# EDGAR Filing Document

**Accession Number:** 0001786286
**File Stem:** 0001493152-23-009544
**Filing Date:** 2023-3
**Character Count:** 187650
**Document Hash:** 3b91798240c2801d11f08cdfca0dc20e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-23-009544.hdr.sgml**: 20230329

**ACCESSION NUMBER**: 0001493152-23-009544

**CONFORMED SUBMISSION TYPE**: SUPPL

**PUBLIC DOCUMENT COUNT**: 2

**FILED AS OF DATE**: 20230329

**DATE AS OF CHANGE**: 20230329

**EFFECTIVENESS DATE**: 20230329

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Draganfly Inc.
- **CENTRAL INDEX KEY:** 0001786286
- **STANDARD INDUSTRIAL CLASSIFICATION:** AIRCRAFT [3721]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** SUPPL

**SEC ACT:**
- **SEC FILE NUMBER:** 333-258074
- **FILM NUMBER:** 23776278

**BUSINESS ADDRESS:**
- **STREET 1:** 2108 ST. GEORGE AVENUE
- **CITY:** SASKATOON
- **STATE:** A9
- **ZIP:** S7M 0K7
- **BUSINESS PHONE:** 403-781-6671

**MAIL ADDRESS:**
- **STREET 1:** 55 BURRARD STREET
- **STREET 2:** SUITE 2300
- **CITY:** VANCOUVER
- **STATE:** A1
- **ZIP:** V6C 2B5

**Filed pursuant to General Instruction II.L of Form F-10**

**File No. 333-258074**

***No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise****.*

 

*This ‎prospectus supplement (the "**Prospectus Supplement**"), together with the accompanying short form base shelf prospectus dated ‎July 14, 2021 to which it relates, as amended or supplemented (the "**Base ‎Shelf Prospectus**"), and each document incorporated or deemed to be incorporated by reference in this Prospectus Supplement ‎and in the Base Shelf Prospectus, constitutes a public offering of these securities only in those jurisdictions where they may be ‎lawfully offered for sale and therein only by persons permitted to sell such securities. See "Plan of Distribution".‎*

 

***Information has been incorporated by reference in this Prospectus Supplement, and in the Base Shelf Prospectus to which it ‎relates from documents filed with securities commissions or similar authorities in Canada and with the United States Securities ‎and Exchange Commission (the "SEC")****. Copies of the documents incorporated herein by reference may be obtained on request ‎without charge from the Corporate Secretary of Draganfly Inc. at 2108 St. George Avenue, Saskatoon, Saskatchewan, S7M 0K7 (telephone 1-800-979-9794), and are also available electronically at <u>www.sedar.com</u> and <u>www.sec.gov</u>.*

 **PROSPECTUS SUPPLEMENT**

**TO THE SHORT FORM BASE SHELF PROSPECTUS DATED July 14, 2021‎**

*<u>New Issue</u>* March 29, 2023

![](formsuppl_001.jpg)

**DRAGANFLY INC.‎**

**$8,000,000**

**8,000,000** **Common Shares**

This Prospectus Supplement, together with the accompanying Base Shelf Prospectus of Draganfly Inc. ("**Draganfly**", the "**Company**", "**we**", "**us**" or "**our**"), qualifies the distribution (the "**Offering**") of 8,000,000 common shares (the "**Common Shares**") at a price of $1.00 per Common Share (the "**Offering Price**").

The Offering is being made in the United States only under the Company's registration statement on Form F-10 (File No. 333-258074) (the "**U.S. Registration Statement**") filed with and declared effective by the SEC under the *U.S. Securities Act of 1933*, as amended (the "**U.S. Securities Act**"**).** The Common Shares offered hereby are not being offered for sale to the public in Canada under this Prospectus Supplement.

The Common Shares are issued and sold in the United States by Aegis Capital Corp. (the "**Underwriter**"), as ‎the sole underwriter, if any (the "**Underwriter**")‎, pursuant to an underwriting agreement (the "**Underwriting Agreement**") dated as of March 29, 2023. The Offering Price has been determined by arm's length negotiation between Draganfly and the Underwriter with reference to the prevailing market price of the Common Shares. See "*Plan of Distribution*".

All dollar amounts in this Prospectus Supplement are in United States dollars, unless otherwise indicated. See ‎‎ "*Exchange Rate Information*".‎

**Price: $1.00 per Common Share**

---

| | | | |
|:---|:---|:---|:---|
|  | **Price to the Public‎<sup>(1)</sup>** | **Underwriter's**<br> **Discount and<br> Commission**<sup>(2)</sup> **‎** | **Net Proceeds to the**<br> **Company**<sup>(3)</sup> |
| Per Common Share | $1.00 | $0.08 | $0.92 |
| Total | $8000000 | $640000 | $7360000 |

---

**Notes:‎**

(1) The
 Offering Price was determined by arm's length negotiations between us and the Underwriter.

(2) In
 consideration for the services rendered by the Underwriter, the Underwriter will receive a discount(the "**Underwriter's Commission**") equal to 8% of the gross proceeds of the Offering and the Company has agreed to reimburse the Underwriter
 for certain expenses. See "*Plan of Distribution* ".‎

(3) After
 deducting the Underwriter's Commission but before deducting the expenses of the Offering, estimated to be $250,000 and
 which will be paid from the proceeds of the Offering.

The Company has granted to the Underwriter an option (the "**Option**") to purchase up to an additional 1,200,000 common shares (the "**Additional Common Shares**") at a price of $1.00 per Additional Common Share representing up to 15% of the number of Common Shares sold under the Offering. The Option is exercisable in whole or in part at any time up to 30 days after the date of closing of the Offering. If the Option is exercised in full, the total "Price to the Public", "Underwriter's Commission" and "Net Proceeds to the Company" will be $9,200,000, $736,000 and $8,464,000 respectively. This Prospectus Supplement qualifies the distribution of the Option and the distribution of any Additional Common Shares issued upon exercise of the Option. A purchaser who acquires Common Shares forming part of the Underwriter's over-allocation position acquires those securities under this Prospectus Supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Option or secondary market purchases. See "*Plan of Distribution".*

The following table sets out the number of securities issuable assuming the exercise in full of the Option:

---

| | | | |
|:---|:---|:---|:---|
| **Underwriter's Position** | **Maximum Size or Number of Securities Available** | **Exercise Period or Acquisition Date** | **Exercise Price or Average Acquisition Price** |
| Option | 1, 2000,000<br> Common Share | Exercisable for a period of 30 days following closing of the Offering | $1.00 per Common Share |

---

Unless the context otherwise requires, all references to the "Offering" in this Prospectus Supplement shall include the ‎Option and the issuance of Additional Common Shares pursuant thereto.

Subject to applicable laws, the Underwriter may, in connection with the Offering, effect transactions which stabilize ‎or maintain the market price of the Common Shares at levels other than those which might ‎otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. See "*Plan ‎of Distribution*".‎

**An investment in the Common Shares involves a high degree of risk. Prospective investors should carefully consider the ‎risk factors described in and/or incorporated by reference in this Prospectus Supplement and the Base Shelf ‎Prospectus. See "*Cautionary Statement Regarding Forward-Looking Statements*" and "*Risk Factors*".‎**

The Common Shares are listed on the Canadian Securities Exchange ‎(the ‎‎"**CSE**") under the symbol "DPRO", on the Frankfurt Stock Exchange under the symbol "3U8A" and on the Nasdaq Capital Market ("**Nasdaq**") under the symbol "DPRO". On March 28, 2023, the last trading day of the Common Shares on the CSE and Nasdaq before the date hereof, the closing ‎price of the Common Shares was C$1.95 and US$1.43, respectively. An application has been made to list the Common Shares on the CSE and notification has been or will be provided to Nasdaq. Listing of the Common Shares will be subject to the Company fulfilling the respective listing requirements of each of the CSE and Nasdaq. Closing of the Offering is subject to usual closing conditions.

The Underwriter conditionally offers the Common Shares on behalf of the Company, on a firm commitment basis, ‎if, as and when issued by the Company and delivered and accepted by the Underwriter in accordance with ‎the ‎conditions contained in the Underwriting Agreement referred to under "*Plan of Distribution*" and subject to ‎‎approval of certain legal matters relating to the Offering relating to Canadian law on behalf of the Company by ‎‎DLA Piper (Canada) LLP. Certain legal matters in connection with the Offering relating to U.S. law will be passed ‎upon ‎for the Company by Troutman Pepper Hamilton Sanders LLP. Certain legal matters in connection with the ‎‎Offering will be passed upon for the Underwriter by Kaufman & Canoles, P.C., with respect to U.S. law.‎

ii

Subscriptions for Common Shares will be received subject to rejection or allotment in whole or in part and the right is ‎reserved to ‎close the subscription books at any time without notice. It is expected that closing of the Offering will ‎occur on or ‎about March 31, 2023 or such other date as the Company and the Underwriter may agree upon (the ‎‎"**Closing ‎Date**").‎

The Common Shares will be ready for delivery through the facilities of the Depository Trust Company ("**DTC**") or by such other means as the Company and the Underwriter may agree, on the Closing Date. It is expected that the Company will arrange for the instant deposit of the Common Shares under the book-based system of registration, to be registered to DTC or its nominee, as the case may be, and deposited with DTC or its nominee, as the case may be. No certificates evidencing the Common Shares will be issued to purchasers of the Common Shares. Purchasers of the Common Shares will receive only a customer confirmation from the Underwriter or other registered dealer who is a DTC participant and from or through whom a beneficial interest in the Common Shares is purchased.

**The offering of Common Shares hereunder is made by a Canadian issuer that is permitted, under a multijurisdictional disclosure system ("MJDS") adopted by the United States and Canada, to prepare this Prospectus Supplement and the Base Shelf Prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. Annual financial statements for the year ended December 31, 2022 included or incorporated herein have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") and are subject to Canadian auditing and auditor independence standards and thus may not be comparable to financial statements of United States companies.**

**The enforcement by investors of civil liabilities under the United States federal securities laws may be affected ‎adversely by the fact that the Company is incorporated or organized under the laws of a foreign country, ‎that some or all of its officers and directors may be residents of a foreign country, that some or all of the ‎experts named in this Prospectus Supplement and the Base Shelf Prospectus may be residents of a foreign ‎country and that all or a substantial portion of the assets of the Company and said persons may be located ‎outside the United States. See "*Enforceability of Civil Liabilities*".‎**

**THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, THE SECURITIES ‎COMMISSION OF ANY STATE OF THE UNITED STATES OR ANY CANADIAN SECURITIES ‎REGULATOR NOR HAVE ANY OF THE FOREGOING PASSED UPON THE ACCURACY OR ADEQUACY ‎OF THIS PROSPECTUS SUPPLEMENT AND THE BASE SHELF PROSPECTUS. ANY REPRESENTATION ‎TO THE CONTRARY IS A CRIMINAL OFFENSE.‎**

**Prospective investors should be aware that the acquisition, holding or disposition of the Common Shares ‎described herein may have tax consequences both in the United States and in Canada. Such consequences for ‎investors who are resident in, or citizens of the United States may not be described fully herein. ‎You should read the tax discussion contained in this Prospectus Supplement and consult your own tax advisor ‎with respect to your own particular circumstances. See the sections titled "*Certain ‎Canadian Federal Income Tax Considerations*", "*Certain U.S. Federal Income Tax Considerations*" and "*Risk ‎Factors*".‎**

The Common Shares may only be sold in those jurisdictions where offers and sales are permitted. This Prospectus Supplement is not an offer to sell or a solicitation of an offer to buy the Common Shares in any jurisdiction in which it is unlawful. Prospective investors should be aware that the acquisition or disposition of the Common Shares described in this Prospectus Supplement may have tax consequences both in the United States and in Canada or elsewhere, depending on each particular existing or prospective investor's specific circumstances.

The Company is neither a "connected issuer" nor a "related issuer" of the Underwriter as defined in National Instrument 33-105 - *Underwriting Conflicts*.

Andrew Hill Card Jr., John M. Mitnick and Julie Myers Wood are members of the board ‎of directors of the Company, all reside outside of Canada and have appointed DLA Piper (Canada) LLP, 2800 Park Place, 666 ‎Burrard St, Vancouver, British Columbia, Canada ‎V6C 2Z7‎‎, as agent for service of process. Purchasers are advised that it ‎may not be possible for investors to enforce judgments obtained in Canada against any person or company that is ‎incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, ‎even if the party has appointed an agent for service of process.‎

The Company's head office is located at 2108 St. George Avenue, Saskatoon, Saskatchewan S7M 0K7, ‎and its registered office is located at Suite 2800, Park Place, 666 Burrard Street, Vancouver, British ‎Columbia V6C 2Z7.

iii

**Table of Contents**

**Preliminary Prospectus Supplement**

---

| | |
|:---|:---|
|  | **Page** |
| [GENERAL MATTERS](#A_001) | S-1 |
| [‎EXCHANGE RATE INFORMATION](#A_002) | S-1 |
| [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](#A_003) | S-2 |
| [DOCUMENTS INCORPORATED BY REFERENCE](#A_004) | S-4 |
| [DOCUMENTS FILED AS PART OF THE U.S. REGISTRATION STATEMENT](#A_005) | S-5 |
| [THE OFFERING](#A_006) | S-6 |
| [THE COMPANY](#A_007) | S-7 |
| [DESCRIPTION OF THE BUSINESS](#A_008) | S-7 |
| [CONSOLIDATED CAPITALIZATION](#A_009) | S-7 |
| [USE OF PROCEEDS](#A_010) | S-8 |
| [PLAN OF DISTRIBUTION](#A_011) | S-9 |
| [DESCRIPTION OF SECURITIES BEING DISTRIBUTED](#A_012) | S-12 |
| [PRIOR SALES](#A_013) | S-12 |
| [TRADING PRICE AND VOLUME](#A_014) | S-13 |
| [RISK FACTORS](#A_015) | S-14 |
| [CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS](#A_016) | S-16 |
| [CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR UNITED STATES RESIDENTS](#A_017) | S-19 |
| [LEGAL MATTERS](#A_018) | S-20 |
| [AUDITOR, TRANSFER AGENT AND REGISTRAR](#A_019) | S-21 |
| [AGENT FOR SERVICE OF PROCESS](#A_020) | S-21 |
| [STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION](#A_021) | S-21 |
| [ENFORCEABILITY OF CIVIL LIABILITIES](#A_022) | S-21 |

---

**Table of Contents**

**Base Shelf Prospectus**

---

| | |
|:---|:---|
|  | **Page** |
| [ABOUT THIS PROSPECTUS](#Ha_001) | 1 |
| [CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION](#Ha_002) | 1 |
| [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#Ha_003) | 1 |
| [DOCUMENTS INCORPORATED BY REFERENCE](#Ha_004) | 2 |
| [THE COMPANY](#Ha_005) | 4 |
| [USE OF PROCEEDS](#Ha_006) | 4 |
| [CONSOLIDATED CAPITALIZATION](#Ha_007) | 4 |
| [PRIOR SALES](#Ha_008) | 4 |
| [TRADING PRICE AND VOLUME](#Ha_009) | 4 |
| [DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY](#Ha_010) | 4 |
| [DESCRIPTION OF WARRANTS](#Ha_011) | 5 |
| [DESCRIPTION OF SUBSCRIPTION RECEIPTS](#Ha_012) | 6 |
| [DESCRIPTION OF UNITS](#Ha_013) | 7 |
| [PLAN OF DISTRIBUTION](#Ha_014) | 7 |
| [CERTAIN CANADIAN AND UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS](#Ha_015) | 8 |
| [RISK FACTORS](#Ha_016) | 8 |
| [INTERESTS OF EXPERTS](#Ha_017) | 11 |
| [LEGAL MATTERS](#Ha_018) | 11 |
| [AUDITORS, REGISTRAR AND TRANSFER AGENT](#Ha_019) | 11 |
| [AGENT FOR SERVICE OF PROCESS](#Ha_020) | 11 |
| [STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION](#Ha_021) | 11 |

