ROCKETDNA LTD. - Annual Report 2022

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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31 DECEMBER 2021

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

HIGHLIGHTS

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ASX: DLT

FY2021 – as at 28 Feb 2022 (unaudited)

REVENUE INCREASED 36% From pcp to $4.6m ($3.4m FY20)

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AUSTRALIAN OPERATIONS 12% Contribution to the Group’s overall revenues

NEW ENTERPRISE CUSTOMERS 12 Increased from 2020

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

OUR ADVANTAGE

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ASX: DLT

What makes our business model so unique

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Market-leading Technologies

We research & deploy sophisticated sensors that are best in their class, enabling faster workflows & data capture

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Long-Range Flight Capabilities

We operate semi & fully autonomous equipment beyond visual line of site (BVLOS) to enable larger area acquisition

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Scalable Business Model

We deploy specialist drone pilots & semiautonomous drones within a short time period of receiving customer orders, allowing flexibility of capital structures

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High- Frequency High Speed Data

We provide higher resolution data at a higher frequency (vs. manned aircraft & satellite solutions) within 24 hours of capture

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Proven Safety & Quality Systems

Our systems are world-class in meeting enterprise customer demand & regulator support for complex drone operations

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Economies of Scale

We provide a more cost-effective offering through strong negotiating power with suppliers and with the support of our own internal maintenance & repair facilities

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

“

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ASX: DLT

The future is about long-range, high frequency super-fast drone data that is delivered daily on site enabling autonomous operations for our customers

CHRISTOPHER CLARK CEO

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

INTRODUCTION	7
Chairman’s Letter	7
CEO’s Letter	8
Corporate Directory	9
Directors’ Report	11
Information on Directors	13
FINANCIAL STATEMENTS	30
Consolidated statement of proft or loss	31
and other comprehensive income
Consolidated statement of	33
fnancial position
Consolidated statement of	34
changes in equity
Consolidated statement of cash fows	35
Notes to the consolidated	36
fnancial statements
Directors’ declaration	75
Independent auditor’s report to the	76
members of Delta Drone International
Limited
ASX Additional Information	80

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021
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CHAIRMAN’S LETTER

Dear Shareholders

On behalf of the Board, it is with pleasure I present Delta Drone International’s annual report for the financial year ended 31 December 2021 (FY21).

On behalf of the Board, we thank our shareholders for their support throughout 2021. As the world embarks on a new journey towards autonomous drone operations, we see an abundance of opportunities for Delta Drone International, not only in Australia, but into new markets and geographies with our leading drone service capabilities.

Delta Drone International’s first year as a listed company has seen us build a market-leading drone service business by extensively expanding the markets we operate in, our suite of services and number and calibre of enterprise contracts.

At the beginning of 2021, two international business were merged to form Delta Drone International, and with our majority acquisition of Arvista in Australia, we have formalised the foundations of our future market focus.

This refreshed focus on the Australian market along with thriving African operations has contributed to a strong financial performance in FY21, driven by our strong customer relationships, our expanded global footprint, and growing our range of services. Post-balance date we also sold the ParaZero business to narrow our focus on drone services, which will position Delta Drone International for accelerated growth in the years to come.

Delta Drone International operates as a subsidiary under the Delta Drone Group (DDG) (EPA: ALDR), with DDG owning 55.22% of DLT’s shares as of February 2022. Post reporting period, leading provider of integrated drone solutions Volatus Aerospace made a strategic investment in the Delta Drone Group which will provide significant opportunities for Delta Drone International to further grow its business through sharing of expertise and use of complementary services.

With the overall global drone market expected to grow at a compound annual growth rate of 13.8% over 2020–2025 to reach US$42.8 billion, I look forward to updating you on the role Delta Drone International plays in revolutionising the way mining and agriculture companies conduct complex aerial data capture and embrace drone technology across other aspects of their sector, and in turn, deliver strong results for our shareholders.

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Eden Attias Executive Chairman

The FY21 achievements would not have been possible without the dedication and tremendous contribution of our staff, led ably by CEO Chris Clark. I would therefore like to thank our team for their ongoing commitment and outstanding effort throughout the year.

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021
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CEO’S LETTER

I am pleased to report that throughout the FY21 year we have made significant progress to ensure Delta Drone International remains one of the world’s leading drones-as-a-service providers, by delivering on key strategic initiatives, particularly with respect to new markets and services.

Delta Drone International entered new markets throughout FY21, bringing our global footprint to nine countries, as well as adding another 12 major contracts with multinational enterprise companies. These achievements, along with others outlined in this report, played a key role in Delta Drone International being recognised as a top four global drone services provider in the Drone Industry Insights (Droneii) Top Drone Service Providers for 2021 Report.

The sale of ParaZero provides DLT with a strengthened balance sheet and a substantially reduced need for cash to fund the ongoing R&D investment that had been required by the ParaZero business, allowing us to focus on aggressively growing our global drone services business.

While 2021 was a year of positive flux, with the merger, establishing Australian operations, purchasing Arvista, the sale of ParaZero, we have a plan to profitability.

Looking ahead, I am excited by scaling our drone services offering and looking for other attractive growth opportunities. Commercial applications for drone services are steadily rising and will probably overtake government and defense in terms of market share in the next few years.

The Company’s overall revenue grew significantly, up 64% to $5.5 million for the year, attributed to expanding the markets we operate in, an expanded suite of services, and growing the number and calibre of enterprise contracts. Our already extensive range of services was bolstered by the latest capability in light detection and ranging [LiDAR], security monitoring and advanced Beyond Visual Line-of-Site (BVLOS) operations, allowing us to meet the increasingly specialist needs of our customers.

Our customer base continues to grow, with Delta Drone International signing contracts with some of the world’s leading enterprise mining and agriculture companies, including, South32 Coal Holdings (now Seriti Power), Pioneer Seed RSA, GoviEx Uranium, AMS African Mining Services, and Rustenberg Platinum Mines, to name a few.

Perhaps the most significant milestone for our Company throughout 2021, was establishing an Australian-based headquarters and acquiring Perth-based provider of aerial and terrestrial surveying services, Arvista. Australia was identified as a key expansion area due to its vast mining and agriculture sectors and fragmented drone services industry, with the acquisition of Arvista providing the Company with a blue-chip Australian customer base. Post financial year end, we sold our drone safety business, ParaZero Technologies, for A$6 million to allow the Company to focus on becoming the leading drone service provider globally.

Delta Drone International is therefore focused on profitably growing its business, with ongoing investment in sales and marketing to harness the reputation of our technology and operations leadership as we execute our growth strategy throughout 2022 and beyond.

Lastly, I would like to thank you, our shareholders, for joining us on this exciting journey. I am confident our strong business offering combined with a wider social acceptance of drone technology will ensure our company continues to grow sustainably into the future and delivers value for our shareholders.

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Christopher Clark Chief Executive Officer

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

CORPORATE DIRECTORY

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B.Gen (ret.) Eden Attias Executive Chairman
Mr Christopher Clark Chief Executive Officer
Mr Stephen Gorenstein Non-Executive Director
Directors
Mr Nicolas Clerc Non-Executive Director
Mr Christian Viguie Non-Executive Director
Mr Clive Donner Non-Executive Director
Company secretary Mr Stephen Buckley
75 Thomas Street
Subiaco WA 6008
Registered office
Email: [email protected]
75 Thomas Street
Principal place of business
Subiaco WA 6008
Automic Registry Services
Level 5, 191 St Georges Terrace
Perth WA 6000
Share register Tel: 1300 288 664 (Within Australia) | +61 2 9698 5414 (Outside Australia)
Fax: +61 8 9321 2337
Email: [email protected]
Web: www.automic.com.au
BDO Audit (WA) Pty Ltd
Level 9, Mia Yellogonga Tower 2
Auditor
5 Spring Street
Perth WA 6000
Arnold Bloch Leibler
Level 21
Legal Advisers (Australia) 333 Collins Street
Melbourne VIC 3000
Shibolet
Museum Tower
Legal Advisers (Israel) 4 Berkowitz Street
Tel Aviv Israel 6423806
Rodl & Partner
1 Eastgate Lane
Legal Advisers (South Africa) Bedfordview
South Africa 2007
Delta Drone International Limited shares are listed on the Australian Securities
Exchange (ASX code: DLT)
ASX Limited
Stock exchange listing
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6005
Website Web: www.dlti.com.au
Corporate Governance Delta Drone’s Corporate Governance Statement can be viewed at:
Statement https://www.dlti.com.au/resource/corporate-governance/
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘Group’) consisting of Delta Drone International Limited (referred to hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 31 December 2021.

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Directors
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Directors	Directors	Directors

Name	Title	Appointed	Resigned
B. Gen (ret.) Eden Attias	Executive Chairman	13 June 2018	-
Mr Christopher Clark	Chief Executive Ofcer	3 December 2020	-
Mr Stephen Gorenstein	Non-Executive Director	17 October 2018	-
Mr Nicolas Clerc	Non-Executive Director	8 April 2021	-
Mr Christian Viguie	Non-Executive Director	8 April 2021	-
Mr Clive Donner	Non-Executive Director	14 July 2021	-
Mr Chris Singleton	Non-Executive Director	1 January 2019	14 July 2021
Mr Dan Arazi	Non-Executive Director	13 June 2018	21 June 2021

Principal activities

Delta Drone is a multi-national drone-based data service and technology solutions provider for the mining, agricultural and engineering industries. It provides aerial surveying and mapping, security and surveillance and blast monitoring and fragment analysis through a fully-outsourced service and fast data turnaround that allows enterprise customers to focus on their operations while DLT takes care of everything in the air, including compliance and maintenance.

During the year, Delta Drone had in-house enabling proprietary technology, an R&D and integration centre and specialist expertise in designing, developing and provided best-in-class autonomous safety systems for commercial drone deliveries, drone flights for crowd monitoring in urban areas as well as ‘beyond visual line of sight’ (BVLOS) missions.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Review of operations

The loss for the Group including non controlling interests, after providing for income tax amounted to $3,590,483 (31 December 2020: $115,391).

The loss for the Group from continuing operations amounted to $1,705,749 (31 December 2020: $61,003).

Unless otherwise stated, all figures in this report are in the Company’s presentation currency, the Australian Dollar (“$”).

While the COVID-19 pandemic did have an impact on the business, the overall business remained resilient due to long-term annuity contracts with mining customers, considered essential to national economies.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Significant changes in the state of affairs

Acquisition of 60% ownership of Arvista Pty Ltd

On 1 September 2021 the Group completed the acquisition of 60% of the shares in Perth-based provider of aerial and terrestrial surveying services, Arvista Pty Ltd (Arvista). The merger is a key milestone in DLT’s expansion strategy and has immediately provided the Group with a blue-chip Australian client base and access to a team of highly skilled professionals with the expertise to expand their skillset beyond surveying to include the full range of drone-as-a-service operations Delta Drone International provides.

Likely developments and expected results of operations

The Group continues to be a drone-based data service and technology solutions provider for the mining, agricultural and engineering industries. It provides aerial surveying and mapping, security and surveillance and blast monitoring and fragment analysis through a fully-outsourced service and fast data turnaround that allows enterprise customers to focus on their operations on the ground while Delta Drone takes care of everything in the air, including compliance and maintenance.

Board changes

Matters subsequent to the end of the financial year

On 28 January 2022 the Group announced that it had entered into a binding agreement with a consortium of investors led by NASDAQ-listed Medigus Ltd and facilitated by Israeli venture capital firm L.I.A Pure Capital Ltd to sell ParaZero Technologies Ltd (“ParaZero”) which operated the Company’s drone safety business, for a total consideration of A$6 million in cash. This transaction allows the Group to focus on becoming one of the leading drone service providers globally after its successful acquisition of the Delta Drone South Africa business in December 2020 and the purchase of Arvista Pty Ltd in Australia in September 2021. Postsale this will leave the Company with a strengthened balance sheet and a substantially reduced need for cash to fund the ongoing R&D investment that had been required by the ParaZero business, allowing the Group to focus on aggressively growing its global drone services business. As such, the assets (including goodwill and intangible assets), liabilities and net profit of the Parazero operations have been classified as assets held for sale and liabilities directly attributed to discontinued operations in the 31 December 2021 report.

