| SHARE CAPITAL |
Authorized
share capital
Unlimited
number of common shares without par value.
Issued
share capital
During
the three months ended March 31, 2025,
| ● | The
Company issued 6,029 common shares for the vesting of restricted share units. |
During
the year ended December 31, 2024,
| ● | The
Company issued 25,353 common shares for the vesting of restricted share units. |
| ● | The
Company issued 1,991,668 common shares for the exercise of warrants |
| ● | On
February 26, 2024, the Company issued 448,000 units consisting of one common share and one
warrant and 88,000 units consisting of 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. Of the
total share issuance costs $441,166 was expensed in other income (expense). The value of
the issuance was allocated $2,017,966 to the shares, and $2,859,509 to the warrants, including
$431,084 allocated to prefunded warrants. The prefunded warrants were exercised on the date
of issue. On March 27, 2024, the exercise price of the warrants was amended to US$0.1761
from the original 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
shares were returned to treasury that were held in escrow related to the Vital Intelligence
Inc. acquisition for failure to meet required milestones. The shares had a carrying value
of $nil on cancellation. |
| ● | On
April 29, 2024, the Company issued 282,541 units consisting of one common share and one warrant
and 258,000 units consisting of one 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. Of the total
share issuance costs $671,747 was expensed in other income (expense). The value of the issuance
was allocated $396,137 to the shares, and $4,422,815 to the warrants, including $1,248,343
allocated to prefunded warrants. |
| ● | On
August 21, 2024, the Company issued 346,667 units consisting of one common share and one
warrant, and 320,000 units consisting of 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. 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 warrants. |
| ● | On
November 19, 2024 the Company issued 400,000 units consisting of one common share and one
warrant and 1,200,000 units consisting 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. 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 prefunded warrants. |
Stock
Options
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.
Draganfly
Inc.
Notes
to the Condensed Consolidated Interim Financial Statements
For
the Three Months Ended March 31, 2025
Expressed
in Canadian Dollars (unaudited)
| 13. | SHARE
CAPITAL (CONT’D) |
As
at March 31, 2025, the Company had the following options outstanding and exercisable:
SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE
| Grant
Date | |
Expiry
Date | |
Exercise
Price | | |
Remaining
Contractual Life (years) | | |
Number
of Options Outstanding | | |
Number
of Options Exercisable | |
| October 30, 2019 | |
October 30, 2029 | |
$ | 62.50 | | |
| 4.57 | | |
| 11,130 | | |
| 11,130 | |
| April 30, 2020 | |
April 30, 2030 | |
$ | 62.50 | | |
| 5.07 | | |
| 320 | | |
| 320 | |
| April 30, 2020 | |
April 30, 2030 | |
$ | 96.25 | | |
| 5.07 | | |
| 4,400 | | |
| 4,400 | |
| July 3, 2020 | |
July 3, 2025 | |
$ | 80.00 | | |
| 0.26 | | |
| 4,000 | | |
| 4,000 | |
| November 24, 2020 | |
November 24, 2030 | |
$ | 62.50 | | |
| 5.64 | | |
| 1,280 | | |
| 1,280 | |
| February 2, 2021 | |
February 2, 2031 | |
$ | 330.00 | | |
| 5.83 | | |
| 1,200 | | |
| 1,200 | |
| March 8, 2021 | |
March 8, 2026 | |
$ | 347.50 | | |
| 0.93 | | |
| 400 | | |
| 400 | |
| April 27, 2021 | |
April 27, 2031 | |
$ | 253.75 | | |
| 6.06 | | |
| 4,240 | | |
| 4,240 | |
| September 9, 2021 | |
September 9, 2026 | |
$ | 121.00 | | |
| 1.44 | | |
| 1,034 | | |
| 1,034 | |
| November 9, 2023 | |
November 9, 2033 | |
$ | 15.75 | | |
| 8.59 | | |
| 1,200 | | |
| 800 | |
| | |
| |
| | | |
| | | |
| 29,204 | | |
| 28,804 | |
SCHEDULE OF STOCK OPTIONS OUTSTANDING
| | |
Number
of Options | | |
Weighted
Average Exercise Price | |
| Outstanding, December 31, 2023 | |
| 35,954 | | |
$ | 112.00 | |
| Forfeited | |
| (4,350 | ) | |
| 106.83 | |
| Outstanding, December 31, 2024 | |
| 31,604 | | |
$ | 112.05 | |
| Forfeited | |
| -2,400 | | |
| 94.38 | |
| Outstanding,
March 31, 2025 | |
| 29,204 | | |
$ | 105.50 | |
No
options were granted by the Company during the three months ended March 31, 2025.
