Red Cat Well Capatilized and Multi Domain Driven ($RCAT Impact Stock)

Everything. We're all over the globe right now. We're split. We got people at Rep. I'm leaving and going to meet some really important parts of the Army to do some flying tomorrow and Friday. We've been at a whole bunch of different events for different parts of our business. Now that we're truly multi-domain, we have weapon systems for our boats, and now we add our swarms, and there's just so much going on right now. It's sweep week, and everyone's pretty darn busy.

Uh, $172 million with the shoe.

No, we had, uh, it was less than half a day. We had almost 500 million in demand. We basically don't even have to do real road shows right now. There's so much demand, but it was a public offering. So we had to do the after-hours pitch to a bunch of folks, but we literally had almost 500 million in demand. We were just going out to raise about 100. A lot of it's pointed at Blue Ops. We're building a pretty massive factory down in Georgia, 155,000 square feet. We just moved in September 1, but we had so much demand when we were trying to raise 100 that we were able to push it up to 130 million and push the price up. And then we pushed the price up one more time to get 150 million, and we stuck there. And we could have taken it, you know, almost a half a billion dollars, but we feel like we're very fully financed with over 200 million in the bank right now. Huge amount of demand, which is great because the stock reacted great since we did the offering. Although all those people that got cut back are probably buying in the open market, which is great. We got some great institutions. It's great having our institutional investor base grow dramatically. It's one of the reasons that we switched to KPMG, a top four. Our banking relationships are growing dramatically with some of the best in the world, if not the best. And everything's just going in the right direction in the drone space, not just for Redcat, for a lot of companies. But we need lots of drones. We need lots of boats. We need drones and boats combined, missiles combined. Basically, we need to supply some missile systems—I mean, weapon systems—to the warfighter.

I don't think about them one second of any day.

I don't want to give him any more time on this either.

I forget the exact date he told us, but it was right around then. But yeah, that's all public information. You can go look that up. Yeah.

And again, that's all online. That's another thing that, you know, we got to protect our company, and we will. But we're moving forward, not backwards.

You're doing all the salacious stuff first here. Let's get back into building stuff.

They do mine detection, which is pretty impressive stuff. They've been doing a lot of work in Ukraine. And we're starting to do a lot more stuff over there ourselves. I think it's a great technology. We're trying to integrate it right now. They've already integrated some of it on the Teal 2 and demonstrated it. So it'll be an option for our customers if they want that. They'll be able to select that.

Everyone always says this, and it's in the reverse, you know. So, like I said, if we produce 500 Black Widows—just Black Widows, we won't even talk about Blue Ops yet, or FlightWave—a month out of the factory, which is very easily done, it's like 18 million a month. And doing 1,000, which is also easy for us, that's only 50 a day. That gives you like almost 37 million in revenue a month. And our goals are to—we can build up to 5,000 a month if we want to. I mean, we actually did this fire drill for—you know, one group from the Department of War came to us randomly, and I think I mentioned this on one of our calls—and asked us how many Black Widows can we produce. Quick fire drill, we need to know by tomorrow. So we presented it to them, and I think the number was about 5,000 a month starting in January. And if you want more, we can do more. It's all just—we have to have our supply chain paid for upfront to do that. We just need some warning. So those numbers are not daunting to us at all. And demand is massive. And then two days later, the whole Hegseth video for drone dominance came out. So we kind of understood finally what that fire drill was all about.

Yeah, up and down. I'll be very frank. It's very similar to when we took over the Golden Eagle. Golden Eagle needed a lot of work, and we came up with the Teal 2, which was a pretty good bird. Actually, now it's a really good bird, and we're probably going to keep producing it because we have people still wanting it. But FlightWave is in that same stage. When it's flying and it's in the air, it's beautiful. It's got great flight time. It just needs some work on the gimbal and the payload. We want to put a much better camera on there. So we're probably going to just try to get as much of the backlog taken out of the way, and then really focus on getting the next version, which is the Triken. It'll be a little bit more hardened. It'll have EW radios in there with Doodle Labs probably. And it'll have a much better gimbal system and a much better camera. So that bird will be a blockbuster. But, you know, we are taking over a company that we just bought last year, at the end of last year. And when you're making onesie-twosies, you don't really find out the production hiccups that you can have making something, to be able to be mass-produced. And Sean Webb's identifying all that stuff. He did the same thing with the Switchblade 600 at AeroVironment. So he's kind of doing the same thing here. But I think the FlightWave bird for early next year is going to be a very difficult drone to beat for what it does.