---

**GENERAL MATTERS**

This document is in two parts. The first part is this Prospectus Supplement, which describes the terms of the Offering ‎and adds to and updates information in the accompanying Base Shelf Prospectus and the documents incorporated ‎by reference herein and therein. The second part is the accompanying Base Shelf Prospectus, which gives more general ‎information, some of which may not apply to the Offering. This Prospectus Supplement is deemed to be ‎incorporated by reference into the accompanying Base Shelf Prospectus solely for the purposes of this Offering. This ‎Prospectus Supplement may add, update or change information contained in the accompanying Base Shelf ‎Prospectus and the documents incorporated by reference therein. Before investing, you should carefully read both ‎this Prospectus Supplement and the accompanying Base Shelf Prospectus together with the additional information ‎about the Company to which you are referred in the sections of this Prospectus Supplement and the Base Shelf ‎Prospectus titled "*Documents Incorporated by Reference*".‎

Purchasers of Common Shares should rely only on the information contained in or incorporated by reference into this ‎Prospectus Supplement and the Base Shelf Prospectus. The Company has not authorized anyone to provide ‎purchasers with different or additional information. If information in this Prospectus Supplement is inconsistent with ‎the Base Shelf Prospectus or the information incorporated by reference, you should rely on this Prospectus ‎Supplement. If anyone provides purchasers with different or additional information, purchasers should not rely on it. ‎The Company is not making any offer of the Common Shares in any jurisdiction where the offer not permitted by ‎law. Purchasers should assume that the information contained in this Prospectus Supplement and the Base Shelf ‎Prospectus is accurate only as of the date on the front of those documents and that information contained in any ‎document incorporated by reference is accurate only as of the date of that document, regardless of the time of ‎delivery of this Prospectus Supplement and the Base Shelf Prospectus or of any sale of the Common Shares. The ‎Company's business, financial condition, results of operations and prospects may have changed since those dates.‎

**The corporate website of the Company is www.draganfly.com. The information on the Company's website is ‎not intended to be included or incorporated by reference into this Prospectus Supplement and the Base Shelf ‎Prospectus and prospective purchasers should not rely on such information when deciding whether or not to ‎invest in the Common Shares.‎**

Market data and industry forecasts used throughout this Prospectus ‎Supplement, the Base Shelf Prospectus and the documents incorporated by reference therein were obtained from ‎various publicly available sources. Although the Company believes that these independent sources are generally ‎reliable, the accuracy and completeness of the information from such sources are not guaranteed and have not been ‎independently verified.‎

This Prospectus Supplement, the Base Shelf Prospectus and the documents incorporated by reference therein are ‎part of the U.S. Registration Statement. **This Prospectus Supplement and the Base Shelf Prospectus do not contain ‎all of the information set forth in the U.S. Registration Statement, certain parts of which are omitted in ‎accordance with the rules and regulations of the SEC, or the schedules or exhibits that are part of the U.S. ‎Registration Statement. Investors in the United States should refer to the U.S. Registration Statement and the ‎exhibits thereto for further information with respect to Draganfly and the Common Shares.‎**

In this Prospectus Supplement, the Base Shelf Prospectus and the documents incorporated by reference herein and ‎therein, unless the context otherwise requires, references to "Draganfly" or the "Company" refer to Draganfly Inc.

**‎EXCHANGE RATE INFORMATION**

The consolidated financial statements of the Company incorporated by reference in this Prospectus Supplement have been prepared in accordance with IFRS and are reported in Canadian dollars, and the audit of such financial statements are subject to Canadian auditing and auditor independence standards.

In this Prospectus Supplement, unless otherwise indicated, all dollar amounts and references to "$" and "US$" are to U.S. dollars, and references to "C$" are to Canadian dollars.

The following table sets out, for the period indicated, certain exchange rates based upon the rate published by the Bank of Canada during the respective periods. The rates are set out as United States dollars per C$1.00.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,‎** | **Year ended December 31,‎** | **Year ended December 31,‎** | **Year ended December 31,‎** | **Year ended December 31,‎** | **Year ended December 31,‎** |
| ‎ | **2022** | **2022** | **2021** | **2021** | **2020** | **2020** |
| Low | US$ | 0.7217 | US$ | 0.7727 | US$ | 0.6869 |
| High | US$ | 0.8031 | US$ | 0.8306 | US$ | 0.7863 |
| Average | US$ | 0.7685 | US$ | 0.7980 | US$ | 0.6898 |

---

On March 28, 2023, the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was US$1.00 = C$1.3626.

**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

This Prospectus Supplement, the accompanying Base Shelf Prospectus and the documents incorporated by reference herein contain certain "forward-looking statements" and "forward-looking information" within the meaning of applicable securities legislation (collectively, "**forward-looking statements**"). Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "contemplate" and other similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not historical facts. Forward-looking statements in this Prospectus Supplement, the Base Shelf Prospectus and the documents incorporated by reference herein and therein include, but are not limited to, statements with respect to:

● the use of the net proceeds from the Offering; ‎

● any decision not to sell Offered Shares if the sales cannot be effected at or above the price designated by the Company;

● the intentions, plans and future actions of the Company;

● statements relating to the business and future activities of the Company;

● anticipated developments in operations of the Company;

● market position, ability to compete and future financial or operating performance of the Company;

● the timing and amount of funding required to execute the Company's business plans;

● capital expenditures;

● the effect on the Company of any changes to existing or new legislation or policy or government regulation;

● the availability of labour;

● requirements for additional capital;

● goals, strategies and future growth;

● the adequacy of financial resources;

● expectation that the Common Shares will continue to be listed on the CSE and the Nasdaq;

● expectations regarding revenues, expenses and anticipated cash needs; and

● the impact of the COVID-19 pandemic on the business and operations of the Company.

Forward-looking statements are not guarantees of future performance, actions or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out in this Prospectus Supplement, the accompanying Base Shelf Prospectus and the documents incorporated by reference herein and therein include or relate to the following:

● the Company's ability to implement its growth strategies;

● the Company's competitive advantages;

● the development of new products and services;

● the Company's ability to obtain and maintain financing on acceptable terms;

● the impact of competition;

● changes in laws, rules and regulations;

● the Company's ability to maintain and renew required licences;

● the Company's ability to maintain good business relationships with its customers, distributors, suppliers and other strategic partners;

● the Company's ability to protect intellectual property;

● the Company's ability to manage and integrate acquisitions;

● the Company's ability to retain key personnel; and

● the absence of material adverse changes in the industry or Canadian or global economy, including as a result of the COVID-19 pandemic.

Although our management believes that the forward-looking statements herein or incorporated herein by reference are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent in our business, including the following risks:

● risks related to the net proceeds to the Company from the Offering;

● risks related to the Company's discretion in the use of proceeds;

● the market price of the Common Shares may be volatile after this Offering;

● sales of substantial amounts of the Common Shares in the public market, or the perception that these sales may occur, could cause the market price of the Common Shares to decline;

● we have a history of losses;

● shareholder's holdings maybe diluted if the Company issues additional Common Shares or other securities in the future;

● we incur substantial research and development cost and may have reduced profitability as a result;

● new business models could fail to produce any financial returns;

● we are affected by operational risks;

● we operate in evolving markets and we may have difficulty in evaluating future prospects;

● risks related to competition in the industry;

● our markets are prone to rapid technological change and there are risks relating to the evolving nature of the market for our products;

● risks related to regulatory approvals and permitting requirements;

● we may fail to obtain or maintain required regulatory approvals;

● risks associated with acquisitions;

● we are reliant on our key personnel;

● risks related to uncertainty and adverse changes in the economy;

● risks related to the COVID-19 pandemic and its impact on us;

● risks associated with foreign operations in other countries;

● our estimates of market opportunity and market and revenue growth may be inaccurate or we may fail to grow at our estimated rates;

● tax risks associated with carrying on business in Canada;

● we rely on critical components and raw materials to manufacture our products and if they become unavailable or scarce;

● there could be delays in and manufacturing and delivery of our products;

● risks inherent for technology-based businesses operated in outdoor conditions;

● we may be subject to product liability claims;

● risks related to shortfalls in available research and development funding;

● risks related to shipping products outside of Canada and approvals required for exporting;

● risks related to economic and political uncertainty;

● risks related to consumer perception of our products;

● risks associated with any failure by us to successfully promote and protect our product brands;

● we could suffer security breaches and the other risks associated with data security and hacking;

● our business could be adversely affected if its consumer protection and data privacy practices are breached;

● we are reliant on business partners;

● our business may suffer if we cannot continue to protect our intellectual property rights;

● we may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products;

● we may be subject to litigation from time-to-time;

● risks related to conflicts of interest of our directors and officers;

● risks related to the limited experience of the management team;

● changes in laws, regulations, and guidelines relating to the Company's business, including tax and accounting requirements;

● adverse impacts on the Company's reported results of operations as a result of adopting new accounting standards or interpretations;

● changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters;

● investors may lose their entire investment in the Common Shares;

● the price of the Common Shares may be subject to wide fluctuations;

● investors will experience immediate and substantial dilution;

● investors will experience dilution upon subsequent offerings;

● an active trading market for the Common Shares may not be sustained;

● the price of our Common Shares may fall or fail to be sustained;

● we have discretion over the net proceeds from the Offering;

● we may decrease or not continue paying dividends;

● we, or our non-U.S. subsidiaries, may constitute CFCs for tax purposes;

● the enforcement by investors of civil liabilities under the United States federal or state securities laws against us and our directors and officers may be difficult;

● the liquidity of the Common Shares may be limited;

● investors may experience dilution resulting from future Common Share issuances by us, including as a result of the exercise of outstanding stock options or the settlement of our share units;

● our ability to be in compliance with Nasdaq's continued listing requirements, including the Nasdaq minimum bid price requirement;

● we will incur increased costs and obligations operating as a public company in the United States;

● there may be more limited public information available to U.S. shareholders given our current status as a foreign private issuer; and

● the risk factors described under "*Risk Factors*" in this Prospectus Supplement, the Base Shelf Prospectus, the Annual MD&A (as defined herein), and the AIF (as defined herein).

Additional material risks and uncertainties applicable to the forward-looking statements set out in this Prospectus Supplement, the accompanying Base Shelf Prospectus and the documents incorporated by reference herein and therein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately to be inaccurate or irrelevant. Many of these factors are beyond our control. All forward-looking statements set out in this Prospectus Supplement, the accompanying Base Shelf Prospectus and the documents incorporated by reference herein and therein are expressly qualified in their entirety by these cautionary statements. The forward-looking statements set out in this Prospectus Supplement, the accompanying Base Shelf Prospectus and the documents incorporated by reference herein and therein are made as at the date hereof or thereof, as applicable, and we undertake no obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

**DOCUMENTS INCORPORATED BY REFERENCE**

**This Prospectus Supplement is deemed to be incorporated by reference into the Base Shelf Prospectus solely for ‎the purpose of the Offering. Other information has also been incorporated by reference in the Base Shelf ‎Prospectus from documents filed with the securities commissions or similar authorities in Canada, which have ‎also been filed with, or furnished to, the SEC**. Copies of the documents incorporated herein by reference may be ‎obtained on request without charge from the Corporate Secretary of the Company at ‎2108 St. George Avenue, Saskatoon, Saskatchewan, S7M 0K7 (telephone 1-800-979-9794), and are also available ‎electronically on the Company's issuer profile at www.sedar.com.‎

In addition to the continuous disclosure obligations of the Company under the securities laws of certain provinces ‎of Canada, the Company is subject to certain of the information requirements of the United States Securities Exchange Act of 1934, as amended (the "**U.S. Exchange ‎Act**"), and in accordance therewith file reports and other information with ‎the SEC. Under MJDS, some reports and other information may be prepared in accordance with the disclosure requirements of Canada, which requirements are different from those of the United States. As a foreign private ‎issuer, the Company is exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content of ‎proxy statements, and the Company's officers, directors and principal shareholders are exempt from the reporting ‎and short-swing profit recovery provisions contained in Section 16 of the U.S. Exchange Act. In addition, the Company ‎may not be required to publish financial statements as promptly as U.S. companies. A free copy of any public ‎document filed by Draganfly with the SEC's Electronic Data Gathering, Analysis and Retrieval ("**EDGAR**") system is ‎available from the SEC's website at www.sec.gov.‎

Except to the extent that their contents are modified or superseded by a statement contained in this Prospectus ‎Supplement, the Base Shelf Prospectus or in any other document that is also incorporated by reference in this ‎Prospectus Supplement, as of the date hereof, the following documents filed by the Company with securities ‎commissions or similar authorities in ‎certain provinces and territories of Canada are specifically incorporated by reference into, and form an ‎integral part of, this Prospectus Supplement:‎

1. the
 annual information form (the "**AIF**") of the Company for the fiscal year ended December 31, 2022, dated March 27,
 2023;

2. the
 audited consolidated financial statements of the Company for the years ended December 31, 2022 and December 31, 2021, together with
 the notes thereto and the auditor's report thereon;

3. management's
 discussion and analysis of the financial condition and results of operations of the Company for the financial year ended December
 31, 2022 (the "**Annual MD&A** ");

4. material
 change report dated February 9, 2023 with respect to the "at-the-market offering" of up to US$15 million (the "**ATM Offering**") in common shares of the Company in the United States; and

5. the
 management information circular of the Company dated May 9, 2022 with respect to the annual general meeting of shareholders of the
 Company held on June 23, 2022.

**Any documents of the Company of the type referred to in the preceding paragraph, any other documents of ‎the Company required to be incorporated by reference pursuant to applicable laws, including but not limited to, all documents of the type referred to in section 11.1 of Form 44-101F1 of National Instrument 44-101 - *Short Form Prospectus Distributions* filed by the Company with a securities ‎commission or similar regulatory authority in Canada on or after the date of this Prospectus Supplement and ‎prior to the termination of the Offering shall be deemed to be incorporated by reference into this Prospectus ‎Supplement and the Base Shelf Prospectus.‎**

In addition, to the extent that any document or information incorporated by reference into this Prospectus ‎Supplement and the Base Shelf Prospectus is included in any report on Form 6-K, Form 40-F or Form 20-F (or any ‎respective successor form) that is filed with or furnished to the SEC by the Company after the date of this ‎Prospectus Supplement, such document or information shall be deemed to be incorporated by reference as an exhibit to the U.S. ‎Registration Statement of which this Prospectus Supplement forms a part. In addition, the Company may incorporate by ‎reference into this Prospectus Supplement, or the U.S. Registration Statement of which it forms a part, other information from ‎documents that the Company will file with or furnish to the SEC pursuant to Section 13(a) or 15(d) of the ‎U.S. Exchange Act, if and to the extent expressly provided therein.‎

Any statement contained in this Prospectus Supplement, the Base Shelf Prospectus or in a document incorporated or ‎deemed to be incorporated by reference in this Prospectus Supplement or the Base Shelf Prospectus shall be deemed ‎to be modified or superseded for purposes of this Prospectus Supplement to the extent that a statement contained ‎herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this ‎Prospectus Supplement or the Base Shelf Prospectus modifies or supersedes such statement. The modifying or ‎superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. Any statement so modified or superseded shall ‎not be deemed to constitute a part of this Prospectus Supplement or the Base Shelf Prospectus, except as so ‎modified or superseded.‎

You should rely only on the information contained in or incorporated by reference in this Prospectus Supplement ‎and the Base Shelf Prospectus and on the other information included in the U.S. Registration Statement of which the ‎Base Shelf Prospectus forms a part. The Company is not making an offer of Common Shares in any jurisdiction ‎where the offer is not permitted by law.‎

**WHERE TO FIND ADDITIONAL INFORMATION**

The Company has filed with the SEC under the U.S. Securities Act the U.S. Registration Statement relating to the Common Shares being offered hereby and of which this Prospectus Supplement and the Base Shelf Prospectus form a part. This Prospectus Supplement and the Base Shelf Prospectus do not contain all of the information set forth in the U.S. Registration Statement, as to which reference is made for further information.

