• DRO granted unlisted performance options to directors and employees
• Options vested when revenue/cash receipts target of A$200m was met
• Directors exercised and sold shares to meet tax liabilities
• DRO was not aware of directors' sale plans until after market close

DroneShield Limited (DRO) refers to an ASX letter dated 13 November 2025 and provides responses to the questions raised. DRO had previously granted unlisted performance options over ordinary shares to certain directors, senior managers and other employees, which vested upon DRO achieving a revenue or cash receipts target of A$200 million in any rolling 12-month period. The exercise of these performance options by the three directors resulted in the disposal of their entire ordinary shareholding in DRO. DRO was not aware of the decision to dispose or the actual disposal of DRO shares by the three directors until after the market closed on 12 November 2025. DRO believes it has fully complied with its disclosure obligations regarding the director sales and the market is fully informed about those sales. The three directors were in substantial compliance with the approvals process under DRO's Trading Policy, although the notification to DRO was made within five business days rather than two as required. DRO considers that section 5.4 of the Trading Policy was enlivened, but confirms that at the time it was considered on 1 November 2025, the relevant directors had not made a final decision on the disposal of shares or the parameters that would apply. DRO was not aware of the directors' intention to dispose of securities at the time it issued the Cleansing Notice. DRO intends to engage external advisers to undertake a review of its Securities Trading Policy and Continuous Disclosure Policy, and make determinations as to appropriate actions.