Titled "Normalizing Unmanned Aircraft Systems Beyond Visual Line of Sight," also known as BVLOS, aimed at integrating unmanned aircraft systems into the national airspace. These executive orders and the FAA and NRSA proposed rulemaking, combined with Golden Dome announced in May and the recent plus-up from Senate appropriations for small UAS, are creating a massive tailwind and opportunity for all drone and boat manufacturers in the defense space. We believe that our three divisions, FlightWave, Teal Drones, and our maritime division, will be able to assist the administration's goal to dominate drone in the USV space globally. I'm going to start with FlightWave, then Black Widow and SRR, and then finally our new maritime division, which ties all of our products together. FlightWave, the Edge 130, is now in production, following significant upgrades in the implementation and advanced manufacturing methodologies.
These enhancements have positioned the platform strongly for both short-range and medium-range operations. Recently, we've conducted some successful flights for various Department of Defense groups and are starting secure orders, including foreign military sales. Looking ahead, we anticipate releasing the Trichon variant by year-end, featuring upgraded radios and improved camera systems and enhanced visual navigation capabilities. Black Widow, we are finally done with our Black Widow holding pattern. The Black Widow is in production, and we will be making our first delivery under contract this month to the Army after signing TD3/LRIP at the end of July. I want to thank the U.S. Army, and specifically the soldier feedback we received. The soldier feedback has turned the Black Widow into the best in class. 45+ minutes of flight time, we've actually flown 52 minutes recently, and then also furthers our range.
We will surely get lots of questions tonight on Black Widow, so I'm going to move on to the maritime division. Our new maritime division, we have built an incredible team to build our maritime division. They have a long history of boat building. Details will be announced next week, and you won't be disappointed. The total addressable market for USVs is much larger than sUAS, but having a boat that can be fit with our swarm capability is building an entire new market for Red Cat 's Black Widow, and Edge 130. We have a proven tech stack with multiple kills and thousands of operational hours in actual combat and master boat builders. I'm going to leave it at that. Details coming next week on the maritime division. With that, I'm going to hand it over to Chris, our CFO.
All right. Thank you, Jeff. As you might imagine, the recent events have gotten us really excited here for the future of Red Cat . Anticipation is really high, and there is an immense amount of activity and coordination happening across all of our facilities. Financially speaking, Q2 has been an excellent positioning quarter for us. As we have mentioned before, our revenues will be a 2025 second-half story. This also means that Q2 was important to prepare for the massive ramp into Q3 revenues and the execution of our new maritime division. We are now there. We have successfully positioned ourselves with a strong $66 million cash balance and a $16 million inventory buildup to deliver results in the second half of 2025. Now, despite increasing our headcount recently to meet future demands, we've successfully controlled non-labor operating costs to keep a steady and efficient cash burn.
I know this question comes a lot with many of you. Our cash used in operating activities for the second quarter of 2025 was $12.9 million compared to the first quarter of 2025 at $15.9 million, a decrease of $3 million in cash used for operating activities. Though, when excluding working capital changes, or in other words, excluding the changes in operating assets and liabilities, our adjusted cash used for operating activities remain flat at $10 million per quarter in Q1 and Q2 of 2025. The future is looking really bright for Red Cat , and I'm going to turn the time over to Brendan, our Senior VP of Regulatory and Government Affairs, for a more thorough discussion on what we see coming in the near future.
Thanks, Chris. To echo your sentiment, very exciting time to be here at Red Cat. Our government affairs positioning is exceptionally strong. We're operating in a political climate that not only recognizes the urgent need to modernize U.S. military procurement but is actively moving to rebuild the American defense industrial base. Over the past three years, Red Cat Holdings has cultivated deep, productive relationships in Washington that are now translating into tangible opportunities for our customers and our shareholders. From a funding standpoint, the momentum is clear. In its FY 2026 budget justification, the U.S. Army requested approximately $148.85 million for procurement of 2,290 short-range reconnaissance systems, plus roughly $70 million for ongoing operations and maintenance. In the Senate Appropriations Committee's preliminary draft language for fiscal year 2026, the committee recommends roughly $617.13 million for SRR small unmanned aircraft systems procurement and maintenance.
This represents an increase of over 400% compared to the Army's original request. While this draft is subject to change during the legislative process, we believe it's a powerful indicator of the congressional intent and a substantial growth catalyst for our SRR program line. In parallel, we are in advanced discussions with the Department of Defense’s Office of Strategic Capital regarding a non-dilutive funding request of nearly $50 million. This capital would accelerate automation of our production lines, enabling us to scale output rapidly and capture margin expansion as demand ramps. Additionally, regulatory shifts are also poised to reshape the market in our favor. Section 1709 of the Fiscal Year 2025 National Defense Authorization Act will, by default, place DJI on the FCC's covered list no later than December 23rd, 2025, unless a national security determination is made earlier, which would ban them earlier.
