors<br> and market speculation involving it or other companies in its industry;‎
●	changes<br> in its executive management team or the composition of the board of directors of the Company (the “Board”);‎
●	fluctuations<br> in the share prices of other companies in the technology and emerging growth sectors;‎
●	general<br> market conditions and macroeconomic trends driven by factors outside the Company’s control, such as pandemics, geopolitical<br> conflicts, supply chain disruptions, market volatility, inflation, rising interest rate, political instability, and labor challenges,<br> among other factors;
●	actual<br> or anticipated developments in its business or its competitors’ businesses or the competitive ‎landscape generally;‎
●	litigation<br> involving us, the Company’s industry or both, or investigations by regulators into its operations or those of ‎competitors;‎
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●	announced<br> or completed acquisitions of businesses or technologies by the Company or its competitors;‎
●	new<br> laws or regulations or new interpretations of existing laws or regulations applicable to its ‎business;‎
●	shareholder<br> activism and related publicity;‎
●	foreign<br> exchange rates; and
●	other<br> risk factors as set out in this Annual Report and in the documents incorporated by ‎reference into this Annual Report.‎

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

If the market price of the Company’s Common Shares drops significantly, shareholders could institute securities class action ‎lawsuits against it, regardless of the merits of such claims. Such a lawsuit could cause it to incur substantial ‎costs and could divert the time and attention of management and other resources from the Company’s business, which ‎could harm its business, results of operations and financial condition.‎

Thereis no guarantee that an active trading market for the Company’s Common Shares will be maintained on ‎the CSE and/or Nasdaq.Investors may not be able to sell their Common Shares quickly or at the ‎latest market price if the trading in our Common Sharesis not active.‎

The Company’s Common Shares are currently listed on the Canadian Stock Exchange (“CSE”), the Nasdaq Stock Market, LLC (“Nasdaq”), and the Frankfurt Stock Exchange, ‎however, it shareholders may be unable to sell significant quantities of Common Shares into the public ‎‎trading markets without a significant reduction in the price of their Common Shares, or at all and there ‎can be no guarantee that an active trading market for the Common Shares ‎may be maintained. There can ‎be no assurance that ‎there will be sufficient liquidity of its Common Shares on the trading market, and ‎that we will continue to meet ‎the listing requirements of the CSE, Nasdaq or any other public listing ‎exchange.‎

Failureto meet Nasdaq’s continued listing requirements could result in the delisting of the Company’s Common Shares, negativelyimpact the price of the Company’s Common Shares and negatively impact its ability to raise additional capital.

If the Company fails to satisfy the continued listing requirements of the Nasdaq, such as corporate governance requirements or the minimum closing bid price requirement, the exchange may take steps to delist the Company’s Common Shares. Such a delisting would likely have a negative effect on the price of the Company’s Common Shares and would impair shareholders’ ability to sell or purchase its Common Shares when they wish to do so.

As previously disclosed, on September 22, 2023, the Company received a letter from the Listing Qualifications ‎Department of Nasdaq notifying the Company of its noncompliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid ‎Price Rule”) by failing to maintain a minimum bid price for the Company’s common shares of at least $1.00 per ‎share for 30 consecutive business days. The Company was allowed an initial 180-day grace period, or until March ‎‎20, 2024, (the “Bid Price Compliance Period”), to regain compliance with the Bid Price Rule. To regain compliance ‎with the Bid Price Rule the closing bid price of the Company’s common shares needed to be at least $1.00 per share ‎for a minimum of ten consecutive business days during the Bid Price Compliance Period.

On March 21, 2024, the Company received notification that it had failed to regain compliance with the Bid Price ‎Rule and is not eligible for a second 180 day compliance period because of its failure to comply with the $5 million ‎minimum stockholders’ equity initial listing requirement for the period ended September 30, 2023. Unless the ‎Company timely requests a hearing before an independent Nasdaq Hearings Panel (the “Nasdaq Panel”), the ‎Company’s securities will be subject to delisting. Accordingly, the Company will request a hearing before the ‎Nasdaq Panel. The hearing request will automatically stay any suspension or delisting action pending the hearing ‎and the expiration of any additional extension period granted by the Nasdaq Panel following the hearing. In that ‎regard, pursuant to the Nasdaq Listing Bid Price Rules, the Nasdaq Panel has the discretion to grant an additional ‎extension period that can expire as late as September 17, 2024. At the hearing, the Company will be asked to ‎provide a plan to regain compliance to the Nasdaq Panel. The Company intends to present a plan to regain ‎compliance with the Bid Price Rule and request the continued listing of its common shares on Nasdaq pending such ‎compliance. However, there can be no assurance that the Nasdaq Panel will grant the Company’s request or that ‎the Company will ultimately regain compliance with all applicable requirements for continued listing on Nasdaq.‎ In April 2024, the Company received notification that it failed to comply with the Minimum Stockholders’ Equity Requirement which served as an additional and separate basis for delisting. Following the May 21st hearing, the Nasdaq Panel granted an additional extension period with regard to the Bid Price Requirement that would expire on September 17, 2024. In addition, at the hearing, the Company presented a plan to regain compliance with the Minimum Stockholders’ Equity Requirement which plan the Company implemented on August 7, 2024 via amendments to warrants issued in October 2023 and in May 2024. On October 1, 2024, Nasdaq informed the Company that it had regained compliance with the Bid Price Requirement and the Minimum Stockholders’ Equity Requirement. The letter from Nasdaq further informed the Company that it is subject to a Mandatory Panel Monitor for a period of one year from October 1, 2024.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