During the year Mr Chris Singleton and Mr Dan Arazi resigned as non-executive directors effective 14 July 2021 and 21 June 2021 respectively, while Mr Nicolas Clerc, Mr Christian Viguie and Mr Clive Donner were appointed as non-executive directors effective 8 April 2021, 8 April 2021 and 14 July 2021 respectively.

There were no other significant changes in the state of affairs of the Group during the financial year.

Environmental regulation

The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.

No other matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

INFORMATION ON DIRECTORS

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B. GEN (RET.) EDEN ATTIAS Executive Chairman

MR CHRISTOPHER CLARK

Chief Executive Officer

Qualifications

Bachelor of Arts in Computer Science, Master of Arts in Public Administration

Experience and expertise

Brigadier General (ret.) Attias was nominated as Israel’s first Ministry of Defense attach to Ottawa, Canada. He has a distinguished military resume, having served in Israeli’s Air Force as a pilot and as a leader in numerous positions for over 30 years, achieving the rank of Brigadier General.

Qualifications

Bachelor of Accounting, Master of Business Administration

Experience and expertise

Mr Clark has been involved in the mining services sector for over 11 years in South Africa, beginning with technology and communication projects for mining giant Anglo American. Mr Clark has spearheaded the development of the DDSA business across Africa, including Ghana and Namibia, and has set up new business verticals in agriculture and executive training.

Eden was previously CEO and Chairman of

ParaZero Limited and has immense experience in the development of the Drone services business. Following the acquisition of Delta Drone South Africa in December 2020, Eden stepped down as CEO but he has continued as Executive Chairman of the Company to provide his experience and guidance gained within the global drone services market.

Other current directorships None

Former directorships (last 3 years) None

Interests in shares 559,717 Ordinary Shares

Interests in options

37,106 unlisted options expiring 24 June 2024 exercisable at $0.1125 5,598,837 Options expiring 13 June 2023 exercisable at $0.0027

Chris was appointed as CEO of the Company following the acquisition of Delta Drone South Africa in December 2020.

Other current directorships None

Former directorships (last 3 years) None

Interests in shares None

Interests in options None

Interests in rights

6,000,000 performance rights (Terms as noted in note 38 of this Annual report)

Interests in rights

6,000,000 performance rights (Terms as noted in note 38 of this Annual report)

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

INFORMATION ON DIRECTORS

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MR STEPHEN GORENSTEIN

Non-Executive Director

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MR NICOLAS CLERC

Non-Executive Director

Qualifications

BSc (Hons) Geology and Geophysics, Masters in Accounting and Finance

Experience and expertise

Mr Gorenstein has over 17 years’ experience in the capital markets including analyst roles at both Goldman Sachs and Merrill Lynch. He was formerly the Regional Head of Asia Pacific Metals and Mining at Bank of America Merrill Lynch. Mr Gorenstein has extensive networks in the Australian capital markets and is active in cross border transactions particularly sourcing high-quality technology companies from Israel looking to establish themselves in Australia.

Other current directorships None

Former directorships (last 3 years) White Rock Minerals Limited (ceased 1 February 2021)

Qualifications

Advanced Degree in Accounting and Management

Experience and expertise

Mr Clerc boasts 20 years of experience within accounting and audit firms. After working within several national and international firms, he became audit manager within a firm of about 60 people in the Auvergne-Rh ne-Alpes region. He joined the Delta Drone group in September 2017 as Group Administrative and Finance Director.

Other current directorships None

Former directorships (last 3 years) None

Interests in shares None

Interests in shares

400,000 Ordinary Shares

Interests in options

37,106 unlisted options expiring 24 June 2024 exercisable at $0.1125

Interests in rights

Interests in rights: 1,000,000 performance rights (Terms as noted in note 38 of this Annual report)

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

INFORMATION ON DIRECTORS

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MR CLIVE DONNER

Non-Executive Director

MR CHRISTIAN VIGUIE

Non-Executive Director

Qualifications Bachelor of Commerce

Qualifications Graduate of IEP Paris

Experience and expertise

Mr Donner is the founding Managing Director of the LinQ Group, a boutique investment bank he founded in 2004 with specialist skills in mining and resources, technology and the property development sectors. Mr Donner has substantial private equity and debt skills having served as a former director of NM Rothschild and Sons (Australia) Limited, one of the world’s preeminent project finance and advisory banking institutions and a senior executive of Citibank Group for the nine years prior to that. He founded and managed several mining private equity funds and property funds. Mr Donner has over 40 years’ commercial experience in both Australia and internationally in both debt and equity including: private equity, funds management, corporate and project financing, capital raising, investment advising and evaluation of companies across several sectors.

Experience and expertise

Mr Viguie worked as a financial analyst before forming multiple financial reporting companies. He also served as CEO of the Unilog Group from 1998 to 2006, where he was responsible for relationships with the financial community. A member of the French Society of Financial Analysts, Christian VIGUIÉ serves as a professor at the Financial Analysis Training Center.

Other current directorships None

Former directorships (last 3 years) None

Interests in shares None

Other current directorships None

Former directorships (last 3 years) None

Interests in shares None

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

MR DAN ARAZI

Non-Executive Director

Other current directorships None

Qualifications

Bachelor of Economics and History

Former directorships (last 3 years) None

Experience and expertise

Mr Arazi is a serial entrepreneur and has been involved in a number of start-ups in Israel, most particularly in the telecom and internet space. He was a leading film producer in Israel and has been a member of the Board of Israeli Film Council. He is currently the Chairman of the Israel AeroClub Gliding Association and the President of the Keiretsu Forum, the Israeli Chapter of the 100+ Angels Club. Mr Arazi is also a cofounder and executive at Orckit Communications (NASDAQ: ORCT).

Interests in shares

359,800 Ordinary shares (as at the date of ceasing to be a director)

Interests in options:

25,956 unlisted options expiring 24 June 2024 exercisable at $0.1125 (as at the date of ceasing to be a director)

MR CHRIS SINGLETON Non-Executive Director

Other current directorships None

Qualifications

B.Ed. Industrial Arts

Former directorships (last 3 years) Cycliq Group Limited (ceased 7 May 2019)

Experience and expertise

Mr Singleton has extensive international experience in Oil & Gas, Manufacturing, Technology, Telecommunications and Service Industries. He is currently the a provider of corporate advisory and growth strategies to Australian businesses. Mr Singleton has held numerous directorship roles with public and private companies and has successfully founded and sold business including: Votel, a service provider acquired by Vodafone, B Digital, that was funded by Australian Capital Equity and eventually acquired by Soul Pattinson; Managing Director of Impress Energy, acquired by Beach Petroleum and recruitment solutions, Total Staffing Solutions and UltimateSkills, that were both acquired by Humanis Group.

Interests in shares

200,000 Ordinary Shares (as at the date of ceasing to be a director)

Interests in options:

18,553 unlisted options expiring 24 June 2024 exercisable at $0.1125 (as at the date of ceasing to be a director)

MR STEPHEN BUCKLEY

Company secretary

Qualifications GAICD

Experience and expertise

Mr Buckley has over 40 years’ experience in financial markets and is a director of Governance Corporate Pty Ltd, a company specialising in providing company secretarial, corporate governance and corporate advisory services. In the 20 years prior to starting his own business, Mr Buckley has held executive and senior leadership roles in partnership management and business development.

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

Meetings of Directors

The number of meetings of the Company’s Board of Directors (‘the Board’) held during the year ended 31 December 2021, and the number of meetings attended by each Director were:

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Full Board
Attended Held
Eden Attias 9 9
Christopher Clark 9 9
Stephen Gorenstein 9 9
Clive Donner 3 3
Nicolas Clerc 6 6
Christian Viguie 5 6
Dan Arazi 5 5
Chris Singleton 6 6
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Held: represents the number of meetings held during the time the Director held office.

Remuneration report (audited)

This remuneration report for the year ended 31 December 2021 outlines the remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 (Cth), as amended (Act) and its regulations. This information has been audited as required by section 308(3C) of the Act.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all Directors.

Introduction

Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the major activities of the Group. KMP comprise the directors of the Company and identified key management personnel. Compensation levels for KMP are competitively set to attract and retain appropriately qualified and experienced directors and executives. The Board may seek independent advice on the appropriateness of compensation packages, given trends in comparable companies both locally and internationally and the objectives of the Group’s compensation strategy.

The Key Management Personnel of Delta Drone includes the current and former directors of the Company and Key Management Personnel of Delta Drone during the year ended 31 December 2021.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

Remuneration governance

The Board considers that the Company will not currently benefit from the establishment of a Remuneration Committee. In accordance with the Company’s Board Charter, the Board carries out the duties that would ordinarily be carried out by the Remuneration Committee under the Remuneration Committee Charter, including the following processes to set the level and composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and not excessive:

a) the Board devotes time at appropriate Board

meetings to assess the level and composition of remuneration for Directors and senior executives;

b) items that are usually required to be discussed by a remuneration committee are marked as separate agenda items at Board meetings when required; and

c) the Board may seek external advice and benchmarking to inform their decisions.

During the financial year ended 31 December 2021, the Company did not engage any remuneration consultants.

Executive remuneration arrangements

The compensation structures are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. Compensation packages may include a mix of fixed compensation, equity-based compensation, as well as employer contributions to superannuation funds. Shares and options may only be issued subject to approval by shareholders in a general meeting.

At the date of this report the Company has two (2) appointed executives, Mr Eden Attias as Executive Chairman and Christopher Clark as Chief Executive Officer. The terms of their Executive Services Agreement with Delta Drone are summarised below:

EDEN ATTIAS

Executive salary of $185,000.
Reimbursement of reasonable business expenses incurred in the ordinary course of the business in accordance with the Group’s reimbursement policies.
The Agreement is terminable by either party on 90 days’ notice but may be terminated immediately where either party commits a material breach of the Agreement, including for not performing the services under the Agreement.

CHRISTOPHER CLARK

A total remuneration package of $195,000 per annum including statutory superannuation
Participation in the Company’s incentive programs.
Reimbursement of reasonable business expenses incurred in the ordinary course of the business in accordance with the Group’s reimbursement policies.
The Agreement may be terminated by either party giving four (4) months’ notice and the Agreement may be terminated immediately if Mr Clark is engaged in conduct justifying summary dismissal.
Non-compete and non-solicitation restraints in place for up to six months following cessation of employment.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

Performance Conditions Linked to Remuneration

The Group maintains an Employee Incentive Plan (“Plan”) to provide ongoing incentives to Eligible Participants of the Company. The Plan was approved by shareholders at the Company’s annual general meeting held on 24 June 2021. Eligible Participants include:

a Director (whether executive or non-executive) of any Group company;
a full or part time employee of any Group company;
a casual employee or contractor of a Group Company; or
a prospective participant, being a person to whom the Offer was made but who can only accept the Offer if arrangement has been entered into that will resulting in the person becoming an Eligible Participant.

The purpose of the Plan is to provide an incentive to the employees and directors of Delta Drone and its subsidiaries to encourage the sense of proprietorship and to stimulate their active interest in the development and financial success of the Company by providing them with opportunities to purchase shares in the Company.

Both Mr Attias and Mr Clark were issued with 6,000,000 Performance Rights during the 2021 financial year under the Plan, subject to various milestones which are detailed in note 38 of this annual report.