This would effectively ban new imports of DJI drones into the U.S. Given DJI's more than 90% share of the non-DoD drone market, we anticipate significant displacement demand in dual-use sectors like public safety and industrial infrastructure, representing at least $957 million in annual revenue opportunity based on the latest available import data. Moreover, as Jeff mentioned, the FAA's new Part 108 rulemaking for Beyond Visual Line of Sight establishes a standardized, scalable framework for complex drone operations, which unlock cost-efficient, less labor-intensive missions across critical industries. While these projections remain contingent on pending government actions and are, of course, subject to change, we believe the convergence of increased appropriations, favorable regulation, and targeted capital investment creates an extraordinary near-term opportunity and a foundation for compounding growth in the years ahead.
We're confident in our strategy and our market position and our ability to translate these macro tailwinds into lasting shareholder value. Exciting times, and with that, I'll give it back to Stan for our next segment.
Yes. Thank you, Brendan. For those of you out there, there might have been a glitch at the beginning of the Zoom. I just want to reiterate that we are recording this town hall, and we will make it available. Forward-looking statement will have on screen, and we're about to go into our Q&A, and Jeff Thompson's actually going to lead us off in that Q&A. Jeff, just real quick, you know a lot of people are asking about tariffs. Have tariffs impacted any of our supply chain at all?
We have not seen any meaningful tariff complications yet. Basically, most everything, our biggest items all come from the U.S. We have not seen any tariff, anything material at all yet.
Great. Another question that came in is, can you give us a status on Palantir's VNav visual navigation solution and how it relates to Black Widow?
Yeah, we're pretty excited. We're very far down the path, and we're ready to start implementing it as a commercial product. It's going to be between $12,000 and $15,000 per drone, depending on volumes. If you even just looked at what's in the 2026 JBOK for those 2,200 systems, that would be an additional $58 million in revenue just for adding software to our existing platform at basically 100% margin. Now remember, we do a revenue share with Palantir. Even for the 690 systems for LRIP that we just got, it's also an additional $16 million to the 2025 budget. That's pretty exciting to add that. Just to be frank, you got to go with a software solution. The M-code stuff cost about $15,000, actually, and it doesn't really work well. We're hoping that everybody will vow to get the visual navigation software platform.
Speaking of Black Widow, again, another question that came in. What is the next steps for starting to deploy Black Widow to the Army?
Yeah, we've already done the training. Chris can talk more about this. He's right next to it, and he showed me a lot of piles of drones heading out to the U.S. Army this week. How many did we make on Saturday, one day?
Saturday was 32. On Monday was 56.
Yeah, we're getting there. I'm sure we're going to get a lot of questions on how we're going to hit our guidance with last Q, but this is not a last Q story. We've been in a holding pattern with Black Widow, waiting for the Army to say, yes, this is a final version. We actually got changes as close as four weeks ago. Never mind the March 27th stuff that expanded our range and battery life. For us to get the contract done at the end of last month and to be shipping this month is pretty darn exciting. With those run rates, we can easily do 1,000 drones a month of just Black Widow. Since this has already been hit upon, we believe we can still hit at least the lower end of our 80 - 120 guidance, just mostly with the Black Widow.
Great. This next one, I'm going to hand over to Brendan. Brendan, you've identified international defense, public safety, and civilian markets as incremental growth vectors. How are you prioritizing these segments, and what specific go-to-market strategies or partnerships are in place to ensure Red Cat can capture this upside without diluting focus on your core U.S. defense business?
Of course. Thanks, Stan. The thing that I'd like to highlight is there's two things to really envision here. Number one is that there's a lot of overlap between our defense offerings and our civilian, industrial, and public safety offerings. Our goal is to use the acceleration of capital into the defense market to create the infrastructure to then build our civilian market offerings. 80% of what we use in the defense space today is already applicable to the civilian sector. We're still a defense-focused company, but we're accelerating that civilian business as DJI gets kicked out to backfill that $900 million of demand that we expect.
Great. Actually, speaking of DJI, with DJI potentially restricted from the U.S. market as early as the end of 2025, what specific steps are you taking to position Red Cat as the default replacement supplier in both defense-adjacent and civilian channels? The follow-up question from there is, how quickly could you scale production to meet a surge in displaced demand without impacting delivery schedules on existing contracts?
Of course, and rapidly. We're able to do 1,000 drones a month today. We have requirements that we've developed specifically for the civilian market. Those are in process to create a civilian version of Black Widow, which will be entering the market relatively soon. We're very excited about that prospect. We believe that'll drive significant revenue, and we believe that'll provide significant value with the civilian version of the Black Widow once DJI is kicked out.
