UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For
the Month of: November 2024
Commission
File Number: 001-40688
DRAGANFLY
INC.
(Name
of registrant)
235
103rd St. E.
Saskatoon,
Saskatchewan, S7N 1Y8
Canada
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
INCORPORATION
BY REFERENCE
Exhibit
99.1 and 99.2 to this report on Form 6-K furnished to the SEC is expressly incorporated by reference into the Registration Statement
on Form F-10 of Draganfly Inc. (File No. 333-271498), as amended and supplemented.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
| |
DRAGANFLY
INC. |
| |
|
|
| Date:
November 19, 2024 |
By: |
/s/
Paul Sun |
| |
Name: |
Paul
Sun |
| |
Title: |
Chief
Financial Officer |
Form
6-K Exhibit Index
Exhibit
99.1
COMMON
SHARE PURCHASE WARRANT
Draganfly
Inc.
| Warrant
Shares: 1,600,000 |
|
Initial
Exercise Date: November 19, 2024 |
THIS
COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Armistice
Capital Master Fund Ltd. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations
on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)
and on or prior to 5:00 p.m. (New York City time) on November 19, 2029 (the “Termination Date”) but not thereafter,
to subscribe for and purchase from Draganfly Inc. a company incorporated under the Business Corporations Act (British Columbia)
(the “Company”), up to 1,600,000 Common Shares (as subject to adjustment hereunder, the “Warrant Shares”).
The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant
shall be issued in certificated form.
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares
are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding
date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed or quoted for trading
on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases,
the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders of a majority
in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by
the Company.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or the City of
Vancouver, British Columbia, Canada are authorized or required by law to remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York and the City of Vancouver, British Columbia, Canada generally are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Shares” means the common shares of the Company, no par value per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common
Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration
Statement” means the Company’s registration statement on Form F-10 (File No. 333-258074), as amended, or such other replacement
registration statement on the applicable Form that has been declared effective by the Commission.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Shares are traded on the principal Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the
date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New
York Stock Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Endeavor Trust Corporation, the current transfer agent of the Company, with a mailing address of #702 777 Hornby
Street, Vancouver, BC, V6Z 1S4 Canada, and an email address of admin@endeavortrust.com, and any successor transfer agent of the Company.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date)
on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and
if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common
Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Warrant and other Common Share purchase warrants issued by the Company pursuant to the Registration Statement.
Section
2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date, or by delivery to the Company of a duly executed
PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a Canadian bank or a
United States bank if such cashier’s check is denominated in Canadian dollars. No ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise
is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading
Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The exercise price per Common Share under this Warrant shall be CAD$3.3086 (Canadian equivalent, based on an exchange
rate of CAD$1.4079 to USD$2.35) subject to adjustment hereunder (the “Exercise Price”).
