Good day, and welcome to Q3 Investor Summit Virtual. We appreciate your participation in today's virtual event. Up next, we are pleased to introduce Unusual Machines Incorporated. If you would like to ask a question during the webcast, you may drop them in the chat box button on the left side of your screen. Please type your question into the box and click "Send" to submit it. At this time, it is my pleasure to hand over the session to Allan Evans, CEO at Unusual Machines Incorporated, who will lead the presentation. Sir, the floor is yours. Hi, Allan. Sorry for interrupting you. We still cannot hear you. Is that better? Perfect. All right. Sorry about that. Hey, everyone. I'm Allan Evans. Sorry about the technical difficulties. I'm the CEO of Unusual Machines. I'll give you a quick overview of the company, and then I'll talk about where the industry is. Unusual Machines is traded on the New York Stock Exchange American under the symbol UMAC. First, quick overview, we're going to say there's some forward-looking statements here. Solid SEC disclaimer. Please read it at your leisure. If you get into the investment highlights, very quick understanding of where we're at. We sit in the small drone category. We're targeting a few very specific segments. First, we're onshoring the production of drone parts, and our specialty is really FPV, which is the first-person view goggles. You see a lot of these in Ukraine in particular. There's a defense play that is valid right now. We've demonstrated, I think, substantial growth every quarter since we've been public. It's been our highest revenue quarter of all time. Our B2B sales of our parts have really started to take off, with the last quarter being 30%, the highest of all time. We're starting to really do the things necessary to move from being a retail channel into an enterprise channel. The whole opportunity for small drones right now is really being driven by geopolitics. There's a lot of legislation over the last several years in the U.S. that's driving it forward, coupled with the conflict in Ukraine and the interest from the Defense Department. We went out on a limb about 18 months ago when we went public and said, "Hey, we think not just drones, but drone parts need to be onshored." We've really tried to be mostly China, with as much produced in the U.S. as possible, particularly in Orlando. That's a real high level of what we're doing, and we're seeing the market react in a really positive way. Our general strategy is that we have really good e-commerce sites. B2C, rotorriot.com, where we sell a whole bunch of different parts to drone enthusiasts. That acts as a really good first customer for our product design. That helps us get over the chicken and the egg of minimum volumes. We know if we go order 10,000 drone cameras, that we're in a position to not just sell those parts to enterprises, but to customers as long as they're high quality. That brings us into the B2B, or really the B2C, or sorry, B2B2G strategy, where when customers go out and do this, they test it, we get a bunch of feedback, they'll put them in a bunch of scenarios, build them into a bunch of different things. That gives us a really quick R&D and quality cycle loop for customers, which is more effective than just having a single business partner. That then opens up our B2B strategy, where we have these validated parts. We try to be price competitive with China because we also sell them through our B2C store. We're going after the value segment of the parts market rather than the premium or technology ad segment. When you look at how we plan on growing from here, we expect our retail business to continue organic growth. It's grown about 20% year- over- year. We then want to accelerate our enterprise growth. We do that in a couple of ways. One of them is having the Defense Innovation Unit audit it to be sure it's OK as a government product. We're just trying to be sure that we make everything outside of China to solve our customers' problem. Our retail positioning does a really good job of not just reaching out to retail customers, but also to a lot of enterprise customers. Most of the people building drones in this category were retail customers before, and they come out of the same small community. Our videos, the awareness of us, everything else hits that same audience, which is the enterprise buyer, which is helpful. Lastly, we're scaling out more production of critical components in Orlando, particularly drone motors and then next headsets. Quick overview of the retail business. Again, seasonality, but with steady growth. We also have a large social media following. We have almost 300,000 YouTube subscribers and about 150,000 people on our mailing list. We see a lot of that driving business. We're in a good spot there. The interesting specialty of our retail store is that it's curated. We have a lot of pilots, and we have a lot fewer SKUs than maybe the other large retail stores. That puts us in a segment of the industry where we actually have a little bit of premiumization, a lot of awesome customers, and then a very specific limited number of SKUs so that we can focus on quality. In terms of the hardware components, when we started onshoring production, we really started with electronics. There's a really robust electronics production infrastructure in the U.S., and it's really highly automated. This helped us very quickly be cost competitive with Chinese components while getting stuff in the States. If you look, we have four parts now approved on a DIU Blue framework, which is the military's method of auditing for cybersecurity and supply chain to say, "Hey, this is OK to buy." A flight controller, an ESC, a camera, and I believe our VTX is there. When