Everyone wants to give us money and give everyone, so it's cool again. It's like to be a patriot — it's like, I don't know how that went uncool. $3 a share to over $12 a share. Teal Drones, which we bought for $14 million in 2021, and it's now worth about $700 million. The FPV drones are the most successful munition in Ukraine right now, more than HIMARS.
I am John Najarian, Rebel Extraordinaire today, and that has led us to today's Rebel's Extraordinaire with none other than the CEO of Red Cat Holdings. We talked about that several times over the past week. This is a company, folks, that is a drone manufacturer. So rather than listening to me or somebody else on TV or streaming talking about their expertise in drone capabilities, and whether or not what we're seeing in New Jersey is an alien attack, whether it is China setting up for a big attack, or whether it's the US running grid patterns and apparently looking for something — who better than a guy that has built a company from scratch in the drone space? And that somebody is Jeff Thompson. Jeff, great to have you on the show, sir.
Oh, just great. Thanks for having me. This is going to be fun.
Yeah, it should be. In full disclosure, folks, I live in Puerto Rico. Turns out Jeff lives in Puerto Rico and probably lived in Puerto Rico even longer than I have. And I would run into Jeff occasionally down at the harbor or some such thing. And if every time I saw him down there I would have bought shares of his stock, I'd be probably five times richer right now. Because, my gosh, Jeff, this is one of the top-performing stocks. Your stock has gone from just pennies to as high as, I think, $12.57 this year. I mean, it tripled from the end of October right up until the end of November. I think it went from $3 a share to over $12 a share, like I say, I think $12.50-something a share. So tremendous performance, and that was really before everybody spoke about drones every single day. And we've been doing that, of course, because of what's going on in New Jersey. So my first question to you, Jeff, is before I get into the genesis of the company — what the hell is going on in New Jersey with these thousands of drone sightings every day?
Yeah, I've been on national TV like three or four times this week, and it wouldn't happen because, you know, I got a face for radio. But it's not our adversaries, and if it is, that'd be great, because if it's China and they're waiting for nighttime and putting their lights on for proper FAA lighting, that's an enemy I want to go up against every single day. It's got to be something in the government, and they're not the size of small buses, because if they were the size of small buses they could not fly like an FPV drone or drone like we make for the military, because they have four propellers. It doesn't exist to be able to fly like that. So it is not the — and then everyone thinks a plane or everything else, they see a helicopter, is now a drone. And to get rid of the confusion, they're putting a ban in Jersey to get rid of all the hobbyists that are probably just getting up in the sky just trying to figure out who it is. And then everyone thinks they're aliens too. And then China actually responded yesterday — the CCP responded saying this is basically just to give more hysteria because the NDAA, National Defense Authorization Act, went through the Senate yesterday, going to the president's desk, which is probably going to put DJI and Autel — DJI's largest drone manufacturer that's sponsored by the CCP — putting them on the covered list, which is the same as Huawei. So they could be toast in the US market a year from now. So that was them trying to lobby to try to keep their drones here, but it's looking like they're gone finally — DJI and a lot of the things that they manufacture, because it's not just one thing, folks. They make a lot of gear, if you will, and drones. They're really known for making probably some of the easiest-to-fly hobbyist drones.
Now I'll jump back, if I can, Jeff — so how did you start in the drone business?