We're going to have five or six different versions of it. I was just at the factory last week doing the prototypes up at Hodgdon Yachts. I mean, they make some of the most sophisticated boats for some of the most sophisticated people in the world. If you want a very sophisticated tender for your 400-foot yacht, you come to these guys. And for them to bring the seaworthiness they're going to bring to the table, the change in the hull design—I mean, these are one of the best boat builders in the world. And we got to go see the Hinckley factory too, to see a mass production line, which was very exciting. Actually, let me back up a little bit. Sandy Spalding, our vice president of Blue Ops, showed me—well, let me back up even further. So Sandy was at Bain Capital, I don't know if it's 25 years ago now, and they bought Hinckley Yachts. And when they bought Hinckley Yachts, they put him in charge. So when he got there, he's like, the boat stayed in one spot and different teams came and put different stuff on it. Carpentry, upholstery, and eventually you had a beautiful Hinckley yacht. He said that's it—no, that's not how we're going to do it. He showed me where there were no buildings before he got there. He built a brand new factory from the ground up. No buildings existed. And I got to see the factory that he built 20-odd years ago. And they get on cradles and they go through this production line, and they spit out a beautiful yacht at the other end. He did that from scratch. He's the one that found the factory in Georgia that was making 850 boats a year last year. It was—I think it was Regal. But anyway, they moved to Orlando to consolidate, and we're taking over that factory. And we think we can produce more than 850 of our versions. There's no upholstery, there's no bathrooms, there's no plumbing. And the carpentry room they had can be turned into more factory space just to build boats, the upholstery and all the other stuff. So we'll have a lot more capability than just 850 boats in Georgia. And we're hoping our first hulls come online in January out of that factory. But we'll have 10 boats coming out—five out of our prototype shop and five from our partner that built the tech stack—that'll be basically getting driven around all over the United States doing demos at the end of this quarter.

Yeah, we're very well capitalized now. And, you know, the team that we brought in to do this—they're going to get mad when I say this—but they are like swamp Yankee cheap. They will make sure that this thing gets profitable really quick. Actually, Barry Hinckley, the president of Blue Ops, he's been all over the country. He's at Repis, been there almost the whole month. And when he had a weekend off, he goes to Ukraine. So he is just going after it, and bringing a lot to the table. And we've got a great—we've got a little dream team here for Blue Ops, to build these things. Some of the best boat builders in the world are building the hulls, best tech stack, put those things together, and everybody wants to see our—

No, that tech stack is not from Palantir.

No, no, it's from a European country that's in the Ukrainian theater every single day.

Successfully.

Yeah. Yeah. We, um, the thing that I've spent actually on Tuesday—whatever the 30th is next week—I'm going to Arkansas to see one of the final flights with the visual navigation with their team. So we're going to be doing some cool footage, get to see it fly, and then probably hear some announcements very soon about that product getting out there.

Yeah. So, we've got—you know, we're very inquisitive. The stuff we're looking at now is bigger. We are—now we're S, we have to do Sarbox because of our market cap. And our older firm, which is great by the way, there was no issues with them. They just didn't do the Sarbox portion, which is something we have to do.

Yeah. Yeah. So we have to start doing that type of reporting because our market cap is over 700 million now. So it was just preemptive to get them there, and we wanted them to be able to get in in time to do our 10-K, which—you know, they'll review our Q3, and Q4 will be a K, which is a real actual audit. So we wanted to make sure that we had them in there to do a full audit going forward. So it was pretty excruciating going through that process, the due diligence that they do. But they're a great firm, and they're going to be a great partner.

Right now, we think there's going to be four, but there's probably going to be six. What we're doing at Hodgdon's is going to make all of our prototypes for years to come. And what they do is they develop the tooling, and once we have that, we bring the tooling down to Georgia, and we can stamp out a ton of boats. So, like, we're really concentrating on Sea State 4 and 5. You see a lot of boats out there right now that are frankly jokes. They can't handle Sea State 4 and 5.

