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Hey everyone, welcome back. This is Kenny with Marathon Money and this is the Inside the Ticker series and today we got Unusual Machines, you know, ticker symbol. I'm here with the CEO Dr. Allan Evans and we're glad we're going to get into it. Definitely with the changes they made last year and the success they had in the stock market and also the success they had in their operation and business. So Dr., I want you to get started. Tell me, so far how did last year start for you guys with the change?
Oh man. So I think you got to go back to the IPO two years ago, Valentine's Day, you know, lovely. When we IPOed, we set out with the idea that if the US is going to require US-made drones, they're going to require US-made drone parts. So we really started right out of the gate sort of saying, hey, parts are going to ultimately be our business. And then if you look, we have this really great retail channel, you know, Roto Riot, we sell these parts, we do this stuff. And we said, okay, if we start to build our own parts, we at least know where we could sell them. So we could make a thousand or 5,000 and we didn't have to speculate on where the first volumes would go. And then about a year ago, we started getting parts on the Blue UAS framework a little more than a year ago, which is the Department of Defense approved parts list. And people started buying them in large numbers. Like our first flight controller that we did, right when it was done, we sold almost 10,000 of them. And we were, you know, new coming out, we're like 10,000, I don't know. We were panicky. And then they were gone in under a month. And we're like, okay, the concept works. And so really what happens then is we kept doing product development and building and last summer the government shutdown ended. Really, the government budgetary shutdown and the delay on the budget and the continuing resolution delayed the military part of the drone market till late last summer. And then once the market turned on that and the drone dominance program and some of the other stuff that have really come online have now just created huge amounts of demand that we just keep building into. And so that trigger, about nine months ago, started our scaling curve because our customers were all getting tons of orders and really trying to build drones and now I mean we're just trying to keep up and we're doing a very bad job going as fast as we can of keeping up with demand.
Oh, you're muted.
Yeah, I apologize. That's amazing. You know what's awesome is because when I look at your IPO from Valentine's Day from two years ago, your share price was at $4, right? When you guys IPOed, you guys have managed to stay above that and have done really well. That's very difficult for any company that's IPOing. Most times when a company IPOs, they tend to like tank, you know what I mean? Was there like some...
We traded down. We went down to a buck 50 a share for a while there. I invested in the round. We did it at a buck 50 a share and Redcat had owned like 49% of it when we IPOed because we looked kind of like a spin out and we had them bought out. And so that first year there was a lot of, I would say, uncertainty and risk around the company. Like we were not well capitalized. We had to clean up some of the derivative stuff. We were able to go in and do all that without destroying shareholder value.
Yeah, that's what I realized is when I look back, even though because a lot of companies they don't have that leadership style or recognition to see that. So I was wondering what you guys did different because I know you guys went down, then you guys are now back up. You guys didn't have to like dilute or do anything or reverse shares. So like what was the thinking behind that as the lead?
Well, first, solid CFO, so shout out to Brian Hoff. He's, you know, he had to do a lot of the work and contribute a lot of the ideas. What really how it all got done is we have relationships and trust with key investors, right? All the way up and down. We try to be transparent. We try to say what we're going to do. And so we were able to get investors, including Redcat, which owned a lot of the stock, to sort of buy into what we were doing. We hit our execution milestones and everybody sort of went along with it, seeing the long-term opportunity over like a quick flip or a micro cap structured deal. So, you know, I really think it's that approach that we take where we're like, hey, we're trying to do it this way. If everybody participates, here's how you get the win in the longer term and like a real meaningful financial win for everybody. And we were able to deliver on that for those investors who sort of trusted us and bought into what I think is a much cleaner approach to, you know, building the company from a cap tables perspective to where we're at today. And if you look today, we're all common stock, right? No derivatives, no controlling interest, no debt, none of the things you'd say, oh, something cute's going on there. So I think everybody was like, okay, you know, with those relationships, if we support what they're doing, we can really build something meaningful. And in doing that, we, you know, driven value for those early shareholders.