The Company is required to file with the securities commission or authority in each of the applicable provinces of Canada ‎annual and interim reports, material change reports and other information. In addition, we are subject to the ‎informational requirements of the U.S. Exchange ‎Act, and, in accordance with the U.S. Exchange Act, we also file reports with, and furnish other information to, the ‎SEC. Under the MJDS, these reports and ‎other information (including financial information) may be prepared in accordance with the disclosure requirements ‎of Canada, which differ in certain respects from those in the United States. As a foreign private issuer, the Company is ‎exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content of proxy statements, and its ‎officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery ‎provisions contained in Section 16 of the U.S. Exchange Act. In addition, the Company may not be required to publish financial ‎statements as promptly as U.S. companies.‎

Reports and other information filed by the Company with, or furnished to, the SEC may be accessed on the SEC's website at www.sec.gov. You may read and download any public document that the Company has filed with securities commission or similar regulatory authorities in Canada, on SEDAR at www.sedar.com.‎

**DOCUMENTS FILED AS PART OF THE U.S. REGISTRATION STATEMENT**

The following documents have been or will be ‎filed with the SEC as part of the U.S. Registration Statement of which this Prospectus Supplement is a part insofar as required by ‎the SEC's Form F-10:‎

● the documents listed under "*Documents Incorporated by Reference*" in this Prospectus Supplement;‎

● the Underwriting Agreement described in this Prospectus Supplement;‎

● the consent of Dale Matheson Carr-Hilton Labonte LLP‎, the Company's independent auditor; and

● powers of attorney of the Company's directors and officers, as applicable.‎

**THE OFFERING**

The following is a summary of the principal features of the Offering and is subject to, and should be read together with the more detailed information, financial data and statements contained elsewhere in, and incorporated by reference into, this Prospectus Supplement and the accompanying Base Shelf Prospectus.‎

---

| | |
|:---|:---|
| Securities Offered by the Company | 8,000,000 Common Shares. |
| Option | The Company has granted to the Underwriter an option to purchase up to 1,200,000 Additional Common Shares, representing up to 15% of the number of Common Shares sold under the Offering, on the same terms and conditions as the Offering, exercisable in whole or in part any time up to 30 days following closing of the Offering. |
| Common Shares to be Outstanding After This Offering | 42,984,965 Common Shares (44,184,965 Common Shares if the Option is exercised in full). |
| Plan of Distribution | The Offering is made pursuant to the Underwriting Agreement dated March 29, 2023 between the Company and the Underwriter. See "*Plan of Distribution*", including for details regarding the Underwriter's Commission. |
| Use of Proceeds | The Company estimates that the net proceeds from the Offering will be approximately $7,110,000 after deducting the Underwriter's Commission of $640,000 and Offering expenses, which are estimated to be $250,000.<br>The Company intends to use the net proceeds from the Offering, together with existing cash, for general corporate purposes, including to fund its capabilities to meet demand for its new products including growth initiatives and/or for working capital requirements ‎including the continuing development and marketing of the Company's core products, potential acquisitions and ‎research and development‎. See "*Use of Proceeds*". |
| Risk Factors | Investing in the Common Shares involves a high degree of risk. Please read the information contained in and incorporated by reference under the section titled "*Risk Factors*", and under similar headings in the other documents that are filed after the date hereof and incorporated by reference into this Prospectus Supplement. |
| Listing | The Company has applied to the list the Common Shares qualified for distribution by this Prospectus Supplement on the CSE and notification has been or will be provided Nasdaq. Listing will be subject to the Company fulfilling all of the listing requirements of the CSE and Nasdaq. See "*Risk Factors*". |
| Closing | Closing on a T+2 basis, on or about March 31, 2023 or such other date as the Company and the Underwriter may agree upon. |
| Trading Symbol | CSE: "DPRO"<br>Nasdaq: "DPRO" |

---

The number of Common Shares to be outstanding after the Offering is 42,984,965 and is computed on the basis of 34,984,965 Common Shares outstanding as March 28, 2023, but does not include, as of that date:

● 877,157 Common Shares issuable upon the exercise of outstanding 877,157 stock options as of December 31, 2022, with a weighted-average exercise price of C$4.60 per share, under our share compensation plan;

● 1,198,875 Common Shares issuable upon the vesting and redemption of 1,198,875 restricted share units as of December 31, 2022 under our share compensation plan;

● 7,916,767 Common Shares issuable on exercise of outstanding warrants as of December 31, 2022, with a weighted-average exercise price of C$5.08 per share; and

● 4,778,083 additional Common Shares reserved for future issuance under our share compensation plan.

Except as described in the AIF and as outlined under "*Prior Sales*", there have been no material changes in the share and loan capital of the Company, on a consolidated basis, since December 31, 2022.

**THE COMPANY**

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

The Company's head office is located at 2108 St. George Avenue, Saskatoon, Saskatchewan S7M 0K7. The Company's telephone number is (800) 979-9794. The Company's registered office is located at Suite 2800, Park Place, 666 Burrard Street, Vancouver, British Columbia V6C 2Z7. The Company's registered agent in the United States is C T Corporation System, 1015 15<sup>th</sup> Street N.W., Suite 1000, Washington, D.C., 20005 and its telephone number is (202) 572-3133.

**DESCRIPTION OF THE BUSINESS**

The Company is a manufacturer, contract engineering, and product development company within the unmanned aerial vehicle (UAV) and ‎health space, serving the public safety, agriculture, industrial inspections, monitoring, spraying, and mapping and ‎surveying markets. The Company provides sustainable, custom and "off-the-shelf" hardware, services, and solutions to ‎companies and government agencies. The Company's mission is to deliver products that provide vital information to its ‎customers with the hopes of saving time, money and lives.‎

**Products and Services**

The Company can provide its customers with an entire suite of products and services that include: quadcopters, ‎fixed wing aircrafts, ground based robots, handheld controllers, flight training, and software used for tracking, live ‎streaming, and data collection. In addition, Draganfly has launched a health/telehealth platform. The initial focus of ‎the platform is a COVID-19 screening set of technologies that remotely detects a number of key COVID-19 ‎respiratory symptoms. The Company is also offering sanitary spraying services to indoor and outdoor public ‎gathering spaces such as sport stadiums and fields to provide additional protection against the spread of contagious ‎viruses such as COVID-19.‎

**CONSOLIDATED CAPITALIZATION**

Since December 31, 2022, the end of the most recent financial period of the Company for which financial statements have been filed, there have been no material ‎changes in the loan capital of the Company and no material changes in the share capital of the Company on a ‎consolidated basis other than as outlined under "*Prior Sales*." For information on the exercise of stock options pursuant to ‎the share compensation plan of the Company and other outstanding convertible securities, see the section titled "*Prior ‎Sales*."‎

The following table summarizes the Company's share and loan capital as at December 31, 2022 on an actual basis and as adjusted to give effect to the issue and sale of 8,000,000 Common Shares in this Offering at a public offering price of $1.00 per Common Share, after deducting the Underwriter's Commission and estimated Offering expenses. This table should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2022 and December 31, 2021, together with the notes thereto and the auditor's report thereon:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As at December 31, 2022** | **As at December 31, 2022** | **As at December 31, 2022** | **As at December 31, 2022** |
|  | **Actual** <br> **before giving effect to the Offering**  | **Actual** <br> **before giving effect to the Offering**  | **As Adjusted**<br> **after giving effect to the Offering** | **As Adjusted**<br> **after giving effect to the Offering** |
| Cash and cash equivalents | C$ | 7894781 | C$ | 17582867 |
| Long-Term Debt | C$ | 5059 | C$ | 5059 |
| Equity:‎ |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common Shares |  | 34270579 |  | 42270579 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants |  | 7916767 |  | 7916767 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options |  | 877157 |  | 877157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted share units |  | 1198875 |  | 1198875 |
| Total Equity |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Share Capital (fully ‎diluted)‎ |  | 44263378 |  | 52263378 |

---

The foregoing table assumes no exercise by the Underwriter of the ‎Option‎.

**USE OF PROCEEDS**

The estimated net proceeds to be received by the Company under the Offering will be approximately $7,110,000, after deducting the Underwriter's Commission and the estimated expenses in connection with this Offering of approximately $890,000 ($8,214,000 if the Option is exercised in full).

**Principal Purposes**

The estimated net proceeds to be received by the Company under the Offering will be approximately $7,110,000‎‎, after ‎deducting the Underwriter's Commission and the estimated expenses in connection with this Offering of ‎approximately $890,000‎.

The Company intends to use the net proceeds from the Offering, together with existing cash, for general corporate purposes, including to fund its capabilities to meet demand for its new products including growth initiatives and/or for working capital requirements ‎including the continuing development and marketing of the Company's core products, potential acquisitions and ‎research and development.‎

Until applied, the net proceeds will be held as cash balances in the Company's bank account or invested in certificates of deposit and other instruments issued by banks or obligations of or guaranteed by a government authority.

The Company had operating losses and negative operating cash flow for the fiscal year ended December 31, 2022. To the extent that the Company has negative operating cash flows in future periods, it may need to deploy a portion of the net proceeds from the Offering and/or its existing working capital to fund such negative cash flow. While the Company intends to utilize the net proceeds from Offering as set forth in this Prospectus Supplement, there may be circumstances where for sound business reasons a reallocation of funds may be necessary. Management will have significant discretion and flexibility in applying the net proceeds from the Offering. See "*Risk Factors*" in this Prospectus Supplement.

**Business Objectives and Milestones**

**The primary business objectives for the Company over the next 12 months are:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Hire
 engineers and technicians to perform more engineering service work, to complete contracts on a more timely basis, and to perform
 R&D for the company's continued evolution of products and services offering;

(b) Hire
 sales/marketing people to promote our product lines, new and existing drone as a service work, and engineering services work;

(c) Diversify
 and expand business lines organically and by potential acquisitions;

(d) Update/capex
 machinery used for manufacturing and production along with a potential expansion of leased space; and

(e) Strengthen
 balance sheet by providing a strong working capital position.

Significant events that need to occur for the business objectives to be accomplished:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Successfully
find and hire the appropriate engineering staff that can perform very innovative and challenging work specific to the drone industry
within the next 6 months with an allocation of approximately $500,000;

(b) Successfully
 use the capital to enhance and create new product offerings with an allocation of approximately $1,000,000;

(c) Successfully
 source sales and marketing personnel who will grow and generate increased revenues within the next 6 to 12 months along with marketing
 initiatives with an allocation of approximately $450,000; and

(d) Further,
 the Company has a number of innovative ideas for new products that it would like to develop and increase its current product offering
 to various niche and mainstream industries. Finally, the Company has considered offering various other non-engineering services and
 it may make more sense to buy an existing industry player than to build out this offering. This isn't something the Company
 has to do but it will be opportunistic to learn about potential opportunities in the existing fiscal year and the near future.

**PLAN OF DISTRIBUTION**

The Common Shares will be offered in the United States pursuant to the MJDS. Pursuant to the Underwriting Agreement, the Company has agreed to issue and sell and the Underwriter has agreed to purchase, on a firm commitment basis, subject to compliance with all necessary legal requirements and the terms and conditions contained in the Underwriting Agreement, the number of Common Shares shown opposite its name below:

---

| | |
|:---|:---|
| ‎ ‎ | **Number of ‎Shares** |
| Aegis Capital Corp. | 8000000 |
| **Total** | **8000000** |

---

The Underwriting Agreement provides that the Underwriter's obligation to purchase the Common Shares depends on the satisfaction of the conditions contained in the Underwriting Agreement including:

● the representations and warranties made by the Company to the Underwriter are true;

● there is no material change in the Company's business or the financial markets; and

● the Company deliver's customary closing documents to the Underwriter.

**Discounts, Commissions and Reimbursement**

The Underwriter has advised us that it proposes to offer the Common Shares to the public at the Offering Price set forth on the cover page of this Prospectus Supplement. The Underwriter may offer Common Shares at the Offering Price less a concession of not more than $0.04 per Common Share. After the initial offering, the Offering Price and concession to dealers may be changed.

The following table summarizes the underwriting discounts and commissions and proceeds, before expenses, to us assuming no exercise and full exercise by the Underwriter of its Option, respectively:

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| | | | |
|:---|:---|:---|:---|
|  | | **Total** | **Total** |
|  |<br>**Per Common Share** | **Without Option** | **With Option** |
| Public offering price | $1.00 | $8000000 | $9200000 |
| Underwriting discounts and commissions (8%) | $0.08 | $640000 | $736000 |
| Proceeds, before expenses to us | $0.92 | $7360000 | $8464000 |

---

In addition, the Company has also agreed to pay all expenses in connection with the Offering, including the following expenses: (a) all filing fees and expenses relating to the registration of the Common Shares to be issued and sold in the Offering with the SEC; (b) all FINRA public offering filing fees; (c) all fees and expenses relating to the listing of the Company's Common Shares on the Nasdaq and the CSE; (d) all fees, expenses and disbursements relating to the registration or qualification of the Common Shares to be issued and sold in the Offering under the "blue sky" securities laws of such states and other jurisdictions as the Underwriter may reasonably designate (including, without limitation, all filing and registration fees, and the reasonable fees and disbursements of the Company's "blue sky" counsel, which will be Underwriter's counsel) unless such filings are not required in connection with the Company's proposed Exchange listing; (e) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Common Shares under the securities laws of such foreign jurisdictions as the Underwriter may reasonably designate; (f) the costs of all mailing and printing of the offering documents; (g) the costs of preparing, printing and delivering certificates representing the Common Shares to be issued and sold in the Offering, if any; (h) fees and expenses of the Company's transfer agent; (i) transfer and/or stamp taxes, if any, payable upon the transfer of Common Shares from the Company to the Underwriter; (j) the fees and expenses of the Company's accountants; (k) the fees and expenses of the Company's legal counsel and other agents and representatives; and (l) and $75,000 for legal fees and disbursements for the Underwriter's legal counsel.

We estimate the expenses of this offering payable by us, not including underwriting discounts and commissions, including amounts for which we agreed to reimburse the Underwriter for certain of its expenses, will be approximately $250,000.

**Over-Allotment Option**

Pursuant to the Underwriting Agreement, the Company has granted to the Underwriter the Option, exercisable in whole or in part at any time up to 30 days after the Closing Date, to purchase up to 1,200,000 Additional Common Shares, representing up to 15% of the number of Common Shares sold under the Offering, at the Offering Price, less underwriting discounts and commissions, to cover over-allocations, if any, and for market stabilization purposes, on the same terms and conditions as apply to the purchase of Common Shares thereunder. This Prospectus Supplement qualifies for distribution the Common Shares as well as the grant of the Option and the issuance of the Additional Common Shares pursuant to the exercise of the Option.

A purchaser who acquires Common Shares forming part of the Underwriter's over-allocation position acquires those Common Shares under the Prospectus Supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Option or secondary market purchases.

In connection with the sale of the Common Shares in the United States, an Underwriter will be deemed to be an "underwriter" within the meaning of the U.S. Securities Act and the compensation of such Underwriter will be deemed to be underwriting commissions or discounts.

**Lock-Up Agreements**

Our directors, executive officers, and to the knowledge of the Company, shareholders holding at least ten percent of our outstanding Common Shares, have agreed for a period of ninety (90) days, after the Closing Date of the Offering, subject to certain exceptions, not to directly or indirectly offer, sell, or otherwise transfer or dispose of, directly or indirectly, any Common Shares of the Company or any securities convertible into or exercisable or exchangeable for the Common Shares of the Company.