No other Shares or Options were issued to executives under the Plan during the 2021 financial year (2020: nil).

Non-executive director fee arrangements

The Board policy is to remunerate non-executive directors at a level to comparable companies for time, commitment, and responsibilities. Nonexecutive directors may receive performance related compensation. Directors’ fees cover all main Board activities and membership of any committee. The Board has no established retirement or redundancy schemes in relation to non-executive directors.

The maximum aggregate amount of fees that can be paid to non-executive directors is presently limited to an aggregate of $300,000 per annum and any change is subject to approval by shareholders at a General Meeting. To align directors’ interests with shareholder interests, directors are encouraged to hold shares in the Company.

Total fees for non-executive directors for the financial year were $99,144 (2020: $120,000) and cover main Board activities only. Non-executive directors may receive additional remuneration for other services provided to the Group. All non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office of director.

During the 2021 financial year, Mr Gorenstein was issued with 1,000,000 Performance Rights under the Plan, subject to various milestones which are detailed in note 38 of this annual report.

Details of remuneration

The Key Management Personnel of Delta Drone includes the current and former directors of the Company and Key Management Personnel of Delta Drone during the year ended 31 December 2021.

Amounts of remuneration

Details of the remuneration of key management personnel of the Group are set out in the following tables.

DIRECTORS’ REPORT

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

2021

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Short-term benefits Postemployment Long-term Sharebased
benefits benefits payments [(i)]
Cash salary Cash Non- Long service Equity-
$ Superannuation Total
and fees bonus monetary leave settled
Non-Executive Directors:
- - - -
Stephen Gorenstein 40,000 4,138 44,138
Clive Donner [(ii)] 18,639 - - - - - 18,639
Nicholas Clerc [(iii)] - - - - - - -
- - - - - - -
Christian Viguie [(iv)]
Dan Arazi [(v)] 19,000 - - - - - 19,000
- - - - -
Chris Singleton [(vi)] 21,505 21,505
Executive Directors:
Eden Attias 200,446 - - - - 24,828 225,274
- -
Christopher Clark [(vii)] 165,991 16,821 14,638 24,828 222,278
465,581 16,821 14,638 53,794 550,834
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(i) Share-based payment expense is recorded pro-rata over the vesting period. Refer to Additional disclosures relating to equity instruments for further information on share-based payments granted to directors and key management during the year.

(ii) Appointed as non-executive director effective 14 July 2021.

(iii) Appointed as non-executive director effective 8 April 2021. No remuneration was paid during the year.

(iv) Appointed as non-executive director effective 8 April 2021. No remuneration was paid during the year.

(v) Resigned as non-executive director effective 21 June 2021.

(vi) Resigned as non-executive director effective 14 July 2021.

(vii) The remuneration for 31 December 2021 includes remuneration paid to Christopher Clark while employed in Delta Drone South Africa (Pty) Ltd. Other remuneration includes pension, medical and life insurances and other statutory employment benefits.

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2020
Short-term benefits Postemployment Long-term Sharebased
benefits benefits payments [(i)]
Cash salary Cash Non- Long service Equity-
$ Superannuation Total
and fees bonus monetary leave settled
Non-Executive Directors:
Dan Arazi [(i)] 40,000 - - - - - 40,000
Stephen Gorenstein 40,000 - - - - - 40,000
Chris Singleton [(ii)] 40,000 - - - - - 40,000
Executive Directors:
Eden Attias 192,021 - - - - - 192,021
Christopher Clark [(iii)] 82,538 - 37,526 770 - - 120,834
394,559 37,526 770 - 432,855
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(i) Resigned as non-executive director effective 21 June 2021.

(ii) Resigned as non-executive director effective 14 July 2021.

(iii) Appointed 3 December 2020. The remuneration for 31 December 2020 represents remuneration paid to Christopher Clark for the financial year 2020 whilst a director of Delta Drone South Africa (Pty) Ltd. Short term non-cash benefits includes medical and life insurances and other statutory employment benefits.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

The proportion of remuneration linked to performance and the fixed proportion are as follows:

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Fixed remuneration At risk - STI At risk - LTI
Name 2021 2020 2021 2020 2021 2020
Non-Executive Directors:
Stephen Gorenstein 91% 100% - - 9% -
Clive Donner 100% 100% - - - -
Nicholas Clerc 100% 100% - - - -
Christian Viguie 100% 100% - - - -
Dan Arazi 100% 100% - - - -
Chris Singleton 100% 100% - - - -
Executive Directors:
Eden Attias 89% 100% - - 11% -
Christopher Clark 89% 100% - - 11% -
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Share-based compensation

Issue of shares

There were no shares issued to Directors and other key management personnel as part of compensation during the year ended 31 December 2021.

Options

There were no options over ordinary shares issued to Directors and other key management personnel as part of compensation that were outstanding as at 31 December 2021.

There were no options over ordinary shares granted to or vested by Directors and other key management personnel as part of compensation during the year ended 31 December 2021.

Performance rights

There were 13,000,000 performance rights over ordinary shares issued to Directors as part of compensation during the year ended 31 December 2021. Shareholders of the Company approved the issue of the Performance Rights at the Annual General Meeting of the Company held on 24 June 2021.

During the year 1,000,000 performance rights held by Chris Singleton were forfeited due to his resignation.

As at 31 December 2021, an expense of $53,794 based on a fair value of $0.024 per right has been recognised as share-based payment in the statement of profit or loss and other comprehensive income which represents the pro-rated value from 24 June 2021 (grant date) to 31 December 2021. Total value of the remaining 13,000,000 Performance Rights will be expensed over management’s expected vesting period of 3 years. No performance rights have vested in the year ended 31 December 2021.

There were no performance rights over ordinary shares granted to or vested by Directors and other key management personnel as part of compensation during the year ended 31 December 2021.

The terms and milestones for the Performance Rights are listed in note 38 of this annual report.

DIRECTORS’ REPORT

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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Name No. of Performance Rights Milestones % vested % unvested
Eden Attias 2,000,000 New Milestone 1 - 100.00%
Eden Attias 2,000,000 New Milestone 2 - 100.00%
Eden Attias 2,000,000 New Milestone 3 - 100.00%
Christopher Clark 666,667 DDG Milestone 1 - 100.00%
Christopher Clark 666,667 DDG Milestone 2 - 100.00%
Christopher Clark 666,667 DDG Milestone 3 - 100.00%
Christopher Clark 1,333,334 New Milestone 1 - 100.00%
Christopher Clark 1,333,334 New Milestone 2 - 100.00%
Christopher Clark 1,333,334 New Milestone 3 - 100.00%
Stephen Gorenstein 333,334 New Milestone 1 - 100.00%
Stephen Gorenstein 333,334 New Milestone 2 - 100.00%
Stephen Gorenstein 333,334 New Milestone 3 - 100.00%
13,000,000
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DDG Milestones

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Milestone Description
DDSA achieving consolidated revenue (for the avoidance of doubt, only DDSA and excluding the Group) for any
DDG
full financial year (being 1 Jan to 31 Dec) during the three-year term of the Performance Rights of not less than
Milestone 1
US$3,200,000 (based on audited accounts having been prepared by an external auditor or other suitable expert).
If DDSA enters into at least two binding contracts with Australian-based mining companies (being companies that
conduct mining, exploration or extraction services) for the provision of drone survey or mapping solutions services
DDG to those mining companies in Australia (“Services”) and DDSA receives not less than US$1,000,000 (based on
Milestone 2 audited accounts having been prepared by an external auditor or other suitable expert) of verified revenue in
aggregate from such executed contracts received within the three-year term of the Performance Rights for its
Services.
If during the three-year term of the Performance Rights, the Company announces to the ASX that DDSA has
expanded the services of its business offering (being the provision of drone survey and mapping solutions) into a
DDG
new geographic location outside of Australia, Israel, South Africa, Ghana and Namibia and achieved a revenue in
Milestone 3
that new geographic location of not less than US$1,000,000 (based on audited accounts having been prepared by
an external auditor or other suitable expert).
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Note: DDSA means Delta Drone South Africa and its subsidiaries, Drone Safety and Legal, Rocketmine South Africa and Rocketmine Ghana.

New Milestones

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Milestone Description
New The Group achieving consolidated revenue of not less than A$10,000,000 in a single financial year (being 1 Jan to
Milestone 1 31 Dec) based on audited accounts having been prepared by an external auditor or other suitable expert.
New The Group achieving total consolidated EBITDA of not less than A$1,000,000 in a single financial year (being 1 Jan
Milestone 2 to 31 Dec) based on audited accounts having been prepared by an external auditor or other suitable expert.
The Company achieving a total return on equity of not less than 10% in a single financial year (being 1 Jan to 31
New
Dec), where return on equity is equal to net profit as a percentage of total equity based on audited accounts
Milestone 3
having been prepared by an external auditor or other suitable expert.
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

Additional disclosures relating to key management personnel

Shareholding

The number of shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below:

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Balance at the Received as part Disposals/ Balance at the
Additions
start of the year of remuneration resignations/ other end of the year
Ordinary shares
Eden Attias 559,717 - - - 559,717
- - - - -
Christopher Clark
Stephen Gorenstein 400,000 - - - 400,000
Clive Donner - - - - -
Nicolas Clerc - - - - -
- - - - -
Christian Viguie
Dan Arazi 359,800 - - (359,800) -
Chris Singleton 200,000 - - (200,000) -
1,519,517 - - (559,800) 959,717
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Option holding

The number of options over ordinary shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below:

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Expired/
Balance at Balance at
forfeited/
the start of Granted Exercised the end of Vested Unvested
resigned/
the year the year
other
Options over ordinary shares
Eden Attias 5,635,943 - - - 5,635,943 100% 0%
- - - - - - -
Christopher Clark
Stephen Gorenstein 37,106 - - - 37,106 100% 0%
Clive Donner - - - - - - -
Nicolas Clerc - - - - - - -
- - - - - - -
Christian Viguie
Dan Arazi 25,956 - - (25,956) - 100% 0%
Chris Singleton 18,553 - - (18,553) - 100% 0%
5,717,558 - - (44,509) 5,673,049
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

Performance rights holding

The number of performance rights over ordinary shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below:

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Balance at the Expired/ forfeited/ Balance at the
Granted Vested
start of the year other end of the year
Performance rights over
ordinary shares
Eden Attias - 6,000,000 - - 6,000,000
Christopher Clark - 6,000,000 - - 6,000,000
Stephen Gorenstein - 1,000,000 - - 1,000,000
Clive Donner - - - - -
Nicolas Clerc - - - - -
- - - - -
Christian Viguie
Dan Arazi - - - - -
- - - - -
Chris Singleton
- 13,000,000 - - 13,000,000
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Loans to key management personnel and their related parties

There were no loans to/from key management personnel and their related parties as at 31 December 2021 (2020: nil)

Other transactions with key management personnel and their related parties

Transactions with related parties are entered into on terms equivalent to those that prevail in arm’s length transactions. The Group had no other transactions with members of the Group’s key management personnel and/or their related parties during the year.

Voting of shareholders at last year’s annual general meeting

The Company received 99.47% “Yes” votes cast on its Remuneration Report for the 2020 financial year. The Company did not receive any specific feedback at the Annual General Meeting regarding its remuneration policies.

This concludes the remuneration report, which has been audited.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

Shares under option

Unissued ordinary shares of Delta Drone International Limited under option at the date of this report are as follows:

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Grant date Expiry date Exercise price Number under option
13 June 2018 13 June 2023 $0.0027 7,590,418
17 April 2019 17 April 2024 $0.1125 955,480
24 June 2019 24 June 2024 $0.1125 953,544
5 November 2019 5 November 2024 $0.09 948,053
10,447,495
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No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the Company or of any other body corporate.