Very interesting. I had another company that I founded, took public, was in telecommunications. And one of my largest investors had a fund, and it was just as some of the hedge funds were starting to move to Puerto Rico for tax reasons. And he also wanted me to go look at a drone company, because Jeff Bezos on 60 Minutes back in, like, 2013, I think it was, said all packages are going to be delivered by drones. So all of a sudden drones were hot back then. That was drones 1.0, which everyone lost their shirt in. But anyway, they told me to go look at this company in Florida, which is now a pretty important company called GetFPV. It's the original FPV, which is these goofy goggles that we wear when we fly, so you see what the drone sees. But anyway, I was there for a couple days and they asked me to be the CEO, so I was like, no, I got a pretty good gig, and I bought some of the kits to actually make them. I went to school for electrical engineering, and that was in October of 2015. And in February, I asked my wife if she wanted to move to Puerto Rico and I was going to resign from this company and start from scratch again. And I don't know why she said yes, she's just as crazy as I am. Great weather, great island, I love it there. So yeah, that got me in there. And then I didn't know what I was going to do — I just wanted to do something in the drone world. I knew that from my last time I rolled up six regional players using a public vehicle and made a national play, you know, putting together six regional plays. So with all these very small, high-tech, great companies in this nascent technology, I was like, I need to roll up the best of the best with a public vehicle again. And that's what I've done. I actually bought five companies so far, and then I spun out two and they're doing great now, they're doing fantastic — called UMAC, just put Donald Trump Jr. on their board. I'm also a co-founder there too, but, you know, we sold those two off and we mothballed the hardware on one side. We wanted their remote piloting, which is very important for war. And we have Teal Drones, which we bought for $14 million in 2021, and it's now worth about $700 million. And we recently bought a company called FlightWave, which is very undervalued right now. The demand from the military, DOD, all the three-letter agencies for the FlightWave Edge 130 has gone through the roof since we closed a month ago. So we have these two really unique birds, we call them in the industry. The Edge 130 does stuff no other bird can do — it's a fixed-wing, that's how it has the longest flight time when the government approved, called Blue UAS. But it also can hover. Again, it's not us above New Jersey with this UFO thing. But yeah, we have two great drones, and we have another system that we're actually getting from UMAC, they're building it for us, called Fang. So we got Fang, we got the Black Widow, which just won a massive contract with the Army, and then we have the Edge 130, but we're switching the name to the Tarantula to fit into the spider world. So that's — we call that our family of systems. But I did it mostly from acquisition. But now Teal has been mostly growing organically for the last three years.
Sort of like Hewlett-Packard — you actually started some of this in a garage right here in the southern part of Puerto Rico, right?
Yes. I was sitting in — well, I went to look at a bunch of different houses and a lot of different neighborhoods, like everyone does that's moving to Puerto Rico. And one of the locations I looked at down there in Palmas had an air conditioner in the garage. I was like, this is it, this is the one I want. It's hot here, I'm going to be in this garage, you know, 12 hours a day, I need air conditioning. And started it there, met a bunch of the local pilots that were racing pilots. You know, my first employee I just got off the phone with a few minutes ago. He just landed. He's flying all over the world. He's a really great pilot. He works for the biz dev team, demos to ministries of defense, events all over the place. And because he speaks Spanish, he just took over all of Latin American sales. So yeah, we've got to build a company from scratch right out of Puerto Rico, to the NASDAQ.
I'd be remiss if I didn't mention one of our — I mean, the guy handling the duties today is Jared Winkelman. Jared is fantastic. He is a producer, videographer over at Market Rebellion. And a gentleman that handles an awful lot of the social media and other posts is Andrew Coffey. And Andrew Coffey is the guy that really turned me on to Red Cat Holdings and to what you guys were doing. Because he said, John, these guys got the best pilots on Earth. And Andrew is an avid hobbyist and has had several iterations of drones. And so a lot of us, of course, are used to seeing people flying drones with, you know, their iPhone, where the software goes on here and they can see, of course, through the camera that's on the drone. It's basically streaming to their iPhone so they can see it like that. And then the next level up is where you've been, and that is, you know, you put on that array of goggles and you're literally — it's like you're at the wheel of that thing and you're just flying. I couldn't believe what these drones could do. I mean, the very tiny spaces with, like, just inches on either side and the drone could go right through there and so forth. So maybe tell us a little bit about that, because obviously that's something that the hobbyists would envy, but not a lot of hobbyists have that kind of tech. That's an awful lot of A, the skill of the pilot, and B, perhaps a slightly different drone itself for the military.