c)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by (A) crediting the account of the Holder’s or its designee’s balance account with The
Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and there is an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by the Holder or (B) by physical delivery of a certificate, registered in the Company’s share register in the name of the
Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company
of the Notice of Exercise, (ii) five (5) Trading Day after delivery of the aggregate Exercise Price (if applicable) to the Company and
(iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the completed and correct Notice of Exercise and
payment of the aggregate Exercise Price (if applicable), the Holder shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant
Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii) the
number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for
any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading
Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until
such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant
in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days (including no Trading Days if the settlement date is the
trade date), on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of
the Notice of Exercise.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y)
the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. For example,
if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise
of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
d)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant
Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
Warrant Shares which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion
of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act
and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated
above shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(d), in determining the number of outstanding Common Shares, a Holder may rely on the number
of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with or furnished to
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company
shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the
number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding
Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior
to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issuance of
Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant
held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation
will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or
to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
a)
Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise
makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares
(which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common
Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company,
then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding
treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares
outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the
Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding
Common Shares under which such holders are entitled to subscribe for or purchase Common Shares or securities exchangeable for or convertible
into Common Shares, where:
| i. | the
right to subscribe for or purchase Common Shares or other securities expires not more than
45 days after the record date for such issue (the period from the record date to the date
of expiry being herein in this Section 3(b) called the “Rights Period”);
and |
| ii. | the
cost per Common Share during the Rights Period (inclusive of any cost of acquisition of securities
exchangeable for or convertible into Common Shares in addition to any direct cost of Common
Shares) (herein in this Section 2(the “Per Common Share Cost”) is less
than 95% of the Current Market Price of the Common Shares on the record date; |
(any
of such events being called a “Subsequent Rights Offering”), then the Exercise Price will be adjusted effective immediately
after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of
the Rights Period by a fraction:
| (A) | the
numerator of which is the aggregate of: |
(1) the
number of Common Shares outstanding as of the record date for the Subsequent Rights Offering; and
(2) a
number determined by dividing the product of the Per Common Share Cost and:
| a) | where
the event giving rise to the application of this Section 3(b) was the issue of rights, options
or warrants to the holders of Common Shares under which such holders are entitled to subscribe
for or purchase additional Common Shares, the number of Common Shares so subscribed for or
purchased during the Rights Period; or |
| b) | where
the event giving rise to the application of this Section 3(b) was the issue of rights, options
or warrants to the holders of Common Shares under which such holders are entitled to subscribe
for or purchase securities exchangeable for or convertible into Common Shares, the number
of Common Shares for which those securities so subscribed for or purchased during the Rights
Period could have been exchanged or into which they could have been converted during the
Rights Period, by the Current Market Price of the Common Shares as of the record date for
the Subsequent Rights Offering; and |
| (B) | the
denominator of which is: |
(1)
in the case described Section 3(b)(ii)(A)(2)(I), the number of Common Shares outstanding; or
(2)
in the case described in Section 3(b)(ii)(A)(2)(II), the number of Common Shares that would be outstanding if all the Common Shares
described in subsection 3(b)(ii)(A)(2)(II) had been issued, as at the end of the Rights Period.
Any
Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British
Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
If
by the terms of the rights, options or warrants referred to in this Section 3(b), there is more than one purchase, conversion or exchange
price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or
the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment
on the basis of:
(I)
the lowest purchase, conversion or exchange price per Common Share, as the case may be, if such price is applicable to all Common Shares
which are subject to the rights, options or warrants, and
(II)
the average purchase, conversion or exchange price per Common Share, as the case may be, if the applicable price is determined by reference
to the number of Common Shares acquired.
To
the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(b) as a result of the fixing by the Company of
a record date for the distribution of rights, options or warrants referred to in this Section 3(b), the Exercise Price will be readjusted
immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based
upon the number of Common Shares actually issued and remaining issuable as a result of the event described in this Section 3(b) immediately
after such expiration, and will be further readjusted in such manner upon expiration of any further such right.
If
the Holder has exercised this Warrant in accordance herewith during the period beginning immediately after the record date for a Subsequent
Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Common Shares to which
it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the difference between (a)
the result obtained when the Exercise Price in effect immediately prior to the end of such Subsequent Rights Offering pursuant to this
subsection is multiplied by the number of Common Shares received upon the exercise of this Warrant during such period, and the resulting
product is divided by the Exercise Price as adjusted for such Subsequent Rights Offering pursuant to this subsection, and (b) the number
of Common Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 2(c)(v) will
be applicable to any fractional interest in a Common Share to which such Holder might otherwise be entitled. Such additional Common Shares
will be deemed to have been issued to the Holder immediately following the end of the Rights Period.