During
the three months ended March 31, 2024, the Company recorded $1,013 (2024 – $26,689) 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.
Restricted
Share Units
During
the three months ended March 31, 2025, the Company recorded share-based payment expense of $287,869 (2024 - $172,218) for RSUs, based
on the fair values of RSUs granted which were calculated using the closing price of the Company’s stock on the day prior to grant.
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 Exchange requirements, grant to directors, officers, employees and technical consultants
to the Company, restricted stock units (RSUs). The number of RSUs awarded and underlying vesting conditions are determined by the Board
of Directors in its discretion. 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 15% (in the aggregate) of the issued and outstanding common shares from time to time.
Draganfly
Inc.
Notes
to the Condensed Consolidated Interim Financial Statements
For
the Three Months Ended March 31, 2025
Expressed
in Canadian Dollars (unaudited)
| 13. | SHARE
CAPITAL (CONT’D) |
As
at March 31, 2025, the Company had the following RSUs outstanding:
SUMMARY OF CHANGES IN RESTRICTED STOCK UNITS
| | |
Number
of RSUs | |
| Outstanding, December 31, 2023 | |
| 44,545 | |
| Vested | |
| (25,353 | ) |
| Issued | |
| 185,240 | |
| Forfeited | |
| (16,332 | ) |
| Outstanding, December 31, 2024 | |
| 188,100 | |
| Vested | |
| (16,998 | ) |
| Forfeited | |
| (1,001 | ) |
| Outstanding,
March 31, 2025 | |
| 170,101 | |
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.
No
warrants were issued during the three months ended March 31, 2025.
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.
Draganfly
Inc.
Notes
to the Condensed Consolidated Interim Financial Statements
For
the Three Months Ended March 31, 2025
Expressed
in Canadian Dollars (unaudited)
| 13. | SHARE
CAPITAL (CONT’D) |
SCHEDULE OF ISSUE DATE FAIR VALUE INPUTS OF WARRANTS
| | |
February
Issuance | | |
April
Issuance | | |
August Issuance | | |
November
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
years | | |
| 3
years | | |
| 5
years | | |
| 3
years | | |
| 3
years | | |
| 3
years | |
| Expected dividend yield | |
| 0 | % | |
| 0 | % | |
| 0 | % | |
| 0 | % | |
| 0 | % | |
| 0 | % |
Warrant
Derivative Liability
SCHEDULE OF WARRANT DERIVATIVE LIABILITY
| Balance at December 31, 2023 | |
$ | 4,196,125 | |
| Warrants issued | |
| 7,282,325 | |
| Exercised | |
| (3,661,283 | ) |
| Change in fair value of warrants outstanding | |
| (1,842,618 | ) |
| Reclassify to equity | |
| (3,776,428 | ) |
| Balance at December 31,
2024 | |
$ | 2,198,121 | |
| Change
in fair value of warrants outstanding | |
| (157,830 | ) |
| Balance at March 31,
2025 | |
$ | 2,040,291 | |
Details
of liability warrants and their fair values are as follows:
SCHEDULE OF WARRANT AND FAIR VALUE OUTSTANDING
| Issue Date | |
Exercise
Price | | |
Number of Warrants Outstanding at
March 31, 2025 | | |
Fair Value at
March 31, 2025 | | |
Number of Warrants Outstanding at
December 31, 2024 | | |
Fair Value at
December 31, 2024 | |
| Derivative