Yeah, so no one knew about FPV just two years ago. There's been maybe a million FPV drones made in the history of FPV. In the early, you know, 2013 or so. And then as LiPo batteries became even more important and made you be able to fly longer and the performance — and so you basically build these things called first-person-view drones. They're very basic. They just basically have a computer that tells the electronic speed controllers, really simply, for propellers, which direction to spin and how fast. But when you see these pilots in person going 70, 80 miles an hour, doing stuff that no one else can do — and naturally, as you know, things progressed, the war broke out in Ukraine and they didn't have drones. They said, wow, we could probably use these FPV drones, and all of a sudden they become one of the most — actually, FPV drones are the most successful munition in Ukraine right now, more than HIMARS, more than Javelins. I mean, this thing that costs $1,000 — and I was there last year and got to do a little ride-along on one of the test facilities. And you have to see how they use these things, wow. It takes them about 10 days to train these guys, and they go right to the front, and they're doing things with thousand-dollar drones that you can't believe. They're fast, and you can go five feet off the ground and go 70 miles an hour. By — if you're the enemy, by the time you hear that coming, it's too late. So now we've got — you know, Eric Schmidt from Google went there a bunch of times to see these FPV drones. Now he wants an FPV company, I think he is — like a White Ghost or something, I forget what it is. But now everyone knows what FPV is because of the Ukraine war. And now the actual Department of Defense is building a program, which is going to be a traditional program of record for FPV drones. And I think our sister company UMAC will do very well from that, because that's — they've been in that business. They basically — Allen and the co-founder of Fat Shark that made these, they basically invented FPV. They tell me never to say that, but no one else built a real goggle that was reliable and built in the tens of thousands every year. So no one knows FPV better than UMAC, Unusual Machines. So it's going to be great times. But the drone industry is now realizing that you don't need exquisite $33 million Reapers. You're going to use smaller drones that are portable.
And with that, like the Black Widow, which you just launched in September, and that's the drone that we built for the US Army — we've been, for five and a half years, we've been trying to win a program of record, started with like 30-something companies that included all the big guys, the big primes, AeroVironment, Boeing, Lockheed. Went from 30-something companies down to five, then from five down to three — it was us, Vantage Robotics, and Skydio. Skydio is very well backed from Andreessen Horowitz. And then down to two, and then we had our final prototype deliveries in May, and we were sole-source selected for 12,000 drones, 6,000 systems. Each system is two drones and one controller, but it has to fit in a rucksack. And when you look at what this drone can do, you can fit it in your rucksack, so every soldier on a battlefield can launch a drone, go around, look, do reconnaissance. It also has kinetic capability — I can drop that kinetic and keep the drone, or if I see a $4 million tank and want to get rid of my $177,000 drone, that's a great statistical win. You can just kill that target very easily, or if you see people carriers, mortars — you have air support by yourself. You don't have to call on air support and have that capability.
And more recently, just this week, we announced our combination with Palantir. So that same drone that we can fit in our rucksack has artificial intelligence — the best in the market. I mean, they're actually making revenue off of AI, a lot of companies aren't. But in that small drone, we have artificial intelligence. And when you're in Ukraine or any battlefield, GPS doesn't work, so a lot of drones can't go to the battlefield because they're useless. So we also are partnering with them for their software called visual navigation, VNav. So no GPS required — it relies on the cameras to drive the drone on a battlefield when GPS is being jammed. So it's kind of like a Tesla, they use cameras.
That was one of my questions. In fact, this Palantir partnership, if you will, seemed like that was pretty groundbreaking. Because AI for navigation, for all the reasons that you just mentioned, Jeff, seems like a game-changer. And the fact that Palantir picked you guys to do this with — I'm sure Mr. Schmidt, you know, the former Google guy, is probably surprised that they decided to throw in with you. But then again, you've got 12,000 of these that are going to be in the field, and he's just starting to get into the field.
Yeah, so when you have — the way AI has to work is they have to have lots of cameras and sensors, and all that data becomes what teaches the AI further and further and further. And they've been doing it for 20 years for the military with their AI. It's called MAVIN. So believe it or not, the drone that we have in our rucksacks now is more capable than the drones that cost tens of millions of dollars. But with this technology on there, it's even tenfold of what we can do. And those sensors, the cameras — payload, they call it, that's military-speak for camera — it's actually the largest buy from the DOD for a drone in quantity, not in dollars. So we're going to have the most cameras and the most sensors out on the battlefield. So for Palantir to want to choose us — that's probably a big, big reason. I'm just happy they're working with us. They're a great company. We align with their culture quite a bit, and they're really fun to work with, and they get done — like, it drives them hard.
Yeah, it's kind of — drives them hard. But that's another Peter Thiel, Elon Musk company, right? As far as those guys, I don't know if Musk is in there. You got John Lonsdale and a lot of smart guys in there that are also patriots. It's good to see that these days. They kind of started all that, and then Anduril came in, and then all of a sudden no VC would touch a defense company. Now they're all drooling over everybody, and everyone wants to give us money.