**Company Standstill**

The Company, on behalf of itself and any successor entity, has agreed that, without the prior written consent of the Underwriter, it will not, for a period of one-hundred and twenty (120) days after the Closing Date (the "**Standstill Period**"): (a) offer, sell, issue, or otherwise transfer or dispose of, directly or indirectly, any common shares or equity securities of the Company or any securities convertible into or exercisable or exchangeable for equity of the Company; (b) file or caused to be filed any registration statement with the SEC relating to the offering of any equity of the Company or any securities convertible into or exercisable or exchangeable for equity of the Company; or (c) enter into any agreement or announce the intention to effect any of the actions described in subsections (a) or (b) hereof (all of such matters, the "**Standstill**"). So long as none of such equity securities shall be saleable in the public market until the expiration of the Standstill Period, the following matters shall not be prohibited by the Standstill: (i) the adoption of an equity incentive plan and the grant of awards or equity pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8; (ii) the issuance by the Company of common shares upon the exercise of a stock option or warrant or the conversion of a security, outstanding on the date hereof, which terms may not be amended during the Standstill Period, provided that such options, warrants and securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or the conversion price of such securities or to extend the term of such securities; (iii) the issuance of equity securities in connection with an acquisition or a strategic relationship, with a company whose operations are complimentary to the Company; and (iv) the Offered Shares to be sold hereunder. In no event should any equity transaction during the Standstill Period result in the sale of equity at an offering price to the public less than that of the Offering referred herein.

**Right of First Refusal**

Pursuant to the terms of the Underwriting Agreement, we have granted the Underwriter an irrevocable right of first refusal (the "**Right of First Refusal**"), for a period of ninety (90) days after the Closing Date, to act as sole and exclusive investment banker, sole and exclusive book-runner, sole and exclusive financial advisor (provided that nothing in this agreement shall restrict the Company from engaging a financial advisor in connection with an M&A transaction where such engagement does not include an offering component), sole and exclusive underwriter and/or sole and exclusive placement agent, at the Underwriter's sole and exclusive discretion, for each and every future public and private equity and debt offering, including all equity linked financings during such ninety (90) day period, of the Company, or any successor to or subsidiary of the Company, on market terms and conditions for such transaction.

**Electronic Offer, Sale and Distribution of Shares**

This Prospectus Supplement and Base Shelf Prospectus in electronic format may be made available on the websites maintained by one or more of the Underwriter or their affiliates participating in the Offering. Other than the Base Shelf Prospectus and Prospectus Supplement in electronic format, the information on these websites is not part of this Prospectus Supplement or the Base Shelf Prospectus, has not been approved or endorsed by the Company or any Underwriter in its capacity as underwriter, and should not be relied upon by investors.

**Stabilization**

The Underwriter has advised us that it, pursuant to Regulation M under the U.S. Exchange Act and certain persons participating in the Offering may engage in short sale transactions, stabilizing transactions, syndicate covering transactions or the imposition of penalty bids in connection with this offering. These activities may have the effect of stabilizing or maintaining the market price of the Common Shares at a level above that which might otherwise prevail in the open market. Establishing short sales positions may involve either "covered" short sales or "naked" short sales.

"Covered" short sales are sales made in an amount not greater than the Underwriter's Option in this Offering. The Underwriter may close out any covered short position by either exercising their Option or purchasing Common Shares in the open market. In determining the source of shares to close out the covered short position, the Underwriter will consider, among other things, the price of the Common Shares available for purchase in the open market as compared to the price at which they may purchase Common Shares through the Option.

"Naked" short sales are sales in excess of the Option. The Underwriter must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the Underwriter is concerned that there may be downward pressure on the price of the Common Shares in the open market after pricing that could adversely affect investors who purchase in this Offering.

A stabilizing bid is a bid for the purchase of the Common Shares on behalf of the Underwriter for the purpose of fixing or maintaining the price of the Common Shares. A syndicate covering transaction is the bid for or the purchase of Common Shares on behalf of the Underwriter to reduce a short position incurred by the Underwriter in connection with the Offering. Similar to other purchase transactions, the Underwriter's purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the Common Shares or preventing or retarding a decline in the market price of the Common Shares. As a result, the price of the Common Shares may be higher than the price that might otherwise exist in the open market. A penalty bid is an arrangement permitting the Underwriter to reclaim the selling concession otherwise accruing to a syndicate member in connection with the Offering if the Common Shares originally sold by such syndicate member are purchased in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member.

Neither the Company nor the Underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Common Shares. The Underwriter is not obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time.

**Passive Market Making**

The Underwriter may also engage in passive market making transactions of the Company's Common Shares on Nasdaq in accordance with Rule 103 of Regulation M during a period before the commencement of offers or sales of the Common Shares in this Offering and extending through the completion of distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker's bid, that bid must then be lowered when specified purchase limits are exceeded.

**Other Relationships**

Certain of the Underwriter and their affiliates have provided in the past to the Company and its affiliates, and may provide from time to time in the future, certain commercial banking, financial advisory, investment banking and other services to the Company and its affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. From time to time, certain of the Underwriter and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in the Company's debt or equity securities or loans, and may do so in the future.

**Indemnification**

The Company has agreed, pursuant to the Underwriting Agreement, to indemnify the Underwriter and their respective affiliates and their respective directors, officers, employees, shareholders and agents and each other person, if any, controlling any of the Underwriter or their respective affiliates and against certain liabilities, including liabilities under Canadian and U.S. securities legislation in certain circumstances or to contribute to payments the Underwriter may have to make because of such liabilities.

**Offer restrictions outside the United States**

Other than in the United States, no action has been taken by us or the Underwriter that would permit a public offering of the Common Shares offered by this Prospectus Supplement in any jurisdiction where action for that purpose is required. The Common Shares offered by this Prospectus Supplement and the accompanying prospectus may not be offered or sold, directly or indirectly, nor may this Prospectus Supplement or any other offering material or advertisements in connection with the offer and sale of any such Common Shares be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this Prospectus Supplement comes are advised to inform themselves about and to observe any restrictions relating to the Offering and the distribution of this Prospectus Supplement. This Prospectus Supplement does not constitute an offer to sell or a solicitation of an offer to buy any Common Shares offered by this Prospectus Supplement in any jurisdiction in which such an offer or a solicitation is unlawful.

The Company has applied to the list the Common Shares qualified for distribution by this ‎Prospectus Supplement on the CSE and notification has been or will be provided Nasdaq. Listing will be subject to ‎the Company fulfilling all of the listing requirements of the CSE and Nasdaq.‎

‎Subscriptions will be received subject to rejection or allotment in whole or in part and the right is reserved to close ‎the subscription books at any time without notice. The closing of the Offering is expected to occur on or about March 31, ‎‎2023, which will be the second business day following the pricing of the Offering.‎

**DESCRIPTION OF SECURITIES BEING DISTRIBUTED**

**Common Shares**

Draganfly's authorized share capital consists of an unlimited number of Common Shares and Preferred Shares issuable in ‎series, all without par value. As of March 28‎, 2023, a total of 34,984,965 Common Shares and no Preferred Shares ‎were issued and outstanding.‎

See "*Description of Share Capital*" in the Base Shelf Prospectus for a detailed description of the attributes of the ‎Common Shares.‎

The Common Shares are listed on the CSE under the symbol "DPRO", on the Nasdaq under the symbol "DPRO" and on the Frankfurt Stock Exchange ‎under the trading Symbol "‎3U8A‎".

See "*Trading Price and Volume*" in the Base Shelf Prospectus and in this Prospectus Supplement for detailed ‎information on the price ranges and trading volume of the Common Shares on the CSE and the Nasdaq.‎

**PRIOR SALES**

Except as disclosed under this heading, no other Common Shares or securities exchangeable or convertible into ‎Common Shares have been issued during the twelve-month period preceding the date of this Prospectus ‎Supplement.‎

**Common Shares**

During the twelve-month period prior to the date of this Prospectus Supplement, the Company has issued:‎

---

| | |
|:---|:---|
| **Date of Grant** | **Issuance Price** |
| March 23, 202212500<sup>(2)</sup> | C$3.55 |
| May 2, 202211666<sup>(3)</sup> | C$1.60 |
| September 7, 2022271500<sup>(3)</sup> | Average price of C$1.3508 |
| September 7, 2022224997<sup>(3)</sup> | C$1.25 |
| September 9, 20228608<sup>(3)</sup> | C$1.21 |
| September 29, 202286776<sup>(3)</sup> | US$0.66 |
| October 13, 2022240044<sup>(3)</sup> | C$1.04 |
| November 10, 2022147943<sup>(3)</sup> | US$0.5908 |
| November 23, 202281061<sup>(3)</sup> | C$0.8615 |
| January 25, 202333419<sup>(3)</sup> | US$1.4254 |
| January 26, 2023338<sup>(3)</sup> | US$1.4254 |
| January 31, 202329900<sup>(3)</sup> | US$1.4254 |
| February 1, 2023121260<sup>(4)</sup> | US$2.282555 |
| February 2, 2023112895<sup>(4)</sup> | US2.1078 |
| February 3, 2023152477<sup>(4)</sup> | US$2.060694 |
| February 6, 202380000<sup>(4)</sup> | US$1.925756 |
| February 7, 2023144600<sup>(4)</sup> | US$1.700110 |
| February 8, 20238000<sup>(4)</sup> | US$1.721316 |
| February 15, 202328073<sup>(4)</sup> | US$1.985595 |
| February 17, 20233424<sup>(4)</sup> | US$2.135397 |

---

**Notes:**

(1) Issued
 pursuant to the exercise of warrants of the Company.

(2) Issued
 pursuant to the exercise of stock options of the Company.

(3) Issued
 pursuant to the settlement of RSUs of the Company.

(4) Issued
 pursuant to the Company's ATM Offering.

**Stock Options**

During the twelve-month period preceding the date of this Prospectus Supplement, the Company did not grant any stock options pursuant to its share compensation plan.‎

**Restricted Share Units**

During the twelve-month period preceding the date of this Prospectus Supplement, the Company granted restricted share units ("**RSUs**") ‎pursuant to its share compensation plan exercisable for an aggregate of 1,820,972 Common Shares. The particulars ‎of such grants are set forth in the following table:‎

---

| | | |
|:---|:---|:---|
| **Date of Grant** | **Number of RSUs Granted** | **Grant Date Fair Value** |
| June 30, 2022 | 1630000 | C$1.26 |
| July 26, 2022 | 190972 | C$1.08 |

---

**TRADING PRICE AND VOLUME**

The Common Shares are listed on the CSE under the symbol "DPRO" and on the Nasdaq under the symbol "DPRO".

The following table provides the price ranges and trading volume of the Common Shares on the CSE for the periods indicated below:‎

---

| | | | |
|:---|:---|:---|:---|
|  | **Price Ranges** | **Price Ranges** | |
|  | **High (C$)** | **Low (C$)** |<br>**Total Volume** |
| March 2022 | 4.80 | 1.50 | 2242098 |
| April 2022 | 3.18 | 1.60 | 532294 |
| May 2022 | 1.80 | 1.10 | 545077 |
| June 2022‎ | 1.40 | 1.07 | 218936 |
| July 2022 | 1.28 | 1.05 | 202991 |
| August 2022 | 1.42 | 1.10 | 172346 |
| September 2022 | 1.50 | 0.90 | 455428 |
| October 2022 | 1.05 | 0.75 | 154531 |
| November 2022 | 1.61 | 0.65 | 1540742 |
| December 2022 | 1.49 | 0.98 | 527001 |
| January 2023 | 3.00 | 1.00 | 1971827 |
| February 2023 | 3.25 | 2.13 | 1877541 |
| March 1 to March 27, 2023 | 3.30 | 1.70 | 1320521 |

---

‎

On March 28, 2023, the last trading day of the Common Shares on the CSE before the date of this Prospectus Supplement, the closing ‎price of the Common Shares was C$1.95.

The following table provides the price ranges and trading volume of the Common Shares on Nasdaq for the periods indicated below:‎

---

| | | | |
|:---|:---|:---|:---|
|  | **Price Ranges** | **Price Ranges** | |
|  | **High (US$)** | **Low (US$)** |<br>**Total Volume** |
| March 2022 | 3.84 | 1.15 | 205933220 |
| April 2022 | 2.53 | 1.22 | 7473351 |
| May 2022 | 1.39 | 0.90 | 3753768 |
| June 2022‎ | 1.13 | 0.81 | 3794745 |
| July 2022 | 0.98 | 0.80 | 2255558 |
| August 2022 | 1.10 | 0.83 | 2922827 |
| September 2022 | 1.15 | 0.65 | 4120534 |
| October 2022 | 0.76 | 0.59 | 1916755 |
| November 2022 | 1.22 | 0.50 | 17995175 |
| December 2022 | 0.77 | 0.72 | 3747548 |
| January 2023 | 2.28 | 0.73 | 13716956 |
| February 2023 | 2.47 | 1.56 | 14658876 |
| March 1 to March 27, 2023 | 2.45 | 1.61 | 7847900 |

---

On March 28, 2023, the last trading day of the Common Shares on Nasdaq before the date of this Prospectus Supplement, the closing ‎price of the Common Shares was US$1.43.

**RISK FACTORS**

**An investment in the Company's securities involves risk. Before you invest in the Common Shares, you should carefully consider the risks contained in or incorporated by reference into this Prospectus Supplement and the Base Shelf Prospectus, including the risks described below and in the AIF and Annual MD&A, which are incorporated by reference into this Prospectus Supplement and the Base Shelf Prospectus.** The discussion of risks related to the business of the Company contained in or incorporated by reference into this Prospectus Supplement and the Base Shelf Prospectus comprises material risks of which the Company is aware. If any of the events or developments described actually occurs, the business, financial condition or results of operations of the Company would likely be adversely affected.‎

**Risks Relating to this Offering**

Management will have broad discretion as to the use of the proceeds from the Offering and may not use the proceeds effectively.

Management of the Company will have broad discretion in the application of the net proceeds from the Offering and could spend the proceeds in ways that do not improve the results of operations of the Company or enhance the value of the Common Shares. Failure to apply these funds effectively could have a material adverse effect on the business of the Company, delay the development of its product candidates, and cause the price of the Common Shares to decline.

The market price of the Common Shares has been and is likely to continue to be volatile and an investment in Common Shares may suffer a decline in value.

You should consider an investment in Common Shares as risky and invest only if you can withstand a significant loss and wide fluctuations in the market value of your investment. The Company receives only limited attention by securities analysts and frequently experiences an imbalance between supply and demand for Common Shares. The market price of the Common Shares has been highly volatile and is likely to continue to be volatile. This leads to a heightened risk of securities litigation pertaining to such volatility. Factors such as the financial position of the Company; the ability to raise additional capital; general market conditions; published reports by securities analysts; and shareholder interest in the Common Shares all contribute to the volatility of the market price of the Common Shares.

Future sales of Common Shares by the Company or by its existing shareholders could cause the market price of the Common Shares to fall.

The issuance of Common Shares by the Company could result in significant dilution in the equity interest of existing shareholders and adversely affect the market price of the Common Shares. Sales by existing shareholders of a large number of Common Shares in the public market and the issuance of shares issued in connection with strategic alliances, or the perception that such additional sales could occur, could cause the market price of the Common Shares to decline and have an undesirable impact on the Company's ability to raise capital. With any additional sale or issuance of Common Shares, investors will suffer dilution to their voting power and the Company may experience dilution in its earnings per Common Share.

Subsequent offerings may result in dilution to investors.

The Company may raise funds in the future through the sale of additional securities of the Company. Any ‎such issuances may dilute the interests of holders of Common Shares and may have a negative impact ‎on the market price of the Common Shares, including the Common Shares offered hereunder. ‎Convertible securities have been issued and may be issued in the future by the Company at a lower price ‎than the current market value of the Common Shares, consequently, purchasers who purchase Offered ‎Shares may incur substantial dilution in the near future.‎

There is no assurance of a sufficient liquid trading market for the Common Shares in the future.

Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all. There can be no assurance that there will be sufficient liquidity of the Common Shares on the trading market, and that the Company will continue to meet the listing requirements of the CSE or Nasdaq or achieve listing on any other public listing exchange.

No dividends have been paid on the Common Shares and the Company does not intend to pay dividends in the foreseeable future although it may ultimately do so in the appropriate circumstances.

The Company has paid no cash dividends on any of its Common Shares to date and currently intends to retain its future earnings, if any, to fund the development growth of its businesses. In addition, the terms of any future debt or credit facility may preclude the Company from paying any dividends unless certain consents are obtained and certain conditions are met.

*Failure to meet the continuing listing requirements of the Nasdaq could result in a de-listing of the Company's securities*.

