Red Cat Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the REDCAT Holdings fiscal 2023 second quarter financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then do. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call through March 15, 2023. I would now like to turn the call over to Joey Delahousie, Vice President of Core IR, the company's investor relations firm. Please go ahead, sir.

Thank you, MJ. Good afternoon, everyone, and thank you for joining us for the Redcat Holdings Fiscal 2023 Second Quarter Financial Results and Corporate Update Conference Call. Joining us today from Redcat Holdings are Jeff Thompson, Chief Executive Officer, and Joseph Hernon, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address REDCAT's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in REDCAT's most recently filed periodic reports on Form 10-K and Form 10-Q and then REDCAT's press release that accompanies this call, particularly the cautionary statements in it. The content of this call contains time-sensitive information that is accurate only as of today, December 15, 2022, except as required by law. REDCAT disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Jeff Thompson, Chief Executive Officer. Jeff.

Thank you, Joey. Welcome to our fiscal year 2023 second quarter earnings conference call. This has been a tough year for the economy and a brutal stock market. Many businesses and technology companies are battening down the hatches. But at REDCAT, We are focused on growth. The defense industry is growing, not shrinking in the U.S. and NATO. First, let's talk about the current military and defense drone industry. The defense space is going through a huge change. The Ukraine war has demonstrated that drones are changing warfare and specifically small drones like the Teal Golden Eagle. Just some recent headlines, drone warfare in Ukraine in the changing battlefield, source CBC. Russia and Ukraine are fighting the first full-scale drone war, Washington Post. The drone war in Ukraine, Financial Times. The tiny and nightmarishly efficient future of drone warfare, The Atlantic. Ukraine enters a dark new era of drone warfare, Wired Magazine. Two main developments are going to impact future war, said Samuel Bendet, a military analyst at the Virginia-based research group CNA. The proliferation and availability of combat drones for longer range, more sophisticated operations, and the absolute necessity to have cheap tactical drones for close support operations. Just Google Ukraine drone war. It comes back with 3 million plus results. Drones, and more specifically short-range reconnaissance drones like the Teal Golden Eagle, are changing warfare. Defense budgets across the globe need to replenish, and many have doubled in NATO countries. Many of these new programs, like the SRR program of record, go well past 2030. REDCAT estimates that small unmanned aircraft fleet size of 64,000 for the U.S. military is and approximately 78,000 for U.S. allies. These projections and research were pre-Ukraine war. REDCAT has invested heavily in our supply chain inventory. Most of these orders were 18 months ago. We have invested in a new factory in Salt Lake City that can produce tens of thousands of drones per year. We believe we are well positioned now to meet the growing demand for made in USA drones. The Teal drone is a great drone, but like an iPhone, it's nothing without the apps. Our open platform has allowed for two great partnerships to give the Warfighter a complete out-of-the-box system. We have announced partnerships recently with Reveal Technology and Tomahawk Robotics and expect to add to this list of partners. Each Teal drone now ships with a fully licensed version of Kinesis software from Tomahawk Robotics. When you add the reveal mapping capabilities, you can give the warfighter tactical advantages not seen before on the battlefield. I could spend an hour on the capabilities we are bringing to the table with these three companies. Let's talk about Skypersonic. The Skycopter is an inspection drone, and we inspect the infrastructure built to produce large contracts in late 2023. We are on our second version of the Skycopter. It is a much more reliable drone now. We have also found a new market for the Skycopter, the military. The Skycopter is a great solution for GPS-denied flying. This includes caves, abandoned buildings, tunnels, and any other place you don't want to put a soldier at risk. We have received some great initial feedback in recent demonstrations for the U.S. military down in Fort Bragg. Let's switch gears and talk about current contracts and then the SRR program. As you know, we have a $90 million contract with the Border Patrol. We are one of a handful of companies in the contract. They recently gave us a purchase order for approximately $1 million. They gave similar contracts to two other companies. We believe we are in a bake-off to replace the existing Chinese fleet. We expect to ship this order in January 2023. We believe we are well positioned with our capabilities to fly at night when most missions take place. REDCAT's mission is to dominate the night, and we hope to expand the Border Patrol contract throughout 2023 and beyond. SRR, otherwise known as Short Range Reconnaissance Tranche 2, SRRT2, program of record. Tranche 2 is going according to plan. We have weekly meetings with the Army, and the first flyoff is in January 2023. This is an alpha version of the new Tranche 2 bird. We are excited to demonstrate the capabilities of our new drone and payload. We are also pleased to report that Tranche 3 has been canceled. They are adding Tranche 3 to Tranche 2 to accelerate the program. We believe this will increase the contract size of Tranche 2 as it absorbs Tranche 3 capabilities. To summarize, we are excited that our brand new factory is now producing the newest version of the Golden Eagle. We expect the 2023 to be an explosive year for drones. And with that, I'm going to hand it over to Joseph. Thank you.