For
purposes of this Section 3(b) and of Section 3(c) the “Current Market Price” on any date, shall mean the price per
Common Share equal to the weighted average of the sale prices per Common Share at which the Common Shares have traded (i) on the Trading
Market, or (ii) if the Common Shares are not listed on the Trading Market, on such other stock exchange on which such shares are listed
as may be selected for such purpose by the board of directors of the Company, or (iii) if the Common Shares are not listed on any stock
exchange, then on the over-the-counter market, during the period of any five (5) consecutive Trading Days selected by the Company commencing
not earlier than twenty (20) Trading Days and ending no later than three (3) Trading Days before such date; provided, however, if
the Common Shares are not listed on any exchange or on the over- the counter market, the Current Market Price shall be as determined
by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors
of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale
price for any period shall be determined by dividing the aggregate sale prices per Common Share during such period by the total number
of Common Shares sold during such period, provided that “Current Market Price” shall be converted into United States
dollars using the applicable closing daily exchange rate published by the Bank of Canada on the Business Day before the day the Current
Market Price is calculated, and provided further, that if no such rate was published on such date, the next preceding closing daily exchange
rate published by the Bank of Canada be used.
c) Special Distributions. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding:
| i. | capital
stock of the Company of any class other than Common Shares; |
| ii. | rights,
options or warrants to acquire Common Shares or securities exchangeable for or convertible
into Common Shares (other than rights, options or warrants issued to the holders of all or
substantially all of the outstanding Common Shares pursuant to which such holders are entitled
to subscribe for or purchase Common Shares at a price per share (or in the case of securities
exchangeable for or convertible into Common Shares at an exchange or conversion price per
Common Share at the date of issue of such securities) of at least 95% of the Current Market
Price of the Common Shares on such record date); |
| iii. | indebtedness
of the Company; or |
| iv. | any
property or other assets of the Company, and if such issue or distribution does not constitute
(A) an action of the Company under clauses (ii), (iii) or (iv) of Section 3(a), or 3(b) a
Subsequent Rights Offering (any of such nonexcluded events being called a “Special
Distribution”),the Exercise Price will be adjusted effective immediately after
such record date to a price determined by multiplying the Exercise Price in effect on such
record date by a fraction: |
| (C) | the
numerator of which is the difference between: |
| 1. | the
product of the number of Common Shares outstanding on such record date and the Current Market
Price of the Common Shares on such record date; and |
| 2. | the
aggregate fair market value (as determined in good faith by action of the board of directors
of the Company, subject, however, to the prior written consent of the Trading Market or any
other stock exchange or market on which the Common Shares are traded, where required) to
the holders of the Common Shares of such securities, evidence of indebtedness or property
or other assets to be issued or distributed in the Special Distribution; and |
| (D) | the
denominator of which is the product obtained by multiplying the number of Common Shares outstanding
on such record date by the Current Market Price of the Common Shares on such record date. |
Any
Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British
Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
To
the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(c) as a result of the fixing by the Company of
a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or
convertible into Common Shares referred to in this Section 3(c), the Exercise Price will be readjusted immediately after the expiration
of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined
on the basis of the number of Common Shares actually issued and the number of Common Shares remaining issuable, as a result of the issue
or distribution referred to in this Section 3(c) immediately after such expiration, and will be further readjusted in such manner upon
the expiration of any further such right.
c)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company or any Subsidiary, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory
share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another
Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or more that 50%
of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation
in Section 2(d) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as
a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes
of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a fair and commercially reasonable manner reflecting the relative
value of any different components of the Alternate Consideration in accordance with standard valuation practices for transactions of
that type. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor
Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity
or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents
with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the
Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless
of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental
Transaction occurs prior to the Initial Exercise Date.
d)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall
be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.
e)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Shares, (B) the Company shall declare a special non-recurring cash dividend on or a redemption of the Common Shares, (C) the
Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with
any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash
or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of
the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall
appear upon the Warrant Register of the Company, at least 5 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice, and provided that no notice shall be required if the information is disseminated in a press release or document filed
with the Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company, the Company shall simultaneously file or furnish such notice with the Commission pursuant to a Current Report
on Form 8-K or a Report on Form 6-K, as applicable. The Holder shall remain entitled to exercise this Warrant during the period commencing
on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section
4. Transfer of Warrant.
a)
Transferability. Subject to compliance with all applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company
unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three
(3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new
Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a)
No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv),
in no event shall the Company be required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the
Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or share certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares
a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will
have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 2108 St. George Avenue Saskatoon, Saskatchewan S7M 0K7 Canada, Attention: Paul Sun, email
address: Paul.Sun@draganfly.com, or such other email address or address as the Company may specify for such purposes by notice to the
Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or
address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail
address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission,
if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to
be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company
or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Warrant Shares or as a shareholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on
the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
o)
Currency. All references to currency herein are to lawful money of Canada.