If, within that one-year monitoring period, the Company is again out of compliance with the Minimum Stockholders’ Equity Requirement, the Company will not be afforded the opportunity to present a plan of compliance to Nasdaq with respect to that deficiency nor additional time to cure that deficiency. Instead, Nasdaq will issue a Delist Determination Letter and the Company will have the opportunity to request a hearing before a Nasdaq Panel to respond to such letter.

Futureissuances of equity securities by us or sales by the Company’s existing shareholders may cause the price ‎of its Common Sharesto fall.‎

The market price of the Company’s Common Shares could decline as a result of issuances of securities or sales by its ‎existing shareholders in the market, including by its directors, executive officers and significant ‎shareholders, or ‎the perception that these sales could occur. Sales of the Company’s Common Shares by ‎shareholders might also make it ‎more difficult for it to sell Common Shares at a time and price that it ‎deems appropriate. The Company also expects to ‎issue Common Shares in the future. Future issuances of Common ‎Shares, or the perception that such issuances ‎are likely to occur, could affect the prevailing trading ‎prices of the Common Shares.‎

Wemay never pay dividends over the foreseeable future.‎

Investors should not rely on an investment in the Company’s Common Shares to provide dividend ‎income. The ‎Company does not anticipate that it will pay any cash dividends to holders of its Common ‎Shares in the ‎foreseeable future. Instead, the Company plans to retain any earnings to maintain and expand ‎its ‎operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting ‎‎the amount of dividends that may be declared or paid on its Common Shares. Accordingly, investors ‎must ‎rely on sales of their Common Shares after price appreciation, which may never occur, as the only ‎way to ‎realize any return on their investment. As a result, investors seeking cash dividends should not ‎purchase the ‎Company’s Common Shares.‎

UnitedStates investors may not be able to obtain enforcement of civil liabilities against us.

‎

The Company is incorporated under the laws of British Columbia, Canada, and its principal executive offices are located in Canada. Most of the Company’s directors and officers and most of the experts named in this Annual Report reside outside of the United States and all or a substantial portion of the Company’s assets and the assets of these persons are located outside the United States. Consequently, it may not be possible for an investor to effect service of process within the United States on the Company or those persons. Furthermore, it may not be possible for an investor to enforce judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws or other laws of the United States against those persons or the Company. There is doubt as to the enforceability, in original actions in Canadian courts, of liabilities based upon United States federal securities laws and as to the enforceability in Canadian courts of judgments of United States courts obtained in actions based upon the civil liability provisions of the United States federal securities laws. Therefore, it may not be possible to enforce those actions against the Company, certain of the Company’s directors and officers or the experts named in this Annual Report.

Weare an emerging growth company and intend to take advantage of reduced disclosure requirements ‎applicable to emerging growth companies,which could make the Company’s Common Shares less attractive to ‎investors.

We are an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth ‎company until the earliest to occur of (i) the last day of the fiscal year in which we have total annual gross ‎revenue of $1.07 billion or more; (ii) December 31, 2026 (the last day of the fiscal year ending after the fifth ‎anniversary of the date of the completion of the first sales of its common equity pursuant to an effective ‎registration statement under the Securities Act); (iii) ‎the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-‎year period; or (iv) the date we qualify as a “large accelerated filer” under the rules of the SEC, which means the ‎market value of the Company’s Common Shares held by non-affiliates exceeds $700 million as of the last business day of ‎its most recently completed second fiscal quarter after we have been a reporting company in the United States ‎for at least 12 months. For so long as we remain an emerging growth company, we are permitted to and intend to ‎rely upon exemptions from certain disclosure requirements that are applicable to other public companies that ‎are not emerging growth companies.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

