Welcome to Alpha Wolf Capital, I'm Tim. And I want to personally thank you for stopping by. This channel is designed to help small companies both public and private gain exposure with potential consumers, investors, even partners. Take for example today's guest, CEO Jeff Thompson of Red Cat Holdings. Red Cat is a drone technology company integrating robotic hardware and software for military, government, commercial operations through two wholly owned subsidiaries, Teal Drones and Flightwave Aerospace. Red Cat has developed a leading-edge family of ISR precision strike systems including the Teal 2 small unmanned system offerings, the highest resolution thermal imaging in its class, the Edge 130 blue tricopter for extended endurance and range, and the Fang, the industry's first line of NDAA-compliant FPV drones. And of course, the Black Widow, which recently was awarded the SRR contract. But I'll let Jeff tell you more about that in just a moment. This is not to be taken as investment advice. I am not a certified financial planner. This is for education and entertainment purposes only. I encourage everyone to do their own due diligence.
Hey everybody, Tim from Alpha Wolf Capital. Happy New Year everyone. Jeff Thompson here, starting off the year on the right foot.
Jeff, it's been an exciting end of '24, right? You got a lot of speculation out there in the marketplace, a lot of, I think, misinformation being kind of tossed around. I think one of the first things that I want to address is that you filed to sell some shares. And just so everybody is really clear, Jeff, I think you're the largest shareholder in the company. Is that accurate?
Yeah, yeah. Actually, my net of last week, I was up 990,000 shares from where I was two weeks ago. So I did sell 500,000 shares. I've been in a blackout window for 14, 18 months, no liquidity for eight years. So I just took a tiny bit off the table, but I also exercised some shares at $3.95 and ended up with 90,000 more shares that I started that week with. And then I did a Rule 144, which this was the hard part. I wouldn't even sold the 500,000 shares, but to get a company to lend or do, let you loan against your own shares when we were micro-cap just a few months ago and we're still small-cap and we're very volatile, so to get someone to do that, it took a while. So I had to file a 144 for 1.5 million shares. I'm not selling them; those are just so I can if I want access to my money, I can borrow it against myself and don't have to sell. And frankly, if I had that, it takes a long time, I would have just done that instead of selling any. But right now, and then we've got other members on the team that haven't had a chance to get any liquidity. You got people that are leaving; they're going to sell, and the only window they have because then they're locked out for 90 days as an affiliate still. So but now everyone's locked up again until August. So there's not going to be any insider trading whatsoever from any of the crew or any of the employees because the employees basically go with the management's blackout windows because we work on so much stuff so closely, whether we're buying companies or integrating companies. So they pretty much know everything management knows when we're doing deals and stuff like that. So anyhow, all that housekeeping, all the first chance of liquidity for some people for years, like myself, is over with. The stock held up; everyone realizes it wasn't a big part of my position. So yeah, we're onwards and upwards, like you said, it's the beginning of January 2025. You know, we're finally on a calendar year, which is exciting, and we're looking to come out of Q1 hot out of the box, baby. It's going to be a great Q1.
All right, so you know, I'm thinking about some of the questions that I've been getting hit with. So you've got what's the other division with the ones that goes through the gas pipes? What is it called again?
Skyper Sonic? Yeah, yeah, I get everybody busted me about Skyper Sonic. Is this division just dead or what's the deal? Well, actually, what we got from Skyper Sonic, we mothballed the piece of hardware, but we got some great patents and some great remote software that we've been, which is something that we did keep. I kind of use this example: you've got, I think it's the WAM-32 whatever it is that Ocean Power Technologies, that boat that they make at OPTT. You put a Starlink on that, you throw a Sentry Hive on top of it with our drones, and then you throw some torpedoes from our friends on BAE underneath, and you launch that thing 200 miles into the country in, you know, in the Taiwan Strait. You got a very lethal device there. And we can use that remote software that we got from Skyper Sonic. That's probably the best thing we got out of Skyper Sonic, was that remote software capability.
Okay, all right. So you're not focusing right now; your whole focus is the warfighter. So if anybody, right? I mean, that's where you're at.
I don't give a damn about going to gas lines. And that's a tiny business; you do it like every six months, you get paid to do something like that. And I mean, I don't see the real business there compared to what we're doing with the warfighter.
