DroneShield’s Contract Announcement Error Raises Questions on Disclosure Controls

Background on Director Share Sales

DroneShield Limited (ASX – DRO) recently disclosed that 44.5 million performance options granted to directors and senior employees had vested after the company achieved a significant revenue milestone. These options, initially approved when the company’s revenue was around A$54 million, vested upon reaching a stretch target of A$200 million in rolling 12-month revenue.

Following vesting, three directors; Oleg Vornik, Peter James, and Jethro Marks; exercised a substantial portion of their options and sold shares on-market. DroneShield clarified that these sales were primarily to meet significant tax liabilities arising from the exercise of options. Importantly, the company stated there was no coordinated agreement among the directors regarding the timing or volume of share disposals; each acted independently within broker-agreed trading parameters.

Disclosure and Compliance with ASX Rules

The company responded to ASX Compliance queries regarding the timing and materiality of these transactions. DroneShield only became aware of the directors’ share sales after market close on 12 November 2025 and promptly disclosed the details through Appendix 3Y filings. The company maintains it complied with its continuous disclosure obligations and that the market was fully informed.

DroneShield also acknowledged that while the directors disposed of all shares received from exercising options, they retained vested options for future exercise, indicating ongoing confidence in the company’s prospects.

Contract Announcement Error and Withdrawal

Separately, DroneShield addressed an erroneous market announcement made on 10 November 2025, which reported receipt of $7.6 million in new standalone contracts for handheld counter-drone systems. The company later withdrew this announcement, clarifying that the contracts were not new but reissued orders from an existing customer, submitted for internal administrative reasons.

This administrative error stemmed from a failure to perform manual checks on the orders, compounded by the complexity of the customer’s resubmission. DroneShield has since implemented a second validation step for new orders and is accelerating the rollout of new enterprise resource planning (ERP) and customer relationship management (CRM) systems to automate and improve order processing and disclosure accuracy.

Looking Ahead – Governance and Market Impact

The company has engaged external auditors and advisers to review its securities trading policy adherence and internal controls. While the directors largely complied with approval processes for share sales, some delays in trade notifications were noted. DroneShield intends to take appropriate remedial actions based on forthcoming external advice.

DroneShield also reaffirmed its commitment to transparent continuous disclosure, confirming compliance with ASX Listing Rules and outlining its materiality thresholds for contract announcements, which will increase from A$5 million to A$20 million in 2026 to reflect business growth.