No options were issued in the year.

Shares issued on the exercise of options

The following ordinary shares of Delta Drone International Limited were issued during the year ended 31 December 2021 and up to the date of this report on the exercise of options granted:

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Date options granted Exercise price Number of shares issued
13 June 2018 $0.0027 579,201
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Shares under performance rights

Unissued ordinary shares of Delta Drone International Limited under performance rights at the date of this report are as follows:

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Grant date Expiry date Number under rights
24 June 2021 24 June 2024 13,000,000
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During the year 1,000,000 performance rights held by Chris Singleton were forfeited due to his resignation. As at 31 December 2021, an expense of $53,794 based on a fair value of $0.024 per right has been recognised as share-based payment in the statement of profit or loss and other comprehensive income which represents the pro-rated value from 24 June 2021 (grant date) to 31 December 2021. Total value of the remaining 13,000,000 Performance Rights ($312,000) will be expensed over management’s expected vesting period of 3 years. No performance rights have vested in the year ended 31 December 2021.

No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the Company or of any other body corporate.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Shares issued on the exercise of performance rights

There were no ordinary shares of Delta Drone International Limited issued on the exercise of performance rights during the year ended 31 December 2021 and up to the date of this report.

Indemnity and insurance of officers

The Company has indemnified the Directors and Officers of the Company for costs incurred, in their capacity as a Director or Officer, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the Company paid a premium in respect of a contract to insure the Directors and Officers of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Indemnity and insurance of auditor

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

Non-audit services

The Company may decide to employ the Auditor (BDO Audit (WA) Pty Ltd) on assignments additional to their statutory audit duties.

Details of the amounts paid or payable to the Auditor for audit and non-audit services provided during the year are set out below.

The Board has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the Auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the Auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the Auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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Consolidated
2021 2020
(i) Audit services $ $
Audit or review of the financial statements 71,000 58,000
Total remuneration for audit and other assurance services 71,000 58,000
(ii) Other services $ $
Investigating Accountant’s Report -
- 60,600
BDO Corporate Finance (WA) Pty Ltd
Total remuneration for other services - 60,600
Total remuneration of BDO Audit (WA) Pty Ltd 71,000 118,600
(iii) Audit services - network firms $ $
Audit or review of the financial statements 54,831 60,327
Total remuneration of auditors 125,831 178,927
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Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors’ report.

Auditor

BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the Directors

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Christopher Clark Chief Executive Officer

31 March 2022

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ REPORT

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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29
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CONTENTS

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS
Consolidated statement of proft or loss and other comprehensive income	31
Consolidated statement of fnancial position	33
Consolidated statement of changes in equity	34
Consolidated statement of cash fows	35
Notes to the consolidated fnancial statements	36
Directors’ declaration	75
Independent auditor’s report to the members of Delta Drone International Limited	76
ASX Additional Information	80

General information

The financial statements cover Delta Drone International Limited as a Group consisting of Delta Drone International Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Delta Drone International Limited’s functional and presentation currency.

Delta Drone International Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

75 Thomas Street, Subiaco WA 6008

A description of the nature of the Group’s operations and its principal activities are included in the Directors’ report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 31 March 2022. The Directors have the power to amend and reissue the financial statements.

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ASX: DLT

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Consolidated statement of profit or loss and other comprehensive income For the year ended 31 December 2021

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Consolidated
Note 2021 ($) 2020 ($)
Revenue 4 4,581,962 3,369,115
Cost of sales (2,153,244) (1,398,727)
Gross profit 2,428,718 1,970,388
Other income 39,811 68,519
Gains from disposals of assets 11,123 20,332
Expenses
Operating expense 5 (4,114,053) (1,874,275)
Depreciation expense (86,995) (125,154)
Amortisation of intangible assets (33,273) (37,595)
Operating (loss)/profit (1,754,669) 22,215
Finance income 11,654 26,292
Finance expense (867) (23,064)
(Loss)/profit before income tax benefit/(expense) from continuing operations (1,743,882) 25,443
Income tax benefit/(expense) 6 38,133 (86,446)
Loss after income tax benefit/(expense) from continuing operations (1,705,749) (61,003)
Loss after income tax expense from discontinued operations 7 (1,884,734) (54,388)
Loss after income tax benefit/(expense) for the year (3,590,483) (115,391)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (94,728) 454,230
Depreciation expense (94,728) 454,230
Total comprehensive income for the year (3,685,211) 338,839
Loss for the year is attributable to:
Non-controlling interest 27,324 68,568
Owners of Delta Drone International Limited (3,617,807) (183,959)
(3,590,483) (115,391)
Total comprehensive income for the year is attributable to:
Continuing operations (4,705) 67,596
- -
Discontinued operations
Non-controlling interest (4,705) 67,596
Continuing operations (1,795,771) 325,631
Discontinued operations (1,884,735) (54,388)
Owners of Delta Drone International Limited (3,680,506) 271,243
(3,685,211) 338,839
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The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Consolidated statement of profit or loss and other comprehensive income For the year ended 31 December 2021 (continued)

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Cents Cents
Loss per share for loss from continuing operations
Basic loss per share 37 (0.34) (0.34)
Diluted loss per share 37 (0.34) (0.34)
Loss per share for loss from discontinued operations
Basic loss per share 37 (0.37) (0.04)
Diluted loss per share 37 (0.37) (0.04)
Loss per share for loss
Basic loss per share 37 (0.71) (0.13)
Diluted loss per share 37 (0.71) (0.13)
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The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Consolidated statement of financial position As at 31 December 2021

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Consolidated
Note 2021 ($) 2020 ($)
Assets
Current assets
Cash and cash equivalents 8 954,916 4,991,134
Trade and other receivables 9 1,415,957 789,758
Deposits 40,178 35,531
2,411,051 5,816,423
Assets of disposal groups classified as held for sale 10 6,540,901 7,282,631
Total current assets 8,951,952 13,099,054
Non-current assets
Property, plant and equipment 11 741,252 397,952
Right-of-use assets 12 121,621 177,304
Intangibles 13 5,313 38,118
Deferred tax 14 97,542 50,930
Goodwill 15 1,403,438 580,824
Total non-current assets 2,369,166 1,245,128
Total assets 11,321,118 14,344,182
Liabilities
Current liabilities
Trade and other payables 16 470,718 408,425
Contract liabilities 17 114,850 -
Borrowings 18 350,000 506,839
Lease liabilities 19 97,638 79,194
Deferred consideration 20 271,483 -
Bank overdraft 18,895 31
1,323,584 994,489
Liabilities directly associated with assets classified as held for sale 21 1,682,604 1,746,997
Total current liabilities 3,006,188 2,741,486
Non-current liabilities
Borrowings 22 105,253 -
Lease liabilities 23 56,003 122,642
Deferred tax - 13,169
Total non-current liabilities 161,256 135,811
Total liabilities 3,167,444 2,877,297
Net assets 8,153,674 11,466,885
Equity
Issued capital 24 13,207,118 12,904,061
Reserves 25 (587,354) (548,725)
Accumulated losses (4,581,279) (963,472)
Equity attributable to the owners of Delta Drone International Limited 8,038,485 11,391,864
Non-controlling interest 115,189 75,021
Total equity 8,153,674 11,466,885
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The above consolidated statement of financial position should be read in conjunction with the accompanying notes

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Consolidated statement of changes in equity As at 31 December 2021

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Foreign
Issued capital Currency Accumulated Noncontrolling
Consolidated Reserves ($) Total equity ($)
($) Translation losses ($) interest ($)
Reserve ($)
Balance at 1 January 2020 1,159,854 (35,357) (968,570) (779,513) 7,425 (616,161)
(Loss)/profit after income - - - (183,959) 68,568 (115,391)
tax expense for the year
Other comprehensive
income for the year, net - 455,202 - - (972) 454,230
of tax
Total comprehensive - 455,202 - (183,959) 67,596 338,839
income for the year
Transactions with owners
in their capacity as
owners:
Reverse acquisition 5,563,284 - - - - 5,563,284
Issue of shares 6,815,530 - - - - 6,815,530
Share issue costs (634,607) - - - - (634,607)
Balance at 31 December
12,904,061 419,845 (968,570) (963,472) 75,021 11,466,885
2020
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Foreign Share based Non-
Consolidated Issued capital ($) Translation Currency Reserves ($) payment Accumulated losses ($) controlling Total equity ($)
reserves ($) interest ($)
Reserve ($)
Balance at 1 January 2021 12,904,061 419,845 (968,570) - (963,472) 75,021 11,466,885
(Loss)/profit after income - - - (3,617,807) 27,324 (3,590,483)
tax expense for the year
Other comprehensive
- - -
income for the year, net (92,422) (2,306) (94,728)
of tax
Total comprehensive - (92,422) - (3,617,807) 25,018 (3,685,211)
income for the year
Acquisition of Arvista 5,563,284 - - - - 5,563,284
Issue of shares 6,815,530 - - - - 6,815,530
Issue of performance - - - 53,793 - - 53,793
rights
Share issue costs (5,882) - - - - (5,882)
Balance at 31 December
13,207,118 327,423 (968,570) 53,793 (4,581,279) 115,189 8,153,674
2021
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The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Consolidated statement of cash flows For the year ended 31 December 2021

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Consolidated
Note 2021 ($) 2020 ($)
Current assets
Receipts from customers (inclusive of GST) 4,507,022 3,761,123
Payments to suppliers (inclusive of GST) (6,216,466) (3,483,788)
(1,709,444) 277,335
Interest received 11,654 23,374
Net cash from/(used in) continuing operating activities (1,697,790) 300,709
-
Net cash from/(used in) operating activities - discontinued operations (1,163,968)
Net cash from/(used in) operating activities 34 (2,861,758) 300,709
Cash flows from investing activities
Payment for purchase of subsidiary, net of cash acquired 31 (231,213) -
Payments for property, plant and equipment 11 (813,792) (339,117)
Proceeds from disposal of property, plant and equipment 18,364 91,376
Cash acquired on acquisition of subsidiary - 247,104
Payments for deposits (equipment and rental) (515) (19,876)
Net cash (used by) continuing investing activities (1,027,156) (20,513)
-
Net cash (used by) investing activities - discontinued operations (6,466)
Net cash used in investing activities (1,033,622) (20,513)
Cash flows from financing activities
Proceeds from issue of shares 4 - 4,395,356
Repayment of borrowings (512,111) (167,707)
Repayment of lease liabilities (49,062) (112,563)
Proceeds from loans 454,821 -
Net cash from/(used in) continuing financing activities (106,352) 4,115,086
-
Net cash from/(used in) financing activities – discontinued operations (36,963)
Net cash from/(used in) financing activities (143,315) 4,115,086
Net increase/(decrease) in cash and cash equivalents (4,038,695) 4,395,282
Cash and cash equivalents at the beginning of the financial year 4,991,134 784,604
Effects of exchange rate changes on cash and cash equivalents 2,477 3,037
-
Cash movement of discontinued operations (191,789)
Cash and cash equivalents at the end of the financial year 8 954,916 4,991,134
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The above consolidated statement of financial position should be read in conjunction with the accompanying notes

NOTES TO THE CONSOLIDATED DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021 FINANCIAL STATEMENTS

Note 1. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 30.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Delta Drone International Limited (‘Company’ or ‘parent entity’) as at 31 December 2021 and the results of all subsidiaries for the year then ended. Delta Drone International Limited and its subsidiaries together are referred to in these financial statements as the ‘Group’.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Operating segments

Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Foreign currency translation

The financial statements are presented in Australian dollars, which is Delta Drone International Limited’s functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

Revenue recognition

The Group recognises revenue as follows:

Revenue from contracts with customers

Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining principle

whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.