Yeah, and just to add to that, with the addition of our, when we're not even really utilizing the new space that Chris and his team have gotten right next door to Teal that's attached to the building, the secondary location that's in California for Black Widow. We'll be able to meet that need, no problem. It's kind of, we got the chicken and the egg here. We need the orders first, and then we can make as many drones as people need.
Jeff, maybe this is over to you and Chris. Somebody just mentioned Teal 2, which is our legacy aircraft to Black Widow. They said in an article that it was back in production. Shed a little bit more light on that one.
Yeah, the goal was to shuttle Teal 2 as Black Widow was coming on. We had a lot of requests for the Teal 2 start to come in. We wanted to save at least a few hundred for our partners at Sentien because they're based on Teal 2 but now switching to the Black Widow, which is our swarm platform, is incredible. We got some other from the Indo-Pacom region, people that wanted a cheaper drone that's almost the same exact operating system as Black Widow. There were some pretty significant numbers behind those people wanting the Teal 2 again. It doesn't hurt us to keep the Teal 2 going as a less expensive option.
With now the procurements of the Army, what is the international focus going to look like, you think, in the future? That's another question that came up.
International has changed quite dramatically just in the last month. There was a negotiation for NATO to buy $700 billion worth of U.S. defense products in the recent tariff negotiations and all that big mixture. We believe that there's going to be quite a few companies that are going to benefit. Even before that, we've been going to a lot of different RFPs. We just had a fly-off this weekend that went very well with one of the major NATO countries. We are very well positioned there. Our flight time is best in class now, and we've got a mature platform. We're pretty excited about having the maritime division for that $700 billion. If you look at a lot of the coastals, there are all water, right?
If you look on the whole side of Iran and all these different places, there's lots of places that would be able to use our maritime division products.
Another question that came in that's specific to our maritime business is, do we have any worries that we're maybe scaling too fast? Can you maybe shed some light on the actual scaling aspect of our business?
To be in the boat business, you have to know how to scale. Most boat businesses, if you look at the recreational space, don't do so well. A lot of them go out of business. To have a particular product that you can stamp out thousands of times for the DoD is a welcome surprise in the boating industry. We have some of the best master boat builders out there that know how to make stuff at scale. Their companies that they came from have been in World War I and World War II, became one of the largest boat builders in World War II. You have to know how to scale. You have to have the right product. We believe we do have the right product for any maritime solution based on our partner for the tech stack, which is, you know, they're in live combat today.
They were yesterday. They will be tomorrow. They're proven. They've got thousands of hours of operational experience in combat with these boats or USVs. Also, you have to remember, the Army has more boats, small boats. They have more boats in period than the Navy. A lot of people don't know that. There's a very big TAM that we're going after with basically the best tech stack out there and some of the best boat builders in the world.
Great. Thanks, Jeff. Speaking of TAM, this goes back over to Brendan. Given that your TAM estimate is intentionally conservative, can you walk us through the key milestones of regulatory, contractual, or technological that would prompt you to revise that figure upward, and how you would allocate additional capital to scale and do those opportunities ahead of competitors?
Yeah, of course. One thing to focus on is that BVLOS is really going to change the game. I've been in the drone industry on the civilian side for about a decade. The labor ratio of flying within visual line of sight is really, really expensive because you got to have visual observers. Oftentimes, you have to daisy chain visual observers, so have one, two, three, four. The fact that a drone will now be able to fly miles down a power line is going to create much more adoption in the high-end civilian, industrial, and public safety sector. We expect that $957 million to grow pretty significantly there. As we compare that to our defense business, both domestically and international, we'll make capital allocation decisions about that that Jeff can probably speak to.
From my perspective, however, the physical requirements of the drone are so similar that both drones are going to come off the same production line. In the same way that you have different trim levels of a car or a truck coming off the same production line, we'll have defense specialized versions, excuse me, we'll have civilian specialized versions with slightly different features, but the fundamental architecture of the drone is going to be very, very similar. That allows us to drive scale. That allows us to increase our margins and capture more of that addressable market.
Great. Thanks, Brendan.
To add to that, Stan, we basically ignored a lot of the first responders in the enterprise drone business because it's very difficult. The business model is very difficult when you've got a $25,000 drone and they've got a $3,000 drone that's subsidized by the CCP. That dog's not going to hunt. Once they're gone and we get some scale from the DoD, this new dominance of drones from the administration, our prices are going to come down as we get some scale to meet the needs. We expect at the beginning there's going to be a lot of grants given to people to make that conversion from Chinese to American-made so we can get the scale that needs to be done to get the prices where they need to have it.
