Draganfly Inc. (CSE: DFLY) (OTCQB: DFLYF) (FSE: 3U8) (“Draganfly” or the “Company”), an award-winning, industry-leading systems developer within the commercial Unmanned Aerial Vehicle (“UAV”) and the Unmanned Vehicle Systems (“UVS”) industry, is pleased to announce that it has entered into an arm’s length definitive share purchase agreement dated January 15th, 2020 with the shareholders of Dronelogics Systems Inc. (“Dronelogics”), whereby Draganfly has agreed to acquire all of the shares of Dronelogics (the “Transaction”) for cash and common shares of Draganfly (“Draganfly Shares”).
- The Transaction continues to establish Draganfly as a leading, diversified drone organization. Dronelogics has been growing steadily with revenues in excess of CAD$3.0 million and expected 2019 year over year growth of 20.0%. Draganfly management believes the Transaction will generate combined pro forma revenue of between CAD$6 to CAD$7 million for the fiscal year 2020, representing an increase in Draganfly’s revenue of between 23% and 43%.
- Strategically Positioned to Leverage Draganfly’s Brand: Dronelogics is a complementary business to Draganfly and the acquisition of Dronelogics will expand the product offering of Draganfly in the integration and engineering segments. This will expand Draganfly’s total addressable market and enhance its position as a leader in the UAV and UVS industry.
- Expanded Customer Base. Draganfly and Dronelogics have limited overlap in customer base representing an opportunity to cross-sell the expanded product offerings and further customized solutions to existing clients.
- Established History of Providing Drone Services. Dronelogics has been in business for 10 years, working closely with Fortune 500 companies to provide insights into inventory metrics, asset management, volume-metric calculation and digitizing assets, among many other applications.
- Enhanced Management Expertise. The acquisition will add a team of 9 employees. Post-closing, Mr. Justin Hannewyk (“Mr. Hannewyk”) will be President of the operating subsidiary and will also be appointed to Draganfly’s board of directors. The Dronelogics employee base brings a wealth of industry experience and knowledge to Draganfly.
Cameron Chell, Chairman and CEO, stated, “We are excited to welcome the whole Dronelogics team as part of Draganfly. Dronelogics has established itself as a trusted drone service provider. Its business is highly complementary to our business and the combined entity will deliver an enhanced product and service offering to the combined client base. This transaction further establishes Draganfly as a leading, publicly-traded drone company, and provides a strong platform for us to pursue continued consolidation in the industry.”
Material Terms of the Agreement with Dronelogics
- On closing of the Transaction (the “Closing”), the Company will pay the shareholders of Dronelogics (the “Sellers”) CAD$2.0 million, which will consist of the following: (i) a cash payment of CAD$500,000, subject to a working capital adjustment, and (ii) CAD$1.5 million in value plus certain closing adjustments to be satisfied by the issuance Draganfly Shares at a deemed price of CAD$0.50 per share.
- The Sellers will receive a nomination right to appoint one person to the board of directors of the Company for a period of two years from the Closing or as long as Mr. Hannewyk holds a senior executive position with the Company.
- The Draganfly Shares issued under the Transaction will be subject to resale restrictions in the form of pooling terms providing for release of these Draganfly Shares over a period of 24 months and a right to place in favor of Draganfly during the same 24-month period.
- Completion of the Transaction is subject to a number of closing conditions customary for a transaction of this nature, including the filing of required forms with the Canadian securities Exchange (the “CSE”).
- The two Sellers will enter into executive employment agreements with the Company.
The Transaction has been approved by the board of directors of Draganfly and Dronelogics. In connection with the Transaction, the Company will pay fees of $160,000 to certain advisors; as to $100,000 by way of 200,000 in Draganfly Shares at a deemed price of $0.50 per share and as to $60,000 in cash or Draganfly Shares at a deemed price of $0.50 per share. At Closing, the Company will issue: certain additional Draganfly Shares to the Sellers, at a deemed price of CAD$0.50 per Draganfly Share, in satisfaction of accrued management bonuses in connection with their services to Dronelogics; (ii) grant 445,000 incentive stock options to certain employees of Dronelogics pursuant to the Company’s share compensation plan, exercisable at a price equal to closing price of the Draganfly Shares on the CSE on January 15, 2020. The options shall have a term of 10 years and vest in three equal tranches, on the first, second and third anniversaries of the date of grant, and (iii) award 375,000 restricted share units (the “RSUs”) to certain directors and officers of Dronelogics. RSUs were awarded to certain directors and officers of Dronelogics pursuant to the Company’s share compensation plan. The RSUs shall vest in three equal tranches, on the first, second and third anniversaries of the date of award.
Scotiabank is acting as Draganfly’s financial advisor, and Gowling WLG (Canada) LLP is acting as Draganfly’s legal advisor. Stikeman Elliott LLP is acting as Dronelogics legal advisor.
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 based in Vancouver, Canada. The wide variety of services, products and innovations that Dronelogics provides results in a unique one-stop-shop solution for their clients which aids in higher customer retention, diversified revenue streams, repeat business and protection against market volatility. Dronelogic’s customer base comprises well over 10,000 independent names and the company enjoys high repeat business due to its expertise, unique focus on service and broad scope of offerings.
Draganfly Inc. (CSE: DFLY; OTCQB: DFLYF; FSE: 3U8) is the creator of quality, cutting-edge, unmanned vehicle systems and software that revolutionizes the way people do business. Recognized as being at the forefront of technology for over 21 years, Draganfly is an award-winning, industry-leading manufacturer within the commercial UAV and UVS 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.
For more information on Draganfly, please visit us at: www.draganfly.com. For additional investor information, visit www.thecse.com searching DFLY or visit https://www.boerse-frankfurt.de/ searching 3U8.