These exemptions include not being required to comply with the auditor ‎attestation requirements of Section 404 (“Section 404”) of the Sarbanes-Oxley Act (2002), as amended (the “Sarbanes-Oxley Act”).‎

We may take advantage of some, but not all, of the available exemptions available to emerging growth ‎companies. ‎We cannot predict whether investors will find the Company’s Common Shares less attractive if it relies on these ‎‎exemptions. If some investors find the Company’s Common Shares less attractive as a result, there may be a less ‎active ‎trading market for its Common Shares and the price of its Common Shares may be more volatile. ‎

Wewill incur increased costs as a result of operating as a public company in the United States ‎and the ‎Company’s managementwill be required to devote substantial time to new compliance initiatives.‎

As a U.S. public company, particularly if or when we are no longer an “emerging growth company” as ‎defined ‎‎under the JOBS Act, we incur significant legal, accounting and other expenses, in addition to ‎those we ‎incur as a ‎Canadian public company, that we did not incur prior to being listed on Nasdaq. In ‎‎addition, the Sarbanes-Oxley ‎Act, and rules implemented by the SEC and Nasdaq impose various other ‎‎requirements on public companies, and ‎the Company spends time and resources to ensure compliance with its ‎‎reporting obligations in both Canada and the ‎United States.‎

For example, pursuant to Section 404, we are required to furnish a report by our management on our ‎internal ‎control over financial reporting (“ICFR”), which, if or when we are no longer an emerging growth ‎company, must ‎be accompanied by an attestation report on ICFR issued by our independent registered ‎public accounting firm. ‎To achieve compliance with Section 404, we must document and evaluate our ‎ICFR, ‎which is both costly and challenging. In this regard, we must dedicate internal resources, ‎potentially engage outside consultants and adopt a detailed work plan to assess and document the ‎‎adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through ‎testing that ‎controls are functioning as documented and implement a continuous reporting and ‎improvement process for ‎ICFR. Despite our efforts, there is a risk that neither we nor our independent ‎registered public accounting firm will ‎be able to conclude that our ICFR is effective as required by ‎Section 404. This ‎could result in a determination that there are one or more material weaknesses in our ‎ICFR, which could cause an ‎adverse reaction in the financial markets due to a loss of confidence in the ‎reliability of our consolidated ‎financial statements.‎

In addition, becoming a public company in the United States has increased legal and financial ‎compliance as well ‎as regulatory costs, such as additional Nasdaq fees, and has made some of our ‎public company obligations ‎more time consuming. We invest resources to comply with evolving laws, ‎regulations and standards in ‎both Canada and the United States, and this investment results in increased ‎general and administrative ‎expenses and increased diversion of management’s time and attention from ‎revenue-generating activities to ‎compliance activities. If our efforts to comply with public company laws, ‎regulations and standards in the ‎United States are insufficient, regulatory authorities may initiate legal ‎proceedings against us and our business ‎may be harmed.‎

Being a public company in the United States and complying with applicable rules and ‎regulations also ‎makes it more expensive for us to obtain sufficient levels of director and officer liability insurance ‎‎coverage. This factor may also make it more difficult for us to attract and retain qualified executive ‎officers and ‎members of our Board of Directors.‎

Asa foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. ‎issuer, which may limitthe information publicly available to the Company’s U.S. shareholders.‎

We currently qualify as a “foreign private issuer” under applicable U.S. federal securities laws and, therefore, are ‎not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. As a result, we do ‎not file the same reports that a U.S. domestic issuer ‎would file with the SEC, although we are required to file ‎with or furnish to the SEC the continuous ‎disclosure documents that we are required to file in Canada under ‎Canadian securities laws. In addition, ‎the Company’s officers, directors and principal shareholders are exempt from the ‎reporting and “short swing” profit ‎recovery provisions of Section 16 of the Exchange Act.

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DraganflyInc.

ManagementDiscussion and Analysis

Forthe year ended December 31, 2024

Therefore, the Company’s ‎shareholders may not know on as ‎timely a basis when its officers, directors and principal shareholders purchase ‎or sell our securities as ‎the reporting periods under the corresponding Canadian insider reporting requirements are ‎longer. In ‎addition, as a foreign private issuer, the Company is exempt from the proxy rules under the Exchange Act.

The Company is ‎also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material ‎non-‎public information. While the Company expects to comply with the corresponding requirements relating to proxy ‎statements ‎and disclosure of material non-public information under Canadian securities laws, these ‎requirements differ from ‎those under the Exchange Act and Regulation FD and shareholders should not ‎expect to receive in every case the ‎same information at the same time as such information is provided ‎by U.S. domestic issuers.