you look, we've done electronics. We're also now doing motors and some of the other physical components. This was our first step. For most of these now, we've sold at least 10,000 of every one of these components, so we're already at scale. That's going really well. We find that, again, there's other people doing it, but we're really in the value segment for first-person view. Our motor production is coming along. We said we'd have first motors produced in September. We have had first motors produced out of the facility. We have about 17,000 sq ft. We have a mid-rate production line, which is already in place and going through qualification right now and starting to build out stuff. We will have a high-rate production line in place in about April as we continue to build out the building. We've also acquired an Australian motor company, Rotor Lab, which has similar, the same equipment across the board, which allows us to take some of their engineering expertise and some of the lessons learned from their longer operations, apply them to what we're doing so that we get up the curve faster. We have all the material in-house to build about 50,000 motors across three different sizes. We're seeing a lot of demand for this, and we're really excited to have production start to ramp in Orlando. Anytime you turn on something new like this, there could be hiccups or whatever. We haven't really projected the business out, but we expect by January to really be running near full rate, which is pretty exciting. The market opportunity for small drones, it's huge. If you look, DJI is being sort of kicked out of the U.S., plus you have DOD and conflict-driven stuff. The military market is sort of the first market. If you look, the Department of War and the government budget for this year have set aside about $750 million for what is SUAS, or the small drone category. That's not counting programs of record. You probably figure there's at least $1 billion in the budget coming up now and more next year for the category of drones that we sell parts for. You'd probably guess parts are about 25% of the total of that budget after it comes all the way through. Just the U.S. Department of War total addressable market for parts this year is probably about $250 million, maybe better. As you scale in and you look at the commercial market, whoever replaces DJI in the U.S., there's probably another $250 billion parts availability market there. There's definitely not just a market opportunity for the drone market in general, but when you look at the components market, it definitely looks like a $1 billion a year TAM or better, even right now, even not considering shipping into Ukraine or conflict zones. There are a ton of drone companies, and they sit in all the different parts of it. You have some component suppliers. We're a Blue component supplier. Most of the rest of these component suppliers, like Mobilicom or Doodle Labs or Mobile AI, they're at the premium end of the spectrum. They'll sell a $500 or $1,000 flight controller, where ours is $50. There are some really great premium parts vendors. We do not have a lot of competition, I'd say, in the value parts, where we're more directly competing with China. We sell into basically U.S. manufacturers or Blue drone manufacturers that are approved by the government, the TEALs, the Skydios, the NEROs, the PDWs. There's probably 30 or 40 drone manufacturers. When you go past that, there's a whole bunch of service and software providers, like Zipline would be in both cases, but they do delivery or LOFT or UAVionix. Over time, this world of 300 - 400 drone companies will probably collapse down to 5 - 10 total. I think we'll see consolidation of a lot of these names into a smaller number of names here over time. This whole thing is driven by legislation. There was a market. DJI, Chinese companies, dominated the market. T-Motor, a Chinese parts vendor, dominated the market. We've seen some legislative action open up the market. There was the American Security Drone Act in 2023. This had a ton of bipartisan support, and it said, "Hey, the U.S. government can't use money to buy or fly Chinese drones." This act goes into effect in January of this coming year. We're about to see this hit. I think then you saw what was originally called the Countering Chinese Communist Party's Drones Act. It got rolled into the most recent National Defense Authorization Act, Section 1709. That may be Section 1703. Anyway, that restricts DJI and Autel, which are the two large Chinese companies, from getting new FCC authorizations on new products and has really started to transition those products out of the consumer segment. You saw tariffs come in. There are about 30% tariffs on China that's actually accelerated our onshoring and put us in a position where we see margin improvement relative to the price competition pressures from China. You're seeing the Department of War now start to issue edicts and assign more budget to small drones, which will inject the cash to facilitate, I think, much faster growth in the segment. We're right at that corner where we expect that to happen. If you look, our strategic roadmap is to really continue to expand our product offering. Right now, we do one or two of every single part for certain types of FPV drones. We'd like to build out things like motor production to be more robust and offer more variety of parts as a second supplier or primary supplier to other companies that are trying to diversify from China. We also want to be sure to capture value in this enterprise cycle for our B2B2G strategy. I'm surprised, actually, we're a little behind on government procurement. I expected a lot of government orders to our customers to have already happened. They