UMAC - AMEX

Hello, everyone. Good afternoon, and welcome to Unusual Machines Second Quarter 2025 Earnings Conference Call and Webcast. With us today are Unusual Machines CEO, Allan Evans; and CFO, Brian Hoff. Following today's remarks, we will have a Q&A session. During this call, management will make forward-looking statements, including statements that address Unusual Machines expectations regarding the impact from tariffs, our ability to add more employees to our ranks, our factory expansions, our ability to increase our margins and revenues, our ability to achieve aggressive growth, our expectation that the marketplace will change in quarter 3 and quarter 4 of 2025, our plan of keeping our cash burn low, our ability to scale our motor and headset manufacturing capabilities, our ability to scale supply chains to meet our customer needs, our expectation that the first motors will be delivered in September of 2025, our expectation that we will close the Rotor Lab acquisition in quarter 3, our increase of our workforce to 50 employees by the end of 2025, receipt of orders from the U.S. Department of Defense, our ability to continue growing revenue and improving margins, our ability to become cash flow positive in 2026 and our expectation that the U.S. drone market will continue to explode. 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 Unusual Machines most recently filed Form 10-Q, Form 10-K and prospectus supplement. Except as required by law, Unusual Machines disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. As a reminder, this call is being recorded, and a replay will be available on Unusual Machines website at www.unusualmachines.com. Now let me hand the call over to CEO, Allan Evans. Please go ahead, Allan.

Goodness. It seems like that statement pretty much covered everything. Anyway, I am really excited about today's call. I'm going to be reading, so forgive me a little bit for that. We have some prepared remarks that we're covering our second quarter results, some of the subsequent events. And then after Brian and I finish, we're going to be really happy to take your questions in an open Q&A session. I really want to start by acknowledging how much work our small team puts in. This quarter was a lot of extra work because of the day-to-day changes in the tariff situation and the rates and the policies on what we could bring in. So everyone just keeps putting the work, and it's really awesome, and they're bringing energy and enthusiasm to these different challenges we face in a weird environment. And I just -- I'm still so excited because the culture and the quality of our workforce just have me really believing in what we can collectively achieve as we go forward and as we add people to what we're doing. So thank you, everyone. Speaking of being busy. So even with what I think I personally expected to be a second quarter to wall because of tariffs and consumer demand, it just doesn't seem to slow down for us. And this second quarter was yet again our highest revenue quarter of all time. This is the fifth consecutive quarter that's true. It's 51% growth over quarter 2 last year, which we're excited about. For the quarter, we generated $2.12 million in sales. And really what's neat is we did that at a 37% gross margin. So this growth really coupled with the increase in enterprise sales, which climbed above 30% of our total sales, they overcame this quarter of weak consumer demand that was really caused by tariffs. And then on top of that, again, pushing margins to 37% without doing anything damaging on the pricing side is really us starting to move in the direction we want to move in. So from my perspective, given that backdrop, I view this quarter as a really great quarter. It was a challenging market environment, and we still hit record revenues. We increased our B2B sales. We improved our margins, and we are now really accelerating our progress. So with all this going on, we'll talk about cash flow, operations and growth. So we started this quarter with $5 million, and that may seem like a long time ago. As we finished the quarter with $38.9 million, we raised another $44.9 million after fees in quarter 3. So we have a cash position of more than $80 million. We're very comfortable with it. And aside from some CapEx expenses for factory expansion, we plan on still keeping our cash burn low going forward. So now we're actively getting ready to aggressively grow, and we expect the marketplace and are actually starting to see indicators of it changing in quarter 3 and quarter 4. I'm sure most of you are on this call to actually hear about that. So I'll hand it off to Brian, while you're still a captive audience to cover our financial results in more detail. And I'll leave you waiting just a little bit longer for those forward-looking statements. With that, I'm going to hand it off to Brian.