p)
Signature. The Warrant certificate may be signed by facsimile or other electronic means, which shall be deemed to be an original
and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
| |
draganfly
inc. |
| |
|
|
| |
By: |
/s/Denis
Silva |
| |
Name:
|
Denis
Silva |
| |
Title:
|
Director |
NOTICE
OF EXERCISE
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall be accepted in lawful money of Canada.
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________
Name
of Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
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(Please
Print) |
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| Address: |
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(Please
Print) |
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| Phone
Number: |
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| Email
Address: |
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| Dated:
_______________ __, ______ |
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| Holder’s
Signature: _______________________ |
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| Holder’s
Address: ________________________ |
|
Exhibit
99.2
PRE-FUNDED
COMMON SHARE PURCHASE WARRANT
Draganfly
Inc.
| Warrant
Shares: 1,200,000 |
|
Initial
Exercise Date: November 19, 2024 |
THIS
PRE-FUNDED COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Armistice
Capital Master Fund Ltd. or its assigns (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial
Exercise Date”) until this Warrant is exercised in full (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Draganfly Inc. a company incorporated under the Business
Corporations Act (British Columbia) (the “Company”), up to 1,200,000 Common Shares (as subject to adjustment
hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to
the Exercise Price, as defined in Section 2(b). This Warrant shall be issued in certificated form.
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares
are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding
date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed or quoted for trading
on a Trading Market and if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases,
the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders of a majority
in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by
the Company.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York or the City of
Vancouver, British Columbia, Canada are authorized or required by law to remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York and the City of Vancouver, British Columbia, Canada generally are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Shares” means the common shares of the Company, no par value per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common
Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration
Statement” means the Company’s registration statement on Form F-10 (File No. 333-258074), as amended, or such other replacement
registration statement on the applicable Form that has been declared effective by the Commission.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Shares are traded on the principal Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the
date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New
York Stock Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Endeavor Trust Corporation, the current transfer agent of the Company, with a mailing address of #702 777 Hornby
Street, Vancouver, BC, V6Z 1S4 Canada, and an email address of admin@endeavortrust.com, and any successor transfer agent of the Company.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date)
on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Shares are not then listed on a Trading Market and
if prices for the Common Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per Common Share so reported, or (c) in all other cases, the fair market value of a Common
Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Pre-Funded Warrant issued by the Company pursuant to the Registration
Statement.
Section
2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date, or by delivery to the Company of a duly executed
PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a Canadian bank or a
United States bank if such cashier’s check is denominated in Canadian dollars. No ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise
is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading
Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The aggregate exercise price of this Warrant, except for a nominal exercise price of CA$0.00014 (Canadian equivalent,
based on an exchange rate of CA$0.00014, to USD$0.0001) per Warrant Share, was pre-funded to the Company on or prior to the Initial Exercise
Date and, consequently, no additional consideration (other than the nominal exercise price of CA$0.00014 (Canadian equivalent of USD$0.0001)
per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall
not be entitled to the return or refund of all or any portion of such pre-paid aggregate exercise price under any circumstance or for
any reason whatsoever. The remaining unpaid exercise price per share of the Common Share under this Warrant shall be CA$0.00014 (Canadian
equivalent of USD$0.0001) subject to adjustment hereunder (the “Exercise Price”).