haven't happened yet. We're still at the turn of the government fiscal year. Right now, it looks like we're about four weeks behind the timing I expected. I still expect drone orders to get placed for drones. A couple of weeks later, those customers come to us to start to order parts to set up their supply chain. Where I would have thought that would have started late August, early September, it's definitely slid backward because of the delay in the government budget, et cetera. We really need to capture that business right now. I think our long-term strategy matters only in so much as we're successful right now because the large companies right now are ultimately going to dominate. We just got to keep, then we got to build what our customers want. If you look, we're building a headset facility in the United States because we're getting customers asking for domestic headsets rather than ones made overseas. We're seeing some of that. I think being successful this cycle will allow us to really have a roadmap that's directed by our customers as we just continue to try to solve their problems as they're trying to catch up as fast as possible. We're in a great financial position. We have between $80 million and $90 million in the bank. We're burning less than $1 million a quarter, and that's not even considering an offset from the bottom line of what we're making on our capital. Every quarter has been the best revenue quarter of all time. We're about 65% year- over- year ahead of last year, and we've shown the highest margins that we've had to date, which is in the 30% range. We're in a great spot, really, from that perspective, and things are going really well. We just hope we're able to continue driving this positively as we have been. If you look at our cap table, we have about 32 million shares outstanding. That's after the Rotor Lab acquisition. It's no longer pro forma. We closed the Rotor Lab acquisition since that was done. We don't have too much overhang. We have a little bit of some of the warrants from the PIPE before. Those are owned by myself and two other board members. We have some of the warrants from our recent fundraising activity over the summer. Leadership team, myself, Brian Hoff, Andrew Camden are the operators. We also have some great board members, with Sandy having a ton of banking experience. Jeff Thompson, who's the CEO of Red Cat, has a lot of industry experience. We feel really good about our leadership team. We're kind of boring. We're a parts company. We're a value parts company where we're just looking to do scale. Unusual Machines, UMAC, is in the value segment of the marketplace. We have demonstrated sort of the structure necessary to be a value producer in that we've kept our cash burn low. We're able to be price competitive with China as a drop-in replacement for people. We've been in a really good spot there, shown margin improvement to the point where we're getting the margins that you could see being really effective long term. We're right up against the current sort of government market cycle. It's a little delayed. We'll know here in four to six weeks where we really land. I'd say that's where a really big opportunity in looking at our company is. Right now, we're in a certain place. In six weeks, we'll have either undergone transformative sales or we'll have to figure out what to do, or the government would have never issued the money toward drones in the first place. I feel pretty confident. I feel like actually right now is a pretty exciting time for the company, where there could be this major catalyst, major transition over the next four to six weeks. We're really part of the onshoring movement. We've been bringing production back to the U.S. for this category for 18 months, and we've seen a lot of interest and success. Kind of simple, kind of boring tier one supplier story, but in an industry that's really exciting and at a time where the energy in the industry is just coming together. I think that those are major drivers for what this will be. Again, thank you. That's my presentation on Unusual Machines. I have about 10 minutes here to answer any questions you have. I'm sure people have a bunch of them and be happy to go through it and address anything you guys want to know. All right. Does anybody put questions in the chat? I think you can chat any questions, and I'll answer them. Thank you, Allan, for the wonderful presentation. If anyone has questions, please feel free to type your question into the Q&A box, and Allan will address them now. Really? Nobody has any questions. I think they're going into the chat instead. Yep, there is one. Josh has a question. Can I talk about my relationship with ONDAS? Two investments in a few weeks. Josh, I think that's, yeah, I'm happy to. I've said it all the way along. There are about 300 companies in the marketplace, and I believe the marketplace is going to consolidate because most marketplaces do. In addition, the market doesn't have to be made. People know they want drones, and they know what they want them for. This market is going to mature faster than most markets because it doesn't have to be made. Eric and I share that viewpoint on the world. Eric is the CEO of ONDAS, for those of you that don't know, Eric Brock. In our discussions, we're interested in promoting the American drone ecosystem, or the Western one in particular, because we still recognize that all of our companies are, we're not as sophisticated as DJI. In doing it and collaborating and in using some of our extra capital, we really believe that there are these great companies that maybe don't have the same awareness where we can make investments. In making those investments help provide the energy necessary for those