Thank you, Allan, and I appreciate everyone joining the call today. As Allan mentioned, we continue to have growth in top line revenue and overall gross margin. We hit $2.1 million in revenue for the quarter with $4.2 million year-to-date, which is a 65% increase as compared to the prior year pro forma revenue. This is also done with increasing our margins from 25% last year year-to-date to 31% year-to-date. And as Allan said, we kind of expected to have a drop in our total revenue and margins between Q1 and Q2 of this year from the tariffs and some of the uncertainties, but we didn't see that as we continue to grow our enterprise orders that also have higher margins. We did see an increase in our tariff costs during Q2. However, we were able to pass these costs on to both retail and enterprise deals. We're going to continue to closely monitor and adjust related to tariff changes moving forward. Our operating expenses increased this quarter as we incurred additional costs as we started setting up our motor factory. We're going to continue to see some operating expenses increase during Q3 and Q4 as we're hiring and have additional costs for both our motor facility and headset operations. However, we are going to continue to be cost conscious, as Allan mentioned. We also saw an increase in our G&A costs. A lot of that was related to some non-recurring professional fees from some of the acquisition-related activities that we've been through and some of the transactional expenses, non-recurring investor relations and some non-cash and the large non-cash increase in our stock-based compensation, which was $5.5 million during the quarter. As we noted in our shareholder letter that we just published about 30 minutes ago, our net loss was approximately $6.9 million, which -- and including the $6.1 million of non-recurring and non-cash costs. I did reference Table 2 in that shareholder letter to see kind of our normal operations and the breakdown there. It's very interesting to reflect on our balance sheet position over the past year. Last year, we had about $2.2 million in cash and $4 million in debt as of this time last year. This year, we're at -- we've reported about $39 million in cash and no debt. And as Allan mentioned again, we just raised $48.5 million in addition to put our cash balance over $81 million, transformational for sure. We also with that large cash balance, we saw about $200,000 of interest income during the second quarter and expect that to continue to increase during Q3 with the larger cash balance. We will -- we started purchasing our motor inventory and equipment, and we're going to continue additional purchase into Q3 and Q4. Our strong balance sheet is going to position us to take advantage of these growth opportunities quickly, which Allan will go into very shortly. Finally, I'd also like to welcome all our new hires to the team as we continue our growth and say a big thank you to the team for all their hard work and execution over the past quarter and look forward to closing out 2025 strong. I'll send it back over to you, Allan. Thanks.