If the Company fails to satisfy the continuing listing requirements of the Nasdaq, such as the corporate governance, stockholders' equity or minimum closing bid price requirements, the Nasdaq may take steps to delist the Common Shares. Such a delisting would likely have a negative effect on the price of the Common Shares and would impair your ability to sell or purchase the Common Shares when you wish to do so. In the event of a delisting, the Company would likely take actions to restore its compliance with Nasdaq's listing requirements, but the Company can provide no assurance that any such action taken by it would allow the Common Shares to become listed again, stabilize the market price or improve the liquidity of the Company's securities, prevent its Common Shares from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq's listing requirements.

**CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS**

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

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

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

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

**Passive Foreign Investment Company Consequences**

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

Based on the current and expected composition of our income and the value of our assets, we believe that we were not a PFIC for United States federal income tax purposes for the taxable year ended December 31, 2022 and, we expect that we will not be a PFIC for the taxable year ended December 31, 2022. Nevertheless, because our PFIC status must be determined annually with respect to each taxable year and will depend on the composition and character of our assets and income including our use of proceeds from the Offering pursuant to this Prospectus Supplement, and the value of our assets (which may be determined, in part, by reference to the market value of Common Shares, which may be volatile) over the course of such taxable year, we may be a PFIC in any taxable year. The determination of whether we will be or become a PFIC may also depend, in part, on how, and how quickly, we use our liquid assets and the cash raised in the Offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for any future taxable year. In addition, it is possible that the U.S. Internal Revenue Service may challenge our classification of certain income and assets as non-passive, which may result in us being or becoming a PFIC in the current or subsequent years.

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

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

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

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

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

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

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

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

**Distributions on the Common Shares**

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

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

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

**Sale, Exchange or Other Disposition of Common Shares**

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

**Medicare Tax**

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

**Information Reporting and Backup Withholding**

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

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

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

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

**CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR UNITED STATES RESIDENTS**

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

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

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

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

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

**Withholding Tax on Dividends**

Amounts paid or credited or deemed to be paid or credited as, on account or in lieu of payment of, or in ‎satisfaction ‎of, dividends on Common Shares to a United States Holder will be subject to Canadian withholding ‎tax. Under the ‎Tax Act, the rate of withholding is 25% of the gross amount of the dividend. Under the ‎Tax Treaty, the rate of ‎withholding on any such dividend beneficially owned by a United States Holder is generally reduced to 15% (or 5% ‎if the United States Holder is a company entitled to full benefits under the Tax Treaty that beneficially owns, directly or indirectly, at least 10% of the voting stock of the ‎Company).‎

**Disposition of Common Shares**

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

Provided the Common Shares are listed on a "designated stock exchange", as defined in the Tax Act (which currently includes the CSE and Nasdaq), at the time of disposition, Common Shares generally will not constitute taxable Canadian property of a United States Holder, unless at any time during the 60 month period that ends at that time, the two following conditions are met concurrently: (i) one or any combination of (a) the United States Holder; (b) persons with whom the United States Holder did not deal at arm's length; or (c) partnerships in which the United States Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships, owned 25% or more of the issued shares of any class of the capital stock of the Company; and (ii) more than 50% of the fair market value of the Common Shares was derived directly or indirectly from one or any combination of: (a) real or immovable property situated in Canada; (b) "Canadian resources properties" (as defined in the Tax Act); (c) "timber resource properties" (as defined in the Tax Act); and (d) options in respect of, or interests in, or for civil law rights in, property described in (a) to (c), whether or not such property exists. Notwithstanding the foregoing, the Common Shares may otherwise be deemed to be taxable Canadian property to a United States Holder for purposes of the Tax Act.

United States Holders who may hold Common Shares as "taxable Canadian property" should consult their own tax ‎advisors with ‎respect to the application of Canadian capital gains taxation, any potential relief under the ‎Tax Treaty, and special compliance ‎procedures under the Tax Act, none of which is are described in this ‎summary.‎

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

**LEGAL MATTERS**

Certain Canadian legal matters relating to the Offering will be passed upon on behalf of the Company by DLA Piper (Canada) LLP. As of the date hereof, the partners and associates of DLA Piper (Canada) LLP, as a group, beneficially own, directly or indirectly, less than 1% of the outstanding Common Shares.

Certain legal matters relating to United States law will be passed upon on behalf of the Company by Troutman Pepper Hamilton Sanders LLP and on behalf of the Underwriter by Kaufman & Canoles, P.C.

**AUDITOR, TRANSFER AGENT AND REGISTRAR**

Our auditors are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, located at 1500-1700, 1140 W Pender Street, Vancouver, BC V6E 4G1. Dale Matheson Carr-Hilton Labonte LLP is independent with respect to the Company within the meaning of the U.S. Securities Act and the applicable rules and regulations adopted by the SEC and the Public Company Accounting Oversight Board (United States) and within the meaning of the rules of professional conduct of the Chartered Professional Accountants of British Columbia.

Our transfer agent and registrar for our Common Shares in Canada and the United States is Endeavour Trust Corporation at its principal offices in Vancouver, British Columbia, and Albany, New York, respectively.‎

**AGENT FOR SERVICE OF PROCESS**

Andrew Hill Card Jr., John M. Mitnick and Julie Myers Wood members of the board ‎of directors of the Company, all reside outside of Canada and have appointed DLA Piper (Canada) LLP, 2800 Park Place, 666 ‎Burrard St, Vancouver, British Columbia, Canada ‎V6C 2Z7‎‎, as agent for service of process.‎

Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against ‎any person or company that is incorporated, continued or otherwise organized under the laws of a foreign ‎jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.‎

**STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION**

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an ‎agreement to purchase securities. This right may be exercised within two business days after receipt or deemed ‎receipt of a prospectus and any amendment. In several of the provinces of Canada, the securities legislation further ‎provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the ‎prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the ‎remedies for rescission, revision of the price or damages are exercised by the purchaser within the time limit ‎prescribed by the securities legislation of the purchaser's province. The purchaser should refer to any applicable ‎provisions of the securities legislation of the purchaser's province for the particulars of these rights or consult with a ‎legal advisor. Rights and remedies may also be available to purchasers under U.S. law; purchasers may wish to ‎consult with a U.S. lawyer for particulars of these rights.‎

**ENFORCEABILITY OF CIVIL LIABILITIES**

The Company is incorporated under, and governed by, the laws of British Columbia, Canada. Many of its officers and directors and ‎experts named in this Prospectus Supplement and the Base Shelf Prospectus are resident outside of the United ‎States, and a majority of their assets, and the assets of Draganfly, are located outside the United States. As a result, it ‎may be difficult for U.S. investors to effect service of process within the United States upon those directors, officers ‎or experts who are not residents of the United States, or to realize in the United States upon judgments of courts of ‎the United States predicated upon civil liability of such directors, officers or experts under U.S. federal securities laws. ‎There is doubt as to whether Canadian courts would enforce the civil liability claims brought under United States ‎federal securities laws in original actions and/or enforce claims for punitive damages. A final judgment for a ‎liquidated sum in favour of a private litigant granted by a United States court and predicated solely upon civil ‎liability under United States federal securities laws would, subject to certain exceptions identified in the law of ‎individual provinces of Canada, likely be enforceable in Canada if the United States court in which the judgment ‎was obtained had a basis for jurisdiction in the matter that would be recognized by the domestic Canadian court for ‎the same purposes. There is a significant risk that a given Canadian court may not have jurisdiction or may decline ‎jurisdiction over a claim based solely upon United States federal securities law on application of the conflict of laws ‎principles of the province in Canada in which the claim is brought.‎

Draganfly has filed with the SEC, concurrently with the filing of its U.S. Registration Statement on Form F-10 of which ‎this Prospectus Supplement and the Base Shelf Prospectus form a part, an appointment of agent for service of ‎process on Form F-X. Under the Form F-X, Draganfly appointed C T Corporation System as its agent for service of ‎process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil ‎suit or action brought against or involving Draganfly in a U.S. court arising out of or related to or concerning the Offering ‎of Common Shares under the U.S. Registration Statement. However, it may be difficult for United States investors to effect ‎service of process within the United States upon those officers or directors who are not residents of the United States, ‎or to realize in the United States upon judgments of courts of the United States predicated upon the Company's ‎civil liability and the civil liability of such officers or directors under United States federal securities laws or the ‎securities or "blue sky" laws of any state within the United States.

*This short form prospectus is a base shelf prospectus. This short form base shelf prospectus has been filed under legislation in each of the provinces of British Columbia, Ontario and Saskatchewan that permits certain information about these securities to be determined after this short form base shelf prospectus has become final and that permits the omission from this short form base shelf prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.*

 

*No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short ‎form base shelf prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered ‎for sale and therein only by persons permitted to sell such securities.‎*

 

***Information has been incorporated by reference in this short form base shelf prospectus from documents filed with ‎securities commissions or similar authorities in Canada****. Copies of the documents incorporated herein by reference may be ‎obtained on request without charge from the Corporate Secretary of Draganfly Inc. at 2108 St. George Avenue, Saskatoon, ‎Saskatchewan, S7M 0K7, telephone 1-800-979-9794, and are also available electronically at <u>www.sedar.com.‎</u>*

New Issue July ‎14‎, 2021‎

**SHORT FORM BASE SHELF PROSPECTUS**

![](formsuppl_001.jpg)

**DRAGANFLY INC.‎**

**‎$200,000,000‎**

**COMMON SHARES**

**PREFERRED SHARES**

**WARRANTS**

**SUBSCRIPTION RECEIPTS**

**UNITS**

This short form base shelf prospectus (the "**Prospectus**") relates to the offering for sale by Draganfly Inc. ‎‎(the "**Company**" or "**Draganfly**") from time to time, during the 25-month period that this Prospectus, ‎including any amendments hereto, remains valid, of up to $200,000,000 (or the equivalent in other ‎currencies based on the applicable exchange rate at the time of the offering) in the aggregate of: (i) ‎common shares ("**Common Shares**") in the capital of the Company; (ii) preferred shares of the Company ‎of any series ("**Preferred Shares**"); (iii) warrants ("**Warrants**") to purchase other Securities (as defined ‎below); (iv) subscription receipts ("**Subscription Receipts**") convertible into other Securities; and (v) units ‎‎("**Units**") comprised of one or more of any of the other Securities, or any combination of such Securities ‎‎(the Common Shares, Warrants, Subscription Receipts and Units are collectively referred to herein as the ‎‎"**Securities**"). The Securities may be offered in amounts, at prices and on terms to be determined based on ‎market conditions at the time of sale and set forth in an accompanying prospectus supplement (each, a ‎‎"**Prospectus Supplement**"). In addition, the Securities may be offered and issued in consideration for the ‎acquisition of other businesses, assets or securities by the Company or one of its subsidiaries. The ‎consideration for any such acquisition may consist of the Securities separately, a combination of ‎Securities or any combination of, among other things, Securities, cash and assumption of liabilities.‎

All shelf information permitted under applicable laws to be omitted from this Prospectus will be contained ‎in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus ‎except in cases where an exemption from such delivery has been obtained. Each Prospectus Supplement ‎will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the ‎date of the Prospectus Supplement and only for the purposes of the distribution of the Securities to which ‎the Prospectus Supplement pertains.‎

The specific terms of any Securities offered will be described in the applicable Prospectus Supplement ‎including, where applicable: (i) in the case of Common Shares, the number of Common Shares offered, the ‎offering price, whether the Common Shares are being offered for cash, and any other terms specific to the ‎Common Shares offered; (ii) in the case of Preferred ‎Shares, the designation of the particular class and, if ‎applicable, series, the number of shares offered, the offering price, the ‎currency, dividend rate, if any, and ‎any other terms specific to the Preferred Shares being offered; (iii) in the case of Warrants, the number of ‎Warrants being offered, the offering price, the designation, number and terms of the other Securities ‎purchasable upon exercise of the Warrants, and any procedures that will result in the adjustment of those ‎numbers, the exercise price, the dates and periods of exercise, whether the Warrants are being offered for ‎cash, and any other terms specific to the Warrants offered; (iv) in the case of Subscription Receipts, the ‎number of Subscription Receipts being offered, the offering price, the terms, conditions and procedures ‎for the conversion of the Subscription Receipts into other Securities, the designation, number and terms of ‎such other Securities, whether the Subscription Receipts are being offered for cash, and any other terms ‎specific to the Subscription Receipts offered; and (v) in the case of Units, the number of Units being ‎offered, the offering price, the number and terms of the Securities comprising the Units, whether the Units ‎are being offered for cash, and any other terms specific to the Units offered. A Prospectus Supplement ‎relating to a particular offering of Securities may include terms pertaining to the Securities being offered ‎thereunder that are not within the terms and parameters described in this Prospectus. Where required by ‎statute, regulation or policy, and where the Securities are offered in currencies other than Canadian dollars, ‎appropriate disclosure of foreign exchange rates applicable to the Securities will be included in the ‎Prospectus Supplement describing the Securities.‎

Prospective investors should be aware that the purchase of any Securities may have tax consequences ‎that may not be fully described in this Prospectus or in any Prospectus Supplement, and should carefully ‎review the tax discussion, if any, in the applicable Prospectus Supplement and in any event consult with ‎their own tax advisers before purchasing any of the Securities.‎

**No underwriter or agent has been involved in the preparation of this Prospectus or performed any ‎review of the contents of this Prospectus.‎**

The Company may offer and sell the Securities to or through underwriters or dealers purchasing as ‎principals, and may also sell directly to one or more purchasers or through agents or pursuant to ‎applicable statutory exemptions. See "*Plan of Distribution*". The Prospectus Supplement relating to a ‎particular offering of Securities will identify each underwriter, dealer or agent, as the case may be, engaged ‎by the Company in connection with the offering and sale of the Securities, and will set forth the terms of ‎the offering of such Securities, including, to the extent applicable, any fees, discounts or any other ‎compensation payable to underwriters, dealers or agents in connection with the offering, the method of ‎distribution of the Securities, the initial issue price (in the event that the offering is a fixed price distribution), ‎the proceeds that the Company will, or expects to receive and any other material terms of the plan of ‎distribution.‎

The Securities may be sold from time to time in one or more transactions at a fixed price or prices or at ‎non-fixed prices. If offered on a non-fixed price basis, the Securities may be offered at market prices ‎prevailing at the time of sale, at prices determined by reference to the prevailing price of a specified ‎security in a specified market or at prices to be negotiated with purchasers, in which case the ‎compensation payable to an underwriter, dealer or agent in connection with any such sale will be decreased ‎by the amount, if any, by which the aggregate price paid for Securities by the purchasers is less than the ‎gross proceeds paid by the underwriter, dealer or agent to the Company. The price at which the Securities ‎will be offered and sold may vary from purchaser to purchaser and during the period of distribution.‎

In connection with any offering of Securities, other than an "at-the-market distribution" (as defined under ‎applicable Canadian securities legislation), unless otherwise specified in a Prospectus Supplement, the ‎underwriters, dealers or agents, as the case may be, may over-allot or effect transactions which stabilize, ‎maintain or otherwise affect the market price of the Securities at a level other than those which otherwise ‎might prevail on the open market. Such transactions may be commenced, interrupted or discontinued at ‎any time. A purchaser who acquires Securities forming part of the underwriters', dealers' or agents' over-‎allocation position acquires those Securities under this Prospectus and the Prospectus Supplement ‎relating to the particular offering of Securities, regardless of whether the over-allocation position is ‎ultimately filled through the exercise of the over-allotment option or secondary market purchases. See "*Plan of Distribution*". No underwriter or dealer involved in an "at-the-market distribution" under this ‎Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in ‎concert with such underwriter or dealer will over-allot Securities in connection with such distribution or effect ‎any other transactions that are intended to stabilize or maintain the market price of the Securities.‎

The issued and outstanding Common Shares are listed and posted for trading on the Canadian Securities ‎Exchange (the "**CSE**") under the symbol "DFLY", on the Frankfurt Stock Exchange (the "**FSE**") under the ‎trading Symbol "3UB" and on the OTCQB Venture Market of the OTC Markets (the "**OTCQB**") under the ‎symbol "DFLYF".‎