Liability | |
| | |
| | |
| | |
| | |
| |
| February
26, 2024 (1) | |
US$ | 4.4025 | | |
| 474,332 | | |
$ | 2,040,291 | | |
| 474,332 | | |
$ | 2,198,121 | |
| | |
| | | |
| 474,332 | | |
$ | 2,040,291 | | |
| 474,332 | | |
$ | 2,198,121 | |
| 1) | The
warrants expire February 26, 2029. |
Warrants
SCHEDULE OF DETAILS OF THE WARRANTS
| | |
Exercise
Price |
| |
Number
of Warrants Outstanding at March 31, 2025 | | |
Number
of Warrants Outstanding at December 31, 2024 | |
| October 30, 2023 (1) | |
$ |
3.3086 |
| |
| 256,000 | | |
| 256,000 | |
| April 29, 2024 (2) | |
$ |
3.3086 |
| |
| 540,541 | | |
| 540,541 | |
| August 21, 2024 (3) | |
$ |
5.12 |
| |
| 666,667 | | |
| 666,667 | |
| November 19, 2024 (4) | |
$ |
3.3086 |
| |
| 1,600,000 | | |
| 1,600,000 | |
| | |
|
|
| |
| 3,063,208 | | |
| 3,063,208 | |
| 1) | The
warrants expire October 30, 2028. These were moved from derivative liability August 7, 2024. |
| 2) | The
warrants expire April 29, 2029. These were moved from derivative liability August 7, 2024. |
| 3) | The
warrants expire August 21, 2029. |
| 4) | The
warrants expire November 19, 2029 |
The
fair values of these warrants were estimated using the Black-Scholes Option Pricing Model with the following weighted average assumptions:
SCHEDULE OF WEIGHTED AVERAGE ASSUMPTION FOR WARRANTS
| | |
March
31, 2025 | | |
December
31, 2024 | |
| Risk free interest rate | |
| 3.96 | % | |
| 4.38 | % |
| Expected volatility | |
| 117.34 | % | |
| 124.06 | % |
| Expected life | |
| 3.91
years | | |
| 4.16
years | |
| Expected dividend yield | |
| 0 | % | |
| 0 | % |
Draganfly
Inc.
Notes
to the Condensed Consolidated Interim Financial Statements
For
the Three Months Ended March 31, 2025
Expressed
in Canadian Dollars (unaudited)
| 13. | SHARE
CAPITAL (CONT’D) |
SUMMARY OF CHANGES IN WARRANTS
| | |
Number
of Warrants | | |
Weighted
Average Exercise Price | |
| 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
31, 2024 and March 31, 2025 | |
| 3,717,502 | | |
$ | 5.16 | |
As
at March 31, 2025, the Company had the following warrants outstanding:
SCHEDULE OF WARRANTS OUTSTANDING
| Date issued | |
Expiry
date | |
Exercise
price | |
Number
of warrants outstanding | |
| October 30, 2023 | |
October 30, 2026 | |
CAD$ |
23.20 | |
| 12,800 | |
| October 30, 2023 | |
October 30, 2028 | |
CAD$ |
3.3086 | |
| 256,000 | |
| February 26, 2024 | |
February 26, 2027 | |
US$ |
8.44 | |
| 26,800 | |
| February 26, 2024 | |
February 26, 2029 | |
US$ |
4.4025 | |
| 474,332 | |
| April 29, 2024 | |
April 29, 2029 | |
CAD$ |
3.3086 | |
| 540,541 | |
| April 29, 2024 | |
April 29, 2024 | |
CAD$ |
11.06 | |
| 27,028 | |
| August 21, 2024 | |
August 21, 2027 | |
CAD$ |
5.12 | |
| 33,334 | |
| August 21, 2024 | |
August 21, 2029 | |
CAD$ |
5.12 | |
| 666,667 | |
| November 19, 2024 | |
November 19, 2029 | |
CAD$ |
3.3086 | |
| 1,600,000 | |
| November 19, 2024 | |
November 19, 2027 | |
CAD$ |
4.1357 | |
| 80,000 | |
| | |
| |
|
| |
| 3,717,502 | |
The
weighted average remaining contractual life of warrants outstanding as of March 31, 2025, was 4.25 years (December 31, 2024 – 4.5
years).
|