Great. Actually, that's a good question going into this one. It's more of a clarification question that somebody has. When it comes to us saying, you know, we can produce up to around 1,000 drones a month, more building to order, would you say that that just is for Teal Drones, or is that across the board, including FlightWave? How would you kind of differentiate the two?
No, that's just Teal. What's interesting is most of the stuff we're talking about is just only Black Widow revenue. We're not even, you know, our boat division with our USVs, those things are going to cost anywhere from $500,000 up to $1.5 million. The capability that we have, which we'll be giving more detail, is to be able to build hundreds a year, if not thousands. We're setting ourselves up for scale with that. You combine that, you can put our drones on there. It is, again, we just keep talking about the in reverse here. You've got to get the orders first to ramp it up.
From an R&D perspective, would you say that Red Cat is working on some R&D projects that cannot be disclosed to the public?
Yeah, sure. Let's just talk about stuff we're not going to disclose to the public. No, we're not going to release anything that we're doing in R&D for all our new products.
Great. Let's see. This one here. You know, we are ramping up not only from a production perspective, but also from a workforce perspective. Chris, maybe you can answer this question. A lot of people are asking about this idea of recruitment and how are we actually ramping up when it comes to FlightWave, Teal across the board and getting a bigger workforce? Oh, you're on mute, Chris.
How we do it is, right now, brute force, we've expanded our HR team, so we tripled our recruiting group as of a few weeks ago. I know that it's kind of been out there that I've posted how many open requisitions we have, and that number has gone up. Even though we are filling those positions now, that number seems to keep on going up. It's strategic. We're looking at our global teams across all the different divisions. We're looking strategically at what they need to get us to the next stage and also looking at how we can utilize the Red Cat corporate kind of level to assist and use the talents across the different divisions to help us scale more quickly. We are looking at that very strategically, but we are also looking at that as a fast ramp, especially on the Teal side of things.
Great. Chris, would you say that, just referring to another question here, would you say that we do have the backend systems in place to really manage this dynamic growth period?
We do have systems in place. Those systems are always continuously being improved and updated. We do have certain individuals that we have hired and are also hiring to help us to improve those systems to make sure that we can scale appropriately with everything else that's going on. Currently, as far as the near future, we are adequately addressing the systems perspective. That is going to quickly dissipate, especially as we get into the USV division. We are currently ramping those systems up and getting them upgraded.
To be more specific, Stan, we're building a team right now that's just going to be solely focused on implementing warp speed from Palantir. That's going to help. That'll go across all our factories, the East Coast, West Coast, Salt Lake City. We're implementing it as we speak in the next few weeks.
Great. This one we head back over to Brendan, actually. This is a Part 108 question. I know something you're very interested in. Is there a strategy to open Black Widow and Edge 130 in the BVLOS market?
There absolutely is. A couple of things to keep in mind. One, now that the rule's been published, it goes into the notice of proposed rulemaking period. There'll be a comment period. Some of the rule may change. We are actively tracking the changes to that rule. We've added those requirements to our program roadmap. We realize this is the direction that the drones are going. It has been since the BVLOS Aviation Rulemaking Committee was established. We've been tracking that for the past four, four and a half years. We've built that into our product roadmap. When the rule is fully enacted and ready for utilization, our products are going to be prepared to comply under the Part 108 regulations.
Thank you, Brendan. Another question here about this idea of kind of U.S. and Ukraine and how Ukraine has rapid drone innovation. You know, Jeff Thompson, how would you talk about Red Cat's rapid innovation when it comes to trying to get things to market and having the best in breed capabilities and those types of things?
Yeah, you have to pay attention. Ukraine has some of the best technology in the world. You know, we had to go there a bunch of times to make sure that our EW platform with Doodle Labs worked, which was exciting. The other big issue you have is GPS denied. We got one of the best partners on the planet in defense called Palantir that's going to dominate that space. You put those two things together, and you got to be ready to continue to iterate because in six months, you'll need to do something else. It's a unique thing to have to talk about when you can't talk about it, but our maritime division is going to have the latest and greatest and the best tech stack out there for autonomous surface vessels by far.
We're pretty excited about grabbing the best technology out there, the most proven technology out there. We're hoping to be able to show people our newest production boats late this year.
Next question is more of a kind of investor question. What is the company doing to encourage institutional coverage of the company?
That is good old-fashioned hard work. If you look at recently, BlackRock just became a 5.2% shareholder. We did our last raise with two massive shareholders. We only talked to two people to raise that $50 million. Myself and Chris do a lot of non-deal roadshows with a lot of great funds. Basically, it's all driven by your growth, and then people start to pay attention, and then you do the growth, and they pay attention. Nothing is going to get your attention other than revenue growth. We've been kind of head down for the last two or three quarters. I've been calling it a holding pattern. Please tell us this is the final version of the Black Widow so we can get moving. Our institutional investors, you can see they're growing and growing every month.