**Unless otherwise specified in the applicable Prospectus Supplement, each series or issue of ‎Securities (other than Common Shares) will not be listed on any securities exchange. Accordingly, ‎there is currently no market through which the Securities (other than Common Shares) may be sold ‎and purchasers may not be able to resell such Securities purchased under this Prospectus. This may ‎affect the pricing of such Securities in the secondary market, the transparency and availability of ‎trading prices, the liquidity of such Securities and the extent of issuer regulation. See "*Risk Factors*".‎**

**An investment in the Securities of the Company is highly speculative and involves a high degree of ‎risk. Readers should carefully review and evaluate the risk factors contained in this Prospectus, the ‎applicable Prospectus Supplement and in the documents incorporated by reference herein before ‎purchasing any Securities. See "*Forward-Looking Information*" and "*Risk Factors*".‎**

**The Company is not making an offer of the Securities in any jurisdiction where such offer is not ‎permitted.‎**

Andrew Hill Card Jr., John M. Mitnick and John Bagocius, each a director or officer of the ‎Company, reside ‎outside of Canada and have appointed DLA Piper (Canada) LLP, 2800 Park Place, 666 Burrard St, ‎Vancouver, British Columbia, V6C 2Z7, Canada for service ‎of process in Canada. See "Agent for Service of ‎Process".‎ ‎

Unless otherwise specified in a Prospectus Supplement relating to any Securities offered, certain legal ‎matters in connection with the offering of Securities may be passed upon on behalf of Draganfly by DLA ‎Piper (Canada) LLP as to legal matters relating to Canadian law and, if governed by United States law, by ‎Troutman Pepper Hamilton Sanders LLP as to matters relating to United States law.‎

The Company's head office is located at 2108 St. George Avenue, Saskatoon, Saskatchewan, S7M 0K7, ‎and the registered office is located at Suite 2800, Park Place, 666 Burrard Street, Vancouver, British ‎Columbia, V6C 2Z7. ‎

ii

**TABLE OF CONTENTS**

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| | |
|:---|:---|
|  | **Page** |
| [ABOUT THIS PROSPECTUS](#Ha_001) | 1 |
| [CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION](#Ha_002) | 1 |
| [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#Ha_003) | 1 |
| [DOCUMENTS INCORPORATED BY REFERENCE](#Ha_004) | 2 |
| [THE COMPANY](#Ha_005) | 4 |
| [USE OF PROCEEDS](#Ha_006) | 4 |
| [CONSOLIDATED CAPITALIZATION](#Ha_007) | 4 |
| [PRIOR SALES](#Ha_008) | 4 |
| [TRADING PRICE AND VOLUME](#Ha_009) | 4 |
| [DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY](#Ha_010) | 4 |
| [DESCRIPTION OF WARRANTS](#Ha_011) | 5 |
| [DESCRIPTION OF SUBSCRIPTION RECEIPTS](#Ha_012) | 6 |
| [DESCRIPTION OF UNITS](#Ha_013) | 7 |
| [PLAN OF DISTRIBUTION](#Ha_014) | 7 |
| [CERTAIN CANADIAN AND UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS](#Ha_015) | 8 |
| [RISK FACTORS](#Ha_016) | 8 |
| [INTERESTS OF EXPERTS](#Ha_017) | 11 |
| [LEGAL MATTERS](#Ha_018) | 11 |
| [AUDITORS, REGISTRAR AND TRANSFER AGENT](#Ha_019) | 11 |
| [AGENT FOR SERVICE OF PROCESS](#Ha_020) | 11 |
| [STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION](#Ha_021) | 11 |

---

**ABOUT THIS PROSPECTUS**

You should rely only on the information contained or incorporated by reference in this Prospectus and any ‎‎applicable Prospectus Supplement. We have not authorized anyone to provide you with different or ‎additional information. ‎If anyone provides you with different or additional information, you should not rely ‎on it. We are not making an ‎offer to sell or seeking an offer to buy the securities offered pursuant to this ‎Prospectus in any jurisdiction where the ‎offer or sale is not permitted. You should assume that the ‎information contained in this Prospectus and any ‎applicable Prospectus Supplement is accurate only as of ‎the date on the front of such document and that ‎information contained in any document incorporated by ‎reference is accurate only as of the date of that document, ‎regardless of the time of delivery of this ‎Prospectus or any applicable Prospectus Supplement or of any sale of our Securities pursuant thereto. Our ‎business, financial condition, results of operations and prospects may have changed ‎since those dates.‎

Market data and certain industry forecasts used in this Prospectus and any applicable Prospectus ‎Supplement, and ‎the documents incorporated by reference in this Prospectus and any applicable ‎Prospectus Supplement, were ‎obtained from market research, publicly available information and industry ‎publications. We believe that these ‎sources are generally reliable, but the accuracy and completeness of ‎this information is not guaranteed. We have not ‎independently verified such information, and we do not ‎make any representation as to the accuracy of such ‎information.‎

The Company prepares and reports its consolidated financial statements in accordance with International ‎Financial Reporting Standards ("**IFRS**"). However, this Prospectus and the documents incorporated by ‎reference herein may make reference to certain non-IFRS measures including key ‎performance indicators ‎used by management. These measures are not recognized measures under IFRS ‎and do not have a ‎standardized meaning prescribed by IFRS and are therefore unlikely to be comparable ‎to similar measures ‎presented by other companies. Rather, these measures are provided as additional ‎information to ‎complement those IFRS measures by providing further understanding of the Company's results of ‎‎operations from management's perspective. Accordingly, these measures should not be considered in ‎‎isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The ‎‎Company uses non-IFRS measures including "gross margins" and "working capital" which may be ‎calculated ‎differently by other companies. These non-IFRS measures and metrics are used to provide ‎investors with ‎supplemental measures of the Company's operating performance and liquidity and thus ‎highlight trends in the Company's ‎business that may not otherwise be apparent when relying solely on IFRS ‎measures. For ‎definitions and reconciliations of these non-IFRS measures to the relevant reported ‎measures, please ‎‎see ‎the "Non-GAAP Measures and Additional GAAP Measures"‎ section of the ‎Company's latest management's discussion and analysis incorporated by reference herein.‎

In this prospectus and in any prospectus supplement, unless the context otherwise requires, references to ‎‎"we", "us", ‎‎"our" or similar terms, as well as references to the "Company" or "Draganfly", refer to Draganfly ‎Inc. ‎together, where context requires, with our subsidiaries.‎

**CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION**

Unless otherwise noted herein and in the documents incorporated by reference, all dollar amounts refer to ‎lawful currency of Canada. All references to "US$" or "U.S. dollars" are to the currency of the United States. ‎On July ‎13‎‎, 2021, the Bank of Canada daily average rate of exchange was US$1.00 = C$‎0.7991‎‎ or C$1.00 = ‎US$1.2514‎‎.‎

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This Prospectus and the documents incorporated by reference herein contain certain "forward-looking ‎statements" and "forward-looking information" within the meaning of applicable Canadian securities ‎legislation (collectively, "**forward-looking statements**"). Forward-looking statements are neither historical ‎facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations ‎and assumptions regarding the future of our business, future plans and strategies, and other future ‎conditions. Forward-looking statements can be identified by words such as "anticipate," "believe," ‎‎"envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," ‎‎"could," "should," "continue," "contemplate" and other similar expressions, although not all forward-looking ‎statements contain these identifying words. These forward-looking statements include all matters that are ‎not historical facts. Forward-looking statements in this Prospectus, any Prospectus Supplement or the ‎documents incorporated by reference herein and therein include, but are not limited to, statements with ‎respect to:‎

● the intentions, plans and future actions of the Company; ‎

● statements relating to the business and future activities of the ‎Company; ‎

● anticipated developments in operations of the Company; ‎

● market position, ability to compete and future ‎financial or operating performance of the Company;‎

● the timing and amount of funding required to execute the ‎Company's business plans; ‎

● capital expenditures; ‎

● the effect on the Company of any changes to existing or new ‎legislation or policy or government ‎regulation;‎

● ‎the availability of labour; ‎

● requirements for additional capital; ‎

● goals, strategies and future ‎growth; ‎

● the adequacy of financial resources; ‎

● expectations regarding revenues, ‎expenses and anticipated cash needs‎; and ‎

● ‎the impact of the COVID-19 pandemic on the business and operations of the Company.‎

Although we base the forward-looking statements contained in this Prospectus on assumptions that we ‎believe are reasonable, we caution you that actual results and developments (including our results of ‎operations, financial condition and liquidity, and the development of the industry in which we operate) may ‎differ materially from those made in or suggested by the forward-looking statements contained in this ‎Prospectus. In addition, even if results and developments are consistent with the forward-looking ‎statements contained in this Prospectus, those results and developments may not be indicative of results ‎or developments in subsequent periods. Certain assumptions made in preparing the forward-looking ‎statements contained in this Prospectus include:‎

● the Company's ability to implement its growth strategies;‎

● the Company's competitive advantages;‎

● the development of new products and services;‎

● the Company's ability to obtain and maintain financing on acceptable terms;‎

● the impact of competition;‎

● changes in laws, rules and regulations;‎

● the Company's ability to maintain and renew required licences;‎

● the Company's ability to maintain good business relationships with its customers, distributors, ‎suppliers and other strategic partners;‎

● the Company's ability to protect intellectual property;‎

● the Company's ability to manage and integrate acquisitions;‎

● the Company's ability to retain key personnel; and

● the absence of material adverse changes in the industry or Canadian or global economy, including as a ‎result of the COVID-19 pandemic.‎

By their nature, forward-looking statements involve risks and uncertainties because they relate to events ‎and depend on circumstances that may or may not occur in the future. We believe that these risks and ‎uncertainties include, but are not limited to, those described or referenced in the "Risk Factors" section and ‎elsewhere in this Prospectus and the documents incorporated by reference herein. These factors should not ‎be construed as exhaustive and should be read with the other cautionary statements in this Prospectus. ‎Although we have attempted to identify important risk factors, there may be other risk factors not presently ‎known to us or that we presently believe are not material that could also cause actual results and ‎developments to differ materially from those made in or suggested by the forward-looking statements ‎contained in this Prospectus. If any of the these risks materialize, or if any of the above assumptions ‎underlying forward-looking statements prove incorrect, actual results and developments may differ ‎materially from those made in or suggested by the forward-looking statements contained in this ‎Prospectus. ‎

Given these risks and uncertainties, you are cautioned not to place substantial weight or undue reliance on ‎these forward-looking statements when making an investment decision. Any forward-looking statement that ‎we make in this Prospectus speaks only as of the date of this Prospectus, and, except as required by law, ‎we undertake no obligation to update any forward-looking statements or to publicly announce the results of ‎any revisions to any of those statements to reflect future events or developments. Comparisons of results ‎for current and any prior periods are not intended to express any future trends or indications of future ‎performance, unless specifically expressed as such, and should only be viewed as historical data.‎

**DOCUMENTS INCORPORATED BY REFERENCE**

**Information has been incorporated by reference in this Prospectus from ‎documents filed with the ‎securities commissions or similar authorities in Canada.‎**

Copies of the documents incorporated herein by reference may be obtained on request without charge ‎from the ‎Corporate Secretary of the Company, at 2108 St. George Avenue, Saskatoon, Saskatchewan S7M ‎‎0K7, telephone (Telephone 1-800-979-9794) or by accessing the disclosure documents through the Internet ‎on the Canadian ‎System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com. ‎

The following documents, filed with the securities commissions or similar regulatory authorities in certain ‎provinces ‎and territories of Canada are specifically incorporated by reference into, and form an integral part ‎of, this ‎Prospectus:‎

● the annual information form (the "**AIF**") of the Company for the financial year ended December 31, 2020, ‎dated June 28, 2021;‎

● the audited consolidated financial statements of the Company for the years ended December 31, 2020 ‎and December 31, 2019, together with the notes thereto and the auditor's report thereon;‎

● management's discussion and analysis of the financial condition and results of operations of the ‎Company for the financial year ended December 31, 2020;‎

● the condensed consolidated interim financial statements of the Company for the three months ended ‎March 31, 2021;‎

● management's discussion and analysis of the financial condition and results of operations of the ‎Company for the three months ended March 31, 2021; and

● the management information circular of the Company dated May 10, 2021 with respect to the annual ‎general meeting of shareholders held on June 23, 2021.‎

Any documents of the type described in Section 11.1 of Form 44-101F1 - *Short Form Prospectuses* filed ‎by the ‎Company with a securities commission or similar authority in any province or territory of Canada ‎subsequent to the ‎date of this Prospectus and prior to the expiry of this Prospectus, or the completion ‎of ‎the issuance of securities pursuant hereto, will be deemed to be incorporated by reference into this ‎Prospectus.‎

A Prospectus Supplement containing the specific terms of any offering of our Securities will be delivered ‎to ‎purchasers of our Securities together with this Prospectus and will be deemed to be incorporated by ‎reference in this Prospectus as of the date of the Prospectus Supplement and only for the purposes of the ‎offering of our Securities to ‎which that Prospectus Supplement pertains.‎

**Any statement contained in this Prospectus or in a document incorporated or deemed to be ‎incorporated by ‎reference in this Prospectus will be deemed to be modified or superseded for ‎purposes of this Prospectus to the ‎extent that a statement contained herein, in any Prospectus ‎Supplement hereto or in any other subsequently filed ‎document that also is or is deemed to be ‎incorporated by reference herein modifies or supersedes such ‎statement. The modifying or ‎superseding statement need not state that it has modified or superseded a prior ‎statement or include ‎any other information set forth in the document that it modifies or supersedes. The making ‎of a ‎modifying or superseding statement is not to be deemed an admission for any purposes that the ‎modified or ‎superseded statement, when made, constituted a misrepresentation, an untrue statement ‎of a material fact or an ‎omission to state a material fact that is required to be stated or that is ‎necessary to make a statement not ‎misleading in light of the circumstances in which it was made. Any ‎statement so modified or superseded will not ‎be deemed, except as so modified or superseded, to ‎constitute a part of this Prospectus.‎**

Any template version of any "marketing materials" (as such term is defined in National Instrument 44-101 -‎ *Short ‎Form Prospectus Distributions*) filed after the date of a Prospectus Supplement and before the ‎termination of the ‎distribution of the Securities offered pursuant to such Prospectus Supplement (together ‎with this Prospectus) is ‎deemed to be incorporated by reference in such Prospectus Supplement.‎

Upon our filing of a new annual information form and the related annual financial statements and ‎management's ‎discussion and analysis with applicable securities regulatory authorities during the currency ‎of this Prospectus, the ‎previous annual information form, the previous annual financial statements and ‎management's discussion and ‎analysis and all interim financial statements, supplemental information, ‎material change reports and information ‎circulars filed prior to the commencement of our financial year in ‎which the new annual information form is filed ‎will be deemed no longer to be incorporated into this ‎Prospectus for purposes of future offers and sales of our ‎securities under this Prospectus. Upon interim ‎consolidated financial statements and the accompanying ‎management's discussion and analysis being ‎filed by us with the applicable securities regulatory authorities during ‎the duration of this Prospectus, all ‎interim consolidated financial statements and the accompanying management's ‎discussion and analysis ‎filed prior to the new interim consolidated financial statements shall be deemed no longer to be ‎incorporated into this Prospectus for purposes of future offers and sales ‎of securities under this ‎Prospectus.‎

References to our website in any documents that are incorporated by reference into this Prospectus do not ‎‎incorporate by reference the information on such website into this Prospectus, and we disclaim any such ‎‎incorporation by reference.‎

The Company has not provided or otherwise authorized any other person to provide investors with ‎information other than as contained or incorporated by reference in this Prospectus or any Prospectus ‎Supplement. If an investor is provided with different or inconsistent information, such investor should not ‎rely on it.‎

**THE COMPANY**

The Company is a manufacturer, contract engineering, and product development ‎company within the ‎unmanned aerial vehicles space, serving the public safety, agriculture, industrial inspections, and mapping ‎and surveying ‎markets. The Company is driven by passion, ingenuity, and the need to provide efficient ‎solutions and first-class ‎services to its customers around the world with the goal of saving time, money, ‎and lives. ‎ Further information regarding the business of the Company or its operations can be found in the ‎AIF and the materials incorporated by reference into this Prospectus. See "*Documents Incorporated by ‎Reference*".‎