Okay, all right. The next question is everybody wants to know about Fang. Is that something that's just, again, you guys are working on it, right? I mean, UMAC is working on that for you guys, correct?
Yeah, well, we got a lot of stuff that's working on that, but UMAC is going to be our primary. So but there are a lot of requirements being written. There's some really smart guys that are putting that together for the Army right now. So we're hoping it becomes a program of record. But you know, Fang is going to be something we probably sell a lot of this year, but it still needs high numbers to make any to matter really to move the scale. But it's also something that the warfighter wants. So if the warfighter wants it, we're going to make it. So you've got OverWatch with the Edge 130 that can go over an hour. We got the Black Widow which has lethal and strike capabilities but also fits in your rucksack, also has GPS, you know, visual navigation with Palantir and artificial intelligence. And we're going to be putting that on the Edge next. And then we, you know, then Fang is basically put that thing in the air and launch a kamikaze drone and go get a target. So the Black Widow, that has, you can attach kinetics to Black Widow, right? That's not the primary focus of Black Widow. Well, I mean, one key item, when you know, General Funk is on our board and I've said this a few times out there, is you got to have strike capabilities. If you see something you want to kill something, you got to, you can't like turn around and say okay let's go back and try to figure out where that object is. So you can do kamikaze with the Black Widow or you can do a drop.
Okay, got it, got it. So we've got one contract, you and I have talked about this several times. You've been talking to NATO countries for a while now. You're on two years now on some of them, right? It's your program of record, which is just like getting really a stamp of approval, really. So I have to believe that, I mean, I don't know how there's got to be, you got to be closer to potential orders now than you were before. Does that make sense?
Yeah, no, absolutely. And as I mentioned, we had a few of these NATO countries tell us to our face that at AUSA in DC in September, we're waiting to see if you guys win SRR. So you know, that didn't get announced till right, you know, November. So the second we had that piece of paper in our hand, we went right back to all of them, which is good. And then it became the holidays and, you know, how they are in Europe, they actually take their vacations. And I'm sure they'll all be getting back to their desk at the crack of 11:00 a.m. on Wednesday of next week or so. Well, we're all working already now, I'm just kidding. But yeah, so we're hoping to hear something soon on the NATO contracts. We have got a million demos with the Black Widow scheduling starting as soon as next week. We are trying to figure out how to fit in every demo that everybody wants with the Black Widow right now, and it's going to have to have more teams and get more units out there because we basically don't have enough time in the day to do Black Widow demos right now.
All right, I'm going to assume that your primary focus is manufacturing, getting able to produce the units that you've got orders for right now, right?
Yeah, we literally shut down our only revenue stream, the Teal 2, to focus on that the second half of 2024. That's going to pay off in huge amounts. It was the right decision to make. So yeah, we are ready to scale Black Widow. We're going to be scaling the Edge 130 second half of the year. We're hoping to have it as a trike with the new radio and the EW capability and putting visual nav on there and putting the artificial intelligence on there. So you know, we're ramping the Edge 130 from scratch from a prototype shop to an actual factory that we're just moving into now.
Okay, and that's the one in Long Beach, right? Yeah, okay. This stuff, I've seen you on a couple of different shows with the strong stuff that's happening in Jersey and now Texas. I mean, I thought your take on it was very interesting, right? I mean, why would you put the lighting on there that's required for flying if you were the bad guy, right?
Yeah, and you know, it got to a point where there's a lot of great memes on X, but you know, there's a helicopter drone, airplane drone, you know, anything you saw in the sky drone, star drone. So it got to a little bit of a hysteria, but it's, you know, it got the world thinking about drones and what they can do, good and bad. And you know, that's good for the world to know. Are you concerned about, I mean, you know, I'm hearing some of these things that the thing's hovering, it's in, you know, for four hours in the same spot, and they're pretty decent size, or they're saying they're fairly big. There's no way; they're half the size of a small bus. There's nothing that could fly like that. And if it's the size of a small bus, someone would have got a drone up there next to it and taken a detailed picture of it. I think that it's, you know, it's kind of like the distance of six feet. Someone just said it once and they all thought it was real, so everyone thought that was real. So you know, someone said small bus and it just went crazy. There was no small bus size drones up there, no way. I don't believe it. That's my opinion, that's my personal. Until you see it, you're not fine.
I hear you. All right, what else you got, Jeff? Anything anybody's hammering you on?
