ASX-listed defense technology company Droneshield has been picked to join a Defense Department panel that it hopes will be signed on some top-secret government contracts.

The Standing Offer of Intelligence, Surveillance, Reconnaissance and Electronic Warfare (ISREW) urges companies to test and develop mission support systems directly with Defense, opening up the opportunity to work on projects that have not been openly tendered.

The announcement is another much-needed positive news for Droneshield after the release of its semi-annual report early last week, which painted a grim picture of its finances.

In the first six months of 2022, Droneshield revenues fell 45 percent to $3.6 million, while losses rose nearly 1,000 percent to $4.9 million.

The company posted a loss of $1.17 per share, up 12c per share over the same period last year.

Droneshield’s stock price closed at 17c on Wednesday, giving the company a market cap of $71 million.

Earlier this month, Droneshield was awarded a $2 million European government contract for its permanent site Dronesentry product – a small mobile tower that uses AI to detect and respond to autonomous unmanned systems such as quadcopter drones.

Droneshield CEO Oleg Vornik said this is the company’s largest European contract to date, highlighting the growing need for products that can target drones.

“This order continues our progress from advancing the technology, toward smaller sales, to iterate smaller size, to fulfill larger contracts,” Vornik said in a statement.

“There is a substantial sales pipeline in the near term and we are excited to turn it into contracts.”

Vornik’s company hopes that a continued move toward a software-as-a-service (SaaS) product model, which includes a machine vision model to detect small, hard-to-see drones in real time, will yield greater returns than the hardware offering.

One of Droneshield’s most recognizable hardware products is the futuristic-looking Droneguns that can disrupt a drone’s radio signals, causing it to fly back to the operator or attempt a safe landing, and interrupt video streams.

The need for portable and fixed anti-drone solutions became apparent in late August when video emerged of Taiwanese soldiers throwing rocks at a Chinese drone who flew casually to their sentry.

Where China’s threat to invade Taiwan and the ongoing war in Ukraine may upset civilians, geopolitical uncertainty is making defense contractors like Droneshield lick their lips.

One of the company’s “key highlights” in its semi-annual report was what it described as a “very favorable macro environment for DroneShield due to increased macroeconomic uncertainties.” [with] war in Ukraine, with extensive use of small drones on both sides, and rapidly increasing defense budgets worldwide, including by the Australian government.”

Droneshield estimates that the contradrone market is now worth about $14 billion.