c)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by (A) crediting the account of the Holder’s or its designee’s balance account with The
Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and there is an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by the Holder or (B) by physical delivery of a certificate, registered in the Company’s share register in the name of the
Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company
of the Notice of Exercise, (ii) five (5) Trading Day after delivery of the aggregate Exercise Price (if applicable) to the Company and
(iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the completed and correct Notice of Exercise and
payment of the aggregate Exercise Price (if applicable), the Holder shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant
Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii) the
number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for
any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading
Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until
such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant
in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days (including no Trading Days if the settlement date is the
trade date), on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of
the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New
York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Underwriting Agreement,
the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date
and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(c)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y)
the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed. For example,
if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise
of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
d)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant
Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
Warrant Shares which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion
of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act
and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated
above shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(d), in determining the number of outstanding Common Shares, a Holder may rely on the number
of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with or furnished to
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company
shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the
number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding
Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior
to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issuance of
Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of Common Shares outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant
held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation
will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or
to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
a)
Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise
makes a distribution or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares
(which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common
Shares into a smaller number of shares, or (iv) issues by reclassification of the Common Shares any shares of capital stock of the Company,
then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding
treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares
outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the
Company fixes a record date for the issue of rights, options or warrants to the holders of all or substantially all of its outstanding
Common Shares under which such holders are entitled to subscribe for or purchase Common Shares or securities exchangeable for or convertible
into Common Shares, where:
| i. | the
right to subscribe for or purchase Common Shares or other securities expires not more than
45 days after the record date for such issue (the period from the record date to the date
of expiry being herein in this Section 3(b) called the “Rights Period”);
and |
| ii. | the
cost per Common Share during the Rights Period (inclusive of any cost of acquisition of securities
exchangeable for or convertible into Common Shares in addition to any direct cost of Common
Shares) (herein in this Section 2(the “Per Common Share Cost”) is less
than 95% of the Current Market Price of the Common Shares on the record date; |
(any
of such events being called a “Subsequent Rights Offering”), then the Exercise Price will be adjusted effective immediately
after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of
the Rights Period by a fraction:
| (A) | the
numerator of which is the aggregate of: |
(1) the
number of Common Shares outstanding as of the record date for the Subsequent Rights Offering; and
(2) a
number determined by dividing the product of the Per Common Share Cost and:
| (I) | where
the event giving rise to the application of this Section 3(b) was the issue of rights, options
or warrants to the holders of Common Shares under which such holders are entitled to subscribe
for or purchase additional Common Shares, the number of Common Shares so subscribed for or
purchased during the Rights Period; or |
| (II) | where
the event giving rise to the application of this Section 3(b) was the issue of rights, options
or warrants to the holders of Common Shares under which such holders are entitled to subscribe
for or purchase securities exchangeable for or convertible into Common Shares, the number
of Common Shares for which those securities so subscribed for or purchased during the Rights
Period could have been exchanged or into which they could have been converted during the
Rights Period, by the Current Market Price of the Common Shares as of the record date for
the Subsequent Rights Offering; and |
| (B) | the
denominator of which is: |
(1)
in the case described Section 3(b)(ii)(A)(2)(I), the number of Common Shares outstanding; or
(2)
in the case described in Section 3(b)(ii)(A)(2)(II), the number of Common Shares that would be outstanding if all the Common Shares
described in subsection 3(b)(ii)(A)(2)(II) had been issued, as at the end of the Rights Period.
Any
Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British
Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
If
by the terms of the rights, options or warrants referred to in this Section 3(b), there is more than one purchase, conversion or exchange
price per Common Share, the aggregate price of the total number of additional Common Shares offered for subscription or purchase, or
the aggregate conversion or exchange price of the convertible securities so offered, will be calculated for purposes of the adjustment
on the basis of:
(I)
the lowest purchase, conversion or exchange price per Common Share, as the case may be, if such price is applicable to all Common Shares
which are subject to the rights, options or warrants, and
(II)
the average purchase, conversion or exchange price per Common Share, as the case may be, if the applicable price is determined by reference
to the number of Common Shares acquired.