Rendering of services

Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Income tax

The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Discontinued operations

A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Non-current assets or disposal groups classified as held for sale

Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal of a noncurrent assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised. Noncurrent assets classified as held for sale and the assets of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Computer 3 years Furniture and equipment 3-17 years Leasehold improvements the shorter of the lease term and the useful life Buildings 2-3 years Plant and equipment 1-10 years

Right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Contract liabilities

Contract liabilities represent the Group’s obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Provisions

Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:

during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.

Employee benefits

Share-based payments

Equity-settled and cash-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021
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If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the

contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any noncontrolling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Delta Drone International Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Goods and Services Tax (‘GST’) and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 31 December 2021. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

The Group issued performance rights during the year ended 31 December 2021 based on the conditions set out in note 38. The Group follows the guidelines of AASB 2 ‘Share Based Payments’ and takes into account non-market vesting conditions and estimates the probability and expected timing of achieving the vesting conditions. For full terms of the securities issued see note 38.

and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Goodwill and other indefinite life intangible assets The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

Allowance for expected credit losses

The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment.

If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Income tax

The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Business combinations

As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported.

During the year, the Company acquired 60% of the ordinary shares of Arvista Pty Ltd and accounted for the acquisition as a business combination as disclosed in note 31. The Shareholders Agreement provides for a call option where the Company has the right to purchase the remaining 40% interest in Arvista Pty Ltd at 1.5 times the 12-month trading revenue. The call option is not on fixed for fixed terms and is therefore accounted for as a derivative at fair value through profit or loss. As the exercise price is based on fair value of the business, the value of the option has been determined by the directors to be nil.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Operating segments

Identification of reportable operating segments

The Group is organised into three operating segments. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. The segments are split into the geographical locations of the Group’s main business, namely Australia, South Africa and Israel. The following table analyses sales revenue and EBITDA based on geographical location

Operating segment information

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Other
Consolidated - 2021 Australia ($) South Africa ($) Israel ($) Total ($)
segments ($)
Revenue
Sales to external customers 553,836 4,028,126 966,354 - 5,548,316
Total revenue 553,836 4,028,126 966,354 - 5,548,316
EBITDA (1,689,851) 114,393 (1,324,677) (44,679) (2,944,814)
-
Depreciation and amortisation (16,891) (103,377) (525,148) (645,416)
Interest revenue 164 11,654 - - 11,818
Finance costs (108) (13,279) (34,910) - (48,297)
(Loss)/profit before income tax benefit (1,706,686) 9,391 (1,884,735) (44,679) (3,626,709)
Income tax benefit 36,226
Loss after income tax benefit (3,590,483)
Other
Consolidated - 2020 Australia ($) South Africa ($) Israel ($) Total ($)
segments ($)
Revenue
Sales to external customers - 3,369,115 - - 3,369,115
Total revenue - 3,369,115 - - 3,369,115
EBITDA (172,220) 357,184 (40,000) - 144,964
- -
Depreciation and amortisation (162,747) (14,388) (177,135)
Interest revenue - 26,291 - - 26,291
Finance costs (4,207) (18,858) - - (23,065)
(Loss)/profit before income tax benefit (176,427) 201,870 (54,388) - (28,945)
Income tax benefit (86,446)
Loss after income tax benefit (115,391)
(i) Results relating to operations in Israel have been included in this note for disclosure purposes. Results for the segment are reported on a net basis
in the consolidated statement of profit or loss and other comprehensive income as it is a discontinued operation.
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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2021 2020
Segment assets 10,504,861 9,302,118
Unallocated assets:
Cash 954,915 4,991,134
Deferred tax asset 97,542 50,930
11,557,318 14,344,182
Segment liabilities 2,948,391 2,357,290
Unallocated liabilities:
Borrowings 455,253 506,838
3,403,644 2,864,128
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Note 4. Revenue

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Consolidated
2021 ($) 2020 ($)
Rendering of services 4,581,962 3,369,115
Consolidated
2021 ($) 2020 ($)
Timing of revenue recognition
At a point in time - -
Over time 4,581,962 3,369,115
4,581,962 3,369,115
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Note 5. Operating expense

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Consolidated
2021 ($) 2020 ($)
Employee benefits expense 1,474,711 822,905
General and administrative expenses 1,398,698 879,150
Corporate costs 1,240,644 172,220
4,114,053 1,874,275
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 6. Income tax expense/(benefit)

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Consolidated
2021 ($) 2020 ($)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
(Loss)/profit before income tax benefit/(expense) from continuing operations (1,743,882) 25,443
Loss before income tax expense from discontinued operations (1,884,734) (54,388)
(3,628,616) (28,945)
Tax at the statutory tax rate of 26% (943,440) (7,526)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent difference relating to loss on disposal of discontinued operations 490,031 -
Permanent difference relating to non-deductible expenses 31,270 -
(422,139) (7,526)
Movement in unrecognised temporary differences - 18,228
Movement in temporary differences (31,593) (88,707)
Tax effect of current year losses for which no deferred tax asset has been recognised 495,665 14,645
-
Tax effect of losses utilised (19,045)
Effect of different tax rate of group entities operating in different jurisdictions (2,724) (4,041)
Income tax expense/(benefit) 39,209 (86,446)
Consolidated
2021 ($) 2020 ($)
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised 1,906,403 4,043,881
Potential tax benefit @ 26% 495,665 1,051,409
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The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Consolidated
2021 ($) 2020 ($)
Deferred tax assets
Capital allowances 5,994 2,201
Leases 8,261 6,869
Provisions 7,431 4,362
Carry forward foreign tax losses 76,541 37,498
98,227 50,930
Deferred tax liabilities
Prepayments 803 (2,496)
Brand name (282) (2,025)
Licenses to operate (1,129) (8,099)
Domain, manuals and processes (77) (549)
(685) (13,169)
Deferred tax liabilities
US License (218,822) (251,000)
Technology (102,368) (117,000)
Customer Relationships (266,174) (380,000)
(587,364) (748,000)
Consolidated
2021 ($) 2020 ($)
Unrecognised temporary differences
Deferred tax assets
Blackhole expenditure - 176,781
Patent costs - 431
Accrued expenses 67,570 27,820
Capital raising costs - 275,442
Carry forward revenue tax losses 457,956 570,935
525,526 1,051,409
Deferred tax liability
Contract assets (29,861) -
-
(29,861)
Total unrecognised temporary differences 495,665 1,051,409
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Unused tax losses for which no deferred tax asset has been recognised will be subject to the Company satisfying the requirements imposed by regulatory taxation authorities. The benefits of deferred tax assets will only be recognised if:

Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised; • The conditions for deductibility imposed by tax legislation continue to be complied with; and
No changes in tax legislation adversely affect the Company in realising the benefit.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Discontinued operations

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Consolidated
2021 ($) 2020 ($)
Revenue 966,354 -
Expenses (2,851,088) (54,388)
Loss before income tax expense (1,884,734) (54,388)
- -
Income tax expense
Loss after income tax expense from discontinued operations (1,884,734) 1,051,409
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In February 2022, the Group finalised the sale of Parazero Israel. In line with AASB 5 Non-current Assets Held for Sale and Discontinued Operations the assets and liabilities of the entity has been disclosed separately in this note and has been recognised as assets of disposal groups classified as held for sale and liabilities directly associated with assets classified as held for sale. The performance of Parazero Israel has been included as a single line item in the Consolidated statement of profit or loss and other comprehensive income. Refer to note 33 for further information.

Note 8. Current assets - cash and cash equivalents

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Consolidated
2021 ($) 2020 ($)
Cash and cash equivalents 954,916 4,991,134
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Refer to note 26 for further information on the risk exposure analysis of cash and cash equivalents.

Note 9. Current assets - trade and other receivables

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Consolidated
2021 ($) 2020 ($)
Trade receivables 1,067,644 557,898
Expected Credit loss allowance (6,095) (7,946)
Goods and services tax 92,143 206,819
1,153,692 756,771
Prepayments 259,885 23,522
Other receivables 2,380 9,465
1,415,957 789,758
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Refer to note 26 for further information on the risk exposure analysis of trade and other receivables. There are no receivables that are past due where expected credit loss has not been assessed.

Prepayments mainly relate to payments made for insurances paid in advance.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 10. Current assets - assets of disposal groups classified as held for sale

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Consolidated
2021 ($) 2020 ($)
Cash and cash equivalents 45,424 191,789
Trade and other receivables 38,281 184,453
Inventories 483,895 480,850
Property, plant and equipment 68,957 82,337
Intangibles and goodwill 5,818,054 6,343,202
Deferred tax asset 86,290 -
6,540,901 7,282,631
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Note 11. Non-current assets - property, plant and equipment

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Consolidated
2021 ($) 2020 ($)
Cost 2,095,970 1,495,952
Accumulated depreciation (1,354,718) (1,098,000)
Net carrying amount 741,252 397,952
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Foreign
Opening Depreciation Closing
31 December 2021 Additions ($) Disposals ($) exchange
balance ($) ($) balance ($)
movements ($)
Survey equipment 18,961 - - 349 (19,310) -
Furniture and fixtures 28,571 2,936 - (743) (7,327) 23,437
Motor vehicles 20,281 137,770 - (1,186) (14,679) 142,186
Office equipment 12,533 28,620 - (250) (8,635) 32,268
IT equipment 44,779 47,278 - 861 (43,206) 49,712
Leasehold improvements 16,285 - - (278) (5,835) 10,172
Drone accessories 55,404 219,829 - (1,527) (129,241) 141,421
Drones 183,832 291,614 (3,044) (8,926) (170,165) 294,928
Drone batteries - 69,686 (1,427) (1,122) (47,081) 19,995
Other fixed assets 287 7,318 (1,488) 6 (4,962) 2,460
Capital works in progress 17,019 8,741 (189) (1,087) - 24,673
397,952 813,792 (6,148) (13,903) (450,441) 741,252
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 11. Non-current assets - property, plant and equipment (continued)

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Foreign
Opening Depreciation Closing
31 December 2020 Additions ($) Disposals ($) exchange
balance ($) ($) balance ($)
movements ($)
Survey equipment - 31,762 - - (12,801) 18,961
Furniture and fixtures 24,924 12,552 - (3,150) (5,755) 28,571
Motor vehicles 12,259 12,339 - (957) (3,360) 20,281
Office equipment 12,353 4,483 - (1,492) (2,811) 12,533
IT equipment 101,471 15,466 (5,556) (14,227) (52,375) 44,779
Leasehold improvements 35,644 14,195 - (4,629) (28,925) 16,285
Drone accessories 67,203 73,305 (4,802) (11,312) (68,990) 55,404
Small assets - 6,163 - - (6,163) -
Drones 318,647 108,319 (1,925) (39,605) (201,604) 183,832
Other fixed assets 563 - - (73) (203) 287
Capital works in progress - 17,019 - - - 17,019
573,064 295,603 (12,283) (75,445) (382,987) 397,952
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Note 12. Non-current assets - right-of-use assets

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Consolidated
2021 ($) 2020 ($)
Land and buildings - right-of-use 397,700 368,680
Less: Accumulated depreciation (276,079) (191,376)
121,621 177,304
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Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

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Land and
Consolidated Total ($)
buildings ($)
Balance at 1 January 2020 202,463 202,463
Additions 92,882 92,882
Exchange differences (26,304) (26,304)
Depreciation expense (91,737) (91,737)
Balance at 31 December 2020 177,304 177,304
Additions 20,694 20,694
Exchange differences 16,215 16,215
Transfers in/(out) (92,592) (92,592)
Balance at 31 December 2021 121,621 121,621
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Right-of-use assets relate to rental properties used in South Africa.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 13. Non-current assets - intangibles