Here's a future roadmap question. Has Red Cat considered entering the unmanned ground vehicle markets? Any plans or aspirations to do so?
Yeah, we get a lot of inbound inquiries since we announced our maritime division from a lot of different folks that would like to be part of the Red Cat team. I've looked at about three different companies that are doing that. It's very interesting to us, but too early for us to make any announcements.
Great. Thanks, Jeff. Back over to Brendan. What do you anticipate are the next steps with our ongoing process with the O S C?
Great question. We actually just got outreach from the OSC as of this week, asking us for a second round of meetings regarding what we believe to be a phase II submission. The way the process works is there was a phase I submission where we wrote a brief as to our capital request. The OSC comes back and reviews those, makes a down selection, and we believe that we are on track for that down selection based on the information that we have. To give you an idea of how competitive this is, the Office of Strategic Capital at the time that it was funded and had the request generated was 800% oversubscribed. We believe that we are down to a finalist selection point.
We're feeling pretty confident about our application, but once we have that meeting with the Office of Strategic Capital in the next week or two here, we should have better information about where we sit.
By the way, that was a layup for him to answer because I ask him that question every single day.
This is true, Jeff.
Jeff, to a lot of us folks out there, when we're talking about differentiators between us and our competition, what would you say are the top primary things that Red Cat does and that separates us really from our competition when working with the Army and other folks?
Yeah, it's a great question. If you look at the quad space, there's a lot of quadcopters out there. There are thousands of companies that make quads. What they do is they try to make the engineers come up with the features instead of listening to the warfighter. We listened to the warfighter. First thing they told us a few years ago for Teal 2 was make it work well at night. Second thing is it's got to be robust and they're going to break. We made modular arms and other modular pieces. Now we have a modular architecture. It's got to be rugged. The Black Widow is a beast. It's got to have long flight time. Just listen to the warfighter because that's what's crucial to them. They don't want to be changing batteries every 15 minutes.
They don't want their controller dying because it has a battery that's embedded, which is not a smart idea. You can use any battery on our system that's from your drone. On the Black Widow, we listened, and that's why we got the down select from the warfighter. On FlightWave, they have a unique differentiator there because it's a fixed wing, which gives you a lot more lift. It's already got 60 minutes plus flight time, which is the best on the Blue UAS list. It's also portable, weighs like 2.5 lbs, which is good for a rucksack. It doesn't weigh too much. It doesn't take two people to launch. It has unusual flight time. It has the speed of a fixed wing, which is great for Secret Service. It actually can hover, which a lot of fixed wings cannot do. That's a huge differentiator there.
You look at USVs right now. A lot of people just say, oh, yeah, I'm from Silicon Valley. I can write code to do something autonomous. Are you a boat builder? Can you handle sea state 4 and 5? Do you know the difference between an Atlantic coastal boat and a Pacific Indo-Pacom style boat that needs to handle sea state 4 and 5? Do you know how to do jet boats? Are you going to use props, which are kind of useless? Some people don't even think about those things. Having basically master boat builders on your team and building a hull that can do everything that I just talked about and then having a tech stack from a mature location is a huge differentiator. For our USV, we're proven in battle, real combat, every single day.
Every day you wake up, we go more hours into the battle from our tech stack. That's another differentiator for us. You combine those all together because we can put FlightWave Edge 130s on this thing. We have missile launchers off this thing, so we can do stuff with Firestorm and AeroVironment with their launchers. Building a platform that can be integrated with other companies so that we can give the warfighter together what we want. Having that modular capability, being basically an open platform, you know we're integrated into the Tomahawk with AV. That gives us an advantage over people that are not. There are a lot of different ways to differentiate just through how you do it.
Along those same lines, is there any stats that we can give on FAANG development?
We do a lot of our FAANG development with UMAC, which everyone understands. Everyone already knows that. They keep getting new stuff on the Blue UAS list, and like every couple of weeks, they're doing a great job. FAANG is going to be a great offering for us, but it's never going to be a massive revenue driver for us because to produce the numbers that we're going to have to produce, the Do D is going to need four or five companies. You're going to have to share that load of drones that are very inexpensive, and it's very hard to generate lots of revenue with that. We have an offering. We have the Black Widow. We have the FlightWave system. We have a Hive system, and we have boats now so that we can get way into country.
We can get way out away from launch internally, which has been being done a lot in Ukraine. There are a lot of different things we can do by combining all three of our platforms and partnering with other folks.
Great. Thanks, Jeff. This next question, I'll just read it. On July 24th, there was a subcontract about $11 million for Teal Drones. Can you just share a little bit more details about that?