**USE OF PROCEEDS**

Unless we otherwise indicate in a Prospectus Supplement relating to a particular offering, we currently ‎intend to use ‎the net proceeds from the sale of any Securities pursuant to this Prospectus for general ‎corporate and working capital ‎requirements, including to fund ongoing operations, growth initiatives and/or ‎working capital requirements, to repay ‎indebtedness outstanding from time to time (if any), to complete ‎one or more future acquisitions of companies, ‎businesses, technologies, intellectual property and/or other ‎assets or for other corporate purposes, all as set forth in ‎the Prospectus Supplement relating to the ‎offering of the Securities.‎

More detailed information regarding the use of proceeds from the sale of Securities, including any ‎determinable ‎milestones at the applicable time, will be described in a Prospectus Supplement. Management ‎of the Company will retain broad discretion in allocating the net proceeds of any offering of Securities by ‎the Company under this Prospectus and the Company's actual use of the net proceeds will vary depending ‎on the availability and suitability of investment opportunities and its operating and capital needs from time ‎to time. All expenses relating to an offering of Securities and any compensation paid to underwriters, ‎dealers or agents, as the case may be, will be paid out of the proceeds from the sale of Securities, unless ‎otherwise stated in the applicable Prospectus Supplement, provided that certain expenses in any ‎secondary offering may be paid by the Company. See "*Risk Factors - Discretion in the Use of Proceeds*". ‎

The Company may, from time to time, issue securities (including Securities) other than pursuant to this ‎Prospectus.‎

**CONSOLIDATED CAPITALIZATION**

Since March 31, 2021, the date of the Company's most recently filed financial statements, and other than ‎as disclosed in the AIF, there have been no material changes to the Company's share and loan ‎capitalization on a consolidated basis. The applicable Prospectus Supplement will describe any material ‎change, and the effect of such material change, on the share and loan capitalization of the Company that ‎will result from the issuance of Securities pursuant to such Prospectus Supplement.‎

**PRIOR SALES**

Information in respect of prior sales of the Common Shares or other Securities distributed under this ‎Prospectus and for securities that are convertible or exchangeable into the Common Shares or such other ‎Securities within the previous 12-month period will be provided, as required, in a Prospectus Supplement ‎with respect to the issuance of the Common Shares or other Securities pursuant to such Prospectus ‎Supplement.‎

**TRADING PRICE AND VOLUME**

The Common Shares are listed and posted for trading on the CSE under the symbol "DFLY", on the FSE ‎under the symbol "3UB" and on the OTCQB under the symbol "DFLYF". Draganfly has applied to list the ‎Common Shares on the ‎Nasdaq Capital Market (the "**Nasdaq**") under the symbol "DPRO". Listing will be ‎subject to Draganfly fulfilling all the listing requirements of the ‎Nasdaq, and there can be no assurance that ‎the Common Shares will be accepted for listing on the Nasdaq.‎ ‎

Trading price and ‎volume information for the Company's securities will be provided as required for all of ‎our Common Shares, as applicable, in each Prospectus Supplement to this Prospectus.‎

**DESCRIPTION OF THE SHARE CAPITAL OF THE COMPANY**

The following describes the material terms of the Company's share capital. The following description may ‎not be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of ‎our notice of articles and articles, as amended.‎

Our authorized share capital consists of an unlimited number of Common Shares of which 135,229,434 were ‎issued and outstanding as of July 13, 2021 and an unlimited number of Preferred Shares, issuable in ‎series, none of which were issued and outstanding as of July 13, 2021. ‎

**Common Shares**

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

**Dividend Policy**

We have not paid any dividends to date on the Common Shares. While the Company is not restricted from ‎paying dividends other than pursuant to certain solvency tests prescribed under the *Business Corporations ‎Act* (British Columbia), we intend to retain our earnings, if any, to finance the growth ‎and development of ‎our business. Accordingly, we do not currently expect to pay any dividends on our Common Shares in the ‎‎near future.‎

**Preferred Shares**

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

**DESCRIPTION OF WARRANTS**

The Company may issue additional Warrants, separately or together, with Common Shares, Preferred ‎Shares, Subscription Receipts or Units or any combination thereof, as the case may be. The Warrants ‎would be issued under a separate warrant agreement or indenture. The specific terms and provisions that ‎will apply to any Warrants that may be offered by us pursuant to this Prospectus will be set forth in the ‎applicable Prospectus Supplement. This description will include, where applicable:‎

● the aggregate number of Warrants offered;‎

● the price or prices, if any, at which the Warrants will be issued;‎

● the currency at which the Warrants will be offered and in which the exercise price under the Warrants ‎may be payable;‎

● upon exercise of the Warrant, the events or conditions under which the amount of Securities may ‎be subject to adjustment;‎

● the date on which the right to exercise such Warrants shall commence and the date on which such ‎right shall expire;‎

● if applicable, the identity of the Warrant agent;‎

● whether the Warrants will be listed on any securities exchange;‎

● certain material United States and Canadian federal income tax consequences of owning the ‎Warrants; ‎

● whether the Warrants will be issued with any other Securities and, if so, the amount and terms of ‎these Securities;‎

● any minimum or maximum subscription amount;‎

● whether the Warrants are to be issued in registered form, "book-entry only" form, non-certificated ‎inventory system form, bearer form or in the form of temporary or permanent global ‎securities and the basis of exchange, transfer and ownership thereof;‎

● any material risk factors relating to such Warrants and the Securities to be issued upon exercise of ‎the Warrants;‎

● any other rights, privileges, restrictions and conditions attaching to the Warrants and the Securities ‎to be issued upon exercise of the Warrants; and

● any other material terms or conditions of the Warrants and the Securities to be issued upon ‎exercise of the Warrants.‎

The terms and provisions of any Warrants offered under a Prospectus Supplement may differ from the ‎terms described above, and may not be subject to or contain any or all of the terms described above.‎

Prior to the exercise of any Warrants, holders of such Warrants will not have any of the rights of holders of ‎the Securities purchasable upon such exercise, including the right to receive payments of dividends or the ‎right to vote such underlying securities.‎

**DESCRIPTION OF SUBSCRIPTION RECEIPTS**

As of the date of this Prospectus, the Company has no Subscription Receipts outstanding. The Company ‎may issue Subscription Receipts, separately or together, with Common Shares, Preferred Shares, Warrants ‎or Units or any combination thereof, as the case may be. The particular terms and provisions of the ‎Subscription Receipts as may be offered pursuant to this Prospectus will be set forth in the applicable ‎Prospectus Supplement pertaining to such offering of Subscription Receipts, and the extent to which the ‎general terms and provisions described below may apply to such Subscription Receipts will be described ‎in the applicable Prospectus Supplement. ‎

The Subscription Receipts may be issued under a subscription receipt agreement. The applicable ‎Prospectus Supplement will include details of the subscription receipt agreement, if any, governing the ‎Subscription Receipts being offered. The Company will file a copy of the subscription receipt agreement, if ‎any, relating to an offering of Subscription Receipts with the relevant securities regulatory authorities in ‎Canada after it has been entered into by the Company. ‎

The specific terms and provisions that will apply to any Subscription Receipts that may be offered by us ‎pursuant to this Prospectus will be set forth in the applicable Prospectus Supplement. This description will ‎include, where applicable:‎

● the aggregate number of Subscription Receipts offered;‎

● the price or prices, if any, at which the Subscription Receipts will be issued;‎

● the manner of determining the offering price(s);‎

● the currency at which the Subscription Receipts will be offered and whether the price is payable in ‎installments;‎

● the Securities into which the Subscription Receipts may be exchanged;‎

● conditions to the exchange of Subscription Receipts into other Securities and the consequences of ‎such conditions not being satisfied;‎

● the number of Securities that may be issued upon the exchange of each Subscription Receipt and ‎the price per Security or the aggregate principal amount and the events or conditions under ‎which the amount of Securities may be subject to adjustment;‎

● the dates or periods during which the Subscription Receipts may be exchanged;‎

● the circumstances, if any, which will cause the Subscription Receipts to be deemed to be ‎automatically exchanged;‎

● provisions applicable to any escrow of the gross or net proceeds from the sale of the Subscription ‎Receipts plus any interest or income earned thereon, and for the release of such proceeds ‎from such escrow;‎

● if applicable, the identity of the Subscription Receipt agent;‎

● whether the Subscription Receipts will be listed on any securities exchange;‎

● certain material United States and Canadian federal income tax consequences of owning the ‎Subscription Receipts; ‎

● whether the Subscription Receipts will be issued with any other Securities and, if so, the amount ‎and terms of these Securities;‎

● any minimum or maximum subscription amount;‎

● whether the Subscription Receipts are to be issued in registered form, "book-entry only" form, ‎noncertificated inventory system form, bearer form or in the form of temporary or ‎permanent global securities and the basis of exchange, transfer and ownership thereof;‎

● any material risk factors relating to such Subscription Receipts and the Securities to be issued ‎upon exchange of the Subscription Receipts;‎

● any other rights, privileges, restrictions and conditions attaching to the Subscription Receipts and ‎the Securities to be issued upon exchange of the Subscription Receipts; and

● any other material terms or conditions of the Subscription Receipts and the Securities to be issued ‎upon exchange of the Subscription Receipts.‎

The terms and provisions of any Subscription Receipts offered under a Prospectus Supplement may differ ‎from the terms described above, and may not be subject to or contain any or all of the terms described ‎above.‎

Prior to the exchange of any Subscription Receipts, holders of such Subscription Receipts will not have ‎any of the rights of holders of the Securities for which the Subscription Receipts may be exchanged, ‎including the right to receive payments of dividends or the right to vote such underlying securities.‎

**DESCRIPTION OF UNITS**

As of the date of this Prospectus, the Company has no Units outstanding. The Company may issue Units, ‎separately or together, with Common Shares, Preferred Shares, Warrants or Subscription Receipts or any ‎combination thereof, as the case may be. Each Unit would be issued so that the holder of the Unit is also ‎the holder of each Security comprising the Unit. Thus, the holder of a Unit will have the rights and ‎obligations of a holder of each applicable Security. The specific terms and provisions that will apply to any ‎Units that may be offered by us pursuant to this Prospectus will be set forth in the applicable Prospectus ‎Supplement. This description will include, where applicable:‎

● the aggregate number of Units offered;‎

● the price or prices, if any, at which the Units will be issued;‎

● the manner of determining the offering price(s);‎

● the currency at which the Units will be offered;‎

● the Securities comprising the Units;‎

● whether the Units will be issued with any other Securities and, if so, the amount and terms of these ‎Securities;‎

● any minimum or maximum subscription amount;‎

● whether the Units and the Securities comprising the Units are to be issued in registered form, ‎‎"book-entry only" form, non-certificated inventory system form, bearer form or in the form ‎of temporary or permanent global securities and the basis of exchange, transfer and ‎ownership thereof;‎

● any material risk factors relating to such Units or the Securities comprising the Units;‎

● certain material United States and Canadian federal income tax consequences of owning the Units; ‎

● any other rights, privileges, restrictions and conditions attaching to the Units or the Securities ‎comprising the Units; and

● any other material terms or conditions of the Units or the Securities comprising the Units, including ‎whether and under what circumstances the Securities comprising the Units may be held or ‎transferred separately.‎

The terms and provisions of any Units offered under a Prospectus Supplement may differ from the terms ‎described above, and may not be subject to or contain any or all of the terms described above.‎

**PLAN OF DISTRIBUTION**

The Company may from time to time during the 25-month period that this Prospectus, including any ‎amendments hereto, remains valid, offer for sale and issue up to an aggregate of $200,000,000 in ‎Securities hereunder.‎

The Company may offer and sell the Securities to or through underwriters or dealers purchasing as ‎principals, and may also sell directly to one or more purchasers or through agents or pursuant to applicable ‎statutory exemptions. The Prospectus Supplement relating to a particular offering of Securities will identify ‎each underwriter, dealer or agent, as the case may be, engaged by the Company in connection with the ‎offering and sale of the Securities, and will set forth the terms of the offering of such Securities, including, ‎to the extent applicable, any fees, discounts or any other compensation payable to underwriters, dealers or ‎agents in connection with the offering, the method of distribution of the Securities, the initial issue price, ‎the proceeds that the Company will receive and any other material terms of the plan of distribution. Any ‎initial offering price and discounts, concessions or commissions allowed or re-allowed or paid to dealers ‎may be changed from time to time.‎

In addition, the Securities may be offered and issued in consideration for the acquisition of other ‎businesses, assets or securities by the Company or one of its subsidiaries. The consideration for any such ‎acquisition may consist of the Securities separately, a combination of Securities or any combination of, ‎among other things, Securities, cash and assumption of liabilities.‎

The Securities may be sold from time to time in one or more transactions at a fixed price or prices or at ‎prices which may be changed or at market prices prevailing at the time of sale, at prices related to such ‎prevailing prices or at negotiated prices, including sales in transactions that are deemed to be "at-the-‎market distributions" as defined in National Instrument 44-102 - *Shelf Distributions* of the Canadian ‎Securities Administrators, including sales made directly on the CSE or other existing trading markets for the ‎Common Shares. The price at which the Securities will be offered and sold may vary from purchaser to ‎purchaser and during the period of distribution.‎

In connection with the sale of the Securities, underwriters, dealers or agents may receive compensation ‎from the Company or from other parties, including in the form of underwriters', dealers' or agents' fees, ‎commissions or concessions. Underwriters, dealers and agents that participate in the distribution of the ‎Securities may be deemed to be underwriters for the purposes of applicable Canadian securities legislation ‎and any such compensation received by them from the Company and any profit on the resale of the ‎Securities by them may be deemed to be underwriting commissions.‎

In connection with any offering of Securities, except as otherwise set out in a Prospectus Supplement ‎relating to a particular offering of Securities and other than in relation to an "at-the-market" distribution, the ‎underwriters, dealers or agents, as the case may be, may over-allot or effect transactions intended to fix, ‎stabilize, maintain or otherwise affect the market price of the Securities at a level other than those which ‎otherwise might prevail on the open market. Such transactions may be commenced, interrupted or ‎discontinued at any time.‎

Underwriters, dealers or agents who participate in the distribution of the Securities may be entitled, under ‎agreements to be entered into with the Company, to indemnification by the Company against certain ‎liabilities, including liabilities under Canadian securities legislation and the United States Securities Act of ‎‎1933, as amended, or to contribution with respect to payments which such underwriters, dealers or agents ‎may be required to make in respect thereof. Such underwriters, dealers and agents may be customers of, ‎engage in transactions with, or perform services for, the Company in the ordinary course of business.‎

Unless otherwise specified in the applicable Prospectus Supplement, each series or issue of Securities ‎‎(other than Common Shares) will be a new issue of Securities with no established trading market. ‎Accordingly, there is currently no market through which the Securities (other than Common Shares) may be ‎sold and purchasers may not be able to resell such Securities purchased under this Prospectus. This may ‎affect the pricing of such Securities in the secondary market, the transparency and availability of trading ‎prices, the liquidity of such Securities and the extent of issuer regulation. See "*Risk Factors*".‎

**CERTAIN CANADIAN AND UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS**

Owning any of the Securities may subject holders to tax consequences. The applicable Prospectus ‎Supplement may describe certain Canadian federal income tax consequences to an initial investor who is a ‎resident of Canada or a non-resident of Canada of acquiring, owning and disposing of any of the ‎Securities offered thereunder. The applicable Prospectus Supplement may also describe certain United ‎States federal income tax consequences of the acquisition, ownership and disposition of any of the ‎Securities offered thereunder by an initial investor who is a U.S. Person (within the meaning of the U.S. ‎Internal Revenue Code of 1986, as amended). Prospective investors should consult their own tax advisers ‎prior to deciding to purchase any of the Securities. ‎