Thanks, Brian. And Brian, I'm sure, is particularly appreciative of the team as we added a controller. So thank you again for all the hard work, Brian, and now to your -- a couple of the members that help you out after a year of slogging through it yourself. So it should be obvious to everyone at this point that we're extremely excited about what's next for unusual Machines. We're really well positioned in the domestic and global political landscape. We generally have really favorable market conditions for the American drone subsegment. We also have the capital to execute. So I'm about to go into a lot more detail, but absolutely want everyone to take note that the rest of my comments from this point forward are forward-looking, and they're in no way guaranteed. So let's start with the $80-plus million in cash we have. We have enough money to build out the motor and headset production as well as scale supply chains to meet our customers' needs. We're keeping it in cash equivalents right now that are generating interest, and we plan on doing that for most of it through the end of October when we have a very clear understanding of what 2026 operating needs will be. And we're also starting to explore what a treasury strategy will be, and we'll have more news on that in the coming weeks. But the real key takeaway is that our growth is not resource constrained. We'll be able to rightsize our company and our speed of growth no matter how fast or how big the marketplace requires us to become. And I spoke at length about other ways we plan on leveraging our cash position last quarter. I won't go into too much more detail now, except to say that we don't plan on sitting on our hands. So update on motor production. We have received delivery of our low-volume production machinery. When we say low volume, it's not prototyping, it's tens of thousands a month rather than more. And we are installing and testing it even right now in our 17,000 square foot motor facility. We still expect the first motors to come out of that factory in September. So in some miracle of execution, we're still on time. That's a testament to the team. And I think Andrew and Brad and everybody doing the work to get that done. We also expect to close the purchase of Rotor Lab in Australia in quarter 3, maybe even as soon as by the end of this month as we met the final major closing condition, which was approval from the Australian government. So in regards to motors, everything remains on track, which is exciting and almost unusual in this world. So then many of you may know with [ Avagon ]and Fat Shark, I have a personal long history of developing and producing headsets and headsets for drones. So the opportunity has really come up for us to onshore this now. So we're going to start doing final assembly and production of Fat Shark headsets in a new Orlando facility. So we're just starting to look at the leasing and everything else, but I am super excited that we recently hired Tom Mercier to be our Vice President of headsets. And he's going to really oversee the initiative. And I just -- there aren't a whole lot of people that are as excellent as he is for this position. He comes from Google, and he was a key person in building out magically production lines also in Florida. So I'm excited to say as one of our new initiatives that we don't think it will be very long until they're made in USA Fat Shark headsets, and we're really excited that our customers have supported and encouraged us to do that. Speaking of hiring. So we ended the second quarter with 19 employees, which is why the work that they've done has been so impressive, and we started scaling. So we're already at 29 employees. We are going through this growth phase, and we expect to be at about 50 employees by the end of 2025. And that's just to continue in our scrappy way to meet the demand increase we expect to go through the second half of this quarter and quarter 4. So to everyone who's joined the team, I want to say welcome aboard. We're glad you're here with us. And I think for investors, while the addition of new employees like Tom or our new Controller, Tim, it can be really exciting. I can tell you that I am personally even more excited about the growth of some of our team members that we already have. For example, Stacy Wright, who is the President of Roto Riot, was promoted to the Executive Vice President of Revenue. She is just crushing it. She's a big part of why we have quarter-over-quarter-over-quarter revenue growth. And to see her and a whole bunch of other team members really bring the energy, the enthusiasm and the excellence to these positions just is really exciting. One thing that I very strongly believe is a company is only as good as the people that actually do the work. And I think if you look at us, that just makes us one heck of a company. So it gives me a chance to really think we've got something special. So I'm sure some of you at this point are thinking, well, that's a lot of growth all at once. And are we sure that now is the right time to turn on? I'd say those concerns are legitimate because scaling early is absolutely a real risk factor, and it's caused a lot of companies to get themselves into dangerous positions. We are very confident that the time is now. At a macro level, the catalysts are in place. The government finally passed a budget. They added more money for drones in the reconciliation phase. Secretary Hegseth issued a memo making drones easier to purchase by different groups of the DoD. Secretary Duffy recently opened up the BD loss rulemaking with a drone dominance inside the U.S., and it really enables more use cases for domestic drones. I strongly expect government orders to start any day now and then start to come quickly and in significant volumes. At the same time, at a micro level, our team has been working with a lot of different customers to understand their specific component needs and volume expectations. We're already seeing the B2B volume increase. We saw that in quarter 2 as it moved to over 600,000. And we're really getting guidance and initial orders and feedback that we're about to see much larger volumes, much larger orders being placed with us over the next 3 to 6 months. So given all of this, we absolutely believe the time is now. And we believe that it's going to be driven by U.S. government orders, which are just starting to happen. So we're just at the front end of this, and it's going. So really, when we look at Q2, I want to go back to say that our team's ability to continue to grow revenue and improve margins in what was a really macro challenging quarter with no government orders or anything else. For me, that makes the second quarter really stand out. And it's really exciting because now that we're well capitalized, we're growing the team and the facilities. These government orders are just starting to materialize for our customers, and we're starting to get guidance there. It's all coming together, and we haven't left pieces of it undone or behind as we scale. So we stated that our goal is cash flow positive, and we expect to need to be at $20 million to $30 million in revenue annually to get there. I firmly believe that's going to happen in 2026. And we're going to cross that $5 million to $8 million quarter. And that doesn't mean that I think we're going to stop there. But once we get there, we're going to be cash flow positive. And I think the major catalysts for that revenue in 2026 are starting right now. Unusual Machines is at the corner where the market is about to mature. Our business is capitalized, extremely healthy. We've demonstrated consistent execution, and now we are aggressively pursuing growth. The U.S. drone market is about to just explode, no pun intended. And we absolutely expect to fearlessly seize this opportunity that we have right now. I want to say thank you again to our staff, everybody new. I also want to say thank you to our shareholders. We're in this together, your owners in the company, and so we're all doing this collectively. So thank you. And then with that, I want to open up the call to questions.

[Operator Instructions] So let me see what we got here. All right. Somebody is going to have to let me know if we have hands up. So I'll start with the first Q&A, and then I'll jump over to the hands that are in the air. Justin [indiscernible], can you expand upon the announcement new facility for headsets? And will you be working on a new headset that will be introduced to the market in the future? What does it mean new levels of interoperability across systems? Unusual Machine strategy to expand U.S.-based production of critical drone components will initially focus on assembling high-performance FPV goggles with new levels of operability across systems. Justin, thank you for the question. What we are going to start to do is final assembly of one of our Fat Shark product lines that we already have that is being ordered in large volumes by government users. So that way, we can get our whole team up to speed on how to manufacture. And then once we have that excellence in-house, we do expect to start to do more headset development and production in the U.S., sort of in the same slice stepwise function that we've always taken. So appreciate it. All right. We're going to go over to the call in, and we're going to say, John Roy, you got a question for us.

So can you hear me now?

I can hear you, John. What do you got?