This is probably from one of those government sites. I don't follow that, so I have no idea what that's attached to.
Okay. That's good. Next question actually is something maybe even I can answer. They just want to, a lot of people want to know, like how are all these trade shows that we're going to? You know, obviously, you guys, everyone out there see me on LinkedIn. I'm all over the world. It's really hard to gauge ROI on trade shows, but I can tell you this. The litmus test for me is the amount of meetings that are usually set up before you go into a trade show. In all honesty, our schedules are completely packed going into these next few shows. I'll be leaving for Thailand tomorrow, so we have the Indo-Pacific Regular Worker Symposium focused on Indo-Pacom, already a packed schedule with interest from that area. We have Commercial UAV coming up, AUVSI d, as well as DSEI in London.
Already for a show that's happening in September, our schedules are completely full with potential customer meetings. I hope that answers your question when it comes to the trade shows. Let's see. We have more people answering stuff here. Oh, here's an interesting one. I don't know who wants to take this. Has there been any progress in developing drones that use fiber optic lines to prevent interference with radio signals?
That's basically an FPV question. Most people that are doing that are using FPV, and the Rotor Riot guys have been asked that a million times, and they can also do it.
We got another forward-looking question. Jeff, where do you see Red Cat this time next year?
Oh, that's a really great question. It's some very interesting things, right? All these JBOKs, which people in January said, oh, this world, we're dying, nothing's going to happen, we're not going to deliver. Then a new JBOK comes out and says it's going to be 2,200 systems instead of 250. You can either believe the old one, or you got to believe the new one, or you got to believe both, or one's wrong and whatever, right? You look at the additional plus up to $617 million. Again, all the stuff we're talking about is only Black Widow. If the JBOK is correct, that's a, what is it, Brendan, $148 million plus like $65 million for SRR?
Yep, $148 million plus $65 and change, close to $70.
I look at that as kind of the bottom end if the JBOK's correct. The high end would be the 2,200 systems. If they get to order more because they just got a plus up from the Senate, next year could be an extraordinary year in revenue. We're only talking Black Widow here. The Edge 130 is doing great. Like I talked about, a lot of the unique stuff that it has capabilities. When we start selling boats at $500,000 a whack and up, it's going to change our revenue stream dramatically. I don't want to give out any number. We're going to update our guidance in December for next year. It's going to be a lot different than what we've been talking about in the past. It'll probably be pretty massive.
Jeff, when it comes to our unmanned surface vessel business, I think a lot of people, when we announced that we were heading into that domain, were probably scratching their heads. They were probably like, you know, why? Where did this come from? Can you maybe give us a little light on this idea of integration and this idea of all-domain operations and why we feel like it's a thread that actually was naturally there?
Yeah, so before I got into drones, I knew a lot more about boats than I did about drones. I know a lot of people in the industry for the last 25 years of my life. You'll understand more of that next week. We've been looking at the USV space for quite some time. To kind of throw you in the bus with me, Stan, you and I went and met with one of them after our investor meeting in New York City. Some people want to partner with us and things of that nature. The USV space opens up. Most of the globe is water, right? If we want to help defend the United States, we got to, you know, there's 79,000 mi of coast. We got to help them.
Combining our stuff with our boat capabilities, bringing experts in there, our team, our maritime division just got back from Ukraine last Friday night. We had meetings all weekend. We are, we've been looking at it for quite some time. We found the right partners. It came together almost all at the exact same time to have what we believe is going to be the best solution by far for USVs in the United States with scale and capabilities to make them at scale. We're not talking tens and twenties. Like I said, we're going to have demo boats. You'll be able to see our boats live across the United States probably October, November.
To that point, if I may, I would also say consider where in the world the next geopolitical conflict is likely to be and what types of systems are going to lead that conflict. I think that demonstrates the value and importance of USVs.
Yeah, well said, guys. Another set of questions all kind of focus on full-rate production for Black Widow. You know, we've answered kind of LRIP questions. Is there anything we could say about full-rate production?
Let me just start with this. The contract that we just signed, TD3, which is officially named, and we've been calling it LRIP, low rate initial production, that's all 2025 budget. Those systems are for 2025. From 2026, it looks like it's going to be pretty massive according to the JBOK if it's correct. We can't until people announce the actual budget and we get it handed to us. I think with Hegseth announcement and the executive order for small drones, the executive order for shipbuilders in the United States, that's the only way we can put it in a bucket. Right now, that contract's for LRIP. That's just what we called it initially. It's TD3. We expect to have, we're just building as many drones as we can right now.