You know, I do want us to walk through the pivot of 2024 retail e-commerce where I think you was generating revenue of 5.5 million and now with enterprise and manufacturing, you're doing about 11.2 million. Is that correct?
Yeah. So it wasn't a pivot, it was the plan all the way along. So we said, okay, we have this retail channel and we can sell parts into it. And then we kept making more and more parts, but we expected that our enterprise and manufacturing business would be much larger than our retail business. And that was our story from the very beginning. That's what we IPOed around. And so our retail channel is still super important. It's actually a really great sales funnel. So like let's say you're running Kenny's drone company. You're building a drone. You know that you can come to our retail channel and buy US-made motors and build your prototypes. And then you know you can come buy 10,000 of them. And so we get a lot of inbound, a lot of initial purchases where people don't want to call a salesperson and deal with the whole rigmarole and they just want to go buy them and know that they can buy a whole bunch of them if it works. So we see a lot of value in still doing the retail channel and a lot of value in servicing the American customers as well.
And I look at drone warfare, you know, with the war going on, drones is becoming a very hot topic. It's actually been a hot topic for like two years now, and you're one of the companies that people really like that you guys do it really well on the retail side and in the military side, enterprise side. And what do you contribute to the success of all that, with your leadership style and the team, your CFO? What else is going on that you guys are putting into this that nobody sees that is potentially to grow your revenue and grow more relationships as you guys expand forward?
Yeah. So I think two questions here. The first one is like why do investors like us? And my guess why I like us, let's just say, and why I have a bunch of equity and keep doing it besides the team's great and the work's fun. In a market like this where a lot of uncertainty, who's going to win? Like DJI, the big company's kicked out, but we don't know who's going to win. And we, as a parts vendor, sell to everybody. So what I've said in the old days, and it's still true, we kind of look like an ETF for drones, right? If you're like, ah, I don't want to pick the winner. I kind of want to pick the industry. I'll just invest in the parts guys. Why? Because they kind of sell to everybody and we do. So I think for a lot of people who look at it, if you don't know which one of the 25 drone dominance companies is going to win or you don't know, there's a lot of really great drone companies all doing new stuff and if you don't have a real strong instinct on one of them being the winner, then the parts guy sells to — we sell to most of them, right? So then you're like, okay, doesn't matter who wins, these guys are going to be just fine. So I think...
I like that. I like that. And that's one thing I really really liked about your company because there's something that we always said on Marathon Money to the people that been listening to us since like 2016. You're better off finding the guy that is selling to everybody because it doesn't matter who wins that game. He's going to sell to everybody. And I think it's no different from Nvidia. That's how I kind of see you guys. You know what I mean? They're not just trying to — they're selling to all the major corporations...
Yeah. They're a parts vendor for that. Exactly. And so we see it the same way. There aren't a lot of other parts vendors in our categories. So the other thing is there's just not the same level of domestic competition. And that just happened to be because what we do is it's the boring part, right? Like the drones are awesome. The parts — like who's — all like Goodyear is great. They're like, no, look at that Tesla. Right. So like we got Goodyear vibes. It's fine.
You're the — you know what I mean? I don't want to take it the bad way and actually as investors you want this to be the good way. You're the boring company. That's what I always say you want to make the most money. Follow the company that is just ABC. I make the parts. I sell the parts and I sell it to everybody. We're not doing specific things. We do it right. We're good at it and that's it. You know what I mean? So I always say the boring companies are the ones that usually win and they're the most profitable in the long run. But on to that, what about backlogs? You know, signed contracts for Q1, Q2, Q3, Q4. What's the 2026 revenue look like locked in for visibility?