All right. So more legislation. Are you expecting to see anything new? I mean, obviously, we've had a lot. Do you, A, expect anything new? And B, do we need anything new?

I don't have any real expectations of anything new except for the [BV loss] like the rules for domestic drones to go through the rule-making process. I think we're in a great spot of legislation-wise. I think it's really set to go forward. And now we just -- now it's that market full where the government will start to place orders, and we'll see where that lands.

Yes. And as a quick follow-up on that, you gave us some color on the government drone demand. Can you give us some more color on -- are you guys selling a lot of parts into those? I mean, where is unusual play in that order?

So a question that I have to answer a little bit delicately. All of our customers, like in a lot of cases, compete with each other. So we can't say anything until it's all the way done and all the way announced. So we are selling to a bunch of different folks. And I would say one big driver is a program called [PBAS] which is an FPV program by the government. There are 12 companies that are currently being looked at to be down selected, 4 of those will be down selected, and that's looking to be about a $500 million total basket. And we have several companies that we are a supplier for that are competing in that as an example of a place where once that's finished, we'll get those revenue projections and really be able to understand what 2026 looks like. I think people are typing in the chat, but if you guys can type in the question space instead of the chat, it would be really appreciated. I'm going to go back to a Q&A question. Rodrigo asked, good afternoon, as a young enthusiastic shareholder, I'd love to go check out the factory in Orlando. Anyway, there can be tours or videos for all those looking to learn what happens behind the door. Rodrigo, I think it's a great suggestion. We do have a video team. Let me work with them and see what we can get out there because we want to share what's enthusiastic with everybody as it comes together. And appreciate you being a shareholder and wanting to be part of the journey. Thank you. All right. So now we're going to go back to somebody who wants to speak here. We're going to go to [Danny Ka]. All right, Danny, are you with us? I think you got on mute, sir. All right. What do you have?

I'm just curious, what kind of collabor are you guys doing with Red Cat? I know that you and Jeff are pretty close. And what a coincidence that you're both doing a town hall the same day, time and hour. So I'm curious what you and Red Cat have going on together.

Well, Jeff is a great guy. We obviously came out of Red Cat. They -- publicly, we're doing motors for them. So that's great. And I'd say the same time thing is just because there are rules on when earnings have to go out, and we're close to the deadline. So when you're busy, it's where you push it. But I can't go into more detail because, again, we don't talk about our customers. That's more for them to talk about, and we're happy to approve anything they want to share.

Got it. Well done, and you're doing a great job. I'm a big shareholder of your company, and I'm super proud.