**RISK FACTORS**

Before deciding to invest in any Securities, prospective investors of the Securities should consider ‎carefully the risk factors and the other information contained and incorporated by reference in this ‎Prospectus and the applicable Prospectus Supplement relating to a specific offering of Securities before ‎purchasing the Securities, including those risks identified and discussed under the heading "*Risk Factors*" ‎in the AIF, which is incorporated by reference herein. See "*Documents Incorporated by Reference*".‎

An investment in the Securities offered hereunder is highly speculative and involves a high degree ‎of risk. ‎The risks and uncertainties described or incorporated by reference herein are not the only ones the ‎Company may face. Additional risks and uncertainties, including those that the Company is unaware of or ‎that are currently deemed immaterial, may also become important factors that affect the Company and its ‎business. If any such risks actually occur, the Company's business, financial condition and results of ‎operations could be materially adversely affected. ‎

Prospective investors should carefully consider the risks below and in the AIF and the other information ‎elsewhere in this Prospectus and the applicable Prospectus Supplement and consult with their professional ‎advisers to assess any investment in the Company. ‎

**The Company has a history of losses.‎**

The Company's business has incurred losses since its inception. Although the Company expects to ‎become profitable, there is no guarantee that will happen, and the Company may never become profitable. ‎The Company currently has a negative operating cash flow and may continue to have a negative operating ‎cash flow for the foreseeable future. To date, the Company has not generated any revenues and a large ‎portion of the Company's expenses are fixed, including expenses related to facilities, equipment, ‎contractual commitments and personnel. As a result, the Company expects for its net losses from ‎operations to improve. The Company's ability to generate additional revenues and potential to become ‎profitable will depend largely on its ability to manufacture and market its products and services. There can ‎be no assurance that any such events will occur or that the Company will ever become profitable. Even if ‎the Company does achieve profitability, the Company cannot predict the level of such profitability. If the ‎Company sustains losses over an extended period of time, the Company may be unable to continue its ‎business.‎

**Subsequent offerings will result in dilution to our shareholders.‎**

The Company may sell additional Common Shares or other securities that are convertible or exchangeable ‎into Common Shares in subsequent offerings or may issue additional Common Shares or other securities ‎to finance future acquisitions. The Company cannot predict the size or nature of future sales or issuances ‎of securities or the effect, if any, that such future sales and issuances will have on the market price of the ‎Common Shares. Sales or issuances of substantial numbers of Common Shares or other securities that are ‎convertible or exchangeable into Common Shares, or the perception that such sales or issuances could ‎occur, may adversely affect prevailing market prices of the Common Shares. With any additional sale or ‎issuance of Common Shares or other securities that are convertible or exchangeable into Common Shares, ‎investors will suffer dilution to their voting power and economic interest in the Company. Furthermore, to ‎the extent that holders of the Company's stock options or other convertible securities convert or exercise ‎their securities and sell the Common Shares they receive, the trading price of the Common Shares may ‎decrease due to the additional amount of Common Shares available in the market.‎

**An investment in the Securities is not guaranteed and may result in the loss of an investor's entire ‎investment. ‎**

There is no guarantee that any investment in the Securities will earn any positive return in the short term or ‎long term. Any investment in the Securities is highly speculative and involves a high degree of risk and ‎should be undertaken only by investors whose financial resources are sufficient to enable them to assume ‎such risks and who have no need for immediate liquidity in their investment. An investment in the Securities ‎is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment.‎

**We will have broad discretion in the use of the net proceeds from the sale of Securities and may not ‎use them to effectively manage our business. ‎**

Management of the Company will have broad discretion with respect to the application of net proceeds ‎received by the Company from the sale of Securities under this Prospectus or a future Prospectus ‎Supplement and may spend such proceeds in ways that do not improve the Company's results of ‎operations or enhance the value of the Common Shares or its other securities issued and outstanding from ‎time to time. Any failure by management to apply these funds effectively could result in financial losses ‎that could have a material adverse effect on the Company's business or cause the price of the issued and ‎outstanding securities of the Company to decline.‎

**The market price of our Common Shares may be volatile, and you could lose all or part of your ‎investment.‎**

The market price of the Common Shares may be volatile and subject to wide fluctuations in response to ‎numerous factors, many of which are beyond the Company's control. This volatility may affect the ‎ability of holders of Common Shares to sell their securities at an advantageous price. Market price ‎fluctuations in the Common Shares may be due to the Company's operating results failing to meet ‎expectations of securities analysts or investors in any period, downward revision in securities analysts' ‎estimates, adverse changes in general market conditions or economic trends, acquisitions, dispositions or ‎other material public announcements by the Company or its competitors, along with a variety of additional ‎factors. These broad market fluctuations may adversely affect the market price of the Common Shares.‎

Financial markets have historically at times experienced significant price and volume fluctuations that ‎have particularly affected the market prices of equity securities of companies and have often been ‎unrelated to the operating performance, underlying asset values or prospects of such companies. ‎Accordingly, the market price of the Common Shares may decline even if the Company's operating results, ‎underlying asset values or prospects have not changed. Additionally, these factors, as well as other ‎related factors, may cause decreases in asset values that are deemed to be other than temporary, which ‎may result in impairment losses. There can be no assurance that continuing fluctuations in price and ‎volume will not occur. If such increased levels of volatility and market turmoil continue, the Company's ‎operations could be adversely impacted and the trading price of the Common Shares may be ‎materially adversely affected.‎

**There is no guarantee that an active trading market for our Common Shares will be maintained on the ‎CSE, OTCQB and/or the NASDAQ. Investors may not be able to sell their Common Shares quickly or at ‎the latest market price if the trading in our Common Shares is not active.‎**

There is currently no market through which the Securities, other than the Common Shares, may be sold and, ‎unless otherwise specified in the applicable Prospectus Supplement, none of the Warrants, Subscription ‎Receipts or Units will be listed on any securities or stock exchange or any automated dealer quotation ‎system. As a consequence, purchasers may not be able to resell Warrants, Subscription Receipts or Units ‎purchased under this Prospectus or any Prospectus Supplement. This may affect the pricing of the ‎Securities, other than the Common Shares, in the secondary market, the transparency and availability of ‎trading prices, the liquidity of these securities and the extent of issuer regulation. There can be no ‎assurance that an active trading market for the Securities, other than the Common Shares, will ever develop ‎or, if developed, that any such market, including for the Common Shares, will be sustained.‎

The Common Shares are currently listed in Canada on the CSE, but are not currently listed on any United ‎States securities exchange other than the OTCQB, so there has been a limited public market in the United ‎States for the Common Shares. While Draganfly has applied to list the Common Shares on the Nasdaq, ‎listing will be subject to Draganfly fulfilling all the listing requirements of the Nasdaq. Moreover, as liquidity ‎and trading patterns of securities listed on the CSE may be substantially different from those of securities ‎listed on a securities exchange in the United States, historical trading prices may not be indicative of the ‎prices at which the Common Shares may trade in the future if and when they are listed on the Nasdaq. ‎There is no assurance that the Common Shares will be listed on the Nasdaq or, if such a listing is obtained, ‎that an active trading market for the Common Shares will develop or be sustained in the United States ‎following the listing. If an active market for the Common Shares does not develop, it may be difficult for ‎United States shareholders to sell their Common Shares without depressing the market price for such ‎shares, or at all.‎

Shareholders of the Company may be unable to sell significant quantities of Common Shares into the ‎public trading markets without a significant reduction in the price of their Common Shares, or at all. There ‎can be no assurance that there will be sufficient liquidity of the Common Shares on the trading market, or ‎that the Company will continue to meet the listing requirements of the CSE or achieve or maintain listing on ‎the Nasdaq or any other public listing exchange.‎

**United States investors may not be able to obtain enforcement of civil liabilities against us.‎**

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

**The Company may be classified as a "passive foreign investment company" for U.S. federal income ‎tax purposes, which would subject U.S. investors that hold the Company's Common Shares to ‎potentially significant adverse U.S. federal income tax consequences.‎**

If the Company is classified as a passive foreign investment company ("**PFIC**") for U.S. federal income tax ‎purposes in any taxable year, U.S. investors holding the Company's Common Shares generally will be ‎subject, in that taxable year and all subsequent taxable years (whether or not the Company continued to be ‎a PFIC), to certain adverse US federal income tax consequences. The Company will be classified as a PFIC ‎in respect of any taxable year in which, after taking into account its income and gross assets (including the ‎income and assets of 25% or more owned subsidiaries), either (i) 75% or more of its gross income ‎consists of certain types of "passive income" or (ii) 50% or more of the average quarterly value of its ‎assets is attributable to "passive assets" (assets that produce or are held for the production of passive ‎income). Based upon the current and expected composition of the Company's income and assets, the ‎Company believes that it was not a PFIC for the taxable year ended December 31, 2020 and expects that it ‎will not be a PFIC for the current taxable year. Nevertheless, because the Company's PFIC status must be ‎determined annually with respect to each taxable year and will depend on the composition and character of ‎the Company's assets and income, including the Company's use of proceeds from offerings pursuant to ‎this Prospectus, and the value of the Company's assets (which may be determined, in part, by reference to ‎the market value of Common Shares, which may be volatile) over the course of such taxable year, the ‎Company may be a PFIC in any taxable year. The determination of whether the Company will be or become ‎a PFIC may also depend, in part, on how, and how quickly, the Company uses its liquid assets and the ‎cash raised in an offering. If the Company determines not to deploy significant amounts of cash for active ‎purposes, the Company's risk of being a PFIC may substantially increase. Because there are uncertainties ‎in the application of the relevant rules and PFIC status is a factual determination made annually after the ‎close of each taxable year, there can be no assurance that the Company will not be a PFIC for any future ‎taxable year. In addition, it is possible that the U.S. Internal Revenue Service may challenge the Company's ‎classification of certain income and assets as non-passive, which may result in the Company being or ‎becoming a PFIC in the current or subsequent years.‎

If the Company is a PFIC for any year during a U.S. holder's holding period, then such U.S. holder ‎generally will be required to treat any gain realized upon a disposition of Common Shares, or any "excess ‎distribution" received on its Common Shares, as ordinary income, and to pay an interest charge on a ‎portion of such gain or distribution, unless the U.S. holder makes a timely and effective "qualified electing ‎fund" election ("**QEF Election**") or a "mark-to-market" election with respect to its Common Shares. A U.S. ‎holder who makes a QEF Election generally must report on a current basis its share of the Company's net ‎capital gain and ordinary earnings for any year in which the Company is a PFIC, whether or not the ‎Company distributes any amounts to its shareholders. However, U.S. holders should be aware that there ‎can be no assurance that the Company will satisfy the record keeping requirements that apply to a QEF, or ‎that the Company will supply U.S. holders with information that such U.S. holders require to report under ‎the QEF Election rules, in the event that the Company is a PFIC and a U.S. holder wishes to make a QEF ‎Election. Thus, U.S. holders may not be able to make a QEF Election with respect to their Common Shares. ‎A U.S. holder who makes a mark-to-market election generally must include as ordinary income each year ‎the excess of the fair market value of the Common Shares over the taxpayer's basis therein. Each U.S. ‎holder should consult its own tax advisors regarding the PFIC rules and the U.S. federal income tax ‎consequences of the acquisition, ownership, and disposition of Common Shares.‎

**INTERESTS OF EXPERTS**

The following persons or companies are named as having prepared or certified a report, valuation, ‎statement or opinion in this Prospectus, either directly or in a document incorporated herein by reference, ‎and whose profession or business gives authority to the report, valuation, statement or opinion made by ‎the expert. ‎

Dale Matheson Carr-Hilton Labonte LLP is the auditor of the Company and has confirmed that they are ‎independent of the Company within the meaning of the Rules of Professional Conduct of the Institute of ‎Chartered Professional Accountants. ‎

**LEGAL MATTERS**

Unless otherwise specified in a Prospectus Supplement relating to any Securities offered, certain legal ‎matters in connection with the offering of Securities may be passed upon on behalf of Draganfly by DLA ‎Piper (Canada) LLP as to legal matters relating to Canadian law and, if governed by United States law, by ‎Troutman Pepper Hamilton Sanders LLP as to matters relating to United States law. As at the date hereof, ‎the partners and associates of DLA Piper (Canada) LLP, beneficially own, directly or indirectly, less than ‎‎1% of the outstanding Common Shares. ‎

In addition, certain legal matters in connection with any offering of Securities will be passed upon for any ‎underwriters, dealers or agents by counsel to be designated at the time of the offering by such ‎underwriters, dealers or agents, as the case may be.‎

**AUDITORS, REGISTRAR AND TRANSFER AGENT**

Our auditors are Dale Matheson Carr-Hilton Labonte LLP, Chartered Professional Accountants, located at ‎‎1500-1700, 1140 W Pender Street, Vancouver, BC V6E 4G1. Dale Matheson Carr-Hilton Labonte LLP is ‎independent with respect to the Company within the meaning of the Rules of Professional Conduct of the ‎Chartered Professional Accountants.‎

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

**AGENT FOR SERVICE OF PROCESS**

Certain directors and officers of the Company reside outside of Canada. As a result of the persons named ‎below residing outside ‎of Canada, each of them has appointed the following agent for service of process:

‎

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| | |
|:---|:---|
| **Name of Person or Company** | **Name and Address of Agent** |
| Andrew Hill Card Jr., John M. Mitnick and John ‎Bagocius ‎ | DLA Piper (Canada) LLP, 2800 Park Place, 666 ‎Burrard St, ‎Vancouver, British Columbia, Canada ‎V6C 2Z7‎ |

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Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada ‎against ‎any such person, even though they have each appointed an agent for service of process.‎

**STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION**

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw ‎from an agreement to purchase securities. This right may only be exercised within two business days after ‎receipt or deemed receipt of a prospectus or a prospectus supplement relating to the securities purchased ‎by a purchaser and any amendments thereto. In several of the provinces, the securities legislation further ‎provides the purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or ‎damages if the prospectus or a prospectus supplement relating to the securities purchased by a purchaser ‎and any amendments thereto contain a misrepresentation or is not delivered to the purchaser, provided that ‎such remedies for rescission, revisions of the price or damages are exercised by the purchaser within the ‎time limit prescribed by the securities legislation of the purchaser's province. A purchaser should refer to ‎any applicable provisions of the securities legislation of the purchaser's province for the particulars of ‎these rights or consult with a legal advisor.‎

In addition, original purchasers of convertible, exchangeable or exercisable Securities (unless the Securities ‎are reasonably regarded by the Company as incidental to the applicable offering as a whole) will have a ‎contractual right of rescission against the Company in respect of the conversion, exchange or exercise of ‎the convertible, exchangeable or exercisable Security. The contractual right of rescission will be further ‎described in any applicable Prospectus Supplement, but will, in general, entitle such original purchasers to ‎receive the amount paid for the applicable convertible, exchangeable or exercisable Security (and any ‎additional amount paid upon conversion, exchange or exercise) upon surrender of the underlying Securities ‎acquired thereby, in the event that this Prospectus (as supplemented or amended) contains a ‎misrepresentation, provided that: (i) the conversion, exchange or exercise takes place within 180 days of ‎the date of the purchase of the convertible, exchangeable or exercisable Security under this Prospectus; ‎and (ii) the right of rescission is exercised within 180 days of the date of the purchase of the convertible, ‎exchangeable or exercisable Security under this Prospectus.‎

In an offering of convertible, exchangeable or exercisable Preferred Shares, Subscription Receipts or ‎Warrants, investors are cautioned that the statutory right of action for damages for a misrepresentation ‎contained in the Prospectus is limited, in certain provincial securities legislation, to the price at which ‎convertible, exchangeable or exercisable Preferred Shares, Subscription Receipts or Warrants are offered ‎to the public under the prospectus offering. This means that, under the securities legislation of certain ‎provinces, if the purchaser pays additional amounts upon the conversion, exchange or exercise of the ‎Security, those amounts may not be recoverable under the statutory right of action for damages that ‎applies in those provinces. The purchaser should refer to any applicable provisions of the securities ‎legislation of the purchaser's province for the particulars of this right of action for damages or consult with ‎a legal advisor.‎