Whether we have an order for it or not right now, because everyone's coming out of the woodwork, now that the Black Widow has finally been demoed over the last few weeks, it's flying longer than anybody. It's got longer range than anybody as a quad. All these things are getting around. We've had a lot of demonstrations, not only with the Army, but with other branches. We've had some great fly-offs in Europe already. We're just going to keep going and making a lot of drones, get some orders, ship them.
I love it. Next up, again, this is kind of a forward-looking question. Obviously, we're going to be military is a bread and butter, Department of Defense, international. What about consumer and enterprise drones? This is maybe going to go to Jeff first, and maybe Brendan, you can kind of follow up.
Yeah, like I said, the consumer drone space is very difficult. They're used to $500 toys, and to try to get down to that, I don't think we're ever going to get there. Enterprise, they need a reliable drone that's capable, that has all the features that we have, would make our drones very valuable. If you take a DJI drone, if you drop it once, I mean, they're plasticky toys, and they're great for what they do, but they're going to fall apart. If you're an enterprise play, you're going to want a drone that can fall out of the sky, maybe just replace the arm and get you back in the air, get you back in the fight. The first responders, our drones fit perfectly with what they do.
Brendan, as a follow-up, what do you think about, again, the idea of getting into enterprise and how that deals with FAA and within the U.S.?
Absolutely. To follow up on Jeff 's point, look, 40 years ago, GPS devices were so big that they had to be worn as a backpack. They cost hundreds of thousands of dollars in today's money. Now everywhere you go, the GPS technology is inescapable. You got one in your phone, you got one in your watch, you got one in your car. The reason the cost base has fundamentally changed is because of DoD investment. DoD launched the satellites under the NavStar program in the 1970s. They built the first GPS receiver devices that exist. Now there's this huge market for positioning that most of us couldn't live our lives without. That is the model.
We're using the incredible capital engine of DoD to drive the development of drone solutions in enterprise, in industry, and in public safety that are not just going to be capability competitive with DJI, but at some point are going to be price competitive with DJI. DoD right now is how we get there while we develop that cost basis for the industrial sector.
Thanks, Brendan. Next up, Jeff and Chris, I think maybe you guys can both answer this. With the projected growth plans, are there any plans for additional debt or equity raise in the near future?
I'll start, and then Chris will yell at me after whatever I say. We have a very strong balance sheet right now. As Brendan mentioned, it sounds like we're in the second phase of the Office of Strategic Capital, which is about a $50 million infusion. Our burn is basically where it is without the revenue starting yet. As we're producing hundreds and thousands and then thousands of drones per month, that burn's going to come down dramatically. We have $66 million in the bank. I think we're very well funded. No need to do a debt offering. I mean, our debt's going to be gone in a few months, so that'll be gone. We're not doing that again. We have a strong balance sheet, so we do not see any need for a raise right now.
Great. Brendan, I'm going to hand this one over to you. It's an interesting question. You know, with SecDef's announcement, where does Replicator land in all of this that we don't really hear too much about anymore?
Yeah, you know, that's a good question. Replicator was an initiative of the previous administration. That should tell you, just that statement alone should tell you something. I'll say this. Look, the current administration really understands that America is behind in the drone war. China is winning. What we know is China has expansionist ambitions. This administration understands that if we are going to protect our national manufacturing sovereignty, we have to start that with drones. We are seeing this administration make incredible investments, not just in terms of the increase in the President's budget that we've seen year- over -year, not just in applying additional money to the Office of Strategic Capital. Replicator was largely old money, old programs, programs of record that already existed, shuffling money around to buy more drones from those programs.
We're seeing this administration completely reimagine what it's going to take to rebuild the American defense industrial base. I believe that gives Red Cat tremendous opportunity because of our strong relationships inside of the administration. Frankly, what I would tell the investors watching this is look at our track record. We went from $69 million last year with a plus up to $148 million in the base case with a $617 million plus up. I think that shows the strength of our positioning inside the administration, how strongly Congress is aligned around this initiative and the ways in which we'll be able to get some funding for our future products. They just might not call it Replicator.
Actually, Stan, just to answer your earlier question about when Replicator came out, I think it was almost at least two years ago, right? That was when we started to dabble and explore the USV space. As we dug in and tried to get meetings with the Replicator folks, which is nearly impossible, we actually got into this administration, you know, people that ended up in this administration. We just kept seeing the USV space as very crucial, specifically for Indo-Pacom, but also for the United States to be able to do both coasts. I mean, you know, I'm in Puerto Rico for a good portion of the year. I know guys from the Customs and Border Patrol, they can't even come close to covering Puerto Rico. They could do it with like 20 of our boats, and they wouldn't have to put any people in harm's way.