To
the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(b) as a result of the fixing by the Company of
a record date for the distribution of rights, options or warrants referred to in this Section 3(b), the Exercise Price will be readjusted
immediately after the expiration of any relevant exchange or conversion right to the Exercise Price that would then be in effect based
upon the number of Common Shares actually issued and remaining issuable as a result of the event described in this Section 3(b) immediately
after such expiration, and will be further readjusted in such manner upon expiration of any further such right.
If
the Holder has exercised this Warrant in accordance herewith during the period beginning immediately after the record date for a Subsequent
Rights Offering and ending on the last day of the Rights Period therefor, the Holder will, in addition to the Common Shares to which
it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the difference between (a)
the result obtained when the Exercise Price in effect immediately prior to the end of such Subsequent Rights Offering pursuant to this
subsection is multiplied by the number of Common Shares received upon the exercise of this Warrant during such period, and the resulting
product is divided by the Exercise Price as adjusted for such Subsequent Rights Offering pursuant to this subsection, and (b) the number
of Common Shares received upon the exercise of the Warrant during such period; provided that the provisions of Section 2(c)(v) will
be applicable to any fractional interest in a Common Share to which such Holder might otherwise be entitled. Such additional Common Shares
will be deemed to have been issued to the Holder immediately following the end of the Rights Period.
For
purposes of this Section 3(b) and of Section 3(c) the “Current Market Price” on any date, shall mean the price per
Common Share equal to the weighted average of the sale prices per Common Share at which the Common Shares have traded (i) on the Trading
Market, or (ii) if the Common Shares are not listed on the Trading Market, on such other stock exchange on which such shares are listed
as may be selected for such purpose by the board of directors of the Company, or (iii) if the Common Shares are not listed on any stock
exchange, then on the over-the-counter market, during the period of any five (5) consecutive Trading Days selected by the Company commencing
not earlier than twenty (20) Trading Days and ending no later than three (3) Trading Days before such date; provided, however, if
the Common Shares are not listed on any exchange or on the over- the counter market, the Current Market Price shall be as determined
by the board of directors of the Company, or such firm of independent chartered accountants as may be selected by the board of directors
of the Company, acting reasonably and in good faith in their sole discretion; for these purposes, the weighted average of the sale
price for any period shall be determined by dividing the aggregate sale prices per Common Share during such period by the total number
of Common Shares sold during such period, provided that “Current Market Price” shall be converted into United States
dollars using the applicable closing daily exchange rate published by the Bank of Canada on the Business Day before the day the Current
Market Price is calculated, and provided further, that if no such rate was published on such date, the next preceding closing daily exchange
rate published by the Bank of Canada be used.
c. Special Distributions. If and whenever at any time after the Initial Exercise Date and prior to the Termination Date, the Company fixes a record date for the issue or the distribution to the holders of all or substantially all of the outstanding:
| i. | capital
stock of the Company of any class other than Common Shares; |
| ii. | rights,
options or warrants to acquire Common Shares or securities exchangeable for or convertible
into Common Shares (other than rights, options or warrants issued to the holders of all or
substantially all of the outstanding Common Shares pursuant to which such holders are entitled
to subscribe for or purchase Common Shares at a price per share (or in the case of securities
exchangeable for or convertible into Common Shares at an exchange or conversion price per
Common Share at the date of issue of such securities) of at least 95% of the Current Market
Price of the Common Shares on such record date); |
| iii. | indebtedness
of the Company; or |
| iv. | any
property or other assets of the Company, and if such issue or distribution does not constitute
(A) an action of the Company under clauses (ii), (iii) or (iv) of Section 3(a), or 3(b) a
Subsequent Rights Offering (any of such nonexcluded events being called a “Special
Distribution”),the Exercise Price will be adjusted effective immediately after
such record date to a price determined by multiplying the Exercise Price in effect on such
record date by a fraction: |
| (A) | the
numerator of which is the difference between: |
| 1. | the
product of the number of Common Shares outstanding on such record date and the Current Market
Price of the Common Shares on such record date; and |
| 2. | the
aggregate fair market value (as determined in good faith by action of the board of directors
of the Company, subject, however, to the prior written consent of the Trading Market or any
other stock exchange or market on which the Common Shares are traded, where required) to
the holders of the Common Shares of such securities, evidence of indebtedness or property
or other assets to be issued or distributed in the Special Distribution; and |
| (B) | the
denominator of which is the product obtained by multiplying the number of Common Shares outstanding
on such record date by the Current Market Price of the Common Shares on such record date. |
Any
Common Shares owned by or held for the account of the Company or any subsidiary or affiliate (as defined in the Securities Act (British
Columbia)) of the Company will be deemed not to be outstanding for the purpose of any such computation.