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Consolidated
2021 ($) 2020 ($)
Brand Names - at cost 30,235 30,990
Less: Accumulated amortisation (29,228) (23,759)
1,007 7,231
Client contracts - at cost 194,837 -
Less: Accumulated amortisation (194,837) -
- -
Licenses to operate - at cost 120,942 123,960
Less: Accumulated amortisation (116,910) (95,036)
4,032 28,924
Domain, manuals and processes - at cost 94,594 96,956
Less: Accumulated amortisation (94,320) (94,993)
274 1,963
5,313 38,118
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Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

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Domain,
Licenses Customer
Brand manuals and USA Technology
Consolidated to operate relationships Total ($)
names ($) processed licenses ($) ($)
($) ($)
($)
Balance at 1 January 15,435 61,741 9,843 - - - 87,019
2020
Additions through business - - - 1,569,000 734,000 2,376,000 4,679,000
combinations (note 31)
- - -
Exchange differences (2,005) (8,022) (1,278) (11,305)
Amortisation expense (6,199) (24,795) (6,602) (5,370) (2,512) (6,506) (51,984)
Balance at 31 December
7,231 28,924 1,963 1,563,630 731,488 2,369,494 4,702,730
2020
- - -
Classified as held for sale (1,367,639) (639,801) (2,132,024) (4,139,464)
Exchange differences 90 355 24 - - - 469
Amortisation expense (6,313) (25,248) (1,713) (195,991) (91,687) (237,470) (558,422)
Balance at 31 December 1,008 4,031 274 - - - 5,313
2021
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Note 14. Non-current assets - deferred tax

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Consolidated
2021 ($) 2020 ($)
Deferred tax asset 97,542 50,930
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 15. Non-current assets - Goodwill

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Consolidated
2021 ($) 2020 ($)
Goodwill 1,403,438 580,824
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Goodwill relates to the acquisition of Rocketmine (Pty) Ltd (South Africa), and Arvista Pty Ltd (Australia).

The recoverable amount of all cash-generating units is based on the higher of its value-in-use or fair value less costs to sell which require use of assumptions. For the purpose of impairment testing, goodwill is allocated to two (2) cash-generating units (CGU), being Delta Drone South Africa and Australia. In assessing goodwill impairment for the year ended 31 December 2021, all CGUs used a discounted cash flow model in accordance with the value-in-use (VIU) method, which reflect the present value of the future cash flows expenditure to be derived from each CGUs. The allocation of the fair value to goodwill arising on acquisition of Arvista Pty Ltd has been made on a provisional basis. Under AASB 3 – Business Combinations management has up to 12 months to finalise the carrying value of assets and liabilities acquired on completion of an acquisition. The significant inputs and key assumptions used by management within the discounted cash flow model for the Delta Drone South Africa CGU and Arvista Pty Ltd CGU are:

Delta Drone South Africa (Pty) Ltd

Discount rate (pre-tax): risk in the industry and country in which it operates – 16.3%.
Revenue growth: relevant to the market conditions and business plan – 31.4%.
Budgeted gross profit rate: based on past performance and management’s expectations for the future – 54.7%.
Long term growth rate: typically consistent with the long-term growth rate of the economic environment or country in which it operates.

Arvista Pty Ltd

Discount rate (pre-tax): risk in the industry and country in which it operates – 15.0%.
Revenue growth: relevant to the market conditions and business plan – 33.5%
Budgeted gross profit rate: based on past performance and management’s expectations for the future – 35.0%.
Long term growth rate: typically consistent with the long-term growth rate of the economic environment or country in which it operates.

Note 16. Current liabilities - trade and other payables

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Consolidated
2021 ($) 2020 ($)
Trade payables 431,388 408,425
Goods and services tax 39,330 -
470,718 408,425
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Refer to note 26 for further information on financial instruments.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 17. Current liabilities - contract liabilities

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Consolidated
2021 ($) 2020 ($)
Contract liabilities 114,850 -
Reconciliations
Reconciliation of the written down values at the beginning and end of the
current and previous financial year are set out below:
- -
Opening balance
Payments received in advance 114,850 -
Closing balance 114,850 -
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Note 18. Current liabilities - borrowings

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Consolidated
2021 ($) 2020 ($)
Short-term loan 350,000 506,839
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Refer to note 26 for further information on financial instruments.

The borrowing represents a short-term bridge financing by way of an unsecured line of credit (“loan”) of $350,000 (2020: $500,000) advanced by Delta Drone SA France with an interest rate of 2.5% (2020: 10%) per annum. The loan and the accrued interest were repaid subsequent to the year end.

Note 19. Current liabilities - lease liabilities

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Consolidated
2021 ($) 2020 ($)
Lease liability 97,638 79,194
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Refer to note 26 for further information on financial instruments.

Note 20. Current liabilities – deferred consideration

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Consolidated
2021 ($) 2020 ($)
Deferred consideration - Arvista Pty Ltd acquisition 271,483 -
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Deferred consideration

The deferred provision represents the obligation to pay contingent consideration following the acquisition of Arvista Pty Ltd in the year. It is measured at the present value of the estimated liability. This consideration is to be paid in cash one month after the annual report is provided to the Australian Securities Exchange (ASX).

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 21. Current liabilities - liabilities directly associated with assets classified as held for sale

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Consolidated
2021 ($) 2020 ($)
Trade payables 932,302 998,997
Deferred tax liability 750,302 748,000
1,682,604 1,746,997
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Refer to note 26 for further information on financial instruments.

Non-current borrowings relate to motor vehicle finance leases and long-term borrowing from a supplier.

Note 22. Non-current liabilities - borrowings

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Consolidated
2021 ($) 2020 ($)
Borrowings 105,253 -
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Refer to note 26 for further information on financial instruments.

Non-current borrowings relate to motor vehicle finance leases and long-term borrowing from a supplier.

Note 23. Non-current liabilities - lease liabilities

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Consolidated
2021 ($) 2020 ($)
Lease liability 56,003 122,642
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Refer to note 26 for further information on financial instruments.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 24. Equity - issued capital

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Consolidated
2021 Shares 2020 Shares 2021 ($) 2020 ($)
Ordinary shares - fully paid 511,604,932 500,800,731 13,207,118 12,904,061
Movements in ordinary share capital
Details Date Shares Issue price ($)
Balance 1 January 2020 139,082,099 1,735,384
Conversion of convertible notes 22 December 2020 12,500,000 $0.0040 500,000
Conversion of convertible notes 22 December 2020 14,705,882 $0.0340 500,000
Issue of shares to acquire Delta Drone South Africa 22 December 2020 203,512,750 $0.0273 5,563,284
Issue of shares pursuant to Prospectus 22 December 2020 125,000,000 $0.0400 5,000,000
Issue of Broker Shares 22 December 2020 6,000,000 $0.0400 240,000
Capital raising costs 22 December 2020 (634,607)
Balance 31 December 2020 500,800,731 12,904,061
Issue of shares on exercise of options 10 February 2021 579,201 $0.0027 1,564
Issue of shares to third party 10 March 2021 625,000 $0.0310 19,375
Issue of shares for acquisition of Arvista Pty Ltd 1 September 2021 9,600,000 $0.0300 288,000
Share issue costs 1 September 2021 - (5,882)
Balance 31 December 2021 511,604,932 13,207,118
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Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Capital risk management

The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

Share buy-back

There is no current on-market share buy-back.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 25. Equity - reserves

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Consolidated
2021 ($) 2020 ($)
Predecessor accounting reserves (968,570) (968,570)
Foreign currency reserve 327,423 419,845
Share-based payments reserve 53,793 -
(587,354) (548,725)
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Foreign currency reserve

The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations.

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their remuneration, and other parties as part of their compensation for services.

Predecessor accounting reserve

The predecessor accounting reserve comprises the excess of purchase price over the fair value of net assets when the common controlled entity, Drone Safety and Legal (Pty) Ltd was acquired by Delta Drone SA France.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 26. Financial instruments

Financial risk management objectives

The Group’s objective when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk.

Given the nature of the business, the Group monitors capital on the basis of current business operations and cash flow requirements. There were no changes in the Group’s approach to capital management during the year.

Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units. Finance reports to the Board on a monthly basis.

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Consolidated
2021 ($) 2020 ($)
Financial assets
Cash and cash equivalents 954,916 4,991,134
Trade and other receivables 1,415,957 789,758
Financial assets held at amortised cost 34,869 35,531
2,405,742 5,816,423
Financial liabilities
Trade and other payables 470,718 408,425
Bank overdraft 18,895 31
Lease liabilities 153,371 201,836
Borrowings 455,253 506,839
Deferred consideration 271,483
1,369,720 1,117,131
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The fair value of the above financial instruments approximates their carrying values.

Market risk

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US Dollar (the functional currency of the Israeli subsidiary company now held for sale), the New Israeli Shekel, the Australian Dollar (functional currency of the Parent company) and the South African Rand (the functional currency of the South African subsidiaries).

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Interest rate risk

The Group’s main interest rate risk arises from borrowings. Borrowings obtained at variable rates expose the Group to interest rate risk.

Price risk

The Group is not exposed to any significant price risk

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Basis points Basis points
Consolidated - 2021 Basis points increase profit Effect on Basis points decrease Effect on Effect on
change equity change equity
before tax profit before tax
Cash and cash equivalents 100 9,549 9,549 (100) (9,549) (9,549)
Basis points Basis points
Consolidated - 2020 Basis points increase profit Effect on Basis points decrease Effect on Effect on
change equity change equity
before tax profit before tax
Cash and cash equivalents 100 49,911 49,911 (100) (49,911) (49,911)
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Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.

trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available.

Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.

The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to

Allowance for expected credit losses

The Group has recognised a loss of $6,095 (31 December 2020: $7,946) in profit or loss in respect of the expected credit losses for the year ended 31 December 2021.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The ageing of the receivables and allowance for expected credit losses provided for above are as follows:

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Allowance for expected
Expected credit loss rate Carrying amount
credit losses
2021 2020 2021 2020 2021 2020
Consolidated
% % % % % %
Not overdue - - 1,059,504 515,374 - -
0 to 3 months overdue 74.69% 18.00% 8,160 30,162 6,095 5,429
3 to 6 months overdue - 20.36% - 12,362 - 2,517
1,067,664 557,898 6,095 7,946
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Liquidity risk

Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Remaining contractual maturities

The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

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Weighted
Remaining
average 1 year or less Between 1 Between 2 Over 5 years
Consolidated - 2021 contractual
interest rate ($) and 2 years ($) and 5 years ($) ($)
maturities ($)
(%)
Non-derivatives
Non-interest bearing
Trade payables - 470,718 - - - 470,718
Deferred consideration 271,483 271,483
Non-interest bearing
Bank overdraft - 18,895 - - - 18,895
Lease liability - 97,638 56,003 - - 153,641
Interest-bearing - fixed rate
Borrowings 2.50% 350,000 - - - 350,000
Total non-derivatives - 1,208,734 56,003 - - 1,264,737
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Weighted
Remaining
average 1 year or less Between 1 Between 2 Over 5 years
Consolidated - 2020 contractual
interest rate ($) and 2 years ($) and 5 years ($) ($)
maturities ($)
(%)
Non-derivatives
Non-interest bearing
Trade payables - 408,425 - - - 408,425
Non-interest bearing
Lease liability - 79,194 122,642 - - 201,836
Interest-bearing - fixed rate
Borrowings 10.00% 506,839 - - - 506,839
Total non-derivatives - 994,458 122,642 - - 1,117,100
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The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Fair value of financial instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

Note 27. Key management personnel disclosures

Directors

The following persons were Directors of Delta Drone International Limited during the financial year:

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Eden Attias Executive Chairman
Christopher Clark Chief Executive Officer
Stephen Gorenstein Non-Executive Officer
Clive Donner Non-Executive Officer (appointed 14 July 2021)
Nicolas Clerc Non-Executive Officer (appointed 8 April 2021)
Christian Viguie Non-Executive Officer (appointed 8 April 2021)
Dan Arazi Non-Executive Officer (resigned 21 June 2021)
Chris Singleton Non-Executive Officer (resigned 14 July 2021)
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Compensation

The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below:

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Consolidated
2021 ($) 2020 ($)
Short-term employee benefits 482,402 432,085
Post-employment benefits 14,638 770
Share-based payments 53,794 -
550,834 432,855
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Note 28. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by BDO Audit (WA) Pty Ltd, the auditor of the Company, and its network firms:

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Consolidated
2021 ($) 2020 ($)
Audit services -
Audit or review of the financial statements 71,000 58,000
Other services -
-
Investigating Accountant’s Report
- BDO Corporate Finance (WA) Pty Ltd - 60,600
60,600
71,000 118,600
Audit services - network firms
Audit or review of the financial statements 54,831 60,327
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Note 29. Related party transactions

Parent entity

Delta Drone International Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 32.