One of the guys from Border Patrol got shot a year ago boarding another boat. We could do it. We could cover Hawaii. We could cover Puerto Rico, West Coast, East Coast, Alaska, you know, with our USVs. You look at the Gulf of America where all the cartels are coming across. There is so much need for the USV space. If you combine it with what we can do, we can put EW packages on there, modular packages. We have missile systems that are going on the variant 7. We have our swarms going on our 11 m. We have kamikazes on our 5 m. The Replicator kind of got us thinking about water.
Jeff, one thing that I think is interesting, I've kind of seen in some of the questions here is, you know, there's obviously a similarity between our air assets and our unmanned surface vessels in that these are carriers of capabilities. Can you just walk us through, you know, this idea of Red Cat Futures Initiative and why that's important to the development of these systems?
Yeah, so one of the crucial things, if you look at some of the things that have happened in Ukraine, they've taken USVs and they've taken down jets. They've taken down helicopters. They've taken out large naval assets. They basically got the Russians out of the Black Sea. That capability, having a modular capability for our USVs, I know AeroVironment's got a ton of things it could attach to one of our variants. I know that Firestorm, which is a company we have an investment in, is doing great. They need a 9 ft launcher. We got that, no problem. There are all sorts of different things we can put on that USV that can be useful for that mission. Now, this USV could be like, hey, listen, you can buy this USV and you can put any of these attachments on it that you want to put on it.
We're just going to give you the vehicle. Here's your iPhone, put whatever app you want on it. We're pretty excited. The day we announced our USV division, we were at a couple of conferences and people are just dying to put their stuff on our boats.
Outstanding. Back to SRR, is there anything we talked about as far as additional milestones, contract length, those types of things, time frames?
We didn't even do a press release. We got this contract a couple of weeks ago. We're just putting our heads down and want to build a bunch of drones for them. Like I said, there's a lot of demand out there. Before the Hegseth video, a few days before that, we got an inbound from DoD, from someone in the DoD, and said, we need to speak to you in a couple of days. We need to know how many drones can you make? We're like, that's kind of an odd fire drill. Chris was involved in modeling a lot of this. We basically said, we can get you, and we're just talking Black Widows again here, about 5,000 Black Widows a month to, as Chris put it, infinity, which you never hear a CFO say that. We were very perplexed why this request came in that way.
Two days later, the Hegseth video came out. There's a lot going on there.
Jeff and Chris, do you see, as our business expands and we do a lot more international sales, do you see Red Cat expanding globally outside of the U.S. as far as facilities and support?
Of course. Where are you going tomorrow? Thailand?
Thailand, yeah.
Yeah, that could be coming back with some POs. We spent a lot of time and energy in a bunch of RFPs. We finally had a drone to do a couple of these in Europe the last few weeks. We didn't have any drones because we were waiting to kind of get off that holding pattern. Now when people see it, we crushed the flight time. We crushed the range. We're really showing up with a best-in-class drone now. We are hoping to get quite a bit of business from Europe. If you look at some of our peers, about half of their business comes from NATO. We're hoping to get there.
Jeff, another just kind of follow-up question when it comes to, you mentioned training, I think, earlier in the conversation. How critical do you see training being as part of our business? That's something that's usually kind of an add-on that customers can buy into. How critical do you see that?
For defense, as we've mentioned on a few of these calls, that's a whole different bucket of money that we get to do spares, repairs, and training all come out of this separate bucket, which I think Brendan told us that the $148 million and there's, what, $65 million for that, Brendan?
Yeah, between $65 million and $70 million.
Yeah, that's a big number. You got to have a lot of documentation. You got to train the trainer. It is crucial, actually, because if you just send your drones to someone and they don't know how to use them, they're going to crash them and they're going to come back to you and say it's your fault. To answer that question on a big, big picture, it's absolutely critical to do in-depth training so that they can take their weapon and use it properly.
Thanks, Jeff. Let's see here. We are nearing the end of our questions here. Jeff, I'm going to hand it back over to you. Is there any other information you'd like to discuss?
No, I am so excited that we finally signed the contract. A lot of people thought we weren't in SRR for quite some time, but we didn't want to promote it. We just wanted to put our heads down, get that first shipment, which is going out very soon to the Army. We want to help the warfighters of the Army. The Army's been a great partner. What I think is crucial for us is for people to understand our business. We're not getting into a new space for the USVs. We knew a lot about USVs for a long time. I'll just say this, stay tuned for next week. You're going to hear a lot about our USV maritime division.
Great. Thanks so much for closing us out, Jeff. That brings us to the end of our town hall. Many thanks to our panelists, participants, attendees, and those who submitted questions. Stay tuned for news of future town halls and our social media and press releases. I'll have more news for you guys coming from Thailand next week. Have a wonderful rest of your day, everyone. Thanks so much.
Thank you, everyone.
Thanks, everybody.