Q1 FY27 highlights: Boresight builds inventory and US capacity after IPO
In its Q1 FY27 quarterly report, Boresight (ASX: BST) recorded cash of A$5.39 million with no debt at 30 September 2026. The aerial target drones company used the quarter to execute the strategy set out at its IPO, including inventory, US facility and team expansion.
Revenue was ~$829k (unaudited), which the company said reflects lower deliveries in the quarter, consistent with the lumpy timing of defence procurement. Boresight built A$1.45m of inventory (unaudited) ahead of anticipated demand.
Against the 55% FY26 revenue growth reported in the debut quarterly, a quarter of lower deliveries looks more like timing than trend, particularly with deferred revenue providing a running start to FY27.
Net operating cash outflow was A$2.28 million, compared with A$0.90 million in Q4 FY26. The company attributed this to lower receipts ahead of payment for the North American order, plus purchases of long-lead electronics and components.
Justin Olde, Managing Director & Chief Executive Officer
“Our first Quarter of FY27 has been one of building and preparation for scaling…”
Spending was therefore weighted to manufacturing ahead of the US$383,275 order, with delivery and payment expected in Q2 FY27.
When big ASX news breaks, our subscribers know first
Operational performance: Huntsville move and US order
Larger Huntsville, Alabama facility
Boresight signed a lease for an 812 sqm manufacturing facility in Huntsville, Alabama, approximately 15 times the size of its previous US premises. The lease is on normal commercial terms for an initial three-year term, with extension options.
The move is complete and production has commenced. Construction is under way to expand the production area, and the initial fit out will be capable of producing more than 5,000 BQ-400 aerial target drones per year. The Alabama facility is expected to become capable of high volumes by the end of Q2 FY27.
The company invested ~A$136K in its US manufacturing expansion during the quarter, including A$59K in additional 3D printing and supporting equipment.
Customers and contracts
- North American military order: Boresight U.S., Inc. received a purchase order of US$383,275 (approximately A$532,000) from Mountain Horse Solutions LLC, the company’s in-country reseller. The end customer is the US National Training Centre at Fort Irwin in California.
- Order scope: The order is approximately three times the value of that end user’s previous order. It comprises more than 340 swarming-capable BQ-400 aerial target drones, multiple Ground Control Stations and an Operator Training Course.
- Australian Defence Force: Boresight delivered 120 BQ-400s to support Counter-UAS training in Army units, and continues ongoing support to Project LAND 156.
- Lockheed Martin: Boresight became a registered supplier through the Exostar Supplier Management Portal, in anticipation of supporting Lockheed Martin international Counter-UAS test and development activities in future.
Mr Olde described the order as the company’s “largest ever US order” and the third from the National Training Centre.
Products and pipeline
The BQ-750 Block 2 was released to market on 6 July 2026, offering 35+ minutes flight time and 2.5 km+ range. First orders have been delivered.
Initial, low rate production of the BF-100 fixed wing drone commenced late in the quarter. One US demonstration has been completed, and another is planned for Europe in late October 2026.
Supply chain constraints delayed production of the BS-350 ISR drone, with initial deliveries now scheduled to begin in November 2026 and continue into Q4 FY27.
The company’s product roadmap includes:
- BQ-300/350: initial systems to be released to market in Q3 FY27 after a pause in development.
- BF-150 Group 1 fixed-wing target: development expected to be complete by the end of Q4 FY27.
What are aerial target drones, and why does inventory matter?
Aerial target drones are low-cost, expendable drones that act as realistic threats, allowing militaries to train with and test counter-drone systems.
Boresight previously used a “build to order” production model. The company described this as a cashflow imposed constraint that slowed deliveries and occasionally resulted in lost orders.
In the quarter it transitioned to a “build to inventory” model, holding high volume products and supply chain components. Holding stock is intended to let the company respond to customers and speed up deliveries.
Defence procurement timing is uneven, as the revenue result shows. Inventory is the company’s stated approach to meeting demand when orders arrive. The 6,300th BQ-400 unit was manufactured and delivered during the quarter.
Cash position and use of funds
The Appendix 4C items below show where cash went during the quarter.
| Item | Q1 FY27 |
|---|---|
| Receipts from customers | A$1.1m (Q4 FY26: A$2.04m) |
| Product manufacturing and operating costs | A$1.43m (of which A$963K stock and long-lead components) |
| Net cash used in operating activities | A$2.28m |
| Property, plant and equipment | A$100K |
| Cash and cash equivalents at end of quarter | A$5.39m |
Cash decreased by $2.5 million to A$5.39 million. Item 8.5 of the Appendix 4C shows an estimated 2.4 quarters of funding available.
The table below compares actual expenditure from admission on 10 June 2026 to 30 September 2026 against the Replacement Prospectus use-of-funds statement.
| Use of funds (per Prospectus) | Prospectus allocation | Actual spend, 10 June to 30 September 2026 |
|---|---|---|
| Development and manufacturing | $3,250,000 | $555,208 |
| Purchase of stock to fulfil orders | $950,000 | $1,128,581 |
| Sales, marketing and business development | $250,000 | $438,259 |
| Grow engineering pool | $880,000 | $172,026 |
| General administration and working capital | $2,166,369 | $332,284 |
| Directors’ fees and ASX fees | $600,000 | $202,923 |
| Costs of the public offer | $846,195 | $832,634 |
| Total | $8,942,564 | $3,661,915 |
Stock purchases and sales, marketing and business development spending exceeded their allocations. Stock purchases were brought forward to build inventory ahead of customer demand, while sales and marketing spend includes salaries from business development hires in Australia and the US. As contemplated by the Prospectus, the Board applied funds allocated to general administration and working capital to these items.
Item 6.1 disclosed A$130,000 paid to related parties, comprising directors’ fees and remuneration. The company also issued 11,000,000 unlisted options under its Employee Securities Incentive Plan, exercisable at $0.25 each, with no effect on cash flows for the quarter.
Key hires were a Production Manager (USA), a Director of Business Development (USA), a Director of Global Brand and Marketing (USA-based) and a Supply Chain & Procurement Manager (Australia).
Q2 FY27 priorities
Boresight’s stated priorities for Q2 FY27 include:
- Delivering the North American military order, which is expected to be completed in Q2 FY27.
- Completing construction of the high-volume Huntsville facility, which will be operational by the end of Q2 FY27.
- Supplying BQ-750 Block 2 aerial target drones for a major international counter-UAS activity, expected later in Q2 FY27.
- Completing the design for manufacturing engineering of the BF-100 and commencing full rate production.
The company also prepared demonstrations for a NATO event in Europe, and its UK sales office prepared to support Ministry of Defence trials of the BQ400 and BQ750 in October. Future sales are anticipated following the UK trials.
Payment for the US$383,275 order is expected in Q2 FY27, the key cash milestone following a quarter of front-loaded spending.
Want to See How Boresight Is Scaling Its Aerial Target Drone Business?
Boresight is building inventory and expanding into a larger Huntsville facility, with a record US$383,275 North American order due for delivery and payment in Q2 FY27. The company is positioning its BQ-400 and BQ-750 drone platforms to capture growing demand for Counter-UAS training.
Discover the full product range, defence customers and growth strategy by visiting the Boresight website. Explore how the company plans to commercialise its pipeline of next-generation aerial target drones.