companies to get up the curve faster and make Western solutions more viable in a shorter period of time. We see it the same way, and we know a lot of the same people. We prefer to collaborate on these things so that we know that we're supporting, because where they sit is kind of the end product, and where we sit is the entry. In collaboration, we know that we're supporting both sides of our partners. The two investments we made, one was in Safe Pro Group. They have this really excellent data set to detect landmines. If you look, that's going to be the first thing that needs to be deployed in Ukraine, whether during conflict or after conflict, because there are landmines all over the high-producing agricultural zones. Cleaning them up is going to allow the restoration of Europe. It's just an amazing use of drones and is important, again, also for military applications. They're in a really great spot. The second one is LightPath Technologies, which is in Orlando, where Sam's over there. They developed thermal glass, where we otherwise have a really big dependency on China and on germanium. This, again, helping them get the energy to go forward is really critical to, I think, having alternatives that are cost-effective and viable. Michael Connor, I talked about defense money. What about U.S. and global agricultural money? The U.S. and global agricultural money is really for a size category of drone that we don't support as much. Agriculture spraying is really great. I think field management is really great. Those tend to be heavier classes of drones and sort of outside of our sweet spot of small SUAS. I do think that you're going to see the defense market right now where you're seeing the injection. That's why we have to focus on providing parts to those companies. I think the winners in defense, or defense adjacent, maybe even more so, are going to be in a position to go win enterprise in two or three years as that market opens up with the FCC then really coming into play on DJI. I think you have the first wave, sort of the first gate of 300 companies down to maybe 200 or 150 that are going to occur for those who are able to scale in the current time period. You'll see another gate, maybe those 150 collapse to 50 or fewer as the enterprise market starts to manifest and we realize what occurs there. I think Ben Q or Ben said, in what ways the relationship with Donald Trump Jr. helped you? I think it helps drive awareness. Early on, I think one of the major challenges for a company like ours is having people trust in our mission, believe in us, think that it's real. There's a lot in the micro-cap world. I think there's a lot of uncertainty. There are a lot of zombie companies. There's a lot of challenges where it's very difficult to ascertain what groups you think are going to succeed or fail or are honest in the mission. I think the partnership there, given his history as an author and his work in business and everything, has helped people identify us early on when there was low awareness as a place where we're in a position where we're really going after it. I won't comment any further on that, but I appreciate the question. Jackson, can I talk a little bit about who I see filling the U.S. gap from DJI and Autel leaving the market? Should we expect this to be manufacturers in the commercial market who make new products with your parts? Given we're building the component set to supply them, would we ever consider building our own drones? There are a few questions there, and they're all awesome. First, I have no idea who's going to fill the gap from DJI and Autel. The DJI gap is massive. DJI makes an amazing product at a great price. I think that anyone who says that they're there or the DJI killer is maybe being a little premature if we're going to be polite about it. I really believe that the only way to eventually replace DJI is to have a value parts stream, motors that are cost competitive and quality competitive, et cetera. Our goal right now is to work with everybody. As this starts to coalesce, I think we'll have a better idea who's going to fill the gap. At that point, we'll be very active about trying to be sure we're a parts vendor for that, those one or two or three companies that are really successful in that market. Given that we are building the component set, will we ever consider building our own drone? I think that's a very challenging question, and I think it's a trap that a lot of companies fall into. If we build our own drone, who wants to buy parts from us because we're a competitor? At the point where we choose to build our own drone, we'll have to acknowledge that our parts business is going to have limited shelf life or do a whole lot to structure our parts business so our customers still don't feel like it's competitive. It's very easy to think about building our own drone. I think the choice to do that is going to take, is a very substantial business choice with lasting ramifications. We haven't really put more thought into it than that. I think it'll be a while till you see us do that. Use the remaining cash on the balance sheet. Will we make further co-investments with ONDAS? We've said that we're going to invest in drone companies, whether it is with or without ONDAS. At the same time, we are restricted by the Act of 1940 that only allows us to use a certain% of our assets in investments. We have to keep most of the rest as cash or in federal bonds, et cetera. We are constantly exploring things, and I think collaboration has been great so far, but there may be things that they're not interested in that we do independently. Brad has asked, we said that we began motor production in our new facility in September with full production capacity planned for