00:00Well, the Ukraine war just escalated the demand in Europe.
00:04So the Europe just woke up with the rearmament and woke up with all the deployment of the safety stocks
00:12they had to Ukraine.
00:15So it simply speed up after the Ukraine conflict.
00:20And there is demand for almost every type of military equipment you can imagine.
00:25Of course, there is a military and artillery ammunition demand that's the highest because Ukraine needs that a lot.
00:32But it's moving pretty much fast towards the anti-drone systems and in general air defense systems.
00:40And it will probably not be only for the defense, but will be also a dual use.
00:46Because if you remember, there has been some attacks by the drones of the airports, of the civilian airports.
00:52So it looks like the critical infrastructure should be covered.
00:56Also some type of a mixture of the military and the dual use systems, mostly for the air defense.
01:04There are basically three takeaways that the artillery still rules from Ukraine and the drones and anti-drone systems.
01:14Anti-drone systems and anti-ballistic missile systems are in the focus right now.
01:19Are you seeing increased demand tied to the Middle East as well at this time, where clearly that's a hot
01:25spot?
01:26Well, it is expected probably after the recent Iran attack.
01:32But yes, it has been and it's worldwide.
01:36Europe and NATO prevail.
01:38They are asking a lot and the demand is quite high.
01:41But it's also coming from the Southeast Asia, from the Middle East and from the rest of the world.
01:46But simply, whoever or whichever country has been served by Russian equipment, they are now without any spare parts and
01:56everything.
01:56So they are moving towards other standards or equipment as well.
02:01How difficult is it to fill demand, given how much is coming from all corners?
02:07How difficult is it to fulfill the demand, to provide the artillery and the ammunition to countries around the world
02:14that all seem to be moving in the same direction with rearmament?
02:17Well, there are high barriers of entry into that business.
02:22First of all, you need to be certified, because it's a NATO certification.
02:26Second, you need to certify each of the artillery ammunition for each type of the gun and each type of
02:33the barrel from which it's being shot.
02:38That's the first point.
02:39And second, there are critical components which are missing, and those are typical propellants and the explosives.
02:46So throughout of this, it's not possible to speed up and ramp up so quickly the capacities for those ones.
02:55And even though NATO came with the new standards of the safety stocks, which are multiples of what has been
03:02in the past,
03:04together with that, it's coming also to the land system, so whatever types of vehicles and military applications.
03:12Is it tough to know where to source some of these materials from in this increasingly geopolitically fractured world,
03:20in terms of how you get some of the equipment, where it's made, some of those challenges?
03:27How much more challenging is that?
03:30Well, we have been using quite a lot.
03:33We call it a scrap material in the past, so the ex-military equipment, which we acquired, now we refurbished
03:42and we served Ukraine by that as well.
03:45We see a demand also coming from some of the countries that they will be using this refurbished or commissioned
03:53equipment for the trainings.
03:57And the sourcing is all the countries around, of course, securing the supply in terms of using at least dual
04:08use or at least to be as much vertically integrated as we, for example, try to be.
04:14So you IPO'd in January and there clearly is a tremendous amount of investor interest.
04:19How much has it increased over the past, even just weekend, based on what we're seeing?
04:25Increased, what do you mean, the demand?
04:26In terms of people who want to lend you money, people who want to invest in what you do, people
04:30who want to allow you to expand at a faster pace.
04:33Well, of course, that is quite a nice move, but they were moving also before the IPO.
04:39So throughout our growth and the track record we have been showing, we already built up the capital structure to
04:48be ready, either to be ready for IPO,
04:50and we already entered the capital markets back in June 2025 by the public bonds, sizable public bonds.
04:57So we were getting ready for that.
04:59Of course, now it's even better.
05:01The position is nice.
05:04There's a big question about how much artificial intelligence is going to change the nature of war.
05:09And originally there was a feeling that we'd be moving from sort of what one analyst called a relic,
05:15which was the sort of using guns and things of that nature and using more drones and sort of unmanned
05:21entities.
05:22How much are you seeing that really come into play?
05:24Well, I think AI will be one of the most significant parts of the drones and anti-drone systems and
05:31the overall air defense, for example.
05:34Because now we are, there is one good example.
05:38Now you can see it in the Middle East.
05:40So the Shahid drones are shut down by the so expensive Patriot missiles.
05:48So the few thousand Shahid drones is shut down by a million missiles, which cost the Patriot.
05:57And that is not sustainable anymore, even though it's not efficient.
06:01So we need to find a solution how to be efficient in terms of the elimination of the drones,
06:08either by using artificial intelligence.
06:10So, for example, it takes over the control over the drone.
06:15So you are not shutting it down, but you are safely somewhere landing, for example.
06:22Or you just simply send it to the area where you can shut it down.
06:27And those are examples what I can particularly see in the area of AI using for the air defense, for
06:34example.
06:34Can you give a sense of how expensive the anti-drone missiles are currently, or at least that had been
06:40used a couple of years ago,
06:41versus the cost of some of the technology that you're talking about that could cause the drone to land, reroute
06:47it, cause it to self-destruct, whatever.
06:49Sort of how much more cost-efficient that is?
06:55Well, if we include the research and development costs, so R&D, I am not that much sure.
07:01But imagine that one Shahid drone costs several tens of thousands of dollars,
07:08and the two Patriot missiles, which are going against, are a few millions.
07:13So the cost savings and efficiency should be significant.
07:17How quickly is the AI development, how quickly are some of these new technologies being deployed?
07:23Can you give a sense of the experience in Ukraine, and how quickly that's translated to what we're seeing right
07:29now,
07:30in terms of how militaries are using drones and using different equipment?
07:34Well, some of the experience from Ukraine is developed quite quickly into the use.
07:40Some of this will take time, and the experience is still coming.
07:43So I'm expecting now the focus in AI particularly is so massive, as well as all the other technologies,
07:51like, for example, 3D printing of the missile, etc., what we can use within the U.S. and European startups.
08:00So that is something where the overall area is moving.
08:05AI, it's a question of time, when this will be developed.
08:10But as much as the experience is coming, we can see a significant move forward within the AI.
08:21You're an international company.
08:23You're selling weapons of war to many different nations.
08:27Do you have anything baked into the way that your company is run,
08:32where there are countries that you will sell to and countries that you won't sell to?
08:37Well, we are strictly, within the compliance, we are strictly under the rules of the European Union and the NATO.
08:44So whenever we are following all the sanction lists,
08:47we have very robust compliance system, monitoring 24-7 all our customers and suppliers.
08:53So that is just simply following that.
08:56Do you get the sense that the West or the NATO and European allies more broadly are maintaining the upper
09:05hand
09:05versus some of the adversaries, whether it's Russia, whether it's China?
09:10No, I don't think so. It's fairly spread.
09:13It's fairly spread around. So everyone is getting this technology.
09:16What's your big takeaway from this conference? I'll leave you with this one.
09:19Well, the conference just started, so one of the big takeaways is to spend time with you,
09:27which is great to be and I'm honored that you invited me.
09:30And I expect a lot of meetings, which I have planned for the next two days,
09:37which I will be here with all the investors, either from equity or from the leverage finance,
09:43which is this conference about.
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