Thanks. Really appreciate it, and thank you for joining us today. All right. We got a Q&A in the type in. Jesse says, the goal of Unusual Machines is producing drones in the U.S. Can you please give us an update about that? What are the next steps toward this goal? Jesse, I'd say our goal right now is to produce parts, so other people can produce drones. There are a whole lot of great drone companies out there, and we don't want to directly compete with our customers. So the second we start doing that, I think we start to not service the entire industry. So now if in a few years, there's consolidation and things move around, that may change. But right now, we're just trying to get ahead of the component supply chain. All right. Let's see what we got next. By the way, I appreciate it, guys. Your questions, we're here to be as transparent as possible. So [Jason Yun] do you anticipate needing any additional equity raises this year? But considering the timing of expected orders and any supply chain prebuys, do you foresee a need to raise incremental capital? No, I don't think we'll need any more capital for operations. Now if there are strange circumstances or other things occur, there's the opportunity to make all our shareholders a bunch of money, we're going to explore it. We're not ever going to take anything all the way off the table. But our burn rate is really low. We're in a great position to execute on everything we need, and we don't have a requirement in any way around that. Compared to my interview in mid-July, are you seeing stronger demand from customers and a faster pace of orders today? Yes. It is turning on now. This is about to go. Among competitors, who else has comparable balance sheet strength? Do any peers have a cash position as strong as ours right now? I am unaware of any other parts vendor in our same situation. There are a couple of other parts vendors that don't sell into the value segment where we sell sort of competing with the Chinese. And I'd say like there are some great companies out there, examples are like ModalAI, a few others that sell sort of premium Aterian. Other companies that their parts may get mixed and matched with ours depending on our customers' objectives. But I don't think there's a parts company out there in our same position at this point. All right. We're going to go to [Joe Schicker]. Joe, are you with us? I think you're muted, Joe. All right, Joe. All right. We're going to have to get back to you, sir. All right. Dylan, huge fan of the company. Would love to know some insight into the new means of production, what scalability looks like in the current factory. Right now, we're producing tens of thousands of electronics components. We're producing tens of thousands of cameras. We're lining up to be able to produce tens of thousands of motors. We have enough motor material in to do tens of thousands already in the supply chain. It might be some teething efforts. There might be some supply chain hiccups that's a little early. So tens of thousands is what we're looking at with a supply chain that's ready to go pretty much across everything. If we have to scale to hundreds of thousands, you're really looking at a 6-month window with a ramp into it to build out the supply chain. And that varies depending on the component. But if you use it as a rule of thumb, you'd get a really good idea of where it's at. Larry Walsh, where do you see the company in 10 years? Honestly, Larry, we're either one of the 2 or 3 major drone companies left or we've lost. And I see us being 1 of the 2 or 3 major drone companies left. And I see us being a monster in what is an emerging logistics category. That's what our entire objective is, and we won't quit until we get there. So the exact steps to get there, exactly what that looks like. I think we're going to have a drone future. And I think once we get and start to win with drones, then you're going to see our parts used with other robotics companies. And I see that as our long-term expansion. Now we got to win these first steps, and we got to focus on them or we'll never get there, but I think we're taking it one step at a time and not losing sight of the long-term goal. Austin. Congrats on the solid results in the tough environment. Thank you. It's all credit to the team. They crushed it. How should we think about gross margin in the second half? We're really constantly striving to always say minimum 30% gross margin with a long-term goal of 50% gross margin, 37% might be a little bit of an overshoot. It might ring back down, but I think you're going to see us keep staircasing this up. And I would expect 35% and if volumes are higher, us to keep figuring out ways to improve margins. Now we're going to see blended margins drop a little as we turn on a motor factory because when you do something knew your margins because you're doing returns and replacements for customers and stuff. But I still think as we do this, we're going to manage to start to take those margin gains that are going to be required for us to be a sustained business. Next question. Are we expecting to grow revenue sequentially in the second half 2025 in quarter 3 and quarter 4? Well, every quarter has been our highest revenue quarter to date, and we expect the market to turn on. So yes, I mean, I think if it would take a real anomaly for that not to be true. So yes, I expect revenues to continue to grow. And I expect to have to repeat that same opening line several more times in a row. I almost -- if you're going to sit at home and play Allen Bingo, you'd probably make it your bingo center square for a while here if you were listening to these. How big should enterprise sales account for total revenues in 2025? It's a little bit uncertain. It depends on the timing of the orders and what they order and delivery. I think we're seeing 30% of where we're at. I think we'll probably hold there. We might see an uptick depending on if they want delivery in 2025 or early 2026. But I think our move to 30%, our long-term goal is to have enterprise be more than 50%. But you got to remember, Christmas is our biggest consumer season, and we have a lot of stuff there. So the 2 parts are kind of racing each other to see how it goes. But I'd say the 30% to 40% that we were able to demonstrate in Q2 feels like where I would minimally expect it and it could be a lot bigger than that if some of our customers want earlier delivery. [Chris Pok] how much of the production is based on assembly of third-party components and how much is vertically integrated? Chris, truth is, it depends how far down you go down the chain, right? If you think about Apple phones, they don't do any manufacturing. I mean they still maintain the whole supply chain and do it all. And then if you look at like our motors, we make all the motor components, but we don't make the rare earth magnets. But then if you look at the people who assemble the rare earth magnets, they don't mine the magnetic material. So at some level, it's all us. At some level, it's none of us. It just depends on how many slices you want to go. Do we have stamping and powder coating lines for cores and housings going live or soon to be? We have some of that in Australia with our acquisition of Rotor Lab. We do some of the mechanical components over there. Otherwise, we haven't put that in place yet just because there's a lot more of those services domestically than there are some of the other things. And we're still just trying to prioritize the things that nobody else really has good alternatives for. I mean I wish we could do everything all at once, but we can't, and our COO, Andrew Camden, would probably fit out of being overwhelmed. So I really appreciate the questions. Kelly Roman, what's the possible best case revenue for 2026, i.e., if the customers you work would land the vast majority of expected drone-related contracts? Okay, wildly speculative. It depends on the government placing stuff, depends on everything else. Let's take [ PBAS ] which is a $500 million contract. You expect the whole collection of customers probably to take 50% margins. So $250 million in drone parts or in drones, let's call it half of that parts, $125 million. I mean, I think if you're looking at like best case scenario in numbers, somewhere in there. That's also probably about as fast as we could scale to fulfill. I mean if somebody came and said we needed to do $1 billion in parts next year, I'd look at them and be like, okay, 18 months because you require a ramp and you require a supply chain and a lot of other stuff. But I think if you look at what's out there publicly and you do some back of the envelope math, you'd be in the low hundreds of millions for absolute best case. What do I see as the best edge and biggest mountain for the future? I'm a backpacker, so I'm not sure about the mountain. I could get literal, and I don't think that's the question you're asking, [Derek] I think our best edge is the aggressiveness that we've taken in terms of getting ahead of making it in the U.S. and then also just working with our customers, like we -- they're very much about solving their problem. And it's not about, hey, here's what it should be. It's like what are you trying to do and how can we be helpful? And then compared to some of the other parts guys, we have scale. So if you look, for instance, for our VTX, there's a chip in there made by a Taiwanese company, Richwave. Where because of the conflict in Ukraine, you can't even order them unless you're going to place an order for $40,000. They just won't talk to you. You'd have to go to brokers or whatever else. So we're big enough and we move enough that we can go have those direct relationships. And that gives us cost, supply chain surety, reliability. And then having that stuff in stock at a competitive price, not only lets our customers -- our consumer customers get a great deal, but it lets our government customers get a great deal, too. And I see those as the biggest edges. The biggest mountain is honestly government purchase processing. So okay, the government said they're going to do all this. When do they execute this? And then our customers have to place their orders. And so that creates a lot of timing uncertainty. And that's a big part of why we raised the money is to mitigate that uncertainty, so we didn't have to guess. Anonymous attendee. Has the coast guard purchased any drone components? Or is it mainly the Army? I'm not -- I don't know the exact answer of all the people that have purchased components because a lot of them come through the store directly, but we've had most of the branches and a lot of different folks in the government buy different parts of components at different scale. So I think the Army and the Marines right now are the ones the most forward in terms of budgets for drones. And so we probably see it weighted to those 2 groups more than others, but everybody has really started to make purchases and explore. [WHBBBB] what role does Trump Jr. play at UMAC and how are we getting value out of that relationship? He's an adviser. I talked to him. He is able to do business introductions. But right now, we're not in a position where we need much. So when we get back to those elements, we engage and we ask. But we're just trying to scale. We're trying to drive sales. So that's what we see. So very happy to have them as an adviser. I think the folks that support the company, everybody are really excited and helpful in the ways they see it being helpful. Justin, does the company have ambitions of manufacturing some digital components in the future for the drone industry like you have for analog? Justin, if you look at the history, when I was at Fat Shark, we were the first ones to partner with HD