Oh, you know, I can't talk about that. I mean, it's — and I also don't like the word backlog. Like backlog implies we're not delivering on time. We definitely deliver on time. So it's more like revenue under contract, but remember, we're a parts vendor. So actually that's not a big part of our blend. What we get is these forecasts that are non-binding from customers. And I'll give you a great example. Drone Dominance Phase 2 is expected to be announced in September. They're going to pick 10 companies to build 60,000 drones. It's about — if we do all the parts that we do, it'd be about $1,000 a drone. It'd be about a $60 million opportunity. Right. Like let's just take that for example. How are any of those companies going to place orders right now when they don't even know when they would go compete to see if they won? So they don't know and they can't really place orders till like September when they find out if they won or not. But we're already starting to build inventory and be ready to supply all those customers. So we know that just from Drone Dominance Phase 2, there is a $60 million revenue potential opportunity, but we won't get orders till September for it. But we have to build now and be ready to meet the demand or we won't be able to let our customers meet the end timing demand.
Because you're the parts guy. So the demand is going to come your way.
Correct. Especially if we're the only ones in stock at scale when they have to use US parts. It's great, but they don't know if they've won. So how can they sign a binding PO for $20 million? For a lot of these companies, they're small and that would be — if they've won, they can do it. If they haven't, then they got to be much more careful about what they do. And we understand and appreciate that. So you would say, okay, what is the programmatic revenue opportunity? Just Drone Dominance just this year for us is a $90 million opportunity. Are we going to realize the whole thing? No. You don't ever get 100% of the pie, but I think we'll do pretty good.
You're gonna get a good chunk of the pie.
I think we'll do pretty good.
Okay. So can I make a little bit of the assumption — the reason, one of the many reasons that you raised $157.8 million in 2025 and then another $150 million in March 2026, which totals $37 million in 12 months — is that one of the reasons because you guys are preparing for that type of growth and that's where some of the capital is going to get deployed?
Yeah, let's just use another example. Drone Dominance, the program requires about $250 million worth of parts in 2027. The only way for us to have the raw material to make that is to order it and we have to order at least 6 months in advance because supply chains are long and as you order more and more stuff, they get even more long. So just to have the material — just material, not the warehousing, not the staff, not the capex, not the anything — to just meet the demand for Drone Dominance in just 2027, I have to place about $125 million worth of parts orders by about August.
Man, dude, I'm already loving what I hear because I can tell the reason why is because it's like you're perfect. It's like the rare find, you know what I mean? You're the parts guy. You're going to get a good chunk, you know? I mean, you don't want to oversell yourself, but you're going to get some of that business that's coming from the Drone Dominance. And on my information, you ended the 2025 year with 103 million in cash. At your current burn rate, how long will the 150 million raise in March last? 12 months, 24 months, 36 months if you...
I mean, so if you look at our finances, we register a GAAP loss but only because of equity comp. We have never had a quarter where we've spent more than a million dollars.
So $150 million will get us till I'm dead from old age. I mean, it's a little bit tongue-in-cheek, right? We have to spend some money to accelerate and stuff. But I think another reason why people really like us is we're not a venture company. We don't look like VC money to scale at all at all speeds. We're a growth company where if you look, Amazon lost money but was cash flow positive for 20 years till they turned a profit because they kept reinvesting in growth. Uber the same way for like 10 years where they kept reinvesting in growth. You know, they were cash flow positive but equity comp is why they registered a loss. Our goal is to sit in that same sweet spot. And if we're growing 50% year-over-year, do you really want us to turn a profit and kick it off or do you want us to keep growing?
No, we want growing 100%.
So we see a real big market opportunity here, but we wanted to have enough working capital in the bank to place the orders later this year to just meet the minimum demand next year and not run out of capital. Because if you can't pay your vendors or whatever, the whole hardware system jams up. So we took the opportunity to raise money to just be ready for what we have to do over the next six months to be in a position to be the big winners next year as a parts vendor. And that's actually one of the reasons why the bigger you get, the better your raw material pricing, the better your systems, the cheaper your parts, the better your parts because of quality, the more people that want to buy your parts, so the bigger you get, right? It's a virtuous cycle. Hardware is. And so the further out in front we get and the more we can use capital to really drive scale, the more of the market we win.