Large seas. Large seas, right? So you look at some of our competitors out there, they're building stuff that looks like a large surfboard, or the GRC—it's like an old jet ski that used to be made for rescuing surfers 15 years ago. And I think there's like a 160 million dollar contract out for that thing. And it is not very seaworthy. So we're hoping to displace a lot of this with a proven product that's had proven success in the Black Sea every single day, and is a three-year-old, mature stack. You know, our competitors were running into each other—was that the big Reuters article where they're running into each other during a demo in San Diego? It's just—that's not what you want. That doesn't show much confidence. So we're pretty excited where we are with the Blue Ops team. Within months we've accomplished so much: getting the contract with our tech stack, getting the prototypes done. The Hodgdon team's been to Europe to see the hulls and know where they have to improve them. We've got a better propulsion system already, one that the Navy's used to using—they guided us on that. So there's just some really interesting, cool stuff we're going to be doing with Blue Ops, and the speed of us getting this factory built is just going to be amazing.

No, absolutely not. Most of the value that people are looking at right now is probably only based on the Black Widow and the demand for drones right now. If you look at a peer that's private, it's Seronic. They raised, I think, 600 million at a 4 billion dollar valuation. And I'm not sure if they've built any boats yet. They might have. They weren't at Rep this year. We didn't see them there. Their valuation is 4 billion. And we have a factory that's going to produce—you know, if we get the orders, we can produce over a thousand boats next year. The smaller one, the V5, the workhorse—which, variant five just stands for five meters, no special meaning—and that's mostly just a kinetic one-way unit. Those cost around 500,000—around 500 is what we're seeing in the market. So if you sell 200 of those, that's a lot of revenue.

No, no. The biggest we're looking at right now is the V11, but the V7 we think is going to become the workhorse, because the 7-meter version can put—you can put missiles on it. It's got a launching pad for drones that come right out of it. We're trying to standardize the top deck plate so it can handle US-made stuff that mounts. So, you know, we'll have swarms on there. We'll have EW stuff to protect the bigger fleet behind us. We can go out and do electronic warfare. We have missiles. I mean, everybody—you know, a lot of folks here in the US that make missiles have all wanted to be on our boat. So, again, we're kind of like the Black Widow of platforms: whatever options you want. These USVs are going to be like—here's our platform. What's your mission? You can put this on it. We actually, at RepMas, they've got a machine gun on the front of it, and it's insane.

Oh, we've got a few. One of the ones that we just did a great demonstration with was down at Fort Rucker—I think it was Fort Rucker. We were the introduction to a massive vendor day with about 40 vendors, but they saw our swarm capability during practice day, and they said, “We're moving you into the front position for the introduction.” And they had some bigwigs come in on a helicopter, they're playing music, and there's the Red Cat swarm with Teal 2s and Black Widows flying around. And I saw the video, man. It was just—I got stoked just watching that, hearing the music play and seeing our swarm swarming around. We were the only ones that did swarm out of 40 vendors. So it's exciting stuff. Then we also work with Cention. They have the box that does like 20. And we've helped them quite a bit. They also have a box that does 80, but no one seems to understand what to do with 80 yet. I'm sure we'll find a reason. But yes, I truly believe swarming is going to be so crucial for the future. And some people are good at it, and some people aren't, and it's hard to do.

I love waking up and working at this company. It's great. It's fun. It's mostly—I mean, it's just the people that we get to hang out with. I'm looking forward to flying with some of the people I'm going to meet with on this Friday, and then next week with the Palantir guys. The people we're meeting for all this boat activity, the places I get to go visit—fun, sometimes a little sketchy. And we got a great team. Everyone's pulling in the right direction, and everyone's go, go, go.

Sometimes my dates are a little slow.

Yeah. I'm not making any timeframes, because I've learned very quickly—not very quickly; maybe I've had to get bashed in the head a few times—but I can't control the government and when they sign stuff. So I'm not going to make any predictions ever again about when they sign stuff.