[Music] Welcome to the market front lines. I'm Lyndsay Malchuk. A powerful new player is reshaping the aerospace and defense landscape, and investors are now starting to take notice. Aerospace isn't just moving the drone revolution; they're shaping it. From strategic financing to geopolitical positioning, the company has been quietly building momentum while the rest of the market catches up. And at the helm of this operation is someone who's been steering the company through a very fast-paced landscape with precision. I'm joined by Glen Lynch, CEO of Volatus Aerospace. Glen, it's so great to see you again.
Nice to see you, too, Lyndsay. Thank you for having me.
Absolutely. Now Glen, if we can kick things off with the surge in order volume that you're seeing, has been reporting a very sharp increase in that activity, and that doesn't happen by accident. So, what's really fueling this growth, and how confident are you that this is not just a temporary spike, but really a durable trend over the next year or two?
There's a number of things that are affecting it. I would say geopolitics is number one. I mean, everything started three years ago with obviously the development of conflicts in the world where drones have played a prominent role, but that's become even more important recently as geopolitical trends have shifted to more isolationist-type policies. It's caused countries to look inward to make sure that they've got more self-sufficiency, more security, and economic independence. I believe because of the impact on drones in modern warfare and modern defense strategies, we'll probably continue to see that over the next three to five years as people learn from the experiences of Ukraine, for example, and start to integrate drones into their own defense strategies.
Well, it's definitely fascinating to watch it all evolve, for sure. I mean, the kind of growth that you're experiencing right now, that doesn't come without strategic firepower behind it. So, you recently closed some very significant financing rounds, and investors are watching that very closely to see where that capital is headed. My question here is: how are you deploying these funds, and what concrete milestones should the market be watching for in the near term that signal real momentum?
So we went through a couple of years of working capital challenges, I would say, as capital markets were unfriendly or even closed to small-cap tech companies. So a lot of what we did was reposition ourselves to be properly capitalized. So a lot of that has to do with our solution sales where, you know, our demand cycle is significantly shorter than our supply cycle. So inventory investments are required, and really the investment was to extend our runway, put us in a position that we could actually finance the growth activities that we've been expecting, and strengthen our balance sheets. So we're now in a good position. Our CFO, who I'll call more of a financial engineer than anything, has done a really good job repositioning us so that as we catch the bus, we know what to do with the bus.
Absolutely. I mean, you guys have a strong team behind you for sure. Now, Glen, capital is one thing, but navigating today's geopolitical chessboard, that's a whole other game right there. So, we're seeing rising global tensions, we're seeing defense budgets shifting, and governments are actually, you know, shifting their priorities as well. So, you know, how is Volatus positioning itself in this new landscape to seize that opportunity while also managing the risks that come with operating in such a high-stakes environment?
So, there's a lot to that question. One of the things I want to bring up is that things are changing as defense procurement starts to recognize the significance of drones in that space. There's an awful lot of market share that's shifting from what would have been the primes or tier-one suppliers to small business where there's a more rapid scale of innovation. Right now, if we look at Ukraine, from thought to theater is about three months, so very quick development, and our industry is kind of built on that kind of agility. Really, what we're seeing is somewhat of an isolationist attitude that's happened with our southern neighbor as they focus on America First. So, building their own interests and starting to recapture some of the jobs that they feel they've lost. I think in cases like that, it's meant making sure that we recognize and respect the position of the administration. They're elected by the American people, and so at the end of the day, what we do in the United States is using our US leadership; we serve America by Americans using American assets. So that's in America. In Canada and the rest of the world, it's a little bit different where we've realized that perhaps ourselves in Canada, certainly Canada, but many countries have taken access to the US market for granted. And these recent changes have been a wakeup call regardless of where things fall out with the global trade dynamics. Everybody's realized now, and particularly in Canada, that we have to become more economically and security independent. So what does that mean? You know, our prime minister recently said that we as Canadians can give ourselves far more than any nation can take away. And I think a lot of people are seeing that around the world where they're looking inwards to say let's make sure that we're actually developing a healthy domestic ecosystem and that where we are partnering, they're diversified partnerships that are not overly dependent on any single market. So that's creating, you know, it's a new way of looking at things, but frankly for those that are paying attention, I think there's enormous opportunities. And from a defense procurement standpoint, I mean, that's the blue sky right now, but the blue sky is actually here today. The procurement activities are happening today with the increase in spending that's pledged not just by Canada, but by governments around the world.