‎

In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate ‎governance ‎practices, except to the extent that such laws would be contrary to U.S. federal securities ‎laws and Nasdaq ‎listing rules and provided that we disclose the requirements we are not following and ‎describe the Canadian ‎practices we follow instead. We rely on this exemption in part. As a result, the Company’s ‎shareholders may not have ‎the same protections afforded to shareholders of U.S. domestic issuers that ‎are subject to all U.S. corporate ‎governance requirements.

At some point in the future, we may cease to be a foreign private issuer. If we cease to ‎qualify, we will ‎be subject to the same reporting requirements and corporate governance requirements as a U.S. ‎‎domestic issuer, which may increase the Company’s costs of being a public company in the ‎United States.

REGULATORYPOLICIES

DisclosureControls and Procedures

Disclosure Controls and Procedures (“DC&P”) are designed to provide reasonable assurance that all material information is gathered and reported on a timely basis to senior management so that appropriate decisions can be made regarding public disclosure and that information required to be disclosed by the issuer under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation. The Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), along with other members of management, have designed, or caused to be designed under the CEO and CFO’s supervision, DC&P and established processes to ensure that they are provided with sufficient knowledge to support the representations made in the interim certificates required to be filed under National Instrument 52-109.

InternalControls over Financial Reporting

The CEO and CFO, along with participation from other members of management, are responsible for establishing and maintaining adequate Internal Control over Financial Reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial statements prepared in accordance with IFRS. During the year ended December 31, 2024, there has been no change in the Company’s ICFR that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.

Limitationsof Controls and Procedures

The Company’s management, including its CEO and CFO, believe that any DC&P or ICFR, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OtherInformation

Additional information about the Company is available at www.draganfly.com

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Approval

This MD&A is authorized for issue by the Board on March 27, 2025

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Form 52-109F1

Certificationof Annual Filings

Full Certificate

I, Paul Sun, the Chief Financial Officer of Draganfly Inc., certify the following:

1.	Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A,<br> including, for greater certainty, all documents and information that are incorporated by<br> reference in the AIF (together, the “annual filings”) of Draganfly Inc. (the<br> “issuer”) for the financial year ended December 31, 2024.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence,<br> the annual filings do not contain any untrue statement of a material fact or omit to state<br> a material fact required to be stated or that is necessary to make a statement not misleading<br> in light of the circumstances under which it was made, for the period covered by the annual<br> filings.
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3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual<br> financial statements together with the other financial information included in the annual<br> filings fairly present in all material respects the financial condition, financial performance<br> and cash flows of the issuer, as of the date of and for the periods presented in the annual<br> filings.
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4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing<br> and maintaining disclosure controls and procedures (DC&P) and internal control over financial<br> reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
---	---
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s<br> other certifying officer(s) and I have, as at the financial year end
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(a)	designed<br> DC&P, or caused it to be designed under our supervision, to provide reasonable assurance<br> that
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(i)	material<br> information relating to the issuer is made known to us by others, particularly during the<br> period in which the annual filings are being prepared; and
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(ii)	information<br> required to be disclosed by the issuer in its annual filings, interim filings or other reports<br> filed or submitted by it under securities legislation is recorded, processed, summarized<br> and reported within the time periods specified in securities legislation; and
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(b)	designed<br> ICFR, or caused it to be designed under our supervision, to provide reasonable assurance<br> regarding the reliability of financial reporting and the preparation of financial statements<br> for external purposes in accordance with the issuer’s GAAP.
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5.1	Control framework: The control framework the issuer’s other certifying officer(s) and<br> I used to design the issuer’s ICFR is the Internal Control – Integrated Framework<br> (2013 COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway<br> Commission (COSO).
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5.2	N/A.
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5.3	N/A.
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6.	Evaluation(default): The issuer’s other certifying officer(s) and I have
---	---
(a)	evaluated,<br> or caused to be evaluated under our supervision, the effectiveness of the issuer’s<br> DC&P at the financial year end and the issuer has disclosed in its annual MD&A our<br> conclusions about the effectiveness of DC&P at the financial year end based on that evaluation;<br> and
---	---
(b)	evaluated,<br> or caused to be evaluated under our supervision, the effectiveness of the issuer’s<br> ICFR at the financial year end and the issuer has disclosed in its annual MD&A
---	---
(i)	our<br> conclusions about the effectiveness of ICFR at the financial year end based on that evaluation;<br> and
---	---
(ii)	N/A.
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7.	Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the<br> issuer’s ICFR that occurred during the period beginning on October 1, 2024 and ended<br> on December 31, 2024 that has materially affected, or is reasonably likely to materially<br> affect, the issuer’s ICFR.
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8.	Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s<br> other certifying officer(s) and I have disclosed, based on our most recent evaluation of<br> ICFR, to the issuer’s auditors, and the board of directors or the audit committee of<br> the board of directors any fraud that involves management or other employees who have a significant<br> role in the issuer’s ICFR.
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Date:<br> March 27, 2025
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Paul<br> Sun
Chief<br> Financial Officer