Something in the chat from Marvel Pegers. Would you like me to read it?

Yes, I get it out there.

How much of the $40 million and $48.5 million offerings are going to be spent on the motor factory? And how much is left off after the in-house manufacturing? What are the next major components that UMAC attempts to mass manufacture in-house after the motors?

So we expect to have about $80 million left after all the CapEx for the motor factory. We're still burning under $1 million in cash a month, and that will be mostly offset by interest from the money even at the current rate. And then we plan on moving to set up a headset final assembly line, which will be significantly less expensive and move to revenue sooner. So we expect to be sitting to actively have for funds under management between $70 million and $80 million through 2026, depending on how fast we grow and return. So we feel really comfortable with that, and we're really excited about having kept our cash burn rate low so that we can be in a position to do this without creating tertiary or cash risks. Okay. So Chris, I can't comment on direct targets, but can we get a feel for M&A activity ahead? Chris, right now, I think there are a lot of interesting drone parts companies out there, et cetera. And everybody right now thinks they're going to get the government contract. So if you're talking to anyone right now, they're like, "Oh, I'm going to get this a huge contract. We're going to crush it." And it will really be who are the really solid teams that maybe didn't get selected for a government contract or whatever else that we can add in and really build something robust because we're not here to overpay. And we're, again, very particular about who we want to integrate because integration is a real headache. And it's personality driven and is it a good fit in the company and everything else. So I think we're -- again, we talk to everybody. We're a supplier to everybody. We do a really good job there, but we're not -- there's nothing like real spicy or anything. And I think we'll -- again, we might see what it really looks like, and there might be a lot of opportunity, but it won't be until late October until people know who won and lost. All right. I know, right? Do we got anything else? I mean I'm pretty excited about it.

We have one last comment from Bill McCammon. I'm enjoying the Q&A and just hearing more.