Key management personnel

Disclosures relating to key management personnel are set out in note 27 and the remuneration report included in the Directors’ report.

Transactions with related parties

There were no transactions with related parties during the current and previous financial year.

Receivable from and payable to related parties

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Loans from related parties

The following balances are outstanding at the reporting date in relation to loans with related parties:

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Consolidated
2021 ($) 2020 ($)
Current borrowings:
Loan from Delta Drone SA (France) 350,000 506,838
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As at 31 December 2021, Delta Drone International Limited held a loan payable balance of $350,000 (31 December 2020: $500,000), which was owed to Delta Drone SA (France), a related party which holds a majority shareholding in the Company. The loan bears an interest of 2.5% (2020: 10%) per annum. This loan balance was repaid in full post-year end.

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

Note 30. Parent entity information

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Parent 2021 ($) Parent 2020 ($)
Loss after income tax (4,064,639) (17,429,836)
Parent 2021 ($) Parent 2020 ($)
Assets
Current assets 562,846 4,340,808
Total assets 562,846 4,340,808
Liabilities
Current assets (708,660) (726,869)
Total liabilities (708,660) (726,869)
Net Assets (145,814) 3,613,939
Shareholders’ Equity
Issued capital 19,418,100 19,115,043
Reserves 1,924,512 1,922,683
Accumulated losses (21,488,426) (17,423,787)
(145,814) 3,613,939
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Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

The parent entity had no guarantees in relation to the debts of its subsidiaries as at 31 December 2021 and 31 December 2020.

Contingent liabilities

The parent entity had no contingent liabilities as at 31 December 2021 and 31 December 2020.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 31 December 2021 and 31 December 2020.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 31. Business combinations

Arvista Pty Ltd

On 1 September 2021 Delta Drone International Limited acquired 60% of the ordinary shares of Arvista Pty Ltd for the total consideration transferred of $859,483. The acquired business contributed revenues of $553,836 and profit after tax of $39,760 to the Group for the period from 1 September 2021 to 31 December 2021. The goodwill on acquisition was $836,758 which arose as the difference between the fair value of consideration paid and the total tangible assets transferred and represents the access to blue-chip Australian client base and highly skilled professionals allowing the Group to expand its offering beyond surveying. If the acquisition occurred on 1 January 2021, the full year contributions would have been revenues of $1,396,352 and loss after tax of $80,584.

Deferred consideration

There is a deferred consideration portion of $271,483 that is due within one (1) month of the submission of the 31 December 2021 annual report to the Australian Securities Exchange (ASX).

Call Option

The Shareholders Agreement provides for a call option where the Group has the right to purchase the remaining 40% interest in Arvista Pty Ltd at 1.5 times the 12-month trading revenue on the purchase price for 31 August 2021. The option is valid for 5 years. As the option exercise price is linked to the fair value of the business, the directors have determined that the option is immaterial.

Details of the acquisition are as follows:

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Fair value ($)
Cash and cash equivalents 68,787
Trade receivables 173,595
Other current assets 1,092
Plant and equipment 1,867
Motor vehicles 13,739
Trade payables (161,201)
Employee benefits (58,922)
Other borrowings (1,082)
Net assets acquired 37,875
Goodwill 836,758
Non-controlling interest (15,150)
Acquisition-date fair value of the total consideration transferred 859,483
Representing: 300,000
Cash paid or payable to vendor 288,000
Delta Drone International Limited shares issued to vendor 271,483
Deferred consideration 859,483
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred 859,483
Less: cash and cash equivalents (68,787)
Less: payments to be made in future periods (271,483)
Less: shares issued by theCompany as part of consideration (288,000)
Net cash used 231,213
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* The non-controlling interest has been calculated by the proportionate share of net asset method.

Fair value measured on a provisional basis

The allocation of the fair value to goodwill has been made on a provisional basis. Under AASB 3 – Business Combinations management has up to 12 months to finalise the carrying value of assets and liabilities acquired on completion of an acquisition.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 32. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1:

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Principal place of business / Ownership Ownership
Name
Country of incorporation interest 2021 ($) interest 2020 ($)
ParaZero Technologies Israel 100.00% 100.00%
Delta Drone South Africa (Pty) Ltd South Africa 100.00% 100.00%
Drone Safety and Legal (Pty) Ltd South Africa 100.00% 100.00%
Rocketmine South Africa South Africa 74.00% 74.00%
Rocketmine Ghana Ghana 90.00% 90.00%
Rocketmine Australia Pty Ltd Australia 100.00% 100.00%
Arvista Pty Ltd Australia 60.00% -
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Note 33. Events after the reporting period

the ParaZero business, allowing the Group to focus on aggressively growing its global drone services business. As such, the assets (including goodwill and intangible assets), liabilities and net profit of the Parazero operations have been classified as assets held for sale and liabilities directly attributed to discontinued operations in the 31 December 2021 report.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 34. Reconciliation of loss after income tax to net cash from/(used in) operating activities

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Consolidated
2021 ($) 2020 ($)
Loss after income tax benefit/(expense) for the year (3,590,483) (115,391)
Adjustments for:
Depreciation and amortisation 1,064,076 202,293
Share-based payments 53,793 -
Foreign exchange differences (92,422) 585
Gain on sale of assets (11,123) (20,332)
Interest received - (26,292)
Finance costs 7,487 110,723
Expected credit loss allowance 6,095 (5,019)
Change in operating assets and liabilities:
Increase in trade and other receivables (318,694) (289,083)
Decrease/(increase) in inventories 6,185 (472,719)
Decrease/(increase) in income tax refund due (135,576) 86,446
Increase in deferred tax assets (146,070) -
Increase in trade and other payables 180,124 829,498
Increase in contract liabilities 114,850 -
Net cash from/(used in) operating activities (2,861,758) 300,709
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Note 35. Non-cash investing and financing activities

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Consolidated
2021 ($) 2020 ($)
Shares issued in relation to business combinations 288,000 -
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The Company issued 9,600,000 shares as part of the business combination to acquire Arvista Pty Ltd during the year. Refer to note 31 for more information.

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70
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 36. Changes in liabilities arising from financing activities

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Lease
Consolidated Borrowing ($) Total ($)
liabilies ($)
Balance at 1 January 2020 3,354,742 226,740 3,581,482
Net cash used in financing activities (167,707) (103,384) (271,091)
Loans received 500,000 - 500,000
Acquisition of leases - 92,882 92,882
-
Exchange differences (29,459) (29,459)
Changes in fair values 6,839 15,058 21,897
Other changes (3,187,035) - (3,187,035)
Balance at 31 December 2020 506,839 201,837 708,676
Net cash used in financing activities (512,111) (49,062) (561,173)
Proceeds from loans 454,821 - 390,000
Addition on business combination 1,082 - 1,082
Exchange differences 4,620 4,620
Changes in fair values - (867) (867)
Balance at 31 December 2021 455,241 151,908 607,149
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There are no other non-cash investing and financing activities.

Note 37. Earnings per share

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Consolidated
2021 ($) 2020 ($)
Loss per share for loss from continuing operations
Loss after income tax (1,705,749) (61,003)
Non-controlling interest (27,324) (68,568)
Loss after income tax (1,733,073) (129,571)
Number Number
Weighted average number of ordinary shares used in calculating basic earnings per share 505,033,787 144,191,756
Weighted average number of ordinary shares used in calculating diluted earnings per share 505,033,787 144,191,756
Cents Cents
Basic loss per share (0.34) (0.09)
Diluted loss per share (0.34) (0.09)
Consolidated
2021 ($) 2020 ($)
Loss per share for loss from discontinued operations
Loss after income tax (1,884,734) (54,388)
Number Number
Weighted average number of ordinary shares used in calculating basic earnings per share 505,033,787 144,191,756
Weighted average number of ordinary shares used in calculating diluted earnings per share 505,033,787 144,191,756
Cents Cents
Basic loss per share (0.37) (0.04)
Diluted loss per share (0.37) (0.04)
Cents Cents
Total Basic loss per share (0.71) (0.13)
Total Diluted loss per share (0.71) (0.13)
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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 38. Share-based payments

The Group provided performance rights to selected directors as a part of their remuneration package and as a performance incentive – the Board considers that performance rights are an appropriate form of incentive as they align remuneration with the longterm success of the Group, shareholder interests and current market practice.

Vesting of the performance rights is conditional on the satisfaction of various milestones within a three (3) year timeframe. The performance rights were issued at nil cost and will be converted into the equivalent number of shares when exercised.

2021

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Balance at the Expired/ Balance at the
Grant date Expiry date Granted Exercised
start of the year forfeited/ other end of the year
24/06/2021 24/06/2024 - 14,000,000 - (1,000,000) 13,000,000
- 14,000,000 - (1,000,000) 13,000,000
Set out below are summaries of performance rights granted under the plan:
Number of rights
2021
-
Outstanding at the beginning of the financial year
Granted 14,000,000
Forfeited (1,000,000)
Outstanding at the end of the financial year 13,000,000
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	-	14,000,000	-	(1,000,000)	13,000,000
	-	14,000,000	-	(1,000,000)	13,000,000

Set out below are summaries of performa	nce rights granted under the plan:
					Number of rights 2021

Outstanding at the beginning of the fnanc	ial year				-
Granted					14,000,000
Forfeited					(1,000,000)

Outstanding at the end of the fnancial ye	ar				13,000,000

There were 14,000,000 performance rights over ordinary shares issued to Directors as part of compensation during the year ended 31 December 2021. Shareholders of the Company approved the issue of the Performance Rights at the Annual General Meeting of the Company held on 24 June 2021.

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During the year 1,000,000 performance rights held by Chris Singleton were forfeited due to his resignation. As at 31 December 2021, an expense of $53,794 based on a fair value of $0.024 per right has been recognised as share-based payment in the statement of profit or loss and other comprehensive income which represents the pro-rated value from 24 June 2021 (grant date) to 31 December 2021. Total value of the remaining 13,000,000 Performance Rights will be expensed over management’s expected vesting period of 3 years. No performance rights have vested in the year ended 31 December 2021.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The details of allottees and the Milestones are described in the tables below

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Name No. of Performance Rights Milestones
Eden Attias 2,000,000 New Milestone 1
Eden Attias 2,000,000 New Milestone 2
Eden Attias 2,000,000 New Milestone 3
Christopher Clark 666,667 DDG Milestone 1
Christopher Clark 666,667 DDG Milestone 2
Christopher Clark 666,667 DDG Milestone 3
Christopher Clark 1,333,334 New Milestone 1
Christopher Clark 1,333,334 New Milestone 2
Christopher Clark 1,333,334 New Milestone 3
Stephen Gorenstein 333,334 New Milestone 1
Stephen Gorenstein 333,334 New Milestone 2
Stephen Gorenstein 333,334 New Milestone 3
13,000,000
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DDG Milestones

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Note: DDSA means Delta Drone South Africa and its current subsidiaries, Drone Safety and Legal, Rocketmine South Africa and Rocketmine Ghana.