Form 52-109F1

Certificationof Annual Filings

Full Certificate

I, Cameron Chell, the Chief Executive Officer of Draganfly Inc., certify the following:

1.	Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A,<br> including, for greater certainty, all documents and information that are incorporated by<br> reference in the AIF (together, the “annual filings”) of Draganfly Inc. (the<br> “issuer”) for the financial year ended December 31, 2024.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence,<br> the annual filings do not contain any untrue statement of a material fact or omit to state<br> a material fact required to be stated or that is necessary to make a statement not misleading<br> in light of the circumstances under which it was made, for the period covered by the annual<br> filings.
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3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual<br> financial statements together with the other financial information included in the annual<br> filings fairly present in all material respects the financial condition, financial performance<br> and cash flows of the issuer, as of the date of and for the periods presented in the annual<br> filings.
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4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing<br> and maintaining disclosure controls and procedures (DC&P) and internal control over financial<br> reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
---	---
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s<br> other certifying officer(s) and I have, as at the financial year end
---	---
(a)	designed<br> DC&P, or caused it to be designed under our supervision, to provide reasonable assurance<br> that
---	---
(i)	material<br> information relating to the issuer is made known to us by others, particularly during the<br> period in which the annual filings are being prepared; and
---	---
(ii)	information<br> required to be disclosed by the issuer in its annual filings, interim filings or other reports<br> filed or submitted by it under securities legislation is recorded, processed, summarized<br> and reported within the time periods specified in securities legislation; and
---	---
(b)	designed<br> ICFR, or caused it to be designed under our supervision, to provide reasonable assurance<br> regarding the reliability of financial reporting and the preparation of financial statements<br> for external purposes in accordance with the issuer’s GAAP.
---	---
5.1	Control framework: The control framework the issuer’s other certifying officer(s) and<br> I used to design the issuer’s ICFR is the Internal Control – Integrated Framework<br> (2013 COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway<br> Commission (COSO).
---	---
5.2	N/A.
---	---
5.3	N/A.
---	---
6.	Evaluation: The issuer’s other certifying officer(s) and I have
---	---
(a)	evaluated,<br> or caused to be evaluated under our supervision, the effectiveness of the issuer’s<br> DC&P at the financial year end and the issuer has disclosed in its annual MD&A our<br> conclusions about the effectiveness of DC&P at the financial year end based on that evaluation;<br> and
---	---
(b)	evaluated,<br> or caused to be evaluated under our supervision, the effectiveness of the issuer’s<br> ICFR at the financial year end and the issuer has disclosed in its annual MD&A
---	---
(i)	our<br> conclusions about the effectiveness of ICFR at the financial year end based on that evaluation;<br> and
---	---
(ii)	N/A.
---	---
7.	Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the<br> issuer’s ICFR that occurred during the period beginning on October 1, 2024 and ended<br> on December 31, 2024 that has materially affected, or is reasonably likely to materially<br> affect, the issuer’s ICFR.
---	---
8.	Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s<br> other certifying officer(s) and I have disclosed, based on our most recent evaluation of<br> ICFR, to the issuer’s auditors, and the board of directors or the audit committee of<br> the board of directors any fraud that involves management or other employees who have a significant<br> role in the issuer’s ICFR.
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Date:<br>March 27, 2025
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Cameron<br> Chell
Chief<br> Executive Officer

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Exhibit 15.3

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CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

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We consent to the incorporation by reference in the Annual Report on Form 20-F of our report dated March 27, 2025, with respect to the consolidated financial statements of Draganfly Inc. as at and for the years ended December 31, 2024, and 2023 included in this Annual Report on Form 20-F of Draganfly Inc.

We also consent to the incorporation by reference in the Registration Statements on Form F-10 (No. 333-271498), as amended, and Form S-8 (No. 333-259459) of Draganfly Inc. of our report dated March 27, 2025 referred to above.

/s/ Dale Matheson Carr-Hilton Labonte LLP

Chartered Professional Accountants

Vancouver, Canada

March 27, 2025