Red Cat Holdings, Inc.

So much greetings and welcome to the Red Cat quarterly earnings. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anki Hira, Investor Relations. Thank you, Anki. You may begin.

Good afternoon and welcome to Red Cat's first quarter 2026 earnings conference call. Joining us are Red Cat CEO Jeff Thompson, COO Chris Erickson, and CFO Christian Morrison. Please note that certain information discussed on the call today will include forward-looking statements for future events at Red Cat's business strategy and future financial and operating performance, including Red Cat's target revenue. These forward-looking statements are only predictions and are subject to risk, uncertainties, and assumptions that are difficult to predict and may cause actual results to differ materially from those stated or implied by those statements. Certain of these risks, uncertainties, and assumptions are discussed in REDCAT's SEC filings, including its most recent annual report on Form 10-K and other SEC filings. These forward-looking statements reflect management's beliefs, estimates, and predictions as of the date of this live broadcast, May 7, 2026, and REDCAT undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at ir.redcatholdings.com. With that, I'll now turn the call over to Jeff.

Thank you, Nkit. Good afternoon, and thank you for joining RedCat's Q1 2026 earnings call. Secretary Hegseth last week at a hearing on the Hill announced that Defense Autonomous Warfare Group, DOG, will have a $54 billion budget for drones, drone dominance, and counter. But also said it would be closer to $74 billion. Ann added that announcing a new unified command that would add to this $74 billion and is made in USA only. This is 2027 funding, which is only 4.5 months away. On top of this good news, the DOW has stated they intend to spend the 2025 $156 billion reconciliation bill related to defense in fiscal 2026. It's not going to go over three years now. Only $30 billion has been obligated through April. Fiscal 2026 also ends in 4.5 months. The funding has finally been turned on in a big way for 2026 and is magnitudes higher for 2027, specifically for UAVs and USVs. These are great tailwinds, so let's get started. I am pleased to report we delivered record quarterly revenue of $15.5 million, representing an 849% increase compared to the same period last year, This is remarkable growth considering the government shutdown at the end of last year. I'm going to review our opportunity pipelines that tie into our target revenue with our multi-domain family of systems. We'll start with FANG and drone dominance, then FlightWave Triken, of course, the Keel Black Widow, and then finally the Blue Ops fleet. Then Chris Erickson will review operations. Then Chris Morrison will review financials, and then we will take your questions. So let's start with FANG and drone dominance. We are gearing up for Gauntlet 2 in August. We have been working with the DDP and believe this will be a much smoother and realistic competition. FPV drones, which are called shooters, need a sensor to complete the sensor-shooter kill chains. We believe we are the only made in USA company with a blueless approvals sensor black widow successfully deployed in Ukraine and other theaters. We believe that 350,000 FPV drones would need between 10,000 and 17,000 black widows, depending on ratios of sensors to shooters. Red cat is integrating our targeting from the black window widow into Fang and other FTD partners. This gives us tighter integration into the kill chain and a competitive advantage. FlightWave. Our first demo tricons are being delivered in a few weeks. The features on this new version are stunning. The demand for the Edge 130 has always been significant, but as you know, it is too fragile for warfighters. We will be updating the suite in the upcoming months but believe this can be a winning drone in sweeps this year. On to the Black Widow. We could spend an hour on what we've been doing with the Black Widow. The Black Widow is currently in three theaters. Word spreads fast when you have a combat-proven capability and the scale to produce them. This led to an invite to the Pentagon to share lessons learned as a successful platform in the most contested battlefield in the world. Most importantly, we want to bring these capabilities back to the U.S. warfighter. The Black Widow is EW proven and capable, proven in GPS-denied battlefields, flight time of 52 plus minutes, and over 10 kilometer range. These features I've positioned the Black Widow with a large opportunity pipeline for 2026. This pipeline consists of the U.S. Army, with our final LRIP contract soon, and the OTA, Marines, Air Force, drone dominance, Ukraine, Japan, Philippines, and Taiwan. We currently have the supply chain and inventory to build $220 million worth of Black Widow's and can step on the gas if needed. As we reported last quarter, the Ukraine opportunity could be for over 100,000 black widows. We are completing the final integrations actually this week and hope to have them tested next month in theater. Let's talk about the Blue Ops fleet. The Valdosta factory is operational. We have started 3D printing the 5-meter boat We have approximately 145 fiberglass hulls to be built this year, and we will have approximately 100 3D printed boats. That's a potential of approximately $150 million in USB sales this year. The Variant 7 has received a lot of attention recently, with President Trump talking about the machine gun that is mounted on the Variant 7. The machine gun is made in USA by our partners, ACS. This combination is very powerful. The Strait of Hormuz has been a great example of the need for this type of weapon system. Our team is in the region now by invitation, and we believe we will be a very valuable partner in the Arabian Peninsula. We've also been invited to Indo-Pakon next month, and we'll be participating in the RFP for the 1,300 U.S. fees in Taiwan, which will be awarded first quarter next year. Look forward to your questions, and we'll hand it over to Chris.