January? Does this mean 50,000 motors per month? It means a capacity of 50,000 motors per month, but we may still have to scale into that capacity. We should be able to meet whatever demand level we have by about January, assuming there's no really severe, like a machine going all the way down or us blowing a transformer or something that would require infrastructure overhaul. Otherwise, we'll be ready to meet whatever demand we see by January is what I expect and where the team is. Is there other collaboration with ONDAS? Are they a parts customer for you? We haven't disclosed any of that in regards to ONDAS. We still won't disclose it. We tend not to talk about our customers. We just like to support them unless we have to. Obviously, we get along with them pretty well. What they're doing is great. They started the consolidation faster than I expected. I initially expected sort of this investment in other companies' consolidation phase to start in November. Eric got it kicked off, and he started it last month. It means that if we're not participating, we'll be left behind. We're participating. Any other questions? I really appreciate it. I try to answer them. I don't know what you guys want to ask, and I live it. It leaves me in a position where it's always helpful to know what people are most curious about. Come on. Nobody has any other questions? Like, have we signed a lease on a headset factory yet? No, but we're close. There'll be some interesting elements there. We still expect to hopefully be in a position to have that going by January. That's pretty exciting. We'll get updates on that as it coalesces. Nobody here is really grilling me on the DOD cycle. What I can tell you is I'm shocked that they figured out how to move some 2025 money into pockets into 2026 to enable slightly further delay on orders. It leaves some uncertainty around where it is, but it has tightened up the window some. Those are a couple of interesting questions. Oh, we got a couple of ours. What do we expect the industry to look like in three years in terms of consolidation? Who will be the major players then? I expect in three years there to be about 20 companies left as it starts to smash together. In any one of these industries that's consolidated, the consolidators are the ones who have access to capital. You would say who has access to capital right now? You'd put them as the likely leaders. I think you'd say ONDAS looks like they're going to be there. Slightly larger, Anduril, they have a lot of capital, and they're in a position where they're doing it. Can't count out AeroVironment. They're in another position to do it. I'd say there's some spots left. I think we have a chance. I think Red Cat has a chance just to get large amounts of capital. I think Skydio kind of dances in that world where maybe yes, maybe no, depending on if they can continue to navigate it. There might be a couple more that come out of nowhere still as capital aggregators. Justin says, what catalyst can we look forward to in the coming months? Justin should have started already. I was hoping we'd have catalysts by now, but over the next six to eight weeks, Department of War orders for drones from drone companies. They should be coming. We should be seeing catalysts, and that should collapse the world of everyone who thinks they're going to win into the world of winners and losers. That's going to be the first sort of reduction and kick for consolidation. It is coming. It should be right on top of us. One more from our community. Beyond military needs, do they see? Are they actively pursuing? Are we pursuing more domestic application contracts? Yes, we sell stuff for domestic companies. We're really interested in drone light shows. Drone light shows would be a great place for us to sell our parts. Drone delivery is coming with the BVLOS rules. If you look at like Zipline and Wing, we're actively looking at those different types of customer bases. We expect those volume ramps to still be another two years away as they're going to be dependent on the BVLOS rule making process. That's just where the delay is. We're trying to work with other businesses. Everything is dual use. We also sell all of our parts through our store to the whole community of hobbyists. Last year we sold $6 million worth of parts to consumers who built things like racing drones or want to go out and fly or do whatever else. We're really actually particularly focused on being dual use. We just are honest enough to recognize that the current largest end customer right now is sort of the military, given everything in Ukraine and the transformation that is being driven. Anything else? I think I'm almost out of time here. If you got anything else you want to know, you probably got to slide it in about the next two minutes. I do really appreciate everyone paying attention, by the way. I know it can be exhausting going through all these and trying to understand what you like and don't like. Thank you so much for the questions. Thank you so much for your time and attention. Please, you know, reach out, follow us, do whatever. Remember, it's UMAC. I always encourage everybody to buy one share so it shows up and you can track all our notices and everything. That would be my sign-off: go out, click yes to one. We appreciate everybody out there who's interested in what we're doing. All right. Since there is no more question came in, we will now close this session. Thanks, Allan. Thanks. Have a great day. You too. Bye-bye. That concludes Unusual Machines Incorporated's presentation. We may now disconnect. For details on upcoming presentations, please refer to the conference agenda. Thank you for your participation, and we look forward to welcoming you to the next session.