New Milestones

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 38. Share-based payments (continued)

In the prior year the Company issued 45,000,000 Performance Shares for which $nil value was ascribed to as part of the acquisition accounting. The Performance Shares will convert to new shares according to the following milestones:

Class A Performance Shares

Each Class A Performance Share entitles Delta Drone SA France to subscribe for one fully paid ordinary share in the capital of the Company if Delta Drone South Africa achieves consolidated revenue (for avoidance of doubt, only Delta Drone South Africa and excluding the Company) for any full financial year (being 1 January to 31 December) during the three-year term of the Class A Performance Share of not less than US$3.2 million (“First Performance Milestone”).

Class C Performance Shares

Each Class C Performance Share entitles Delta Drone SA France to subscribe for one fully paid ordinary share in the capital of the Company if during the three-year term of the Class C Performance Shares the Company announces to the ASX that Delta Drone South Africa has expanded the services of its business offering (being the provision of drone survey and mapping solutions) into a new geographic location outside of Australia, Israel South Africa, Ghana and Namibia and achieved a revenue in that geographic location of not less than US$1,000,000 (“Third Performance Milestone”).

Class B Performance Shares

Each class B Performance Share entitles Delta Drone SA France to subscribe for one fully paid ordinary share in the capital of the Company if Delta Drone South Africa enters into at least two binding contracts with Australian based mining companies (being companies that conduct mining, exploration or extraction activities) for the provision of drone survey or mapping solution services to those mining companies in Australia (“Services”) and Delta Drone South Africa receives not less than US$1,000,000 (based on audited accounts) of verified revenue in aggregate form from such executed contracts received within the three-year term of the Performance Shares for its Services (“Second Performance Milestone”).

If a Performance Milestone is not satisfied within 3 years of the date of issue of the Performance Shares (being 22 December 2020), then the relevant Performance Shares will automatically lapse.

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

DIRECTORS’ DECLARATION

Directors’ declaration

In the Directors’ opinion:

the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group’s financial position as at 31 December 2021 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the Directors

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Christopher Clark Chief Executive Officer

31 March 2022

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DELTA DRONE INTERNATIONAL LIMITED

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DELTA DRONE INTERNATIONAL LIMITED

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DELTA DRONE INTERNATIONAL LIMITED

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DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DELTA DRONE INTERNATIONAL LIMITED

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DELTA DRONE INTERNATIONAL ANNUAL REPORT 2022

ASX ADDITIONAL INFORMATION

The shareholder information set out below was applicable as at 6 March 2022. As at 6 March 2022, there were 706 holders of fully paid ordinary shares.

VOTING RIGHTS

The voting rights of the ordinary shares are as follows:

Subject to any rights or restrictions for the time being attached to any shares or class of shares of the Company, each member of the Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of members will be decided by a show of hands unless a poll is demanded. On a show of hands each eligible voter present has one vote. However, where a person present at a general meeting represents personally or by proxy, attorney or representation more than one member, on a show of hands the person is entitled to one vote only despite the number of members the person represents.

On a poll each eligible member has one vote for each fully paid share held.

There are no voting rights attached to any of the options and performance options that the Company currently has on issue. Upon exercise of these options, the shares issued will have the same voting rights as existing ordinary shares.

TWENTY LARGEST SHAREHOLDERS

The names of the twenty largest holders of Ordinary Fully Paid Shares are:

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Holder Name Holding % IC
Delta Drone SA 282,506,678 55.22%
The Trust Company (Australia) Limited 27,275,691 5.33%
010 Yazamut Ltd 23,959,727 4.68%
HSBC Custody Nominees (Australia) Limited 19,999,624 3.91%
Meah Plus Maarchot Betichot Le’rachfanim LP 18,112,983 3.54%
Cukierman & Co Investment House Ltd 6,000,000 1.17%
Nintieth Y Pty Ltd 5,750,000 1.12%
Pither Investments Pty Ltd 5,750,000 1.12%
Adfect Aps 5,107,395 1.00%
Mr Perry Julian Rosenzweig 5,000,000 0.98%
Mr Shane Gavin Mcleay & Ms Karen Leigh Mcleay 3,840,000 0.75%
Mr Evan Mckern 3,840,000 0.75%
Amir Tsaliah 3,523,386 0.69%
Ronald Zelazo 3,238,622 0.63%
Auto Management Pty Ltd 3,000,000 0.59%
Ronald Zelazo 2,433,333 0.48%
Opima Pty Limited 2,000,000 0.39%
Investmin Pty Ltd 1,920,000 0.38%
Mrs Kathryn Valerie Van Der Zwan 1,750,000 0.34%
Jetmax Trading Pty Ltd 1,681,250 0.33%
Totals 426,688,689 83.40%
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80

SHAREHOLDER INFORMATION

DELTA DRONE INTERNATIONAL ANNUAL REPORT 2022

SUBSTANTIAL HOLDERS

The names of the substantial shareholders disclosed to the Company as substantial shareholders are:

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Name No of Shares Held % of Issued Capital
Delta Drone SA 282,506,678 55.22%
Merchant Funds Management Pty Ltd as manager of the Merchant
27,275,691 5.44%
Opportunities Fund and the Merchant Leaders Fund
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DISTRIBUTION OF EQUITY SECURITIES

Ordinary Fully Paid Shares

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Holding Ranges Holders Total Units % Issued Share Ca
1 - 1,000 9 3,581 0.00%
1,001 - 5,000 15 54,790 0.01%
5,001 - 10,000 69 665,198 0.13%
10,001 - 100,000 423 20,118,847 3.93%
100,001 and ove 190 490,762,516 95.93%
Totals 706 511,604,932 100.00%
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Unmarketable Parcels – 216 Holders with a total of 3,061,590 shares, based on the last trading price of $0.018 on 4 March 2022.

RESTRICTED SECURITIES

The following securities are subject to ASX escrow:

211,718,632 Ordinary Fully Paid Shares escrowed until 31 December 2022 20,000,000 Class A Performance Shares escrowed until 31 December 2022 15,000,000 Class B Performance Shares escrowed until 31 December 2022 10,000,000 Class C Performance Shares escrowed until 31 December 2022

Note:

The milestones applicable to the Performance Shares are detailed in Note 38 of this Annual Report.

The following securities are subject to voluntary escrow:

625,000 Ordinary Fully Paid Shares voluntarily escrowed until 10 March 2022 9,600,000 Ordinary Fully Paid Shares voluntarily escrowed until 1 September 2023

81

SHAREHOLDER INFORMATION

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

UNQUOTED SECURITIES

The following unquoted securities are on issue:

7,590,418 Options Expiring 13 June 2023 @ $0.0027 – 3 Holders

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Holders with more than 20%
Holder Name Holding % IC
EATC International Ltd 5,598,837 73.76%
20,000,000 Class A Performance Shares escrowed until 31 December 2022 – 1 Holder
Holders with more than 20%
Holder Name Holding % IC
Delta Drone SA 20,000,000 100.00%
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The milestones applicable to the Performance Shares are detailed in Note 38 of this Annual Report.

15,000,000 Class B Performance Shares escrowed until 31 December 2022 – 1 Holder

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Holders with more than 20%
Holder Name Holding % IC
Delta Drone SA 15,000,000 100.00%
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The milestones applicable to the Performance Shares are detailed in Note 38 of this Annual Report.

10,000,000 Class C Performance Shares escrowed until 31 December 2022 – 1 Holder

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Holders with more than 20%
Holder Name Holding % IC
Delta Drone SA 10,000,000 100.00%
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The milestones applicable to the Performance Shares are detailed in Note 38 of this Annual Report.

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955,480 Options Expiring 17 April 2024 @ $0.1125 – 14 Holders
Holders with more than 20%
Holder Name Holding % IC
The Trust Company (Australia) Limited 618,430 64.72%
953,544 Options Expiring 24 June 2024 @ $0.1125 – 5 Holders
Holders with more than 20%
Holder Name Holding % IC
Meah Plus Maarchot Betichot Le’rachfanim LP 823,673 86.38%
948,053 Options Expiring 5 November 2024 @ $0.09 – 5 Holders
Holders with more than 20%
Holder Name Holding % IC
010 Yazamut Ltd 270,872 28.57%
Adfect Aps 225,727 23.81%
Ronald Zelazo 225,727 23.81%
The Trust Company (Australia) Limited 222,745 23.50%
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82

SHAREHOLDER INFORMATION

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

The following unquoted securities are on issue and were issued under the employee incentive plan.

666,667 Performance Rights - 1 Holder 666,667 Performance Rights - 1 Holder 666,666 Performance Rights - 1 Holder 3,666,668 Performance Rights - 3 Holders 3,666,666 Performance Rights - 3 Holders 3,666,666 Performance Rights - 3 Holders

The milestones applicable to the Performance Shares are detailed in Note 38 of this Annual Report.

ON-MARKET BUY BACK

There is currently no on-market buyback program.

ASX LISTING RULE 4.10.19

The Company has used its cash and assets in a form readily convertible to cash that it had at the time of listing of the Company’s securities to quotation in a way consistent with its business objectives.

83

DELTA DRONE INTERNATIONAL LIMITED ANNUAL REPORT 2021

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DELTA DRONE INTERNATIONAL LIMITED

[email protected] +61 8 6189 1155 75 Thomas Street Subiaco WA 6008 Email: [email protected]

DELTA DRONE INTERNATIONAL LIMITED | ABN 17 618 678 701

84

AI assistant

ROCKETDNA LTD. — Annual Report 2022

65709_rns_2022-03-30_017adcca-becc-45cd-a345-cfe723ee19eb.pdf

HIGHLIGHTS

ASX: DLT

OUR ADVANTAGE

ASX: DLT

Market-leading Technologies

Long-Range Flight Capabilities

Scalable Business Model

High- Frequency High Speed Data

Proven Safety & Quality Systems

Economies of Scale

“

TABLE OF CONTENTS

CHAIRMAN’S LETTER

Dear Shareholders

CEO’S LETTER

CORPORATE DIRECTORY

DIRECTORS’ REPORT

Principal activities

Dividends

Review of operations

Significant changes in the state of affairs

Likely developments and expected results of operations

Board changes

Matters subsequent to the end of the financial year

Environmental regulation

INFORMATION ON DIRECTORS

B. GEN (RET.) EDEN ATTIAS Executive Chairman

MR CHRISTOPHER CLARK

Qualifications

Experience and expertise

Qualifications

Experience and expertise

Interests in options

Interests in rights

Interests in rights

INFORMATION ON DIRECTORS

MR STEPHEN GORENSTEIN

MR NICOLAS CLERC

Qualifications

Experience and expertise

Qualifications

Experience and expertise

Interests in shares

Interests in options

Interests in rights

INFORMATION ON DIRECTORS

MR CLIVE DONNER

Non-Executive Director

MR CHRISTIAN VIGUIE

Qualifications Bachelor of Commerce

Experience and expertise

Experience and expertise

MR DAN ARAZI

Qualifications

Experience and expertise

Interests in shares

Interests in options:

MR CHRIS SINGLETON Non-Executive Director

Qualifications

Experience and expertise

Interests in shares

Interests in options:

MR STEPHEN BUCKLEY

Experience and expertise

Meetings of Directors

Remuneration report (audited)

Introduction

Remuneration governance

Executive remuneration arrangements

EDEN ATTIAS

CHRISTOPHER CLARK

Performance Conditions Linked to Remuneration

Non-executive director fee arrangements

Details of remuneration

2021

Share-based compensation

Issue of shares

ROCKETDNA LTD. Annual Report 2022