To
the extent that any adjustment in the Exercise Price occurs pursuant to this Section 3(c) as a result of the fixing by the Company of
a record date for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exchangeable for or
convertible into Common Shares referred to in this Section 3(c), the Exercise Price will be readjusted immediately after the expiration
of any relevant exercise or conversion right to the amount that would then be in effect if the fair market value had been determined
on the basis of the number of Common Shares actually issued and the number of Common Shares remaining issuable, as a result of the issue
or distribution referred to in this Section 3(c) immediately after such expiration, and will be further readjusted in such manner upon
the expiration of any further such right.
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company or any Subsidiary, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory
share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another
Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or more that 50%
of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation
in Section 2(d) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as
a result of such Fundamental Transaction by a holder of the number of Warrant Shares for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes
of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a fair and commercially reasonable manner reflecting the relative
value of any different components of the Alternate Consideration in accordance with standard valuation practices for transactions of
that type. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor
Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity
or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents
with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the
Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless
of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a Fundamental
Transaction occurs prior to the Initial Exercise Date.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall
be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.
f)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Shares, (B) the Company shall declare a special non-recurring cash dividend on or a redemption of the Common Shares, (C) the
Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with
any reclassification of the Common Shares, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash
or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of
the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall
appear upon the Warrant Register of the Company, at least 5 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice, and provided that no notice shall be required if the information is disseminated in a press release or document filed
with the Commission. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company, the Company shall simultaneously file or furnish such notice with the Commission pursuant to a Current Report
on Form 8-K or a Report on Form 6-K, as applicable. The Holder shall remain entitled to exercise this Warrant during the period commencing
on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section
4. Transfer of Warrant.
a)
Transferability. Subject to compliance with all applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company
unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three
(3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new
Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a)
No Rights as Shareholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive cash payments pursuant to Section 2(c)(i) and Section 2(c)(iv),
in no event shall the Company be required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any share certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the
Company will make and deliver a new Warrant or share certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or share certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares
a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will
have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 2108 St. George Avenue Saskatoon, Saskatchewan S7M 0K7 Canada, Attention: Paul Sun, email
address: Paul.Sun@draganfly.com, or such other email address or address as the Company may specify for such purposes by notice to the
Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or
address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail
address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission,
if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to
be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company
or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Warrant Shares or as a shareholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on
the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
o)
Currency. All references to currency herein are to lawful money of Canada.
p)
Signature. The Warrant certificate may be signed by facsimile or other electronic means, which shall be deemed to be an original
and shall be deemed to have the same legal effect and validity as a certificate bearing an original signature.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
| |
draganfly
inc. |
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|
|
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By: |
/s/Denis
Silva |
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Name:
|
Denis
Silva |
| |
Title:
|
Director |
NOTICE
OF EXERCISE
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall be accepted in lawful money of Canada.
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________
Name
of Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
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(Please
Print) |
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| Address: |
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(Please
Print) |
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| Phone
Number: |
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| Email
Address: |
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| Dated:
_______________ __, ______ |
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| Holder’s
Signature: _______________________ |
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| Holder’s
Address: ________________________ |
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Draganfly (NASDAQ:DPRO)
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Draganfly (NASDAQ:DPRO)
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